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89% MSMEs operating informally, says report

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About 89 percent of the country’s micro, small and medium enterprises (MSMEs) are operating in the informal sector, a 2019 Finscope Survey has shown.

This is threatening revenue collection and prospects for growth.

The figure is, however, lower than the 97 percent rate recorded in a 2012 study.

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The survey further indicates that most businesses only register with the Registrar’s General department, disregarding tax registration requirement of Malawi Revenue Authority (MRA) and local city councils to obtain a business licence.

Among the reasons, the survey found that most do not have access to relevant information.

“Business licencing and registration is high among most developed businesses and low among least developed and emerging businesses,” the report reads.

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National Chairperson of the National Association of Small and Medium Enterprises, William Mwale, said there is need to increase awareness among MSMEs.

“Many did not understand what it meant to have their businesses registered,” Mwale said.

MRA Head of Corporate Affairs, Steve Kapoloma, Monday said the development is detrimental to the unregistered businesses.

Ministry of Industry, Trade and Tourism spokesperson, Mayeso Msokera, said, recently, the government is introducing a new regulations aimed at addressing the challenge.

“The bill [Business Licensing Bill] seeks to enforce the registration of informal enterprises. We target at reducing the turnaround time from 14-days to less than 5,” Msokera said.

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