Making it Easier for Women in Malawi to Formalize Their Firms and Access Financial Services
The global rate of informal firms is high, especially for those that are women-owned and in the poorest countries, despite 149 economies implementing 368 reforms to simplify the registration process in a recent ten-year period. Through an experimen...
| Main Authors: | , , |
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| Format: | Brief |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/120701468263713677/Making-it-easier-for-women-in-Malawi-to-formalize-their-firms-and-access-financial-services http://hdl.handle.net/10986/25454 |
| Summary: | The global rate of informal firms is
high, especially for those that are women-owned and in the
poorest countries, despite 149 economies implementing 368
reforms to simplify the registration process in a recent
ten-year period. Through an experiment in Malawi, the author
established an effective and replicable design to offer
informal firms support to formalize, costing much less than
the typical private sector development intervention. What
works in the short-term is combining business registration
with an information session at a bank including the offer of
a business bank account. This led to women entrepreneurs
increasing usage of bank accounts for business-only
purposes, financial record keeping, and access to other
financial services including insurance. Informal firms are
smaller and less productive than formal ones, and their
informal status is often associated with a number of costs,
including less access to finance. Although 75 percent of the
countries included in the Doing Business project have
adopted at least one reform making it easier to register a
business since 2004, informality remains very prevalent,
especially in Sub-Saharan Africa. This may lead many to
believe that entrepreneurs are not interested in registering
their firms, and that if they could only be convinced to
formalize it would lead to great benefits for their business. |
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