Donor Committee Conference: Business Environment Reform and the Informal Economy, Cape Town, South Africa, 12-15 April 2010
| Implementing agency(ies) | Donor Committee for Enterprise Development | |
|---|---|---|
| Date completed | April 2010 | |
| Issues/challenges | Poor countries are often difficult places to do business. They often have challenging business environments and large informal economies representing an unused potential for growth and poverty reduction. The informal economy provides opportunities for income generation, but often presents very poor working conditions. It remains an essential challenge to improve business environments, reduce the negative aspects of informality and stimulate the formalisation of the economy in developing countries in order to foster growth and poverty reduction. Development agencies have an important role to play in supporting such reforms. In 2008, the Donor Committee for Enterprise Development (DCED) produced donor guidance on business environment reform, titled Supporting business environment reforms: practical guidance for development agencies. This document presents a distillation of the lessons learned by development agencies in their support of business environment reforms in the form of general principles to guide the future work of agencies. Among the topics addressed in this guidance are the link between reform of the business environment and the size and character of the informal economy. The informal economy covers a wide range of actors. It is concerned with informal enterprises, which collectively are sometimes referred to as the informal sector, but also with the full range of informal commercial transactions (i.e., trade, employment, fees) between informal units, between informal and formal enterprises, and among formal enterprises. Thus, informality is concerned with the lack of incentives for compliance, and includes issues such as business registration and licenses, as well as with the full range of possible informal transactions that are undertaken by all kinds of enterprises. | |
| Contact person(s) | Dr. Simon White | |
| Country(ies) | South Africa |
- Description
The conference is intended for donor and development agencies, and their programme partners (i.e. policy-makers, practitioners, business membership organisations, civil society, academia) to investigate the influence that business environment reform has on the size, nature, and in particular, the incentives in terms of constraints and opportunities of the informal economy in developing and transition economies, and to identify lessons learnt and good practices in business environment reform that encourages the formalisation of informal firms and transactions.
A critical focus of the conference will be its attention to practice and programme interventions that improve the business environment in order to enhance the opportunities for formalisation; and to better understand what kinds of reforms allow the informal economy to access new markets and contribute to growth. Thus, the conference will move from describing and understanding the informal economy to sharing specific and practical proposals for reforms that positively affect the informal economy.
The central issue for the conference is to share and reflect on the practical experience and empirical evidence in terms of business environment reforms that has led to increased transition from the informal economy to formality. This will include how best development agencies can support such reforms. The conference will provide an opportunity for the donor community to listen to other voices; it will allow those engaged in business environment reforms that are focused on the informal economy to present their experiences and share their analysis on this topic.
Methods for info gathering
The conference will focus on the following key questions concerning business environment reform and its influence on the informal economy:
1 How does business environment reform affect the transition from the informal economy?
2 Which areas of the business environment require attention in order to encourage the transition to formalisation?
3 Why do some businesses choose informality over formality?
4 What kinds of business environment reforms have worked best to bring informal firms and transactions into the formal economy, and what has not worked?
5 What are the most appropriate programme partners for business environment reform that target the informal economy and how should they participate?
6 What impact does business environment reform that is focused on the informal economy have on economic growth and poverty reduction?
7 What advice can be given to donor and development agencies wishing to support business environment reforms that promote the formalisation of the informal economy?
Summary of results
Many of the background papers and presentations from the conference can be found on the pages listed below under 'Associated Activities and Documents'. Summaries of discussions taking place in Cape Town on a range of themes related to business environment reform and the infomal economy are in the 'Associated Documents' section below, where the draft Outcome Document for the conference can also be viewed.
Cape Town Conference: Outcome Document (215 KB)