Informal Firms in Mozambique

Released on by Gemechu Aga
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  • Informal Firms in Mozambique Book Detail

  • Author : Gemechu Aga
  • Release Date : 2021
  • Publisher :
  • Genre :
  • Pages : 37
  • ISBN 13 :
  • File Size : 23,23 MB
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Informal Firms in Mozambique by Gemechu Aga PDF Summary

Book Description: In most countries in Africa, the informal sector is large and exhibits low levels of productivity compared to the formal economy: informal firms are typically small, inefficient, and run by entrepreneurs with low levels of education. This paper presents novel representative firm-level data collected on informal firms in the three largest cities of Mozambique, as well as data of microenterprises, formally registered businesses with less than 5 employees, the segment of the private sector that compares best to informal firms. Compared to formal microenterprises, informal firms sell about 14 times less, make 17 times lower profits and are 2-3 times less productive. Almost two-thirds (61 percent) of these performance gaps can be explained by differences in firm characteristics: informal firms are smaller and have limited skills, adapt fewer good business practices, use less capital and production inputs and are less likely to have access to finance. The rest of the productivity gap is explained by differential returns. Despite this "duality" between formality and informality, there is nevertheless a small but significant group of informal enterprises (7.6 percent of informal firms, representing 10.6 percent of employment in the informal sector) that in their characteristics and productivity levels are similar to formal microenterprises. Policies should take this heterogeneity into account.

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Informal Firms in Mozambique

Informal Firms in Mozambique

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In most countries in Africa, the informal sector is large and exhibits low levels of productivity compared to the formal economy: informal firms are typically s