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EXAMINING THE DETERMINANTS OF THE LEVEL OF INFORMALIZATION OF MICRO-ENTERPRISES IN A DEVELOPMENTAL URBAN CONTEXT

JOSEPH OMOLOBA

LIRSA, CNAM, Hesam Université, Paris, France

E-mail Address: Jomopreneur@gmail.com

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and

CHRISTOPHE ESTAY

Ferrrandi Paris, Paris, France

E-mail Address: estay.christophe@gmail.com

Corresponding author.

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https://doi.org/10.1142/S1084946723500061Cited by:0 (Source: Crossref)

Abstract

This study aims to identify the key determinants of the level of informalization of micro-enterprises in Nigeria. We seek to understand the motives of entrepreneurs doing business in different segments of the informal sector and to clarify further the relationship between formal and informal economic activity. To fill the research gap, we developed a theoretical framework that focuses on a decision matrix regarding the level of informality. The quantitative approach involved a sample of 120 entrepreneurs operating in the Nigerian informal economy. Our results show that institutional constraints significantly affect the decision to engage in the informal sector. The institutional constraint is related to ambiguity in tax assessment and business registration policies and procedures, including the mismanagement of those in power. We conclude that the presence of informal firms is not always as harmful as it sometimes is considered to be.

Keywords:

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