Issues identified in transition of informal business

The National Business

PROTECTION, definition and interventions are three main issues identified for businesses in the informal economy to transition into the formal economy, according to the Small to Medium Enterprise Corporation (Smec).
Policy manager Brian Sausia said on Tuesday that those issues and challenges were identified during a stakeholder consultation to review the country’s Small-to Medium-Enterprise (SME) Policy 2016.
He said they were trying to accommodate the informal economy into the SME policy.
“From all the consultations, we have come to a conclusion that the informal economy is here to stay,” he said.
“Through the policy, we are now focused on those businesses who want to transit into the formal economy, and what strategies and interventions that they need to assist in that transition.
“It is very challenging,” he said.
“The narrative now is one where we’d like to see more (small businesses) coming across to the formal sector so they can have access to Government funding and assistance.
“We are talking about coming up with strategies to grow the sector or migrate them to the formal sector.”
Sausia said the three core issues on the policy front to migrate businesses in the informal sector to the formal sector were:

  • PROTECTION of rights and security in terms of conducting business;
  • DEFINITION – the challenge was to find a definition that was suitable for all stakeholders as different stakeholders were using their own definitions based on the respective data collected on Micro, Small to Medium Enterprises; and,
  • INTERVENTIONS – what kind of interventions were there to get the small businesses to transition to the formal sector?

Is it access to finance, regulatory intervention or capacity building?
“The narrative now from the SME policy standpoint now is we have to bring them up to this level, we cannot go back,” Sausia said.
“If we keep talking about these issues, 10 years later we will be still talking about these issues.
“This should come through the form of awareness campaigns to make sure that they are informed.”
He also said that better conditions was needed to encourage more businesses in the informal economy to transition into the formal sector.