Informal Sector and Government Policy in Ethiopia Essay

5836 Words Jul 4th, 2012 24 Pages
[Type the company name] | Government Policy towards Informal sector in Ethiopia | A term paper submitted in partial fulfillment of the requirement for the course Entrepreneurship and private sector development | | | |

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The Ethiopian Informal sector
A term paper submitted in partial fulfillment of the requirement for the course Entrepreneurship and private sector development

Contents 1. Introduction 4 2. Country Profile of Ethiopia 4 3. Defining the informal sector 6 4. Informal sector in Ethiopia 6 5. Size and composition of the urban informal sector in Ethiopia 7 5.1 Size 7 5.2 Composition 9 6. Doing Business in Ethiopia 11 7. Pros and Cons of the Informal sector 12 8.
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Recent development of the floriculture sector means Ethiopia is poised to become one of the top flower and plant exporters in the world. Exports from Ethiopia in the 2009/2010 financial year totaled $US1.4 billion. Neighboring Kenya with half of Ethiopia's population exported goods worth US$5 billion during the same period. (wikipedia 2012)

3. Defining the informal sector

Informal sector can be defined in different ways. The Wikipedia defines informal sector as “…that part of an economy that is not taxed, monitored by any form of government, or included in any gross national product (GNP), unlike the formal economy” (Wikipedia 2012). A report on the Informal sector of Ethiopian economy defines it as establishments or activities which are * Mainly engaged in marketed production * Which are not registered * Which have no full written book of accounts * Which employs 10 or less persons * Which have no license (CSA 2010)

SIDA‘s fact finding study on informal sector defines the informal economy as “… all activities by workers and economic units that are not covered or insufficiently covered by formal arrangements” (SIDA 2004). Schneider and others have defined it as “…those economic activities and the income derived from them that circumvent or otherwise avoid government regulation, taxation or observation” ( (SchneiderFriedrich 2010) 4. Informal sector in Ethiopia

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