ABSTRACT
The analysis of the modalities along which the informal Base of the Pyramid (BOP) markets interact with the formal sphere of the economy in the African continent can shed light on the allocation of benefits of such interrelation to BOP economic actors. We explore the theoretical contributions on the informal-formal interdependence by focusing on two approaches. The first considers formal and informal sectors as structurally interrelated, where the latter has a subordinate, but not residual, position with respect to the former. The second sees the two domains as coexistent sources of livelihood in insecure labour markets and underlines the agency of individuals in navigating this divide. We explore the empirical literature in two case studies that illustrate those two theoretical streams: the cases of mobile money development in Kenya and the relationship between the labour markets and micro-entrepreneurship in Ethiopia. Through this review we aim to show the relevance of the two approaches in understanding the role of the informal economy for the BOP markets.
