Informal-Sector Entrepreneurs, Development and Formal Law: A Functional Understanding of Business Law

American Journal of Comparative Law, Vol. 59, No. 1, 2011

42 Pages Posted: 9 Jul 2010

Multiple version iconThere are 2 versions of this paper

Date Written: July 8, 2010

Abstract

The informal sector represents 40-60% of Sub-Saharan Africa’s GDP, and employs as much as 93% of non-agricultural workers in Sub-Saharan Africa. Given the importance of this sector, and given the understanding that formal law does not penetrate easily or predictably there, classic business law alone cannot create for informal-sector nano-entrepreneurs an environment comparable to that enjoyed by a business person in the global North.

Reform of business law must focus on functionality: how to assist informal-sector businesses by increasing the predictability of transactions while limiting government abuse, all in connection with the formation, operation, and, ultimately, termination of businesses. The attack is two-pronged. Formal law can constrain formal-sector actors, such as some landlords transacting with informal-sector businesses, and mandate that formal-sector actors provide pro-business realities that Northern businesses enjoy, including sanitary work environments. With respect to the informal-sector nano-entrepreneurs, who tend not to be directly affected by formal business laws, but who do have a legal a quasi-traditional legal regime that affects businesses, formal laws that reinforce existing business norms will be the most effective in supporting North-style predictability. Further, a modern legal study focused on the formal sector suggests that, in Sub-Saharan Africa where the legal regimes tend to be highly centralized, formal law can be most effective for nano-entrepreneurs if it assists them in coordinating and, ultimately, in creating or negotiating for basic protections taken for granted by businesses in the global North.

Suggested Citation

Dickerson, Claire Moore, Informal-Sector Entrepreneurs, Development and Formal Law: A Functional Understanding of Business Law (July 8, 2010). American Journal of Comparative Law, Vol. 59, No. 1, 2011, Available at SSRN: https://ssrn.com/abstract=1636515

Claire Moore Dickerson (Contact Author)

Tulane University - Law School ( email )

6329 Freret Street
New Orleans, LA 70118
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
148
Abstract Views
1,663
rank
208,463
PlumX Metrics