Informal Microenterprises in Senegal : Performance Outcomes and Possible Avenues to Boost Productivity and Jobs
This paper explores differences and similarities across formal and informal microenterprises in Senegal. It uses a new national sample of more than 500 firms, of which two-thirds are informal and over 95 percent are micro-size, employing five or fe...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
Washington, DC : World Bank
2022
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/099346206292240107/IDU030a2ea830e9f8043860b7a80aa7a07f14c44 http://hdl.handle.net/10986/37634 |
| Summary: | This paper explores differences and
similarities across formal and informal microenterprises in
Senegal. It uses a new national sample of more than 500
firms, of which two-thirds are informal and over 95 percent
are micro-size, employing five or fewer full-time employees.
The analysis finds that formal firms have average
performance outcomes that are in the range of three to five
times higher than informal firms. Formal firms are also more
likely than informal firms on average to possess “good”
characteristics, namely assets and uses of digital
technologies that are positively correlated with
productivity, sales, exporting, and employment. Despite
these average differences, informal firms are highly
heterogeneous, with a sizable number similar to formal firms
in terms of both performance outcomes and good
characteristics: the share of informal firms in the top
productivity and sales deciles having good characteristics
is substantial, and one-third of all firms in the
high-performance cluster based on a data-driven combination
of the four performance variables are informal firms.
Importantly, several characteristics that are correlates of
better performance (being in the top two clusters) for
informal firms are identical to those for all firms in the
high-performance cluster: having electricity, having had a
loan, and in terms of uses of digital technologies, having a
smartphone and using a mobile phone to communicate with
suppliers and customers. However, a sizable number of
high-performance informal firms are lagging in terms of good
characteristics. That roughly half of formal firms and no
informal firm had a loan implies that it is possible to be
in the top performance cluster even without having access to
such formal financing. That over half of formal firms in the
top cluster as well as in the top decile of productivity and
sales use inventory control/point of sales software as a
management tool while only one informal firm does is both
indicative of the small number of informal firms that use
these technologies and suggestive of the potential for
performance improvements if such technologies were used more widely. |
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