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Working Paper

Finding a Path to Formalization in Benin : Early Results after the Introduction of the Entreprenant Legal Status

BUSINESS FACILITATION DEPOSIT LIABILITY QUALITY OF SERVICES CHECKS ACCOUNTING ENTERPRISE DEVELOPMENT TAX EXEMPTION LEGAL ENVIRONMENT CERTIFICATE SALES DUMMY VARIABLES MEDIUM ENTERPRISES OPTION EXCHANGE BANKING SYSTEM INFORMATION BANK ACCOUNT DEVELOPING COUNTRIES SELLING MONITORING ACCESS TO BANK FINANCIAL STATEMENTS IMPACTS LOAN TRADE SECTOR TAX OWNERSHIP QUALITY DUMMY VARIABLE BENEFICIARIES INTERNATIONAL BANK OPEN ACCESS ENABLING ENVIRONMENT INFORMATION SERVICES BUDGET ECONOMIC ACTIVITY SMALL BUSINESS INSTITUTIONS INTERNATIONAL FINANCE INFORMATION BANKS ADVERTISING TECHNICAL ASSISTANCE BUSINESS REGULATION COMMERCE PHONE NUMBER ONE-STOP SHOP COMMERCIAL BANK INFORMATION SERVICES CONTRACTS IMPACT EVALUATION TAX REGIME LICENSE TRADING TAX EXEMPTIONS PRODUCTIVITY BUSINESS SERVICES MARKETS DIRECT COSTS INTERNATIONAL DEVELOPMENT FINANCIAL PRODUCTS LOANS BUSINESS ENTRY ARTISANS BUSINESS REGISTRATION DATABASES CASH TRANSFERS ACCOUNT BANK FINANCING FINANCE TAXES TAX FORMS PHONE HUMAN CAPITAL GOOD TAX RATE INSPECTION BUSINESS MANAGEMENT CONTACT INFORMATION BUSINESS PLAN TRANSPARENCY RESULTS ACCESS TO BANKS BUSINESS PERFORMANCES TURNOVER FUTURE MOBILE PHONE COMPETITIVENESS ELECTRICITY RETURNS TAX REGIMES CONTRACT PROTOCOLS FIRM PERFORMANCE TAX RATES COST INFORMATION BANKS SHARES MARKET NEW MARKETS COMMERCIAL LAW BANK ACCOUNTS LEVY ADMINISTRATION RESULT BOOKKEEPING BANK LOAN REGISTRATION SYSTEM BANK LOANS BUSINESS ACTIVITY NETWORK BUSINESSES BUSINESS COMMERCIAL BANKS SHARE TAX SYSTEM COLLATERAL PERFORMANCE INSPECTIONS BUSINESS PLANS INSTITUTION PROFIT PROTOCOL ADMINISTRATIVE PROCESS ACCOUNTS CHECK DEBIT CARD COMMUNICATION CHAMBER OF COMMERCE UNFAIR COMPETITION CUSTOMERS DATABASE PROFITS IMPLEMENTING AGENCIES LIMITED LIABILITY BUSINESS PERFORMANCE IMPLEMENTATION SMALL BUSINESSES PERFORMANCES REGISTRATION PROCESS BUSINESS TRAINING TAX OBLIGATIONS MICROENTERPRISES
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World Bank, Washington, DC
Africa | Benin
2015-12-22T16:25:24Z | 2015-12-22T16:25:24Z | 2015-12

In April 2014, the Government of Benin launched the entreprenant status, a simplified and free legal regime offered to small informal businesses to enter the formal economy. This paper presents the short-term results of a randomized impact evaluation testing three different versions of the entreprenant status on business registration decisions, each version including incremental incentives to registration: (i) information on the new legal status and its benefits, (ii) business training, counseling services, and support to open a bank account, (iii) tax mediation services. The study included 3,600 informal businesses operating with a fixed location in Cotonou, Benin, which were randomly allocated between three treatment groups and one control group. One year after the program launch, all versions of the program had significant impact on formalization rates. The impact was 9.1 percentage points in the first treatment group; 13 percentage points in the second group; and 15.8 percentage points in the last group. The program had a higher impact on male business owners, with more education, operating outside Dantokpa Market, in sectors other than trade, and that before being offered the incentives to formalization had characteristics similar to businesses that were already formal. Data from a second follow-up survey, which is expected to take place in March 2016, will explore the impacts on other outcomes, like business performances or access to banking.

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