An inclusive approach to regulating the second economy: A tale of four Sub-Saharan African economies. Issue 3 (3rd September 2018)

• Record Type: Journal Article
• Authors: Olomi, Donath; Charles, Goodluck; Juma, Norma
• Is Part Of: Journal of entrepreneurship in emerging economies. Volume 10:Issue 3(2018)
• Page Start: 447
• Page End: 471
• Publication Date: 2018-09-03
• Subjects: Informal sector -- Sub-Saharan Africa -- Shadow economy -- Business informality -- Inclusive formalization -- Indirect formalization; Entrepreneurship -- Developing countries -- Periodicals; Business enterprises -- Developing countries -- Periodicals; Business enterprises, Foreign -- Developing countries -- Periodicals; Industrial management -- Developing countries -- Periodicals; Developing countries -- Commerce -- Periodicals; 338.04091724
• DOI: 10.1108/JEEE-08-2017-0056
• Languages: English
• ISSNs: 2053-4612

Abstract

Abstract : Purpose: This study aims to examine the experiences and lessons from formalisation initiatives in four sub-Saharan African countries. Drawing upon the three main theories that explain the existence of business informality – the exclusion model, rational exit model and dual economy model – the study offers an alternative path to business formalisation. Design/methodology/approach: The researchers adopted a descriptive-qualitative method, and through the triangulation of data, identified emerging themes and patterns. Findings: The findings suggest that the informal sector has a small layer that responds to the simplification of regulations and a larger one that requires a different formalisation framework. This shift in paradigm, indirect or group formalisation, where business associations facilitate traceability (registration), self-regulation, access to resources and services for members was observed in all four of the economies studied: Kenya, Ghana, Rwanda and Tanzania. Research limitations/implications: As with every qualitative study, subjectivity and interpretation inevitably affect the replicability and generalisability of the findings. However, the rich meanings emerging from the qualitative analysis of the text are critically insightful. Practical implications: Developing countries should explore indirect formalisation. Provision of workspace and construction of business premises for informal operators should be given high priority. The model for building structures for micro enterprises should change in favour of ownership by the operators through their own associations or other private sector investors. Originality/value: A pioneering study on cross-country analysis based on sub-Saharan African nations to unearth a new paradigm, a shift towards indirect or group formalisation.