Informal Sector in Zambia; Can it Disappear? Should it Disappear?

The study looked at the Informal sector in Zambia in general. Its main focus was on the size, distribution and characteristics as well as factors determining growth and formalization.

The study notes heterogeneity of firms in the informal sector from firm size to firms’ financial standing. Notably, Larger Informal Sector firms have entrepreneurs with higher education, greater access to infrastructure facilities, and greater use of mobile phones and banking services. The study argues that the potential tax base in the informal sector is enormous. However, the challenge is in bringing these firms under the tax umbrella. The larger firms can be brought under the tax umbrella through greater education and enforcement. Increasing education, infrastructure and banking sector access will increase microenterprise revenues and have the complementary effect of increasing formalization and hence taxation.
Participants, notably the Patents and Companies Registration Authority (PACRA) outlined the government’s commitment to registration and thus formalisation of many informal sector enterprises. PACRA, in its efforts, has introduced mobile registration of business and is in the advanced stages of decentralisation of registration points throughout Zambia.