A small manufacturer may register to sell to larger customers. The certificate helps it meet an onboarding requirement, but the first order still depends on whether it can meet quality standards, fund production and wait for payment. The value of formalisation depends on which opportunities the business can use once it registers.
Connect registration to a practical benefit
Start with the barrier the owner is trying to remove. A supplier that cannot open a business account needs a clear path from registration to account opening and use. A workshop that wants institutional customers needs to understand buyer requirements, demonstrate capacity and work out how it will fund orders. Each business needs a different next step.
Plan for ongoing obligations alongside the intended benefit. Identify which records, renewals and filings apply, who will handle them and how much staff time they require. The owner can then judge whether a proposed opportunity supports the business at its current stage.
Malawi paired registration with a banking connection
A randomised study of informal firms in Malawi tested assistance with business registration, including a treatment that paired registration support with a bank information session and an offer of a business bank account. The researchers reported that the combined intervention increased sales by about 20% and profits by about 15%. Registration assistance alone showed no comparable improvement in firm performance.
The experiment tested a package of support. The results describe the firms in that study and do not establish that opening a bank account by itself will produce the same gains. The case shows why it helps to track whether owners can use the service they were told registration would make available.
Benin raised registration without clear gains in firm performance
A randomised evaluation in Benin tested a simplified status for entrepreneurs known as the entreprenant regime. The most comprehensive package combined direct help with formalisation and access to supplementary services. It raised formalisation by about 16 percentage points compared with the control group. The researchers found little evidence of improvements in sales or profits during the study.
The studies tested different packages in different settings. Malawi’s combined offer created a direct connection to a specific financial service. In Benin, a rise in registrations did not translate into clear performance gains in the study period. Together they give programme managers a reason to measure both take-up and what happens after registration.
Measure access and growth separately
A programme supporting suppliers can track how many firms register, how many meet a buyer’s onboarding requirements and how many receive and complete an order. Record repeat orders and time to payment. This shows whether access is turning into business that suppliers can sustain.
For a finance programme, distinguish accounts opened from accounts actively used for business. Track applications, approvals and actual use where finance is part of the offer. Review sales, profits and the time owners spend meeting ongoing obligations. Where possible, compare outcomes with similar firms that did not receive the intervention before attributing growth to the programme.
M&J Consultants can help business owners and enterprise programmes connect registration to buyer readiness, financial records and practical growth plans. Enquire for a tailored quote.
Research references
Francisco Campos, Markus Goldstein and David McKenzie. The Additionality of Microenterprise Formalization and Access to Financial Services in Malawi. World Bank Policy Research Working Paper 7852.
Najy Benhassine, David McKenzie, Victor Pouliquen and Massimiliano Santini. Can Enhancing the Benefits of Formalization Induce Informal Firms to Become Formal? Experimental Evidence from Benin. Journal of Development Economics, 2018.