South Africa, March 17 -- Unlike comparable emerging economies like Brazil, South Africa's high barriers to entry into the informal sector and the difficulties informal businesses face to transition to formal business create a significant economic bottleneck.

While the formal economy struggles to absorb the nation's workforce, the informal sector, estimated at 7.5 million participants, represents untapped potential.

According to a working paper from the Center for International Development at Harvard University, South Africa's informal economy has the potential to provide an entry point into the labour market for many unemployed South Africans.

The paper argues that the country has traditionally placed too little emphasis on policy int...