Informal Business Sector Research Articles

Challenges in Transformation of Informal Business Sector towards Formal Business Sector in Nepal: Evidence from Descriptive Cross-Sectional Study

This study seeks to contribute to the empirical understanding to the transformation of informal business towards formal business in Nepal on the basis of cross-sectional data. This paper examines the preferences socio-economic and other social capital related to informal business. Various indicators were identified to understand and analyze readiness of various informal sectors from literature review of different theories. People with high level of education less prefer informal sector however, prime working age labor force were involved massively in informal sector. More than two-third respondents argued that situation is not manageable which means the informal economy is not transitional to formal economy. Majority of respondents believes that there are some administrative problems that could hinder the entrepreneurial potential and their creativity to flourish.

Impact Analysis of the COVID-19 Pandemic on the Informal Sector Business Tourism Economy in Zimbabwe

This study sought to conduct a socio-economic impact assessment of the COVID-19 pandemic on informal business tourism in Zimbabwe. The specific objective of this study was to identify the extent to which the informal business tourism economy in Zimbabwe has been affected by the COVID-19 pandemic and to prescribe guidelines and frameworks of workable actions to address the problems. As such, the study adopted a desktop research approach in which a thematic analysis of existing tourism development literature on business tourism in developing economies served as the basis for the arguments presented. Key issues highlighted in the paper include impacts on the supply of basic commodities and household income of the traders and business operations of the related businesses in the formal sector, traders’ survival strategies during the course of the national lockdown, and implications on the way forward. Furthermore, the study offers conclusions and implications drawn from the themes formulated from these key issues. The study also provides insights on the vulnerability of the informal business tourism sector to unforeseen occurrences, and how the affected stakeholder can recover from such a blow.

Innovative Informal Sector Financing: Empirical Evidence from the Capital Sharing Model of Igbo Apprenticeship System in Nigeria

This article investigated the impact of Igbo Apprenticeship System (IAS) on informal sector businesses in Nigeria. IAS is an innovative indigenous informal sector financing approach among the Igbo people in Nigeria. The study conceptualized the capital sharing model of IAS in comparison with venture capital and modern incubation system. Using a household survey data collected from about 400 informal sector businesses randomly selected from Onitsha (Anambra state) and Aba (Abia states) in South-Eastern Nigeria, the study examined the effect of capital sharing model on small firm growth in Nigeria. The estimation technique was based on ordinary least square (OLS) method while the Probit regression was used as a robust check on the OLS estimates. Findings revealed that the businesses of apprentice-graduates, i.e. those who underwent IAS grew significantly in any of the three measures of growth used; unlike the businesses whose owners did not undergo IAS. Therefore, this study provided an empirical validation to the use of the capital sharing model of the Igbo Apprenticeship System as an innovative informal sector financing model in Nigeria. The study thus recommends a policy framework that supports this innovative informal sector financing in Nigeria. Also, the venture capital and modern incubation system can be extended to incorporate features of the capital sharing model of IAS. This would however require strengthening the informal sector business environment.

PENGARUH MODAL KERJA, PERILAKU KEWIRAUSAHAAN DAN KETERAMPILAN ADMINISTRASI TERHADAP PERKEMBANGAN USAHA PARA PEDAGANG DI PASAR BARU KOTA KUNINGAN

Tujuan penelitian ini adalah sebagai berikut: (1) untuk mengetahui pengaruh modal kerja secara simultan, perilaku dan keterampilan kewirausahaan untuk mengelola administrasi pengembangan sektor informal di Pasar Baru Kuningan; (2) untuk mengetahui pengaruh modal kerja terhadap perkembangan sektor informal di Pasar Baru Kuningan; (3) untuk mengetahui pengaruh perilaku kewirausahaan terhadap sektor informal di Pasar Baru Kuningan; (4) untuk mengetahui pengaruhnya terhadap pengembangan keterampilan untuk mengelola administrasi usaha sektor informal di Pasar Baru - Kuningan. Metode yang digunakan dalam penelitian ini adalah metode kuantitatif jenis survei. Hipotesis penelitian ini adalah modal kerja, perilaku kewirausahaan dan keterampilan untuk mengelola administrasi pengaruh secara bersamaan untuk pengembangan usaha sektor informal, Hasil penelitian adalah: modal kerja, perilaku kewirausahaan dan keterampilan untuk mengelola administrasi bersama-sama mempengaruhi secara bersamaan untuk pengembangan usaha sektor informal di Pasar Baru-Kuningan. Modal kerja memiliki dampak positif dan signifikan terhadap perkembangan usaha sektor informal di Pasar Baru-Kuningan. Ini berarti bahwa kehadiran modal kerja tambahan juga akan meningkatkan pengembangan bisnis di sektor informal Pasar Baru - Kabupaten Kuningan.

NOTES ON SPATIAL-STRUCTURAL CHANGE IN URBAN SOUTH AFRICA -THE 1990s

Informal businesses used to be something that was only tolerated in the former black townships during the years of apartheid. Since then the informal business sector has become an integral part of the central business setup of cities in South Africa. It not only serves to widen the security net of the urban poor in cities, it also represents the outcome of the democratization process in the country over the past fifteen years. Yet, there has been a tendency amongst local authorities to take steps to reduce the footprint of this sector in the urban environment in recent years. This trend ties in with the new approach of government to transform South African cities to become ’world class’ centres - a step that is aimed at making the cities more visually acceptable to visitors from abroad. In this paper an attempt is made to demonstrate the importance of the informal sector within the urban business makeup and to show what role it played in the spatial-structural evolution of the urban economies during the 1990s. The paper analyzes the structure of the urban business sector as a whole and structurally links the formal and informal sectors, demonstrating the importance of both sectors in the economic makeup of the cities. It analyses the structure of the informal sector and shows how different layers of the sector potentially relates to the formal urban sector.

EVALUATING THE EFFECTS OF THE INFORMAL SECTOR ON THE GROWTH OF FORMAL SECTOR ENTERPRISES: LESSONS FROM ITALY

This paper evaluates the effect of unregistered and informal sector business ventures on the growth of formal sector enterprises. The hypotheses tested is that formal sector enterprises that have to compete against unregistered or informal sector business ventures suffer from lower levels of performance, measured by annual sales growth, annual employment growth and annual productivity growth. To evaluate this thesis, data is reported from a World Bank Enterprise Survey (WBES) of 760 enterprises in Italy collected in 2019. The finding is that formal sector enterprises that report competing against unregistered or informal sector business ventures have significantly lower annual sales growth and annual productivity growth than enterprises that do not. The paper concludes by discussing the theoretical and policy implications, along with the limitations of the study and future research required.

Informal Sector and Nigerian Economic Prospects: The Covid–19 Experience

The informal sector is essential for economic growth. It is a key provider of jobs and income in emerging economies. But the crisis caused by the pandemic has had a significant impact on these economies. Therefore, this study investigates the impact of Covid-19 on the economic prospects of the informal sector of Nigeria and also proposes various strategies to support the sector. The study highlights some of the challenges facing the informal sector of Nigeria, such as institutional inadequacies, unsafe working conditions, poor enforcement and the non-participation of informal entrepreneurs in decision-making. The impact of Covid-19 is felt in different ways, which means that all the elements of total demand will be reduced. The study recommends that the government implement effective and cost-effective tax incentive packages to minimize the impact of corona virus pandemics on the informal sector. The government should also step down from paying taxes in critical areas in response to the crisis to support the informal sector and other businesses.

Strategic assessment of COVID-19 pandemic in Bangladesh: comparative lockdown scenario analysis, public perception, and management for sustainability.

Community transmission of COVID-19 is happening in Bangladesh—the country which did not have a noteworthy health policy and legislative structures to combat a pandemic like COVID-19. Early strategic planning and groundwork for evolving and established challenges are crucial to assemble resources and react in an appropriate timely manner. This article, therefore, focuses on the public perception of comparative lockdown scenario analysis and how they may affect the sustainable development goals (SDGs) and the strategic management regime of COVID-19 pandemic in Bangladesh socio-economically as well as the implications of the withdrawal of partial lockdown plan. Scenario-based public perceptions were collected via a purposive sampling survey method through a questionnaire. Datasets were analysed through a set of statistical techniques including classical test theory, principal component analysis, hierarchical cluster analysis, Pearson’s correlation matrix and linear regression analysis. There were good associations among the lockdown scenarios and response strategies to be formulated. Scenario 1 describes how the death and infection rate will increase if the Bangladesh Government withdraws the existing partial lockdown. Scenario 2 outlines that limited people’s movement will enable low-level community transmission of COVID-19 with the infection and death rate will increase slowly (r = 0.540, p < 0.01). Moreover, there will be less supply of necessities of daily use with a price hike (r = 0.680, p < 0.01). In scenario 3, full lockdown will reduce community transmission and death from COVID-19 (r = 0.545, p < 0.01). However, along with the other problems gender discrimination and gender-based violence will increase rapidly (r = 0.661, p < 0.01). Due to full lockdown, the formal and informal business, economy, and education sector will be hampered severely (R = 0.695). Subsequently, there was a strong association between the loss of livelihood and the unemployment rate which will increase due to business shutdown (p < 0.01). This will lead to the severe sufferings of poor and vulnerable communities in both urban and rural areas (p < 0.01). All these will further aggravate the humanitarian needs of the most vulnerable groups in the country in the coming months to be followed which will undoubtedly affect the Bangladesh targets to achieve the SDGs of 2030 and other development plans that need to be adjusted. From our analysis, it was apparent that maintaining partial lockdown with business and economic activities with social distancing and public health guidelines is the best strategy to maintain. However, as the government withdrew the partial lockdown, inclusive and transparent risk communication towards the public should be followed. Recovery and strengthening of the health sector, economy, industry, agriculture, and food security should be focused on under the “new normal standard of life” following health guidelines and social distancing. Proper response plans and strategic management are necessary for the sustainability of the nation.Graphic abstract Electronic supplementary materialThe online version of this article (10.1007/s10668-020-00867-y) contains supplementary material, which is available to authorized users.

Development Barriers of Stingless Bee Honey Industry in Bicol, Philippines

Beekeeping industry in Bicol, Philippines is dominated by stingless beekeepers. Tetragonula biroi, is an endemic stingless bee species in the region, which produces the most expensive honey in the local commercial market. However, beekeeping industry remains to be part of the informal business sector under the shadow of rural enterprises. Improving the industry’s economic contribution would mean upgrading the chain through which beekeeping sector passes through. The purpose of the study is to assess the barriers in developing the stingless bee honey industry. The value chain approach was used in determining the issues along each chain level and in finding ways to strengthen the competitiveness of the industry. Results show that there is not enough support programs given to sustain the drive towards an efficient commodity flow of honey. The demand is high but there are few enablers to strengthen the flow of the commodity. The findings revealed seven development barriers: stability of honey supply, product standardization; product traceability; harvesting and processing policies; entrepreneurial support program; vulnerability to natural disasters; and research programs. Similar to farming, stingless beekeeping is a promising enterprise that is largely dependent on climatic condition. The risks associated with climate change and environment limit people from seriously pursuing stingless beekeeping as an entrepreneurial venture. To strengthen the industry, stakeholder’s collaboration must be institutionalized to create strong business linkages among the chain operators. The distinctive characteristic of stingless bee honey should be positioned in a market niche that matches its benefit to target users. A review must be done on the provisions in the Code of Good Beekeeping Practices as regards the production chain of raw honey and its by-products to ensure that honey sold is of good quality, with fair price, and easily traceable.

Correlation of Nutritional Status and Subjective Fatigue with the Productivity of Labourers

Introduction: The scallions sorting and weighing center are an informal sector business engaged in fulfilling the supply of scallions for the wholesale market in Sidoarjo. The labourers at the sorting and weighing scallions have varying nutritional status. The labourers with the normal nutritional status of produce more of processed scallions, whereas those who have poor nutritional status usually the produce fewer number of processed scallions. Work fatigue in the labourers also determines their productivity. Therefore, this study aims to analyze the correlation between individual characteristics, nutritional status, subjective fatigue and the productivity of the labourers in the sorting and weighing scallions. Methods: Based on the objectives of this study, this research is an observational and correlational type of research. The samples of this study were 28 labourers. The variables of this study are individual characteristics, nutritional status, subjective fatigue, and work productivity. Results: The magnitude of the value of the contingency coefficient test and the Spearman correlation with the value α = 1% which showed the results of relationship between years of service with productivity, nutritional status with productivity and also subjective fatigue with productivity. The sig value of correlation coefficient is less than 0.01. Conclusion: There is a relationship between individual characteristics, nutritional status, subjective fatigue with work productivity in the sorting and weighing scallions.Keywords: education, fatigue, nutritional status, productivity, time of services

The portrait of Uganda’s informal sector: What main obstacles do the sector face?

In this paper, using primary data collected from business owners, we examine the nature and obstacles in the informal sector of Uganda. We find that education level matters in the selection of enterprises. The bulk of businesses, like eating kiosks, fish selling, shoe shining among others that require no specialized skill to operate were mainly run by primary school dropouts and those with no formal level of education. Furthermore, we find evidence of a strong entrepreneurial spirit among secondary school dropouts than at any other education level. Across all businesses surveyed, secondary school dropouts run a high number of informal enterprises. Evidence suggests that their motivation is driven by two key factors, namely, wanting to take advantage of an existing business opportunity and failure to find employment in the formal sector. The empirical results show that access to finance, crime, theft and disorder, electricity, water, taxes, burdensome inspections, and informal gifts are robust and significant obstacles to the operations of the informal sector in Uganda. Policies should focus on a regulatory framework that supports the sector to create secure livelihoods and generate employment opportunities for the unemployed rather than viewing the sector as a source of “illegality.” Improving access to finance, providing regular power and water supply, and improving the tax regime would mitigate the obstacles faced by informal businesses leading to possible formalization. Informal sector businesses should not be perceived as “illegal entities” but rather complementary effort by an increasingly enterprising population in the country.

An Assessment of Women Entrepreneurship Performance in Nigeria

Entrepreneurial activities are important factors in creating and increasing employment opportunities and fuelling economic growth. Entrepreneurship is an important source of job creation and opening career opportunities for both women and men. However, women are less likely to have successful enterprises or businesses than men. This paper is aimed at assessing women entrepreneurship in Nigeria: their present state of involvement in comparison to the male entrepreneurs, their challenges, contributions and performance in the formal and informal business sector of the economy. The paper employed the descriptive method of analysis. An inductive methodology involving observation, collection of secondary data and the analysis of such data was employed. To this end, a lot was devoted to the presentation and analysis of data obtained from the Small and Medium Enterprise Development Agency of Nigeria, the National Bureau of Statistics and the Federal Office of Statistics. It was discovered that women participate more in the micro business (informal sector) constituting 42.1% of the ownership structure. Their performance constitutes 13.57% in the formal sector as against the male entrepreneurs at 86.43%. Their poor performance and contribution are a result of the constraints they face. It was also discovered that their performance was higher in the Trade and Agricultural Sector in 1997 but higher in the Education and Service Sector by 2012. Among others, it is recommended that good practice in supporting women entrepreneurship should be initiated by the government in the form of training courses, advisory services or creating awareness campaigns.

ASSESSING THE FINANCIAL LITERACY OF INFORMAL BUSINESSES IN SOUTH AFRICA

Informal business activities have been identified as playing a pivotal role in the growth and development of countries across the globe. However, small and medium business enterprises in the South African informal business sector are perceived to be failing due to a combination of low financial literacy levels and ineffective use of management accounting techniques such as budgets and pricing tools. The aim of this study was to assess the level of financial literacy of informal business owners in the Vaal region of the Gauteng Province of South Africa. A quantitative method was employed via administering a semi-structured questionnaire to 224 informal business owners. The study revealed that informal business owners possess low level knowledge of financial literacy. The study recommends that it is imperative that government and the non-governmental sector’s (NGO) focus training initiatives on this as a matter of importance.

Financial literacy and formal credit accessibility: Evidence from informal businesses in China

There is a sizable informal business sector in emerging markets. This paper investigates informal businesses’ accessibility to formal credit in China and their owners’ financial literacy as a potential determinant. By examining informal businesses in urban areas from the 2015 China Household Finance Survey, we find that business owners’ financial literacy is positively associated with the likelihood of their businesses holding bank loans. This positive relationship only exists among businesses whose owners have rural hukou and it is more pronounced in areas where formal-credit accessibility is lower.

DISRUPTIVE TREND AND TAX POTENTIAL : THE CASE OF FOOD TRUCKS

At present, we are facing a new era, namely, era disruption. In the business world, there are still many people who misinterpret disruption as extensive use of information technology in business processes or what is known as a digital business. Disruption is an innovation. Disruption is destructive and creative. For some businesses, the emergence of a disruptive trend is considered an opportunity rather than an obstacle. In the culinary business, the disruptive trend has been responded to by the growth of the food truck business in recent years. Although food trucks are considered as a new business model that offers many benefits, the existence of a food truck business turns out to also cause problems for tax revenues. Until now, food trucks are still an informal business sector in almost all regions in Indonesia because they have not been legalized, including in Sidoarjo Regency. Therefore, a food truck is also a group of Hard to Tax, is a group of taxpayers, whether individuals or entities involved in a cash transaction and not registered as a taxpayer. From the regulator's side, the food truck business is considered as a party born without following the applicable legal rules. They create innovations that violate the law, even, do not pay taxes that cause a loss of potential tax revenue, including local taxes. However, this is contrary to the disruption theory, which states that disruption in the business world is positive, and the government should respond by creating disruptive regulation. The government must be able to create tax policies that can maximize the potential for tax revenues without having to hamper business growth and innovation. This study attempts to analyze the potential expansion of the restaurant tax object on the food truck business using qualitative methods. Data collection is done by interviewing local tax policymakers and food truck business people. The results of this study indicate that the food truck business can be used as the object of restaurant tax because it fulfills the Laffer Theory concept and the criteria of Sidoarjo Regency Regional Regulation Number 8/2010 about Restaurant Taxes.

Social capital and its effect on business performance in the Nigeria informal sector

This study was aimed at investigating the effect of internal and external social capital on the financial and non-financial performance of businesses in the Nigerian informal sector. The study further investigated the controlling role of firm age. A cross-sectional survey of 650 informal business owners in the Ikeja region of Lagos state, Nigeria was carried out. The analysis was carried out using the partial least square method of the structural equation model (SEM). Findings revealed that without the controlling variable of firm age, social capital had a significant effect on business performance, internal social capital had a significant effect on non-financial performance, it, however, had no significant effect on financial performance, while external social capital had no significant effect on financial and non-financial performance. With the controlling variable of firm age, social capital had a significant effect on business performance, internal social capital had a significant effect on financial and non-financial performance, while external social capital had no significant effect on financial and non-performance. The study, therefore, recommended that informal entrepreneurs take advantage of their internal social capital resources and also try to build their external social capital as they may become vital for their business success.

Do Informal Sector Businesses Support Women’s Livelihood? A Case of Butwal Sub-metropolitan of Nepal

Informal sector business seems rapidly increasing in Nepal. This paperexamines the effect of informal businesses on women’s livelihood, which isgenerally not documented in the literature. This study uses primary datacollected from the Butwal sub-metropolitan, Rupandehi District, Province5 of Nepal. Sample size is 300 women entrepreneurs. There is a positivecorrelation between income level and married as well as migrated womenentrepreneurs. Better educated women entrepreneurs are more likely toearn from their businesses in comparison to the less educated women.Women are learning business skills through businesses. Most important,old aged women (around/over 60 years) should not depend on their sonor daughter for their livelihood and for pocket money after starting suchbusinesses.

Disorders of Lung Function in Mattress Making Workers at Wonoyoso Village, Pringapus District, Semarang Regency

Background: Cotton dust produced from the production process of making mattresses in informal sector businesses based on the temporary measurements using personal dust sampler devices the results are 5.1 mg/m3 and 6.2 mg/m3. The value shows the number above the Threshold Value which is allowed 3 mg/m3. The purpose of this study was to determine the relationship of exposure to inhaled cotton dust with pulmonary function disorders in mattress maker workers. &#x0D; Methods: The type of research used was observational analytic with cross sectional research. The research population is the whole of the research subjects that will be examined as well as sampled, namely workers in the production section. The data were analyzed by univariate and bivariate then statistical tests were performed using the chi-square test. &#x0D; Result: The results of univariate analysis showed that exposure to inhaled cotton dust whose concentration exceeded 3 mg/m3 (56.7%), the use of Personal Protective Equipment (PPE) which included occasional use and did not use PPE at all (43.3%), length of exposure &gt; 8 hours per day (60.0%), working period ≥10 years (46.7%), age&gt; 30 years (73.3%), history of pulmonary disease (23.3%), abnormal nutritional status (60.0%), never exercising (36.7%), smoking habits (36.7%). The results of bivariate analysis showed that there was a significant relationship between exposure to inhaled cotton dust (p=0.001), working period (p=0.000), age (p = 0,034) and smoking habits (0.018) with pulmonary function disorders. &#x0D; Conclusion: The results of examination of lung function capacity of 60.0% of workers experienced pulmonary function disorders. Exposure to inhaled cotton dust, Working period, age and smoking habits are related to lung function disorders.

IDENTIFIKASI KARAKTERISTIK SEKTOR INFORMAL DI PROVINSI JAWA TIMUR

&lt;p&gt;This study aims to explore further information about the background, the profile of the informal sectors sector in east java. The identification results can be utilized in various matters : policy formulation, identify problems informal sectormapping of a strategy to build competitive advantage for informal sectors. This study used quantitative approach and the data collection techniques used are survey methods using questionnaires. Data analysis techniques is descriptive statistic test. The sample used is mostly informal sectors in east java by the number of samples used by 250 respondents. This study shows that the profile of informal sector business actors in East Java can be seen that based on the aspect of gender differences, informal sectors were dominated by respondents with female genitalia. Based on the aspect of marital status, informal sectoris dominated by married respondents with a percentage of 81.6%, based on the aspect of age distribution, informal sectors are dominated by respondents aged 40-49 years, with a percentage of 37.6%. Based on the aspect of education level, East Java informal sectorwas dominated by respondents with high school level education with a percentage of 62.8%. Based on the aspect of ownership of expertise before entrepreneurship, informal sectorwith the same percentage, the respondents already have expertise in entrepreneurship and some do not have expertise before trying. Based on the aspect of the number of full time workers in their business, East Java informal sectoronly has one worker in their business operations, with a percentage of 40.8%.&lt;/p&gt;&lt;p&gt;&lt;br /&gt;Keyword : Informal Sector, East Java, Bussiness.&lt;/p&gt;

Understanding how legitimacy is acquired among informal home-based Pakistani small businesses

The informal business sector has been garnering attention from governments and researchers. In countries where this sector plays a significant role in business activity and employment, policymakers are eager to have entrepreneurs enter or transition to the formal economy. However, with research in its infancy, there is little basis for developing effective policy. In Pakistan, there is a preponderance of informal enterprises, many of which are home-based and invisible. A key challenge for entrepreneurs in this context is gaining stakeholder legitimacy to acquire the resources they need. With the aim of ascertaining and better understanding legitimacy, this qualitative study draws upon the two dominant theoretical perspectives -institutional and strategic - to conceptually guide an exploration of the legitimation process among a cohort of Pakistani informal home-based businesses. Using the institutional lens, the primary influences on action were found to be coercive and mimetic isomorphic mechanisms. For example, the entrepreneurs stressed how essential it was to their customers that societal norms be adhered to when doing business (coercive mechanism). A surprising discovery was that the entrepreneurs deemed action countering prevailing business practice to be the best response to uncertainty (coined anti-mimetic isomorphism). Using the strategic lens, two main strategies were identified – following cultural norms such as those regarding appropriate behavior for women (conforming); and attempting to create new audiences and legitimating beliefs through business activities that advanced women’s rights (manipulating). The interactive influence of pressures from the environment and entrepreneurial action is considered, along with implications for theory and policy.