Economies Between the Lines…

Unlocking the Power of Small, Frictionless Transactions

In Ethiopia, money moves in the margins—equbs, gigs, vendor stalls, Telebirr /MPESA transfers, side projects that pay school fees. The transactions are there, but the rails don’t fit. Informal work isn’t a niche here: estimates suggest Ethiopia’s informal economy makes up nearly 29% of GDP, with more than half of urban non-agricultural workers employed informally—with women slightly overrepresented (ISS Africa Futures). For women and youth especially, this “in-between” economy is not peripheral—it’s daily survival and ambition rolled into one.

Across Sub-Saharan Africa, the picture is similar. The informal sector employs the majority of the labor force, yet the average tax-to-GDP ratios hover around 15%, among the lowest in the world (AfDB / OECD; IMF). Governments lose vital revenue, entrepreneurs lose visibility, and economies lose the chance to show their true scale.

“Governments lose vital revenue, entrepreneurs lose visibility, and economies lose the chance to show their true scale”

What if informality wasn’t an exclusionary problem—what if it’s actually a design challenge?

Rethinking the Rails

Imagine a frictionless system where low-threshold peer-to-peer payments could be voluntarily tagged as “pre-business,” “start-up,” or “SME” transactions. Each tag would automatically trigger a proportional micro-tax, deducted and declared through existing payment rails.

No paperwork, no offices, no overwhelming protocols. Just a once informal transaction seamlessly formalized.

This system would be:

• Automatic and micro — scaling with transaction size.

• Transparent — visible to entrepreneurs, governments, and platforms.

• Transitional — a sandbox phase where solopreneurs and gig workers test their financial capacity, build transaction history, and grow toward full compliance at a measured pace.

The rails already exist. Telebirr’s feature phone and USSD platforms support traceable digital payments with KYC baked in. What’s missing is the customization—and imagination—to align them with the realities of informal work.

💡 What Frictionless Payments Could Unlock:

• Formalization without fear → Entrepreneurs step into visibility gradually, reducing financial risk and ruin.

• Revenue for governments → Even micro-taxation at scale strengthens fiscal capacity.

• Sandboxes for startups → Gig work and creative economies become pipelines for new ventures, not dead ends.

Right now, the missed opportunity isn’t revenue—it’s resilience. Every designer, coder, or musician who stays trapped in the informal economy represents unrealized growth and financial empowerment. Every unrecorded transaction is a lost data point— one that could prove their readiness for capital and provide a more nuanced understanding of their own financial capacity.

Ecosystem builders know the power of networks at both micro and macro levels. If we want to unlock Africa’s next wave of entrepreneurs, we need to stop treating informality as a flaw and start seeing it as an onboarding opportunity.

🙋🏾‍♀️ Question for You 👩🏾‍💻:

What would it take for governments and fintech platforms to design true sandboxes—places where informal entrepreneurs can grow without being crushed by compliance?

This article first appeared on Frontier Notes (Substack), subscribe for more community engagement and access.