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# Before the Permit
- URL: https://abagofstories.com/before-the-permit/
- Published: 2026-08-04T12:39:00.000Z
- Updated: 2026-08-07T17:06:54.000Z
- Description: In places where public welfare is thin and formal employment scarce, millions of people build livelihoods one sale at a time. The informal economy should not be romanticized but neither should it be treated as disorder to be erased.
- Author: Claudio Maria Lerario
- Tags: Local Futures, Field Notes

A shop small enough to carry. A business can be small enough to balance on a head.

Its storeroom may be a woven basket. Its counter may be a square of cloth spread beside a road. Its inventory may fit inside a bowl, a metal container, a wooden box or the pockets of a jacket. At the end of the day, the shop disappears from the street because its owner carries it home.

The man cutting a pineapple wears yellow rubber gloves. The fruit has already been opened, exposing its pale flesh to the customer. Above him sits the large basket in which the rest of the business travels. He has chosen what to carry, where to stand and how much of the fruit to prepare in advance. Too little and he loses a sale; too much and the product begins to spoil. Every decision involves time, weather, appetite and risk.

Elsewhere, a woman waits beside necklaces and small objects arranged on a cloth. Another lifts a white fabric and studies the way it falls. A merchant displays stones beneath electric lamps. Someone has turned a miniature bus into a mobile attraction, painted in colors bright enough to stop a child and persuade an adult to pay.

![](https://storage.ghost.io/c/6d/20/6d207f2a-6719-4291-87ae-b3b4a25be7f5/content/images/2026/08/eco-0002.jpg)

Rio de Janairo, Brazil

### None of these businesses has an office. That does not mean they lack organization.

There is capital, even when the capital is a basin of fruit or a handful of bracelets. There is inventory, pricing, customer service, transportation and market research. There are decisions about which street becomes busy in the afternoon, which goods sell during a religious festival, when tourists arrive, how much a customer can afford and whether a familiar buyer may be trusted to pay tomorrow.

The accounting system may not exist on paper, but it exists. It is held in memory, in the quantity of stock remaining at dusk, in the money set aside for tomorrow’s purchases and in the obligations exchanged among relatives, suppliers and neighbors.

This is the informal economy: not a single sector, but a vast and varied world of work conducted beyond, or only partially covered by, formal registration, taxation, labor law and social protection. It includes street vendors and artisans, but also domestic workers, transport operators, farmers, repairers, construction workers and people employed informally inside otherwise formal enterprises.

In 2025, an estimated 57.9 percent of the world’s employed population worked informally, almost unchanged from a decade earlier. The International Labour Organization describes informality as the daily reality of roughly two billion workers and about 80 percent of enterprises worldwide. This is not a narrow fringe around the official economy. In much of the world, it is the economy people encounter every morning. ([ilostat.ilo.org](https://ilostat.ilo.org/blog/the-world-of-work-and-the-2030-agenda-a-ten-year-review/?utm%5Fsource=chatgpt.com))

![](https://storage.ghost.io/c/6d/20/6d207f2a-6719-4291-87ae-b3b4a25be7f5/content/images/2026/08/eco-0003.jpg)

Hawassa, Ethiopia

## The discipline behind improvisation

From a distance, informal trade is often mistaken for improvisation. Up close, much of it reveals a severe commercial discipline.

A person who begins the day with little working capital cannot absorb many errors. Purchasing the wrong goods, missing the busiest hour or accepting a bad debt can erase the day’s profit. 

When margins are small, inventory must turn quickly. Space must be used efficiently. Transport costs must be watched. Cash for household expenses must be separated — sometimes only mentally — from the money required to reopen the business the following morning.

**The person carrying a basket is also carrying a supply chain.** Products may have passed through growers, wholesalers, drivers and market intermediaries before reaching the street. Goods that appear inexpensive to a customer may already contain the cost of several journeys, payments and risks. 

The final seller often occupies the weakest point in that chain, visible to the police and public authorities but with little influence over prices farther upstream.

There is genuine intelligence in this work. Admiring it, however, must not lead us to admire the insecurity surrounding it.

![](https://storage.ghost.io/c/6d/20/6d207f2a-6719-4291-87ae-b3b4a25be7f5/content/images/2026/08/eco-0004.jpg)

Arba Minch, Ethiopia

Informality often means working without paid leave, insurance, pension contributions, legal representation or protection against injury and illness. A person may possess the freedom to choose a workplace, while also carrying every commercial and personal risk alone. The same flexibility that allows someone to start with almost nothing can leave that person exposed to almost everything.

A broken tool, a week of rain, an illness in the family or a confiscated stock of goods may be enough to close the business. There is rarely a department to absorb the loss. There is only the household.

The informal economy therefore performs two contradictory functions. It creates an accessible entry point into work, particularly where jobs are scarce and institutions weak. 

At the same time, it transfers responsibilities that would normally be shared among employers, insurers and public authorities onto individual workers and their families. The ILO notes that informal employment is closely associated with inadequate earnings, unsafe working conditions and limited social protection. ([ilostat.ilo.org](https://ilostat.ilo.org/topics/informality/?utm%5Fsource=chatgpt.com))

An honest account must hold both realities at once. The work deserves respect. The insecurity does not.

![](https://storage.ghost.io/c/6d/20/6d207f2a-6719-4291-87ae-b3b4a25be7f5/content/images/2026/08/eco-0005.jpg)

Lake Chamo, Ethiopia

## When order becomes punishment

Governments have legitimate reasons to regulate economic activity. Food must be safe. Traffic must move. Dangerous products must be controlled. Workers, customers and shared public spaces require protection.

**But regulation does not operate in a social vacuum.** A licensing system designed for a company with permanent premises, a bank account and professional accountants may be impossible for a person whose entire business fits on a cloth. 

A permit that appears inexpensive to a salaried official may equal several days of a vendor’s earnings. A journey to an administrative office may mean losing the customers who would have paid for dinner that evening.

The issue is not whether rules should exist. It is whether the rules recognize the economic scale and material circumstances of the people expected to obey them.

When governments respond to informal trade principally through fines, seizures and forced removals, they often confuse the appearance of order with economic progress. The vendor disappears from one pavement, but the need that created the business remains. The activity moves to another street, returns after dark or reappears in a form that is harder to monitor and more dangerous to conduct.

![](https://storage.ghost.io/c/6d/20/6d207f2a-6719-4291-87ae-b3b4a25be7f5/content/images/2026/08/eco-0006.jpg)

Antigua, Guatemala

### **The law then becomes selective.** 

It reaches most easily the person whose work is visible: the woman beside the road, the man carrying fruit, the artisan working behind an open doorway. Much larger economic actors can hide wealth through complex financial and corporate structures. A street trader cannot hide a basket.

There is also a difference between an activity that is informal and one that is harmful or criminal. Selling fruit without a license is not equivalent to trafficking dangerous goods, exploiting workers or damaging a community. Informality describes a relationship with institutions; it is not, by itself, a moral category.

Treating every unregistered activity as evidence of dishonesty produces bad policy because it begins from the wrong question. Instead of asking why people refuse to comply, institutions should ask what compliance offers them in return.

What does registration provide? Access to credit? A secure place to trade? Health insurance? Protection from arbitrary confiscation? A pension? Contracts that can be enforced? Reliable electricity and transportation? Or does formality begin and end with the obligation to pay?

![](https://storage.ghost.io/c/6d/20/6d207f2a-6719-4291-87ae-b3b4a25be7f5/content/images/2026/08/eco-0007.jpg)

Adrar Desert,Mauritania

Where the state requests taxes and paperwork but provides few credible protections, remaining informal may be less a rejection of civic responsibility than a rational response to an unequal exchange.

The ILO’s international framework for moving from informal to formal work recognizes this problem. Recommendation No. 204 calls for transitions that preserve and improve existing livelihoods rather than destroying them in the name of compliance. 

Formalization, in this understanding, is not a raid or an administrative deadline. It is a gradual expansion of rights, security and economic possibility. ([Normlex](https://normlex.ilo.org/dyn/nrmlx%5Fen/f?p=NORMLEXPUB%3A12100%3A0%3A%3ANO%3A%3AP12100%5FILO%5FCODE%3AR204&utm%5Fsource=chatgpt.com))

A good policy does not eliminate a person’s work to improve a statistic. It builds a bridge across which that work can become safer and more productive.

![](https://storage.ghost.io/c/6d/20/6d207f2a-6719-4291-87ae-b3b4a25be7f5/content/images/2026/08/eco-0013.jpg)

Adrar Desert,Mauritania

## Not every stall is a startup

It is tempting to tell a simple story about entrepreneurship. A person begins with a few goods on the street. Sales increase. The business moves into a shop, employs workers, registers with the authorities and eventually becomes a company. This happens, and in parts of Africa and Latin America many established businesses can trace their origins to modest trading activities.

**But the story is not universal.** Some informal enterprises have the potential and ambition to grow. Others exist primarily to stabilize a household income. Some provide independence to people excluded from salaried employment. Others remain small because their markets are small, because credit is unavailable or because expansion would introduce costs and risks that the owner has no reason to accept.

**A business does not have to become large to be legitimate.** The right to earn a living cannot depend on promising investors a future of continuous growth. A woman selling textiles may want a shop, several employees and customers in other cities. She may instead want sufficient income to pay school fees and retain control over her time. Both ambitions deserve serious consideration.

This diversity matters because programs intended to formalize businesses often assume that registration itself will produce growth. Research conducted through World Bank-supported experiments has shown a more complicated picture. 

Simplifying registration can help, particularly for enterprises already likely to benefit from formal status, but many small firms see little reason to register when the immediate costs are clearer than the eventual advantages. Assistance with banking, training and access to markets can matter more than the certificate alone. ([World Bank](https://documents.worldbank.org/en/publication/documents-reports/documentdetail/579081480451260134?utm%5Fsource=chatgpt.com))

![](https://storage.ghost.io/c/6d/20/6d207f2a-6719-4291-87ae-b3b4a25be7f5/content/images/2026/08/eco-0008.jpg)

Lalibela, Ethiopia

### Formalization should therefore be treated as an economic proposition, not a lesson in obedience.

For a small business, it must offer something concrete: simplified taxation proportionate to revenue; access to affordable credit; the ability to accept larger contracts; legal recognition of a place of work; insurance; social security; protection against extortion; or entry into supply chains previously closed to unregistered operators.

It should also be reversible and forgiving in its early stages. A person should not face ruin because one bad season makes a tax payment impossible. Registration systems could allow businesses to begin with minimal documentation, graduate through different levels and pay according to actual turnover rather than assumptions designed for larger companies.

The objective is not to keep people informal. It is to stop treating formalization as a door that opens only after someone has already accumulated the resources found on the other side.

![](https://storage.ghost.io/c/6d/20/6d207f2a-6719-4291-87ae-b3b4a25be7f5/content/images/2026/08/eco-0010.jpg)

Lalibela, Ethiopia

## A bank inside the phone

For generations, small traders have operated through cash, personal trust and forms of community credit that rarely appear in official financial records. A supplier extends a few days to a reliable customer. Relatives pool money to purchase stock. A merchant remembers who has paid and who still owes.

These systems can be highly sophisticated, but they have limits. Cash can be stolen. Savings held at home are difficult to protect. A person without a financial history may remain invisible to lenders even after years of successful trading.

Mobile money began changing that landscape long before many traditional banks understood the size of the market.

A basic telephone can now receive payments, transfer money to suppliers, store small savings and establish a record of transactions. For a mobile merchant, the phone can become a cash register, account book and bank branch carried in the same pocket.

![](https://storage.ghost.io/c/6d/20/6d207f2a-6719-4291-87ae-b3b4a25be7f5/content/images/2026/08/eco-0009.jpg)

Adrar Desert, Mauritania

By 2025, mobile money had reached 2.3 billion registered accounts worldwide and processed more than $2 trillion in annual transactions. Payments made directly to merchants grew to approximately $155 billion. 

These figures reveal not a marginal service for emergency transfers, but an enormous financial infrastructure built largely around populations and markets that conventional banking had failed to serve. ([gsma.com](https://www.gsma.com/newsroom/press-release/mobile-money-accounted-for-2-trillion-in-transactions-in-2025-doubling-since-2021-as-active-accounts-continue-to-grow/?utm%5Fsource=chatgpt.com))

Around this infrastructure, a new generation of businesses is developing: payment platforms, digital bookkeeping, microinsurance, inventory systems, savings products, logistics tools and forms of lending based on transaction histories rather than property ownership.

This is one reason the informal economy has become strategically important to investors. Its scale is vast, its financial needs remain underserved and millions of small operators are only beginning to use digital tools. The commercial opportunity is real. So is the danger.

![](https://storage.ghost.io/c/6d/20/6d207f2a-6719-4291-87ae-b3b4a25be7f5/content/images/2026/08/eco-0011.jpg)

Chinguetti, Mauritania

### The digital inclusion of informal workers can easily become a new form of extraction. 

Small transactions can attract proportionally high fees. Credit offered through a phone can carry opaque conditions. A digital history may open access to finance, but it can also expose vulnerable users to surveillance, automatic taxation and exclusion by algorithms they cannot question.

The purpose of technology should not be merely to make the informal economy more visible to governments and financial companies. It should reduce the cost of doing business, increase control over earnings and strengthen the bargaining power of the people generating those earnings.

Taxing mobile transactions requires particular care. A 2025 IMF working paper examining African countries found that transaction taxes reduced mobile-money use, placed heavier effective burdens on rural and unbanked users, and encouraged some activity to return to cash. A tool designed to expand financial inclusion can lose that function when governments treat its visibility chiefly as an opportunity for easy revenue. ([IMF](https://www.imf.org/-/media/files/publications/wp/2025/english/wpiea2025255-source-pdf.pdf?ref=abagofstories.com))

Digitalization is not formalization by itself. A vendor can accept an electronic payment and remain without health insurance, legal protection or a secure place to trade. Technology may create a record of the transaction while leaving the conditions of work untouched.

The important question is therefore not whether the street will become digital. Much of it already has. The question is who will benefit from the data, fees and new financial relationships created there.

![](https://storage.ghost.io/c/6d/20/6d207f2a-6719-4291-87ae-b3b4a25be7f5/content/images/2026/08/eco-0012.jpg)

Konso, Ethiopia

## Recognition before correction

The photographs accompanying this article were made in different countries, but the economic gestures travel easily across borders.

A hand measures cloth. Another holds two bracelets for inspection. Fruit is lifted toward a car window. Objects are placed carefully on a blanket so that a passerby may understand their value. A merchant waits among stones gathered, classified and illuminated. A man rests beside an inventory spread across the sand.

These are not portraits of people waiting to be saved. They are records of negotiation, skill, presentation, movement and patience.

The admiration they provoke should remain exact. It belongs not to poverty but to the human capacity to organize a livelihood under difficult conditions. It belongs to the discipline required to return the following morning, reconstruct the shop and begin again. It belongs to people who calculate with narrow margins yet continue to imagine wider futures.

![](https://storage.ghost.io/c/6d/20/6d207f2a-6719-4291-87ae-b3b4a25be7f5/content/images/2026/08/eco-0014.jpg)

Antigua, Guatemala

## Admiration cannot substitute for rights

An economy that depends on individual ingenuity while withholding public protection is not admirable in itself. It is incomplete. The courage of its workers should not become an excuse for institutional neglect.

The objective should not be to preserve a picturesque world of street markets for the pleasure of visitors, nor to clear those markets away in pursuit of a sterile image of modernity. 

It should be to recognize what already exists and work from there: providing trading spaces, sanitation, storage, affordable licenses, accessible financial services, collective representation and social protection that follows the worker rather than the workplace.

Some enterprises will remain small. Some will grow. Some will fail and begin again under another form. This is also true in the formal economy; only the vocabulary changes.

Work does not begin when an authority issues a permit. Value does not appear when a business enters a database. Enterprise is already present in the purchase of the first basket, the arrangement of the first objects and the first exchange between seller and customer. The permit may come later. **Recognition should come first.**