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Informal enterprises in Kenya (English)

This note draws from an emerging literature on firm informality as well as data collected on micro enterprises and informal firms as part of the World Bank’s enterprise survey initiative for Kenya. The purpose of the note is to assess the main constraints facing informal firms, identify patterns of productivity and firm dynamics, and better understand drivers for formalization. Section one provides an overview of key characteristics and main investment climate constraints facing informal firms. In section two, patterns of informal firm finance are explored, while in sections three and four, labor productivity and drivers of firm growth are analyzed. Section five examines incentives to remain informal and policies that can catalyze formalization. This is followed by a conclusion. Due to the sampling methodology used, all results pertain to the sample of surveyed firms; hence, due caution is necessary in extrapolating the results to the broader informal sector in Kenya. Nevertheless, the assessment of the surveyed firms could provide important information on identifying policies as well as firm-level support that could boost productivity and catalyze formalization. This could have important implications for economic growth and job creation in Kenya.

Details

  • Author

    Safavian,Mehnaz S., Wimpey,Joshua Seth, Amin,Mohammad

  • Document Date

    2016/01/01

  • Document Type

    Working Paper

  • Report Number

    106986

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Kenya,

  • Region

    Africa,

  • Disclosure Date

    2016/07/19

  • Disclosure Status

    Disclosed

  • Doc Name

    Informal enterprises in Kenya

  • Keywords

    private sector development specialist;limited access to finance;labor productivity;informal firms;access to land;term of productivity;source of financing;working capital requirements;primary education education;gap in information;investment climate constraint;sections of society;obstacles to growth;source of employment;separate bank account;measures of impact;economies of scale;terms of sale;behavior of firms;number of workers;access to technology;labor productivity increase;firm survey;informal sector;education level;micro firms;furniture industry;business environment;bank finance;firm dynamic;manufacturing sector;firm productivity;university degree;fixed effect;raw material;power outage;informal payment;Informal Economy;productivity gap;regression analysis;Public Services;regression results;informal enterprise;firm growth;productivity differences;human capital;internal fund;power supply;water problem;average age;summary statistic;government service;firm performance;general management;firm ownership;business experience;tax revenue;protection payment;reasons given;public official;physical infrastructure;Water Shortage;total productivity;natural selection;survey data;productive labor;entrepreneurial ability;regional location;empirical analysis;electricity experience;driving force;wage employment;productivity level;hot sun;industrial zone;summary data;present evidence;living condition;income equality;application procedure;service benefit;greater access;financial constraint;small cities;annex annex;regional variation;business survey;lost revenue;household enterprise;sampling frame;Job Creation;micro enterprise;survey instrument;household characteristic;household livelihood;collaborative effort;income growth;information good;construction permit;correlation coefficient;positive relationship;scatter plot;gender disparity;informal labor;methodological approach;empirical findings;firm expansion;previous paragraph;average cost;Vocational Training;Business Climate;industrial sector;employment growth;median length;higher growth;informal incentives;

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Citation

Safavian,Mehnaz S. Wimpey,Joshua Seth Amin,Mohammad

Informal enterprises in Kenya (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/262361468914023771/Informal-enterprises-in-Kenya