Making It Easier for Women in Malawi to Formalize Their Firms and Access Financial Services
The rate of informal firms is high in Sub-Saharan Africa, especially for those that are women-owned and in the poorest countries, despite a total of 107 business regulatory reforms recorded by Doing Business across 40 economies in the region. Throu...
| Main Authors: | , , |
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| Format: | Brief |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/515901548692715700/Making-it-Easier-for-Women-in-Malawi-to-Formalize-Their-Firms-and-Access-Financial-Services http://hdl.handle.net/10986/31191 |
| Summary: | The rate of informal firms is high in
Sub-Saharan Africa, especially for those that are
women-owned and in the poorest countries, despite a total of
107 business regulatory reforms recorded by Doing Business
across 40 economies in the region. Through an experiment in
Malawi, we established an effective and replicable design to
offer informal firms support to formalize, costing much less
than the typical private sector development intervention.
The study shows that one of the primary barriers to
registration for women-owned firms is transaction costs.
When registration is madevirtually costless, an overwhelming
number of women-owned firms (73 percent) choose to register.
However, when offered the chance to engage in costless
registration for taxes, almost no firms select to pursue
this opt ion. Combining business registration with an
information session at a bank including the offer of a
business bank account leads to an increased use of formal
financial services, and results in increases in women owned
firms sales and profits of 28 percent and 20 percent
respectively. On the other hand, business registration on
its own is not as effective in improving access to financial
services and does not result in enhanced sales and profits. |
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