How relevant is the location of informal businesses for policy?

A distinction is often made between informal firms operating within, versus outside, household premises. In some sense, the former represent the quintessential informal firms beset with a number of problems, such as low efficiency, etc. Policies aimed at bringing informal firms into the fold of the formal sector could therefore be expected to have a bigger impact when targeted toward informal firms operating within, rather than outside, the household.

A survey of informal firms in Ivory Coast, Madagascar and Mauritius conducted by Enterprise Surveys provides some support to this idea. The survey shows that 81 percent of the firms in Ivory Coast, 72 percent in Madagascar and 49 percent in Mauritius operate within household premises. The figures below show the percentage of firms that report various benefits from registering. Overall, a larger percentage of firms located within household premises expect the various benefits from registration. These preliminary findings suggest that understanding the types of informal firms that operate within and outside household premises could be an interesting area for future research.