Small-scale Entrepreneurship and Informal Employment: Evidence from sub-Saharan Africa
by Tabea Lakemann
Date of Examination:2025-05-20
Date of issue:2025-07-28
Advisor:Prof. Dr. Jann Lay
Referee:Prof. Dr. Thomas Kneib
Referee:Prof. Dr. Marcela Ibanez
Persistent Address:
http://dx.doi.org/10.53846/goediss-11404
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Abstract
English
This thesis investigates the livelihoods and constraints of small-scale entrepreneurs in sub-Saharan Africa through a series of empirical studies conducted in Uganda and Côte d’Ivoire. The four chapters provide complementary insights into the vulnerability, financial behaviour, and employment practices in small-scale entrepreneurship, offering a nuanced understanding of the challenges and potential policy levers to support more secure and productive self-employment. The first chapter examines the limitations of the International Labour Organisation’s broad classification of own-account workers as inherently vulnerable by developing an empirically grounded measure of vulnerability based on income adequacy and volatility. Using a six-year panel of Ugandan micro-entrepreneurs, it reveals persistently high vulnerability rates, driven by intertemporal income fluctuations and limited upward mobility, underscoring the need for more context-sensitive criteria in identifying vulnerable populations. The second chapter explores the role of savings in supporting business investment through a randomised control trial (RCT) of a behavioural commitment device in Kampala. The intervention, a goal-setting calendar rooted in mental contrasting techniques, had limited average impact but showed positive effects among specific subgroups, particularly those with lower saving constraints. The findings highlight the importance of intra-household dynamics and social obligations in shaping financial decision-making, challenging the assumption that self-control problems are the primary barriers to savings. The third chapter evaluates a low-intensity, government-implemented business consulting programme for Ivorian Small and Medium Enterprises (SMEs). While the intervention did not significantly improve firm performance or management practices overall, it led to modest but meaningful improvements in employment quality—raising the incidence of minimum wage payments and formal contracts. The results suggest that even light-touch interventions can enhance job quality, especially when well-targeted. The fourth chapter delves deeper into employment outcomes using matched employer-employee data. It confirms the improvements in wage levels and contract formalisation and finds evidence for firms selectively formalising key workers, likely to retain talent. These shifts occurred with minimal financial burden, suggesting that better regulatory awareness—not just enforcement—can enhance labour conditions. Together, these studies contribute to our understanding of micro-entrepreneurship in low-income settings by examining both the vulnerabilities faced by entrepreneurs and the channels through which policy and behavioural interventions can affect firm behaviour and employment quality. The findings emphasise the need for targeted, context-aware support strategies that go beyond binary classifications of informality to foster decent work within the realities of African labour markets.
Keywords: Entrepreneurship; Informal employment; Sub-Saharan Africa; Vulnerability; Randomized Control Trial (RCT); Saving
