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Open Access
Article
Publication date: 8 July 2022

Busani Moyo

This study aims to investigate the factors that affect the likelihood of formalizing informal sector activities in 13 Sub-Saharan African countries, using World Bank enterprise…

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Abstract

Purpose

This study aims to investigate the factors that affect the likelihood of formalizing informal sector activities in 13 Sub-Saharan African countries, using World Bank enterprise survey data collected between the periods 2009 and 2018. Notwithstanding the great contribution of the informal economy in Africa, developing countries may stand to gain more if they make inroads in formalizing the informal sector.

Design/methodology/approach

Since the dependent variable is binary taking the value of one if the firm is willing to formalize and zero otherwise, the study will employ a discrete choice probit model.

Findings

Results inter alia show that firms that are more likely to formalize are young, owned by individuals with high levels of education and, have registered before. Governments should therefore target firms that are young and provide them with information about the benefits of registration, and if these firms are owned by experienced and educated individuals, the likelihood for them to register would be high.

Research limitations/implications

The study uses cross sectional data and therefore cannot capture time variant factors affecting the probability to register and also cannot correct effectively for endogeneity.

Practical implications

Governments should therefore target firms that are young and provide them with as much information as possible about the benefits of registration, and if these firms are owned by experienced and educated individuals, the likelihood to convince them to register would be high. They should also reduce the cost of registration so as to improve net benefits in line with the rational exit view.

Social implications

Formalizing informal activities will help improve the performance of these firms, reduce vulnerable employment as well as crime, poverty and inequality. Providing decent operating and working conditions to informal players will reduce social and political unrest.

Originality/value

The African continent is home to many informal firms accounting for roughly 55% of economic activity with 90% of workers eking out a living in a sector that does not respect worker rights, provide decent working conditions and where changes in growth have done little to reduce its size. Regulatory reforms have also been implemented resulting in the number of start-up registration procedures falling from 11 in 2003 to seven in 2019. The uniqueness of Sub Saharan Africa in terms of entrepreneurial culture, political, institutional and economic conditions as well as lack of consensus in the extant empirical literature make this study pertinent.

Details

African Journal of Economic and Management Studies, vol. 13 no. 3
Type: Research Article
ISSN: 2040-0705

Keywords

Abstract

Details

Youth Development in South Africa: Harnessing the Demographic Dividend
Type: Book
ISBN: 978-1-83753-409-8

Book part
Publication date: 3 October 2023

Busani Ngcaweni

A decade ago, the AIDS pandemic was driven by determinants such as poverty, deprivation, migrancy, patriarchy and gender-based violence. Today, however, the socio-economic and…

Abstract

A decade ago, the AIDS pandemic was driven by determinants such as poverty, deprivation, migrancy, patriarchy and gender-based violence. Today, however, the socio-economic and structural drivers of HIV infections have assumed or added other dimensions, including social and electronic media and reality television. These new dimensions saw further expression with the advent of the COVID-19 pandemic from 2020 onwards. To consign both HIV and the COVID-19 pandemics to history’s museum of pandemics, strategists must employ greater infiltration and mastery of social and electronic media and reality TV. In the case of HIV, these created social clouds or bubbles where unprotected sex, transactional sex and multiple concurrent sexual partnerships are manufactured and proliferated globally. The same was the case with the COVID-19 pandemic, in which case these social clouds or bubbles created an alternative narrative about the source of the pandemic, who and how people get infected, and both the requisite remedies and preventions in this regard. With reality television gaining popularity on low-cost paid channels and free-to-air television; with smartphone penetration widening and costs of access to data falling, a social cloud has been created, enabling the cultural majority (those who control the media and capital) to set trends for everyone, including those with less means. These trends in turn become a standard many aspire to live by. The ontological density of the poor and lower middle-class women is lost through the universalisation of social and cultural trends set by middle elites who control the production and reproduction of knowledge and shape international and national imagination. It is these discourses, and their shaping of imagination as a consequence, that this chapter deals with. It looks at both the implications and consequences which, in the case of pandemics such as these, can be dire.

Details

Youth Development in South Africa: Harnessing the Demographic Dividend
Type: Book
ISBN: 978-1-83753-409-8

Keywords

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