Driving Meaningful Change in Food Systems Through the Informal Economy

Despite its central role in feeding billions, the informal economy remains largely overlooked in efforts to improve food systems. “Governments struggle with informality,” explains De Steenhuijsen Piters. “Street vendors, market traders, and transporters often operate outside formal regulations and don’t pay taxes, which make them hard to engage.” Investors and all kinds of financial organisations face similar challenges. “To secure funding, from loans to investments, businesses need to meet formal requirements. For many small-scale enterprises in low and middle-income countries, this is too costly, complex or simply not attractive.”

This disconnect means that projects aimed at improving food security, food safety, and sustainability often miss the mark, failing to involve the very actors that drive food systems in Africa and Asia. Yet working with the informal economy is crucial to achieving real, lasting transformation. It’s is not just a lifeline for billions; it also reduces poverty, creates jobs, and ensures food accessibility—even for the most vulnerable.

Placing informal entrepreneurs at the centre

“We need to put informal entrepreneurs at the centre of our efforts,” urges De Steenhuijsen Piters. “By involving them in decision-making, supporting their growth, and recognising their contributions, we can unlock their potential to drive the transformation that food systems urgently need.” He stresses that this isn’t just about supporting street vendors or small-scale farmers. It’s also about recognising the vital role of the 'midstream'—processors, packagers, transporters, and distributors who connect production with consumers and ensure that food reaches markets efficiently.

Engaging with this critical, yet often misunderstood, part of the food system requires a shift in mindset. Policymakers, investors, and development organisations need to design solutions that align with the realities of informal entrepreneurs. “The informal economy is an engine of resilience and creativity,” says De Steenhuijsen Piters. “By working with these actors instead of around them, we can build food systems that are not only more inclusive but also more robust and sustainable. And we can learn from the informal economy, which has consistently demonstrated its resilience during crises, such as conflicts or the COVID-19 pandemic.”

Diagnostic Toolbox to demystify the informal economy

Is the informal economy too complex to drive meaningful change? According to De Steenhuijsen Piters and his team, the answer is a clear “no.” Drawing on Wageningen University & Research’s deep expertise in food systems and political economy, they have developed a diagnostic toolbox to unravel the complexities of the informal economy and identify leverage points for impactful change.

“To analyse these systems, we start by focusing on for instance a specific value chain or sector and mapping the key actors involved,” explains De Steenhuijsen Piters. “We examine their relationships, motivations, and the incentives or barriers influencing their actions, taking into account factors like power dynamics and the capacity for change.”

This structured approach helps identify who can drive change and what motivates them. For example, when addressing food waste, the toolbox pinpoints where waste occurs, who is involved, and what incentives could encourage action. “The goal,” De Steenhuijsen Piters explains, “is to create a domino effect—where one key actor’s investment triggers broader systemic impact. Often, systemic problems aren’t solved by the problem holder but by aligning interests and enabling other actors in the system to create solutions and resource flows.”

Real-World examples of systemic change

One example of successful change comes from Tanzania, where small-scale female market traders face significant income loss and food waste at the end of each day due to unsold goods. “A simple cooler can solve this problem by preserving their produce,” de Steenhuijsen Piters explains, “but the women lack the capital to buy one.” Meanwhile, a local reseller, who has access to capital, is hesitant to invest in coolers because the women can’t afford to pay in installments. “By working with a local bank, we help create a credit system that allows the resellers to invest in coolers to preserve their produce and offer the women practical payment plans. This intervention will not only reduce food waste but also boost incomes and create a new, more resilient value chain.”

Another example comes from Benin, where governments recognise the critical role of local street vendors in feeding large portions of the population. “Their offerings often lack key nutrients,” explains De Steenhuijsen Piters. By collaborating with hundreds of street vendors and a civil society agency, spinach—a highly nutritious food item—has been added to the vendors’ menu. “This simple yet strategic intervention reached nearly half a million people in 2024, informing them of the values of more nutritious meals every day,” he adds. “It’s a powerful demonstration of how engaging with the informal sector can drive meaningful change.” It was not just WUR’s knowledge of the food system, but also the involvement of new actors and experience with the local political economy that helped spark change.

Scaling up impact

While these examples may seem small-scale, De Steenhuijsen Piters and his team are constantly looking for scalable solutions. “Through our work, we aim to deeply understand the structures and processes within informal food systems,” he explains. “For example, when value chains or sectors fail, it often takes the introduction of a new actor or incentive to spark change. These same actors and incentives can often be applied to other value chains as well.”

Equally important, he adds, is recognising the critical role of the informal food system and actively working with it. “There’s a common misconception that economic development will naturally transform the informal economy into a more formal one,” De Steenhuijsen Piters notes. “But that’s not true. Governments and investors need to engage with informal actors and align their efforts around shared goals and solutions. They need to learn valuable lessons that come from the resilience of the informal economy during shocks and crises. We can help them do that.”

Looking for partners to expand the toolbox

De Steenhuijsen Piters emphasises that his work is not yet complete. While the diagnostic toolbox provides a strong starting point for understanding complexities of the informal economy, further development is needed. “The toolbox must be tested in real-world contexts to demonstrate how actionable business cases can be built upon its insights,” he explains.

To achieve this, his team is seeking partners willing to invest in this final, critical phase of development. “We’re calling on impact investors and foundations to join us in completing this tool. By doing so, they can unlock the potential of the 50-75% of the economy currently excluded from meaningful impact in informal food systems across Africa and Asia,” he says. With their support, the toolbox could become a powerful resource, guiding users toward an investment agenda. “It’s a small investment with an enormous ripple effect,” De Steenhuijsen Piters concludes.