Impact Evaluation of the Entreprenant Status in Benin 2014-2016 (Benin)

Abstract

The informal sector is predominant across Sub-Saharan Africa. In Benin, informality is particularly high: in 2009, the national statistics agency estimated that the informal sector represented up to 70 percent of the GDP and 95 percent of employment.

In April 2014, the Government of Benin launched the pilot phase of Entreprenant Status, a simplified and free legal regime offered to small informal businesses to enter the formal economy. Entreprenant Status provision was added to General Commercial Law of OHADA (Organisation for the Harmonization of Business Law in Africa) in 2010. The law does not mention the specific combination of incentives that will be included in the Entreprenant Status (for example, tax, credit, business registration, social security benefits), allowing instead each country to fill in the gap. Benin, a member of OHADA, with the support from the World Bank, has been working on legal and administrative regulation that will define the Entreprenant Status.

From 2014 to 2016 experts from the World Bank Group, carried out a randomized impact evaluation, testing three different versions of the entreprenant status. 3,600 informal businesses were randomly allocated between three treatment groups and one control group. The research team tested such incentives as facilitating businesses' links to government training programs, support to open bank accounts, and tax mediation services.

Formalizing in Benin means to choose a legal status and register at the chamber of commerce, GUFE (Guichet Unique de Formalisation des Entreprises).

The entreprenant pilot program was completed in February 2015. The team carried out a baseline listing survey and data collection in September 2014. The midline data was collected in April-June 2015, and endline data - in May-June 2016. Administrative data and focus groups were also used in the study.

Upon completion of the impact evaluation, the package of incentives that result in the highest number of business formalizations will be scaled up and adopted by the government as the official entreprenant status. New insights gained from the project will also inform the shaping of the entreprenant status in other OHADA member countries. The study will also explore whether the granting of the entreprenant status is more effective for women entrepreneurs, thus contributing to women’s empowerment, and inclusive growth.