Our best estimates show that over 30 percent of production and 70 percent of workers in developing countries are outside the scope of government regulation. Most people also agree that the proportion is rising over time. Why is this? What should be done about it? This conference addressed these questions in the African context, with particular attention to post-conflict situations.
Among the questions we debated are:

• Why has informality been rising in the developing world despite recent improvements in the investment climate?
• What can we learn from episodes in which firms have become integrated into tax nets and product and labor standards?
• What can policymakers do to encourage the process? How can we build a culture of compliance?
• Does ‘formalization’ make sense in post-conflict countries? How does it fit with other parts of the state-building agenda?

The conference brought together policymakers and development practitioners from African countries to share information and ideas about which forms of intervention work and which do not. The objective was to develop a practical framework for thinking about the process of enterprise formalization, and to understand what can be done to build trust between private entrepreneurs and the state.

Funding for the conference was kindly provided by the Danish International Development Agency (DANIDA). The conference was jointly hosted with the Institute for Statistical, Social, and Economic Research of the University of Ghana.

For further information please contact: tkenyon@worldbank.org; wsteel@worldbank.org; pthiam@worldbank.org

We are interested in continuing the discussion on these questions. Please visit the Enterprise Formalization Discussion on the PSD Blog and share your thoughts.

Conference Documents

Conference summary: What Have We Learned?
Tom Kenyon, World Bank Group

Summary of Proceedings, Day One & Day Two

Conference Agenda & Participant List

Presentations

Associations and Taxing the Informal Sector
Background paper, powerpoint
Joseph R.A. Ayee, University of Ghana

Formalizing Small-Scale Service Providers
Bernard Collignon, Hydroconseil

Why Formalize Artisan Miners?
Lucie C. Philips, International Business Initiatives

A Framework for Thinking about Enterprise Formalization
Papa Demba Thiam, World Bank Group