Formalisation of Informal Enterprises: Economic Growth and Poverty

Abstract

Several studies have reported on factors that impede the formalisation of the informal sector emphasising the high costs of formalisation and the lack of incentives for operating in the formal sector.Various approaches have been adopted by stakeholders in order to overcome these problems and this paper aims to assess these approaches and the factors related to informality-formality trade-off as well as the matter of formalisation as a solution for firms’ growth. By deliberating over the problems faced by informal enterprises and the literature addressing the options for accelerating the formalisation of informal enterprises, the paper will briefly summarise the weaknesses of these approaches.