Formalization of Enterprises in Senegal, Benin, and Burkina Faso: Segmentation Approach to Informal Entrepreneurs

This paper aims to identify the determinants of business formalization in West Africa, specifically in Senegal, Benin, and Burkina Faso. The methodology used is based on a theoretical model on formality and a Logit model. We adopted the segmentation approach of informal entrepreneurs. We distinguished between the ambitious informal entrepreneur and the default or non-ambitious informal entrepreneur. In the three countries studied, the results showed the importance of access to business premises, firm productivity, and the ambition of the informal entrepreneur on formalization. The age of the firm, access to ICT, and the business environment have a significant influence on formalization only in Benin. The average level of education for employees is significant only in the case of Senegal.