JEFMS Journal

ABSTRACT:

The informal economy is an integral part of a larger economic landscape. Micro Small and Medium Enterprises (MSMEs) informality is attributed to government regulation, a lack of finance, and a lack of access to land, so they do not see the need to formalize. The primary goal of the study was to assess the informal sector’s business registration patterns: nature and size among MSMEs in Lusaka. The study’s objectives were: to describe the size and nature of businesses in the informal sector not registered with PACRA, to assess the efficacy of the policy framework designed by the Ministry of Small and Medium Enterprises to stir the growth of entrepreneurship in Zambia and to determine the business registration patterns and reason (s) why some of those MSME’s have registered their businesses. A descriptive study was conducted with a sample size of 153. The sampling techniques used were purposive and snowball methods. A structured questionnaire was used to collect data and the questionnaire return rate was 82%. The study findings were that out of the 125 respondents, 58% were registered with PACRA and only 42% were not. The high number of MSMEs’ reflect the size of informality. Most businesses that were not registered mainly operated in non-specialized wholesale and retail trade. The study findings also revealed that the Ministry of Medium and Small-Scale Enterprise Development had not completed the process of finalizing policy frameworks aimed at strengthening the growth of entrepreneurship in Zambia. The other study findings were that most MSME’s registered their businesses mainly because it was a legal requirement. This was attributed to increased public awareness as a result of the passage of the Business Regulatory Act No. 3 of 2014. Lastly, the study was also able to identify a significant trend in the registration pattern of MSME's in Lusaka. There has been an increase in the number of registrations in the transport sector, while the wholesale and retail trade, agriculture, fishing and construction continue to top the trends. MSME registration helps to access business support services, meeting legal requirements, and promoting business growth. The MCTI should use the findings of this study to map formally registered businesses, track their growth, and enroll them in business accelerator programs.

KEYWORDS:

Informal Sector, Business Registration Patterns, Micro, Small and Medium Enterprises, Lusaka

REFERENCES:

1) Al-Hyari, K. (2013). Identification of Barrier Factors and Potential Solutions to SMEs Development among Jordanian Manufacturing Sector. International Journal of Biometrics, 8, 132.

2) Angel-Urdinola, D. F. and Tanabe, K. (2012). Micro-Determinants of Informal Employment in The Middle East and North Africa Region, SP Discussion paper No. 1201, Social protection and labour, The World Bank.

3) Babbie, E. (2007). The practice of Social Research 11th ed. Tsinghua: Tsinghua University Press.

4) Benería, Lourdes. 1992. “The Mexican Debt Crisis: Restructuring the Economy and the Household.” In Unequal Burden: Economic Crisis, Persistent Poverty, and Women’s Work, Lourdes Benería and Shelley Feldman (eds.).

5) Chen, M., Vanek, J., & Heintz, J. (2006). “Informality, gender and poverty: A global picture,” Economic and Political Weekly, 2131-2139.

6) Cooper, D., & Schindler, S. (2014). Business Research Methods. New York: McGraw-Hill Irwin.

7) Creswell, W. J. (2012). Educational Research, Planning, Conducting, and Evaluating Quantitative and Qualitative Research, 4th Ed: Pearson Education, Inc., 501 Boylston Street, Boston, MA 02116. University of Nebraska–Lincoln.

8) Folser, S., & Henrekson, M. (1999). Growth and the public sector: a critique of the critics. European Journal of Political Economics, 15(2), 337-358.

9) FSD Zambia, (2009). Financial capabilities, information and policy. FinScope 2009.

10) FSD Zambia (2017). Access to Finance: SME perceptions of Financial Service Providers.

11) Harriss-White, B. (2010) “Work and wellbeing in informal economies: The regulative roles of institutions of identity and the state” World Development, 38(2), 170-183.

12) Hart, K. (1973). “Informal Income Opportunities and Urban Employment in Ghana,” The Journal of Modern African Studies, 11 (1), 61-89.

13) Kambone, M.S. (2017). The impact of small and medium scale Enterprises in achieving sustainable Development growth in Zambia. The International Journal of Multi-Disciplinary Research. Information and communications university.

14) Kanothi, R.N. (2009). “The dynamics of entrepreneurship in ICT: Case of mobile phones downstream services in Kenya,” Working Paper No. 466, Institute of Social Studies, The Hague, The Netherlands.

15) Klepp, S., Nanyangwe, T., Ndovi, E., and Olapade, M. (2004). Joining hands in the informal sector, ASA-Internship, ACUoffice, Lusaka, Zambia. http://www.siljaklepp.de/pdf/lusaka.pdf (Accessed 1 April, 2021).

16) Matoka, W (2001), Entrepreneurship development in Zambia, ZDA

17) MCTI (2007), Small and Medium Enterprises survey 2003 – 2004, final report, ministry of commerce, trade and industry.

18) MCTI (2009). The Micro, Small and medium Enterprise Development Policy, Lusaka, Zambia.

19) Mintah, S., & Darkwah, S. (2018). Drivers of Informal Sector Participation of Small and Medium Enterprises in Ghana. Scientia Agriculture Bohemica, 49(1), 60- 67. Retrieved from https://www. degruyter.com/downloadpdf/j/ sab.2018.49. issue-1/sab-2018- 0010/sab-2018-0010.pdf

20) Mumba, E., (2017). Causes of failure of Entrepreneurship in Zambia. (Conference ID: CFP/157/2017). Livingstone International University of Tourism Excellence and Business Management. The International Journal of Multi-Disciplinary Research, ISSN: 3471-7102.

21) Mwanza, P. S., & Benedict, H. O. (2018). Challenges in Utilising Budget among SMEs in the Manufacturing Sector is the Cape Metropole. Entrepreneurship & Organisation Management, 7(1), 222. https://doi.org/10.4172/2169- 026X.1000222

22) Nuwagaba, A., (2015). Enterprises (SMEs) in Zambia. International Journal of Economics, Finance and Management. VOL. 4, NO.4.

23) PMRC Business Regulatory Act No. 3 of 2014. Sustainable private sector growth; is the path regulatory policy?

24) Saunders, M., Lewis, P. & Thornhill, A. (2012) “Research Methods for Business Students”

25) 6th edition, Pearson Education Limited

26) Small Enterprises Development Act of 1996

27) Tshuma, M.C. and Jari, B. (2013). The informal sector as a source of household income: The case of Alice town in the Eastern Cape Province of South Africa. Journal of African Studies and Development. Vol. 5(8), pp 250-260. DOI: 10.5897/JASD12.042.

28) UK Department for Business Innovation and Skills, Statistical Release, 2013. Web access, 05.05.2015.https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/254552/13-92- businesspopulation estimates-2013-stats-release-4.pdf).

29) Ypeij, A. (2000). Producing against poverty Female and male micro-entrepreneurs in Lima, Peru, Amsterdam, Amsterdam University Press.

30) Zambia Invest (2017) Zambia to Set Entrepreneurial Fund for SMEs.