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Africa

Shedding light on the informal economy: A different methodology and new data

Filip Jolevski's picture

In Mozambique’s three largest cities (Maputo, Beira, and Nampula), informal businesses—those operating outside formal licensing and registration procedures—outnumber formal firms by a factor of 9 to 1. The World Bank’s Enterprise Analysis Unit recently published surveys of informal businesses in Mozambique, conducted in collaboration with the country management unit and colleagues from the Finance, Competition, and Innovation Global Practice. These surveys were designed to mirror the standard World Bank Enterprise Surveys, which cover the formal sector, but were tailored to better understand the unique conditions in which informal firms operate. Thanks to recent methodological innovation in sampling techniques, these surveys now also provide an estimate of the total number of informal businesses.
 
The surveys use stratified adaptive cluster sampling methods—a method commonly used in the field of biology—that allow researchers to efficiently study subjects that cluster near each other. In practice, the method is implemented as follows: first, we take a city such as the capital city Maputo, and divide it into 150 by 150 meter squares—each stratified based on the likely concentration of informal business activities (see the illustration below). Second, we randomly select a pre-defined number of squares for a full enumeration of all informal businesses in each. The process is adaptive in the sense that enumeration is expanded to all adjacent squares if the number of informal firms found in any square is above a pre-defined threshold. This method allows for the same unbiased precision as stratified random sampling (Thompson 1990) but it can be implemented at a lower cost and with reduced fieldwork. Informal businesses tend to operate in close proximity to one another, forming clusters of economic activity.

Figure 1: Primary Sampling Units (Squares) for Maputo

Keeping it clean: Can blockchain change the nature of land registry in developing countries?

Sebastian Kriticos's picture

The global economy is constantly exposed to disruptive technologies. Take the example of telecommunications: it was not long ago that everything revolved around landlines. Households would go to great lengths to ensure they were well-serviced with fixed-line infrastructure, while those left out endured long travel times for everyday activities like managing a business or connecting with family and friends. Those days are a bygone era. The mobile phone changed everything.  

Moonshot Africa and jobs

Pinelopi Goldberg's picture

Is new technology “transformative” or “disruptive”?  I’ve heard this topic hotly debated at meetings both within the World Bank and more broadly.  The issue is not just linguistic hair-splitting.  Technology optimists prefer the first term and see new technologies, digitization in particular, as an opportunity for low-income developing countries to leapfrog into the 21st century. Moonshot Africa, an ambitious World Bank initiative to connect individuals, firms, and governments in Africa to fast internet is inspired by this vision. Technology pessimists on the other hand emphasize the disruptive effects digital technologies are expected to have on labor markets. Concerns about robots and algorithms replacing human labor increasingly dominate the public debate not only in advanced economies, but also in emerging and developing economies. Against this background, it is natural to ask how these two views are compatible. To be more specific: How will Moonshot Africa create jobs on a continent where job creation is needed more than anywhere else in the world with Africa’s working-age population projected to rise by 70% in the next twenty years?

The World Bank’s Land and Poverty Conference: 20 years on

Klaus Deininger's picture

Also available in Español |Français

In 1999, when a few enthusiasts agreed to meet annually in an effort to base interventions on land, on solid empirical evidence rather than ideology, few would have expected this effort to have such a lasting impact. Twenty years on, the small gathering has morphed into a conference, bringing together over 1,500 participants from governments, academics, civil society and the private sector to discuss the latest research and innovations in policies and good practice on land governance around the world.

Think local, act local: Working with civil society for better development outcomes in Burkina Faso

Marcus Holmlund's picture

We love local. Whether it’s buying vegetables directly from your local farmer, frequenting a neighborhood business, or working as a community activist, many of us believe that solutions to some of our most pressing problems lie at least in part in a small series of actions taken from the ground up. This may be especially true in countries with limited state capacity, where community-based organizations (CBOs) are often among the highest-functioning entities at the local level. In some settings, producer cooperatives or savings and credit groups, for example, have stronger financial management capacity than local governments. Parent-teacher organizations, women’s associations, hometown associations, or other membership-based groups can be highly effective community mobilizers.

New evidence on the challenge facing reform leaders should they join the Human Capital Project

Stuti Khemani's picture

Reform leaders who are persuaded by the need to invest in human capital face the challenge of getting thousands of state personnel, who staff myriad government agencies, to deliver. The quintessential “delivery unit” in Africa, a region flagged by the Human Capital Index as having the greatest need for health and education investments, consists of local governments helmed by appointed bureaucrats and locally elected politicians. In new research in Uganda, we find that the quality of local politicians, elected at humble levels in a village or district, is a robust and substantial predictor of delivery of national health programs. These results suggest that for the Human Capital Project to have impact it may need to move beyond creating political space for national leaders to allocate more public resources to health and education and take-on the challenge of local politics as key to service delivery at the last mile.

Service delivery to the poor: A labor of love or just another job?

Sheheryar Banuri's picture

When the going gets tough, do the tough need higher pay?
 
Many public policies and nearly all international aid aim to improve the well-being of the poor.  Front-line service providers may not embrace this goal, however.  Is this mismatch important? Can it be corrected?  These questions are crucial for the success of public policies meant to equalize services to the poor and non-poor.  Recent evidence suggests that money helps – but how we select service providers matters, too. 

The shifting gravity of global poverty

Daniel Mahler's picture

Thirty years ago, 1 in 7 of the world’s extreme poor – those living on less than $1.90 a day – were in Sub-Saharan Africa. Over the years, as other regions successfully reduced their poverty levels, this number has increased and by 2015, 4 in 7 of the global poor were living in Sub-Saharan Africa. The newly published Poverty and Shared Prosperity Report warns that as many as 9 in 10 of the world’s poor may live in this region by 2030 if current trends continue.

Helping poor women grow their businesses with mobile savings, training, and something more?

Mayra Buvinic's picture

Growing a business is not easy, and for women firm owners the challenges can be acute, especially when they are poor and run subsistence level firms. In developing countries, 22 percent of women discontinue their established businesses due to a lack of funds, and women are more likely than men to report exiting their businesses over finance problems, according to the Global Entrepreneurship Monitor. Meanwhile, personal savings are a crucial source of entrepreneurial financing, and nearly 95 percent of entrepreneurs globally state that they used their own funds to start or scale up their businesses. Women, however, face unique constraints in accumulating savings to invest in growing their firms.
 

Photo credit: Marijo Silva and the “She Counts” global platform.

Increasing performance transparency! Generating citizen participation! Improving local government! It's SUPERMUN

Marcus Holmlund's picture

Running a local government is not sexy. It’s making sure that roads are maintained, there is water to drink, health clinics are stocked and staffed, and schools are equipped to teach. Often, it means doing these things with limited resources, infrastructure, and manpower. With few exceptions, there is little fanfare and glamour. It’s a bit like being a soccer referee: you’re doing a good job when no one notices you’re there.

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