Obstacles to Registering: Necessity vs. Opportunity Entrepreneurs

Mohammad Amin, Enterprise Analysis Unit, FPDEA, World Bank

Abstract

Using a new dataset on informal or unregistered firms in three African countries, this paper identifies the type of firms or entrepreneurs that experience greater obstacles to registering. We find important differences between necessity and opportunity entrepreneurs. Averaged over six different obstacles, the severity of obstacles to registering is much higher for necessity compared with opportunity entrepreneurs. This finding appears to be driven by important obstacles including taxes that registered businesses have to pay, registration fees and information required to complete registration procedures. We argue that our results have important policy implications.

[Data and Stata do files included]