Present By : Raphaela Karlen, Resilience and productivity: Solene Rougeaux, Sara Johansson de Silva and Keys to a better future for urban Simon Barussaud informal sector workers in Côte d’Ivoire September 2023 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Content and organization of this document User guide and main messages 00 Conclusions and policy recommendations 05 01 06 Rationale: Why focus Annexes on the informal sector in • Annex 1: Methodology urban areas in Côte d’Ivoire? • Annex 2: Definition of firm, Côte d’Ivoire • Annex 3: Formalization programs: do they work? • Annex 4: Rwanda Ejo Heza savings scheme 02 Productivity and resilience: • Annex 5: Cluster analysis • Annex 6: Financial inclusion in Côte d’Ivoire a conceptual framework • Annex 7: Categories of shocks • Annex 8: Categorization of coping mechanism Annex 9: Good practice for promoting savings 03 • Increasing productivity in Côte d'Ivoire’s informal sector 07 End-matter • Endnotes • References 04 Strengthening resilience in Côte • Abbreviations • Acknowledgements d'Ivoire’s informal sector • Publication information 2 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter This document is a slide deck report intended as a tool for policy dialogue and to inform strategies and programs What is a “slide deck report”? How to navigate this document: • A slide deck report is meant to be read as a report. • This document is hyper-linked to provide details in annexes, • It is a document that combines the brevity of a PPT with the references, etc. without interrupting the flow for the less- detail that would be provided via the audio part of a PPT detailed reader: presentation. It is a shorter and more visual presentation than • Sources of analysis, including the original work prepared for a report. this study as well as other research, is provided through • A conventional PPT (to be accompanied by audio presentation) end-notes with hyperlinks to end-note and further to has also been prepared as a complement to the current references. document. • At the end of each annex, there is a hyperlink that brings the reader back to the main part of the slide deck report that is supported by the content of the annex. • Hyperlinks to additional information are marked as follows: Annex 1. Back to main text Methodology • Readers only interested in parts of the content of the slide deck report can use the hyperlinks in the content slide: Click on the rectangle box 3 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter The slide deck report is intended as a tool for policy dialogue and to inform strategies and programs • The ASA combines quantitative and qualitative analyses to characterize the urban informal sector in Côte d’Ivoire and highlight factors that may influence productivity and resilience. This report represents • Drawing on the analysis as well as international evidence on good practice, it presents findings from a World policy options to strengthen productivity and resilience in Côte d’Ivoire’s cities and towns. Bank Advisory • Testimonials collected during the qualitative work are included across this slide deck Services and Analytics report, giving voice to Côte d’Ivoire’s urban informal workers - their visions, hopes, (ASA) task frustrations and concerns. Annex 1. Methodology. The report is intended • The slide deck report aims to inform the policy dialogue and inform strategies and as a tool to inform programs that support poverty reduction, strengthen social cohesion, and promote the economic transformation of Côte d’Ivoire. policy and programs • It is mainly directed to policy makers and development practitioners. 4 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter The analysis is based on qualitative and quantitative work The work uses both a firm perspective (productivity) and a household perspective (resilience). Given the dependence on household firms for household earnings, these are strongly linked. A quantitative analysis of productivity, using ERI-ESI 2018 (pre-COVID-19), investigates correlates of productivity in the urban informal sector and the existence of clusters. A quantitative analysis of resilience, using EHCVM 2018 (pre-COVID-19), identifies a typology of households according to formality and resilience, and links their different resilience levels to shocks and coping mechanisms. A qualitative study on productivity and resilience builds on field work undertaken in 2022 (post-COVID-19) in Abidjan, Bouaké, San-Pédro, and Korhogo. The ASA also includes four “deep dives”: an overview of the informal sector in Côte d’Ivoire including the definition of formality; social protection policies and programs; financial inclusion; and gender in the informal sector. Technical and high-level consultations were conducted to present and discuss findings throughout the task. Annex 1. Methodology. 5 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Key concepts used in the report: Productivity and Resilience Productivity1 In this document • Productivity represents the level of output for a given level of input – the efficiency in the use of resources. It is critical to economic growth and transformation. • Labor productivity is total output for a given level of labor. Higher labor productivity Productivity refers to labor is associated with better economic performance and is an essential driver of changes productivity. in living standards and poverty reduction. It is measured as profits/sales divided by • At firm level, productivity measures operative efficiency of a firm. the number of workers in the firm, • Necessary to support firm survival, profits, earnings of firm owner, wages of including the owner. employees. Resilience is the capacity of a household to absorb shocks without resorting to negative coping strategies that would Resilience2 hurt welfare over the long-or short term. Negative coping strategies include: • Resilience is the ability of households to prepare for, cope with, and adapt to reducing food consumption, selling shocks in a manner that protects their well-being: ensuring that they do not fall productive assets, taking children out of into poverty or become trapped in poverty as a result of the impacts. school, or being forced to migrate. • Resilient households can mitigate impacts, informing and enabling coping and adaptation, minimize the immediate impact of a shock on wellbeing in the short term, and reduce exposure and vulnerability over the long term. • The definition of what constitutes a household is aligned with the one used in the EHCVM 2018. 6 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Key concepts used in the report: Resilient and non-resilient households Household strategies to cope with shocks In this document Households are divided into four categories based on (i) exposure to shock and coping strategies used, and (ii) formality: 1. Poor households (by definition not resilient). Shocks • A household is defined as poor if its per capita equivalent consumption is Non-resilient Resilient below the national poverty line. 2. Informal, non-resilient: non-poor, informal, and resorting to non-resilient coping strategies to deal with a shock. 3. Informal, resilient: non-poor, informal, not Reduce food Sell productive Take kids out of Forced to Draw from Borrow from Help from Increase labor exposed to shock, or used resilient coping consumption assets school migrate savings Bank family, friends, supply strategies to deal with shock. goverment 4. Formal households (have access to social protection and therefore considered resilient). • A household is defined as formal if at least one member holds formal employment. While this definition holds shortcomings, the available data did not allow for a more precise concept. 7 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Key concepts used in the report: Employment and Informality of firms and workers Employment3 In this document • A self-employed (non-wage) person works for herself as firm owner, and her earnings are made up from the profits from the activity. Urban informal sector refers to non-agricultural • An employer is a self-employed person that employs other people for pay in her firm. activities in urban areas. Agricultural activities are • An own-account worker is a self-employed person running a firm without employees. Can employ not included in the household survey that forms unpaid family workers, however. the basis for the analysis. • Contributing family workers work without pay in a firm run by a household member. • Employees work for pay (regular or irregular), they do not manage any firm. Informal sector worker refers to both informal self-employed and informal employees. A firm is considered informal if it is not registered with and compliant with the regulations Informality of firms and workers4 of the Registre du Commerce et du Crédit Mobilier (RCCM) or the Direction Générale des Impôts (DGI). • Can be defined through firm or work status. Annex 2. Definition of firm, Côte d’Ivoire. A self-employed person is informal if her firm is • An informal firm is not registered with authorities not registered with authorities and she is not (for taxes, or social security, licenses, etc.). personally registered with the national social security fund (Caisse Nationale de Prévoyance • An informal self-employed person is a person who is not registered with the authorities Sociale, CNPS). (taxes, social security). • An informal employee is a person employed by a firm, whether formal or informal, An informal employee works in an that receives pay for work, but does not have access to social security, nor written contract, establishment but is not declared by said firm to nor employment protection. the CNPS, and does not have a contract. The firm • Informality is a continuum with many grey areas, for example, informal firms can pay some employing him may or may not be (often local) taxes or can be formally registered but employ only or partly informally. registered/formal. 8 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Main messages The urban informal sector in Côte d’Ivoire is increasingly critical for livelihoods and job creation, especially for women. It is diverse in needs, capabilities and productivity potential. Informality is a continuum rather than a clear-cut characteristic, and informal activities include low productivity, highly vulnerable subsistence activities and more productive and resilient activities. Given this diversity, tailored policy options for raising productivity are needed to target different groups with different potential and different constraints. Resilience and productivity are mutually reinforcing. Household vulnerability is strongly linked to productivity and precarity of livelihoods, and vulnerable households lack the capacity to protect and invest in raising productivity of their economic activities. Households differ in their resilience and need different policy options. Social protection systems (both, contributory and non-contributory schemes) need to be significantly expanded and adapted to different capacities and protection needs. 9 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Content User guide and main messages 00 Conclusions and policy recommendations 05 01 06 Rationale: Why focus Annexes on the informal sector in • Annex 1: Methodology urban areas in Côte d’Ivoire? • Annex 2: Definition of firm, Côte d’Ivoire • Annex 3: Formalization programs: do they work? • Annex 4: Rwanda Ejo Heza savings scheme 02 Productivity and resilience: • Annex 5: Cluster analysis • Annex 6: Financial inclusion in Côte d’Ivoire a conceptual framework • Annex 7: Categories of shocks • Annex 8: Categorization of coping mechanism Annex 9: Good practice for promoting savings 03 • Increasing productivity in Côte d'Ivoire’s informal sector 07 End-matter • Endnotes • References 04 Strengthening resilience in Côte • Abbreviations • Acknowledgements d'Ivoire’s informal sector • Publication information 10 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Section summary The urban informal sector is increasingly critical for livelihoods and job creation, especially for women. Most jobs in Côte d’Ivoire’s rapidly growing urban areas are informal; the growth in informal activities in services and industries is evidence of economic transformation. But the structural change is not creating enough welfare improvements: average productivity is low and vulnerability to shocks high, pointing to a need for policy interventions to raise productivity and help households develop resilience to shocks. The COVID-19 pandemic and subsequent global instability and inflation has underscored the high vulnerability of firms, workers and households depending on the informal sector. To design relevant policy interventions, we need to understand Côte d’Ivoire’s informal sector better and account for diverse needs within the sector. 11 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Rapid urbanization has not brought sufficient productive opportunities Côte d'Ivoire is now an urban country.5 Non-agricultural self-employment will soon become But the growing urban population needs more The urban population has increased from 37 to 52 the main sector of employment in Côte d’Ivoire.6 productive employment opportunities.7 percent in the past 4 decades. It has expanded rapidly in the past twenty years and is Productivity in the trade sector (which accounts for most projected to overtake agriculture in the next few years. employment in the non-agricultural informal sector) actually fell between 2002 and 2018, as workers left agriculture to crowd into urban informal sector. Rapid urbanization Structural transformation No productivity gains 55 100% 250 Output per worker, Index (Agr 2002 90% Urban pop as % of total pop 80% 200 % of total employment 50 52 70% 45 60% 150 50% 43 = 100) 43 40% 100 40 30 30% 22 20% 50 35 37 10% 0% 0 30 2002 2014 2025 proj Agriculture Trade Total CdI 1995 1980 1983 1986 1989 1992 1998 2001 2004 2007 2010 2013 2016 2019 Wage Non-Ag Selfempl Agriculture 2002 2018 Source: Estimates based on WDI. Source: Reproduced from World Bank 2017 Source: Reproduced from World Bank 2021 12 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter The urban informal sector is central to economic activity and livelihoods – especially for women – but largely represents low productivity jobs with limited earnings8 The analysis of ERI-ESI 2018 shows both the importance and the vulnerability of informal sector jobs The informal sector accounts for the vast These activities largely represent low But not only: it is a preferred option and majority of firms, jobs and incomes productivity and vulnerable jobs. there are some firms with high productivity. in urban areas. Informal firms provides independence and flexibility Most firms are very small, and is often seen as the preferred available option for Almost all jobs are informal 1 person firms with no employees and by low skill workers lacking access to well-paid jobs in the formal sector. 100 91 92 79 Informal % total Higher pay and independence are the most employment Own-account common reason for running a firm 50 2-4 Workers 40% 0 5+ Workers 35% % of firm owners by reason 30% Abidjan Other Urbain Rural 25% 20% A majority of urban informal firm 15% owners are women 10% Source: estimates based on ERI-ESI 2018 5% 0% Did not find Higher pay To be Family Other Male Qualitative work shows that informal activities generally salaried work than salaried independent tradition reasons 36% represent low quality jobs with low and uncertain (own boss) income and insecure working situation, largely due to Female low productivity of activities). Source: estimates based on ERI-ESI 2018 64% The situation is worse for the informal employees as they There is significant variation in productivity and a small live with uncertain income and lack job security. set of higher productivity firms also exist. Source: estimates based on ERI-ESI 2018 13 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter The urban informal sector is highly vulnerable to shocks Poverty is still high and persistent in urban areas: in 2018, COVID-19 had a devastating impact on the urban informal sector, even pre-COVID-19, one quarter of the urban population lived in a including on those households that were not “normally” poor. A poor household.9 survey of the situation in the early months of COVID-19 (April 2020) shows significant impact on urban informal activities and households.10 Urban informal sector activities severely affected Households suffered from shocks to economic activity 65 % experienced cash 70% reported not being able to flow problems meet consumption needs 50% faced falling demand for following month products/services 80% affected by COVID- 26% ceased activities altogether 19 through job losses, lower earnings, or fewer hours of work 0 20 40 60 80 100 0 20 40 60 80 100 % of urban informal firms % of urban households Based on data reported in World Bank 2020 Based on data reported in World Bank 2020 Urban households are significantly affected by the current global economic volatility and a global rise in food prices affecting urban food markets and consumption. There is a need to protect poor households and non-poor households that may fall into poverty during shocks and/or resort to negative coping strategies that harm household welfare over short and long term. 14 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Content User guide and main messages 00 Conclusions and policy recommendations 05 01 06 Rationale: Why focus Annexes on the informal sector in • Annex 1: Methodology urban areas in Côte d’Ivoire? • Annex 2: Definition of firm, Côte d’Ivoire • Annex 3: Formalization programs: do they work? • Annex 4: Rwanda Ejo Heza savings scheme 02 Productivity and resilience: • Annex 5: Cluster analysis • Annex 6: Financial inclusion in Côte d’Ivoire a conceptual framework • Annex 7: Categories of shocks • Annex 8: Categorization of coping mechanism Annex 9: Good practice for promoting savings 03 • Increasing productivity in Côte d'Ivoire’s informal sector 07 End-matter • Endnotes • References 04 Strengthening resilience in Côte • Abbreviations • Acknowledgements d'Ivoire’s informal sector • Publication information 15 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Section summary Productivity and resilience are mutually reinforcing. Raising productivity provides resources that help households increase resilience to shocks. Resilient households can protect and increase human capital and physical capital during shocks, which raises productivity. Productivity in informal sector is held back by constraints in firm inputs, capabilities to combine these inputs, and the external environment, including policies and norms. Resilience is weakened by limited individual or household resources or lack of access to external support (family, community, government) to deal with shocks. A comprehensive and integrated policy agenda tailored to different needs is necessary to increase productivity and resilience. 16 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Productivity and resilience in the informal sector are mutually reinforcing and critical to raising welfare levels sustainably Consumption, RESILIENCE Access and savings, productive Intra-firm/ Factors affecting productivity investment (worker household) quality of inputs labor resources Factors affecting resilience Earnings (worker) Combining Intra-household inputs resources Profits (firms) Human and physical capital protected External PRODUCTIVITY and strengthened External environment resources 17 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Productivity in informal sector is held back by constraints in firm inputs, capabilities to combine inputs, and the external environment11 External Combining environment Access and quality inputs of inputs Access and quality of inputs Combining inputs External environment • Limited labor (multi-tasking) • Low entrepreneurial capacity • Low access to larger or more formal markets and • Low human capital (skills, health) • Low access to digital tools, new technology, limited agglomeration effects • Low quality raw material innovation • Low barriers to entry which leads to over-competition • Lack of land/location (informal ownership, • Lack of information about markets, • Poor infrastructure homebased production) opportunities, innovation • Social norms, including “social tax” • Low capital (access to finance) affecting incentives • Vulnerable to harassment • Lack of voice to influence policy A gender lens is warranted as women face additional constraints in each of these buckets • Less education • Entrepreneurial mindset: Confidence and • Social norms • Lower asset ownership/ control aspirations, risk preferences, willingness (sector and occupational choice, discrimination) • Lower access to networks and information to compete • Legal discrimination (labor, land, assets) • Unfavorable household allocation of factors of • Digital divide • Risk of GBV production including time use 1818 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Resilience is weakened by limited individual or household resources or lack of access to external support (family, community, government) to deal with shocks12 External resources Intra-household (bank credit, friends/ Intra-firm/labor resources family community, resources government support) (labor supply, savings) (labor supply, savings) Intra-firm/labor resources Intra-household resources External resources • No additional labor hours • No additional household labor supply • Financial exclusion – Household duties – Children in school, elderly • No access to public safety nets or social insurance – Low demand for work – Household/care duties (wife, grand parents) • No access to community support (family, friends) – Health • Undiversified household income sources – Covariate shocks • Low productivity – Subject to the same shock – Low earnings, cannot save A gender lens is warranted as women face additional constraints in each of these buckets • Lower ability to increase own labor • Lower productivity and earnings • More financial exclusion (household work) (as firm owner or employee) • In female-headed households, less additional labor • Decision making in households 1919 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter International evidence on policy to raise productivity and earnings shows mixed impact, pointing to need for tailored interventions13 International evidence from evaluations of programs Holistic “big push” livelihood approaches for the ultra-poor – to increase productivity, show mixed results: including skills, asset transfer, training, coaching, but also basic food • Interventions to raise productivity in very small firms show or cash support as insurance, health services, and access to savings significant diversity in outcomes, even for programs addressing account – have met with success and can be cost effective: similar constraints such as building skills or accessing capital. • In Côte d’Ivoire, the PTMP has successfully developed and scaled • This suggests a need for tailored design and careful up such an economic inclusion package. implementation, and for piloting and testing programs to ensure Gender-targeted interventions are needed, for several reasons: cost effective approaches. • Women tend to benefit less from training, finance and formalization programs than men so targeting is needed. Very small-scale (subsistence) firms and (potential) • Social norms play a significant role in determining high productivity firms require different approaches: entrepreneurial opportunities and need to be factored into • Subsistence activities face comprehensive constraints; program design - highly relevant in Côte d’Ivoire where gender cannot be expected to increase output or employment inequality is high, and women dominate the informal sector. significantly but can improve living standards of owners • Care responsibilities limit, significantly, the choices women can and employees (if any). make in running their firms effectively, but there is little evidence • High productivity firms face more specific growth constraints on how to address this effectively. related to finance, specific skills, and access to markets. • Programs that increase access to female networks, role models, raise aspirations have seen positive effects. Programs focusing on entrepreneurial spirit, management skills, Overall, formalization programs have limited impact on the motivational aspects show some promise, also for very small- share of formal firms and firms that formalize see no scale activities. improvements in productivity or financial inclusion. Annex 3. Formalization programs: do they work? 20 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter International evidence shows that safety nets build resilience for the poor, but contributory programs are also needed Different solutions are needed for Social protection instruments across the income spectrum different households to balance diverse needs with (fiscal) costs14: A resilient and productive informal • Productive safety nets, including social safety nets, economy that puts for the chronically poor. workers on a • Non-poor non-resilient informal with low or no sustainable path to contributory capacity need fiscal and/or behavioral better livelihoods incentives to complement their savings. and improved • Non-poor informal with some contributory capacity Social insurance for human capital need access to savings and insurance mechanisms workers in the formal development Social insurance for economy (pensions, for short- and long-term needs; The non-poor non- people who work in the disability, resilient informal can be included in shock- informal economy (short- death, unemployment) responsive safety nets in covariate shocks. Productive social safety & long- term savings) nets, including economic with fiscal incentives for inclusion services the non-resilient The vast majority of low- and Combined with productivity enhancing middle-income countries lack measures adequate social protection systems15: • Social safety nets, where available, focus on poor Poor Non-poor, informal Formal households but often have limited coverage even among the poor. • Social insurance systems, where in place, exclude Non-poor, informal Non-poor, informal informal sector workers, creating a “missed middle” Low or no contributory Some or high of informal households lacking policy options. capacity contributory capacity Source: Adapted from Guven and Karlen, 2020 21 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter International evidence shows that safety nets build resilience for the poor, but contributory programs are also needed Safety nets for the poor Building systems that Integrated social Households need access and vulnerable protect work in “normal” times protection systems to savings instruments, but also help build helps dealing with help ensuring coverage contributory or non- resilience16: covariate shocks and efficiency: contributory: • Strengthen productivity of (adaptive social • Such systems have an effective • Needed to manage short term livelihoods and improve protection, ASP) 17: and, where applicable, fluctuations in earnings and coping strategies and risk integrated delivery chain. accumulate long-term savings for old • COVID-19 shows that scaling age management. up existing systems is a • They have interoperable • Increase investments in significantly more efficient information systems on • Policy should encourage savings, human capital (especially shock response than starting beneficiaries to ensure where applicable, with fiscal and/or education) and in productive from scratch. efficiency, equity and targeting. behavioral incentives. assets (productive tools for • ASP support poor households • They engender economies of • Adapt programs to informal sector farming, livestock, etc.). as well as non-poor scale by sharing infrastructure premises (irregular earnings, limited • Reduce coping through child households at risk of falling and reducing transaction mobility for depositing or withdrawing labor or informal wage work. into poverty when confronted costs. cash, leveraging technology) – as, for by a shock. example, the Rwanda Ejo Heza • Help build up beneficiary scheme. precautionary savings and do • Challenges include how to not crowd out private identify potential beneficiaries, Annex 4. Rwanda Ejo Heza transfers. including the role of social savings scheme. registries, valid ID, identifying common sources of risks, • Schemes to foster private savings work deciding on payments systems better when they include mechanisms (frequency, modality, etc.), and that directly address behavioral ensuring a financing strategy. constraints and norms and incorporate commitment mechanisms (by both increasing self-efficacy, and avoiding “the social tax”). 22 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Content User guide and main messages 00 Conclusions and policy recommendations 05 01 06 Rationale: Why focus Annexes on the informal sector in • Annex 1: Methodology urban areas in Côte d’Ivoire? • Annex 2: Definition of firm, Côte d’Ivoire • Annex 3: Formalization programs: do they work? • Annex 4: Rwanda Ejo Heza savings scheme 02 Productivity and resilience: • Annex 5: Cluster analysis • Annex 6: Financial inclusion in Côte d’Ivoire a conceptual framework • Annex 7: Categories of shocks • Annex 8: Categorization of coping mechanism Annex 9: Good practice for promoting savings 03 • Increasing productivity in Côte d'Ivoire’s informal sector 07 End-matter • Endnotes • References 04 Strengthening resilience in Côte • Abbreviations • Acknowledgements d'Ivoire’s informal sector • Publication information 23 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Section summary The urban informal sector is diverse in needs, capabilities, and growth potential. Informality is a continuum and includes low productivity, highly vulnerable subsistence activities and more productive and resilient activities, requiring different tailored policies. Size and diversity of the informal sector means that tailored but scalable and cost-effective policy options for raising productivity are needed. The majority of urban informal firms More productive firm owners have the represent low productivity skills, experience, and vision to expand subsistence activities in the trade and are primarily constrained by access sector. to credit and markets. But these firms coexist with higher They are more resilient and have the productivity activities, with different capacity and resources to manage risks characteristics and growth prospects. ex ante and weather shocks ex post. Two in three firms are managed by Firms remain informal largely because women but their growth potential is they do not see advantages of limited by norms surrounding formalization and fear high costs of entrepreneurship and gender. being formal. The degree of formality is a continuum – for example, some informal firms pay local taxes. 24 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter The vast majority of urban informal firms represent low productivity subsistence activities, the majority led by women18 The firms The owners These are predominantly very small firms, lacking fixed location, with Two in three informal firms are led The average informal sector low monthly profits (average of around 346 USD/person and firm). by women: improving their entrepreneur is middle aged and situation means improving the has very little education. situation of women in Côte d'Ivoire. 77% 37 58% 3 Share own account Share in trade Age Education (%) (%) (years) (years) Source: Estimates based on ERI-ESI 2018 Source: Estimates based on ERI-ESI 2018 25 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Trade is the most common sector of activity, often over-crowded with firms facing limited demand for products19 The sectors of activity The main constraints Firms are primarily active in trade (three in five) where they are facing Firm owners complain of lack of credit and lack of customers. stiff competition and limited demand. Distribution of firms by sector and location Important constraint to business, % firms reporting , (% firms) by sector (%) 100% 40% Difficulties in accessing credit 42% 90% 22% 20% 18% 18% 41% 23% 25% 80% 36% 70% Lack of customers 38% 43% 60% Technical difficulties in 33% 50% 58% 59% 63% 53% 66% 35% 58% manufacturing 40% 40% 28% 30% Difficulties in accessing equipment 32% 33% 20% 22% 22% 10% 20% 21% 19% 20% 16% Credit is too costly 21% 30% 0% Total Abidjan Other San Pedro Korhogo Bouake 0% 10% 20% 30% 40% 50% urban Industry Commerce Service Service Commerce Industry Source: Estimates based on ERI-ESI 2018 Source: Estimates based on ERI-ESI 2018 26 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Labor productivity varies significantly between firms, suggesting there is scope for improving efficiency overall20 01 Labor productivity by gender For example, This gap is consistent with Similarly, informal firms female-owned firms are evidence from other in Abidjan are more less productive than male- African countries, and productive than those in owned firms on average. reflects additional other urban areas, on constraints faced by average. women. 01 02 But moreover, and importantly, there is Indeed, many female-owned firms are 02 significant spread in labor more productive than many male- productivity overall and within owned firms. categories. The informal sector is hence a very There are potentially significant gains heterogeneous sector and harbors from reallocation of resources within Source: estimates based on ERI-ESI 2018 higher productivity activities as well. the sector - firms in the 75th percentile are 7-8 times as productive as those in the 25th percentile. 27 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter The informal sector contains different types of firms with different characteristics and needs21 CHARACTERISTICS Share of Labor Owner Owner % Number of % Clients % suppliers CLUSTER all firms productivity (ratio to age (years) Education (years) female owners workers (including that are firms that are firms average LP) owner) Subsistence firms with low growth potential (cluster 3) 29% 90% 29 2.3 65% 1.4 11% 45% Somewhat more productive firms, women- owned in commerce, “the average firm” 35% 100% 39 2.4 68% 1.4 8% 39% (cluster 1) Second most productive firms, owned by older women, with some growth potential (cluster 5) 11% 100% 57 1.1 72% 1.3 11% 35% Start-ups operating at low levels of productivity, but with young and highly educated owners, some with potential to 14% 66% 27 9.8 51% 1.3 8% 43% increase productivity (cluster 2) Well established high productivity firms with some connection to markets, highest number 11% 176% 45 2.5 39% 1.8 9% 44% of workers (cluster 4) For more detailed information from the results of the Cluster analysis: Annex 5. Cluster analysis. 28 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter A menu of tailored interventions is needed to account for the needs of the different firms Tailored policy 11% Well established high Promote administrative and fiscal productivity firms with some connection to formality markets, highest number of workers 25% Second most productive firms, owned by older Access to skills, finance, markets, women, with some growth potential (11%) networks Start-ups operating at low levels of productivity, but with young and highly educated owners, some with potential to increase productivity (14%) 64% Comprehensive interventions (“economic inclusion”) to increase Somewhat more productive firms, women-owned in commerce, “the average firm” (35%) productivity and strengthen resilience Subsistence firms with low growth potential (29%) 29 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Productivity levels largely reflect owner characteristics22 The quantitative analysis shows correlates of productivity More productive firms distinguish themselves by: • More often a male owner, operating in the trade • The education of owner is not correlated with sector, and have been in business for a longer time productivity in the quantitative analysis – which is than lower productivity firms. surprising (and qualitative analysis suggests they are • More likely to access credit, however, overall access is linked). very low, even for productive informal firms. • More productive firms are smaller (no employees): • Firms in Abidjan are, on average, more productive − If resource allocation was efficient in Côte d’Ivoire, than in other urban areas, suggesting that more productive firms would be able to grow. agglomeration effects are in place. • They have a higher capacity to import or do business with other, and larger, firms. Two important caveats: • Due to data limitations, productivity is measured as • These are pre-COVID-19 data, and the landscape of profit per person working in the firm, and does not firms may now look different. take into account hours worked – this may introduce important biases. For example, women may work fewer hours than men due to family responsibilities. 30 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter More productive firms are driven by entrepreneurs with business interest, education and experience, and an entrepreneurial mindset23 The qualitative analysis shows a more nuanced profile of more and less productive entrepreneurs More productive entrepreneurs Less productive entrepreneurs Choose activity based on interest and opportunity and invest Choice of activity by necessity and/or the desire to improve in the development of the business: income levels, conditioned by: • A higher level of education – some even at university/diploma • A limited level of education that does not permit access to level. formal jobs (poor prospects). • Business skills (marketing, accounting etc.). • Acquisition of practical skills (informal apprenticeship). • An in-depth professional trajectory in the sector of activity • A less ambitious vision of the future seeking instead to (accumulation of experience). maintain the activity by prioritizing the most urgent needs and • A dynamic vision focused on the diversification of services and day-to-day survival. the consolidation of the firm’s activities. More resilient: Vulnerable and resource constrained: • Have accumulated savings (internal sources of firm financing). • Run mobile activity without fixed location, exposed to forced • Mental capacity to adapt to changing circumstances such as evacuations. COVID-19. • Held back by difficulties in accessing good inputs and • Run firms from a fixed location, protected from evictions. equipment, lack resources for marketing. • Access to networks (professional associations) Growth constrained: • Find it difficult to acquire credit to expand their production to serve new markets. 31 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Most informal firms remain unbanked24 The vast majority of firms are financially excluded, and formal services (banks, MFIs) are rarely available, especially for the smallest firms25: Own-account, San-Pédro: • Access to credit is most frequently cited as an important constraint to business. • Female firm owners are significantly more excluded from formal credit than male owners. “Getting loans from MFIs is hard because they question • Not all firms look to expand: 40 percent of firms with no additional financing cited “no need” our credibility and solvency, just because we work in the as their reason. informal sector. They require collateral that is very often out of our reach.” Field work shows lack of access to formal credit and savings instrument is limiting productivity and resilience.26 Credit is scarce: • Field work shows even the more productive firms have mostly started their firms with capital Own-account, San-Pédro: from prior (salaried) work or a parallel activity, rather than from loans. • Smaller informal firms depend on supplier credit or customer advances and own savings, “I use my own money to finance my firm. I haven’t occasionally on personal network. borrowed money from anybody. So far, I’ve never applied • Credit is considered costly and the conditions for payment and repayment inflexible, processes are seen as administratively heavy, and transparency in conditions is low. for a loan from a bank. So, I don’t have any money to • In many cases, firms do not even try - smaller firms worry about getting into debt and develop my firm even though I need about FCFA repayment capacity. 4,500,000, which would let me buy industrial machinery and get a bigger space that is better located. Since I don’t Financial exclusion reduces productivity and resilience: have the sufficient resources, I have trouble efficiently producing orders and I can’t advertise my production to • Credit constraints prevent potential high growth firms from expanding markets and increasing cost efficiency through scale economies. get more clients.” • For smaller subsistence firms, cash flow management is a significant problem given high variation and low value of their earnings - it is difficult for them to accumulate savings. See: Mobile banking is on the rise, but women Analysis from the household perspective mirrors these findings. remain more excluded. 32 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Mobile banking shows promise for including them27 Government interventions are not sufficiently reaching the informal sector: • Focus on formal sector SMEs, and reach few beneficiaries. • Fragmented across many programs and not well known. Own-account, Korhogo: • Risk for market distortions. “I safeguard my money, because I work hard to get it. Privately provided mobile services are gaining track, however, and I am part of two types of ‘tontines’: my own ‘tontine’ can build on increasing access to cellular technology, also among where I collect for women and I’m the president, and the poor: another where I’m a member who saves like everyone • Mobile banking is driving financial inclusion in Côte d’Ivoire. else. […] In addition to the ‘tontines’, I have a COOPEC account. I also often deposit money in my Orange • Rapid evolution of digital financial services is changing the landscape and can help foster change in formal banking sector as well. money and MTN money accounts, and on Wave, too. I keep a little bit of money in each to cover • A new initiative through mobile suppliers, so called pico-credits, help emergencies when family or friends come to me for reduce transaction costs and generate financial data to assess the creditworthiness of the customer. help.” Annex 6. Financial inclusion in Côte d’Ivoire. 33 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Women’s growth potential is constrained by social norms28 There is a significant gender gap in productivity in Côte d’Ivoire: • On average, the productivity level of female-managed firms is 25 percent below that of male- Own-account, Bouaké: managed firms.29 • Gender gaps are similar to those in other parts of Sub-Saharan Africa, where female-owned “I get up at 3 a.m. to make my husband’s lunch, which I micro-firms on average have lower profits and fewer employees,30 leave on the table, and at 5 a.m. I go to the market to conduct my business. I get home at 7 in the evening. I Constraining social norms and limited agency are at the root of the productivity gap: took my daughter to my mother’s, which helps me out a • Côte d’Ivoire scores high on formal measures of legal equality for entrepreneurship (100/100 in bit. Things would have been too complicated if I’d kept the World Bank Women, Business and Law 2023 index for entrepreneurship). her with me.” • However, evidence from Côte d’Ivoire, backed up by similar findings from elsewhere in Africa, shows that women face more constraints than men in running more productive firms, and that many of these constraints are rooted in constraining social norms and low women agency. • Whereas Ivorian women do have lower human capital (education) and access to resources than Own-account, Bouaké: men, these differences do not explain the productivity gap, suggesting that norms/agency matter.31 “Where we live in the Baoulé region, the parents decided that weaving is not a job for women.” In field work discussions, women in Côte d’Ivoire identify many constraints which are rooted in norms32: • Women have fewer possibilities of expanding their firms as norms dictate how resources (labor, savings, loans, assets) should be allocated within households and among household firms. Micro-entrepreneur, San-Pédro: • They have limited access to resources for firm including markets for raw materials, or credit (with lack of land and property rights a central underlying problem). “Since I didn’t go to school and didn’t learn other • They make career choices under constraints given by social norms (what kind of jobs and activities are accessible and suitable, what can be managed together with family obligations). professions, I decided to go into business, specifically restaurant work.” • They meet with significant discrimination by suppliers and are often (even) more financially excluded than men. 34 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter But there are also many successful and resilient women firms33 As evidenced by the qualitative data collection, there Micro-entrepreneur, Korhogo: are important nuances to the narrative around the “After a practical internship following my degree in food gender gap: engineering, I worked for a company for 17 years, 16 of which were validated by the CNPS. My career was going very well, • As seen above, there is significant overlap, and many female-run but I needed financial freedom and I wanted to give back to firms are more productive than male-run firms. my country. During this enriching professional experience, I saw firsthand the diversity of local products that can be • The discussions also identified more driven female processed and a market niche ready to be exploited. With all entrepreneurs which have different starting points and this knowledge, I decided to launch my firm using savings I motivations from those running subsistence activities. put aside when I was a salaried employee.” • These entrepreneurs have significant levels of education (post- secondary), work experience in the formal sector which also allowed them to accumulate savings and use these to invest in start-ups. Own-account, Korhogo: • They have an entrepreneurial mindset focusing on growth and “I lost my parents and we didn’t have anyone to take care of self-realization. us. Since I was the oldest, I had to leave school and go work with a Lebanese man for 2 years, so I could take care of my • Among necessity driven, resource constrained entrepreneurs, brothers and sisters. After two years, I came to do business at the market. […] I decided to sell schoolbooks because there there are also women able to identify important opportunities are a lot of students in my family. I did it because there was and act upon them. no one to take care of us. That’s why I ended up at the market. Selling schoolbooks was my very first firm.” 35 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter More productive firms are also more resilient when exposed to shocks34 All firms are regularly subject to shocks: • Recently they have met with large, covariate shocks such as COVID-19, recession, Micro-entrepreneur, San-Pédro: inflation. • Firms also regularly face risk of injury, theft, loss of material or forced eviction. “During the pandemic, I kept selling because if I didn’t, I wasn’t going to have anything to eat in the house or to cover the expenses. I cooked at my house and called my clients who But resilience differs: came to pick up their food to go. I didn’t make as much as before COVID, but we could eat. It was risky, because people • Some firms have better capacity to manage risks ex ante and deal with these shocks would often come up and ask me why I had sold food.” as they materialize. More productive firms have resources to meet shocks, which helped sustain activities during COVID-19 and facilitated a relaunch after the Micro-entrepreneur, San-Pédro: pandemic: • They have accumulated financial resources (savings) and stocks. “During the COVID-19 pandemic, my firm slowed down a lot. I • They have the strategic skills to rapidly adapt to new conditions. just had a few small things and furniture for people in the neighborhood. For two years, I didn’t have any good contracts • Some could draw on professional associations and networks and build on with real estate companies, and the ones I was supposed to organized assistance. get were blocked by the pandemic because no one wanted to spend their money. Because of this prolonged period of inactivity, I lost my 6 apprentices who left to find other jobs to However, many of the more established micro-firms also faced make a living, because I wasn’t able to pay them anymore, not significant difficulties during COVID-19, resulting in drops in earnings even a little bit.” and layoffs. 36 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Formalizing is not attractive or realistic for most firms35 Formality is a continuum, not a binary characteristic: • For example, some informal firms pay certain local taxes. Micro-entrepreneur, Korhogo: “For me, being an entrepreneur means having all the right documents before undertaking any business activities. Yes, I think that is more in line with our needs, Firms remaining informal reflects rational choices: because today, to get help from the State, it is so important to structure your activities on a certain number of things, to prove you belong in a given business • They do not see their activity as fitting in formal sector, or do not see the advantages of sector.” formalizing. • They fear the cost of being formal (taxes, social contributions), more than the cost of the formalization process itself. Own-account, Abidjan: • And lack knowledge of the Statut de l’Entreprenant or are deterred by its poor reputation. “My dream is to get out of the informal sector. […] I got the trade register and went to find out about the officialization process at the CEPICI single window. I changed my mind when I saw the financial ramifications. I wasn’t ready to deal with the cost. I know how to transition from the informal to the formal sector, now I just need the For smaller subsistence activities, formality remains irrelevant/unattainable: means to do it.” • They serve principally individual clients for whom their informality does not matter; they may pay local taxes but are not looking to change status. Own-account, San-Pédro: • Fiscal gains from attempting to formalize them are not likely to outweigh costs. “[…] some of my artisan friends and colleagues switched to the formal sector but they haven’t seen any positive results yet. So, some informal entrepreneurs are skeptical. Why should we register and publicize our business if we don’t get anything out of it?” But formality can be attractive/relevant for a smaller set of firms: • Market access is an important incentive for larger or potential high growth firms: lacking adequate documentation, some firms find themselves excluded from business Micro-entrepreneur, San-Pédro: opportunities. “The only criteria of formal business I know is paying my municipal and village tax. I • Hence, raising productivity and opening up for market access may incentivize some don’t know about being a registered entrepreneur. I don’t know much about any growing and more ambitious firms to formalize, if these benefits exceed the cost of being other formalization procedures. I don’t think it concerns the activities I’m involved in.” formal. 37 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Recent policy measures attempt to close some of the gaps in terms of registration and protection A platform linking self-employment status with fiscal incentives and a social protection scheme. A new Statut de l’Entreprenant (2017): • Created for SMEs and own-account workers with annual turnover below These initiatives are at an predefined thresholds. early stage and provide only limited options for • Aims to simplify registration and cessation, exempt from registration with protection or support. RCCM. • Does not include informal employees. They are largely irrelevant for subsistence activities, Fiscal regime (Régime fiscal de l’Entreprenant): where firm owners have • Registered entrepreneurs benefit from reduced tax rate, depending on annual limited contributory turnover. capacity. • Tax payments according to the level of annual turnover: Informal wage employees – Entrepreneur's Communal Tax (turnover < 5 M FCFA). remain excluded. – Entrepreneur's State Tax (turnover between 5 and 50 M FCFA). RSTI (Régime Social du Travailleur Indépendant): • Contributory scheme providing income insurance. • Contributions in accordance with income declared. 38 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter The current institutional and programmatic landscape to support firms and entrepreneurs, including in the informal sector, is highly fragmented Côte d’Ivoire PME has started to offer support services (training, incubator, networking, marketing support) to firms registered under the Statut de l’Entreprenant The recently created Business Development One-Stop-Shop (Guichet Unique de Current programs and Développement des Entreprises, GUDE) still needs to define and tailor services for services to support MSME different categories of targeted firms. productivity mostly operate on a small scale and in a Entrepreneurship support programs and services for (categorical) target groups: compartmentalized manner • Youth supported by the Employment Program Coordination Office (Bureau de without coordination Coordination des Programmes Emploi, BCPE) and the Youth Employment Agency mechanism nor tailored (Agence Emploi Jeunes, AEJ); support and services for different target groups. • Women supported through Côte d’Ivoire’s Women Support Fund (Fonds d’Appui aux Femmes de Côte d’Ivoire, FAFCI) and other entrepreneurship programs targeting Limited empirical women. evidence available on the impact of these support Sectoral policies to support the development of skills and MSME productivity mechanisms on increasing enhancement in the craft (chamber of trades), agro-processing and trade sectors, in the productivity of MSMEs. collaboration with the Ministry of Vocational Training. Professional organizations set up capacity building programs for their members as well as informal operators. 39 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Content User guide and main messages 00 Conclusions and policy recommendations 05 01 06 Rationale: Why focus Annexes on the informal sector in • Annex 1: Methodology urban areas in Côte d’Ivoire? • Annex 2: Definition of firm, Côte d’Ivoire • Annex 3: Formalization programs: do they work? • Annex 4: Rwanda Ejo Heza savings scheme 02 Productivity and resilience: • Annex 5: Cluster analysis • Annex 6: Financial inclusion in Côte d’Ivoire a conceptual framework • Annex 7: Categories of shocks • Annex 8: Categorization of coping mechanism Annex 9: Good practice for promoting savings 03 • Increasing productivity in Côte d'Ivoire’s informal sector 07 End-matter • Endnotes • References 04 Strengthening resilience in Côte • Abbreviations • Acknowledgements d'Ivoire’s informal sector • Publication information 40 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Section summary Households differ in their level of resilience and need different policy options. Social protection systems need to be significantly expanded and adapted to different capacities and protection needs. Shocks are common, even in non- Even with expansion of social pandemic times, and affect poor protection, households will continue and non-poor, formal and to rely on their own savings to informal households. manage and need access to appropriate savings mechanisms. Households differ in their capacity to deal with shocks and in their Raising productivity is key to capacity to contribute to social raising resilience by making space protection schemes. for personal savings (and, in time, contributions into social Social protection systems do not insurance). fill the gaps, as programs remain unknown, are inadequate (cost/benefit) or not accessible for the majority. 41 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Shocks are common across urban households, whether formal or informal36 Shock incidence, by household and type of shock Urban households face a high incidence of shocks: • 3 in five households (57 percent) – poor, non-poor, formal and informal - 40. were exposed to (at least one) shock in the past three years. 30. % of households • Health and family (death, injury, illness) remains the most common 20. shocks for all types of households, with some nuances: 10. − Poor households are comparatively more exposed to shocks related . Natural Disaster Farming Income Labor Market Price shocks and Health and family Other to farming income or natural disasters. Shocks Shocks financial problems events − For poor non-resilient households, shocks related to health and family were most common. Likely, these shocks imply lost labor Poor Informal Formal earnings and prohibitively high costs related to cure and care. Source: Estimates based on EHCVM 2018. Note: The denominator is all urban households − For non-poor informal households resorting to negative coping price shocks and financial problems were the most common shock, followed by health/family. Shocks incidence among non-resilient households − Formal households are somewhat more protected against shocks 80. through health and family events (in the sense of not having to resort 70. to negative coping) – perhaps as a result of access to social insurance. 60. 50. One important caveat: the analysis is based on pre-COVID-19 data (2018) 40. and likely to underestimate incidence of shock and the need to resort to 30. 20. negative coping strategies: 10. • Both poverty levels and incidence of shocks are now certain to be . significantly higher, especially shocks to health, earnings, and prices; and Natural Disaster Farming Income Labor Market Price shocks and Health and family Other Shocks Shocks financial problems events labor markets. • Given the long duration of the pandemic and subsequent crises Poor Informal Formal (inflation), some coping strategies may no longer be sustainable – for Source: Estimates based on EHCVM 2018. Note: The denominator is all urban households that example, personal savings may have been depleted. experienced a shock and resorted to negative coping. Annex 7. Categories of shocks. 42 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter One third of urban households were not resilient to shocks (including both poor and non-poor)37 Urban population by type of household in which they live 24 percent of urban individuals (16 percent of urban households) Non-resilient households lived in a poor household – were larger, suggesting by definition, these are not resilient. children were more likely to live in households resorting to negative coping. 8 percent of urban individuals 24% (8 percent of urban households) After COVID-19, many lived in an informal, non-poor, more are likely to have non-resilient household. 8% 41% 19% become non-resilient 22% due to universality, 27 percent of urban individuals intensity and duration lived in a formal household 27% of the pandemic and (26 percent of urban households). the subsequent price shock. This will have long-term 41 percent of urban individuals consequences as (50 percent of urban households) lived investment in the next in an informal, non-poor household generation’s human capital that was either resilient (22 percent of is reduced. individuals) or had not been exposed to a shock (19 percent of individuals) – for Formal, non-poor Informal, non-poor, not resilient Annex 8. Categorization this latter group, we do not know whether Poor Informal, non-poor, resilient of coping mechanism. they would have been resilient or not. Informal, non-poor, no shock Source: Estimates based on EHCVM 2018. Note: for definitions of resilience and non-resilience. See: Key Concepts. 43 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter About half of all households are non-poor but uncovered households (“missed middle” of social protection) across Côte d'Ivoire38 Population by type of household in which they live 100% Formal households receive Across different locations some protection 90% the respective shares of formal • Covered by formal employment and poor households differ: 80% social insurance • e.g., in Abidjan, the share of poor households is low and 70% Half of the population belong the share of formal households comparatively 60% to the “missed middle” high; the opposite holds in • About 50 percent of all 50% rural areas. households, across Côte d’Ivoire, 40% are not covered by (eligible for) either safety net or social But there is always a constant 30% insurance programs share of “missed middle”: 20% • the share of non-poor non- Poor households are, in theory, resilient and resilient 10% covered by social safety net informal households (the “missed middle” in social 0% • In practice the majority remain protection), is constant and Abidjan Other Rural San Pedro Gbeke Poro uncovered stands at approximately 50 Urban percent of the population. Formal, non poor Informal, non-poor, non-vulnerable Source: Estimates based on EHCVM 2018 44 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Households cope with shocks by drawing on their savings or applying to their private networks for loans and support39 For all types of shocks - except price shocks, Top 5 coping strategies, all households, all shocks the top 5 coping strategies are: • Spending savings (1) and borrowing money from relatives and friends (2); • Doing nothing (3); and • Buy cheaper food (4) or change consumption pattern (5). Spent Saving Households that face price shocks, resort to buying cheaper food as the second most used strategy (after tapping into savings). Borrowed money from In the (current) case of common and prolonged shocks, these relatives/friends strategies have limits: • A survey from early into the pandemic (April 2020) shows that one third of households lacked savings or access to family/friends to help Did nothing them out.40 • And resilience is likely to have lowered even further given the protracted and general nature of the COVID-19 shock and the emergency of international instability, as personal savings are run down, and personal Bought cheaper food networks are also affected by the shocks. Employee, San-Pédro: Changed consumption pattern ”Also, I reduced my family’s food consumption during the COVID-19 pandemic. I didn’t have electricity for 2 months, and my family’s water consumption 0 10 20 30 40 50 60 decreased during the pandemic. It was hard and caused a lot of tension between us.” Source: Estimates based on EHCVM 2018 45 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter The productivity of livelihoods is critical to building resilience41 Labor – human capital – is the main asset of most households, and especially for poor and vulnerable households.42 As seen, using personal savings are the key coping strategy when faced with income shocks. The capacity to accumulate savings depends on sufficiently high earnings from work in “normal” times.43 Employee, Korhogo: The qualitative study44 shows that in response to COVID-19, more resilient informal “I didn’t feel the impact of the crisis sector workers were those that were able to diversify their sources of revenue when even though the restaurant closed, their regular activity was negatively affected. thanks to the little shop I opened. I bought drinks and juice at the The quantitative analysis45 shows that poor or non-poor non-resilient households are supermarket and resold it on the sly. those where members predominantly are in low productivity and precarious work – And I can say that that worked well. which is likely the main reason for their low resilience: • Access to employment is high across resilient and non-resilient households alike. I transformed my parent’s yard into a clandestine café where friends would • However, the source of work matters significantly. come to gather. Later on, they asked • Self-employment status and agricultural work are correlated with low household resilience. me to cook for them. I did really good • Households with more children are less resilient; they have limited additional business during the health crisis.” labor resources. Non-resilient households lack liquid assets46 (they may own house and land, but these cannot or should not be liquified). 46 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Most households attempt to save (informally)47 The qualitative study confirms that own savings are the key coping mechanism to weather shocks.48 Self-employed, Bouaké: Most households, both resilient and non-resilient, have access to some form of savings instrument49 (especially mobile banking, but also “ The ‘tontines’ are what helped my business evolve. “tontines”). What little money I earn, I use it for the ‘tontine’ Financial inclusion by type of households because I know I’ll get it back later, to grow my firm. 100 So when I get my ‘tontine’, I add it to my business 90 capital. Today, the ‘tontine’ is what helps female 80 vendors. It would be difficult for us to operate % of households 70 60 without it.” 50 40 30 20 10 0 Classic Bank Postal Bank Farmers Bank Mobile Bank Prepaid Card Tontine Employee, Abidjan: Poor Informal, non-poor, non-resilient Informal, non-poor, resilient Formal, non-poor Source: Estimates based on EHCVM 2018 “I don’t participate in the ‘tontine’ anymore. I used to do it, but the ladies used up too much of my money. “Tontines” helps pool resources and risks, but free-rider or fraud That’s why I stopped.” problems may arise, which has resulted in higher reliance on mobile banking.50 47 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Mobile banking is on the rise, but women remain more excluded51 Financial exclusion from household perspective mirrors analysis from firm perspective. See: Most firms remain unbanked. Access to a financial account (formal financial institution and/or mobile Mobile savings instruments are more frequently used than formal financial money) has increased significantly since 2017 according to World Bank 2021 institutions but remain limited. FINDEX data. Savings capacity has fallen since 2017, likely reflecting the pandemic impact. Women and poor individuals remain behind men and wealthier individuals, however. The basis for savings is low as most individuals work in low productivity, low earning activities – raising productivity is key. And gender gaps have increased significantly. • Partly this reflects a digital gap as women are less likely than men to have But there are also important behavioral/normative constraints to savings a mobile phone. that can be addressed through program design. Many save but mostly informally. Annex 9. Good practice for promoting savings. Individuals with access to a financial account Individuals who saved Individuals with access to a financial account Individuals who saved 80% 60% 49% 64% % individuals 15+ 43% % of adults age 15+ 55% 60% 47% 46% 44% 40% 36% 37% 34% 40% 16% 20% 20% 6% 6% 0% 0% Female Male Poorest 40% Richest 60% Saved any money through financial institution through mobile money 2017 2021 2017 2021 Source: estimates based on World Bank Global FINDEX Data 2021 48 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter The existing social protection system is not accessible for the vast majority Access to formal bank credit is very low (below 5 percent); The poor are in theory covered by safety nets through hence this is not an option to cope with shocks.52 the national productive social safety net program (PTMP) which provides support in the form of cash transfers + additional services in the form of life skills, productive and Social insurance mechanisms in place include income financial inclusion: protection (through RSTI) and health protection • These type of interventions can help strengthen households’ (through CMU) – health insurance could help avoid resilience, and hence their capacity to prepare for, cope with, and catastrophic health expenditures and free up resources adapt to the shocks they face—before, during, and after these for contribution into other social insurance programs. shocks occur. • But the program needs to expand coverage significantly (so far only covers 15 percent of the poor). Overall, take-up is quite low, as these programs remain relatively unknown, unaffordable, or inaccessible. Policy largely “misses the middle” of non-poor informal, especially the less resilient non-poor with lower RSTI (protecting against income shocks): in theory, the contributory capacity: program is not available to informal sector employees, and is • There is a need for policy that provides partly contributory still relatively unknown among many, it is self-financed and mechanisms (i.e. with some budgetary support) and helps expensive for low productivity activities. encourage own savings. CMU (protecting against health shocks): suffers from poor The social protection system is not currently well reputation due to low quality of services or low access to integrated, missing out on potential efficiency gains, services; this reduces uptake. including in the identification of beneficiaries for contributory and non-contributory schemes. 49 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Protection for self-employed (Régime Social du Travailleur Indépendant, RSTI) reaches few and does not provide adequate protection53 RSTI Conditions: • RSTI is open to formal and informal own-account workers in theory, in practice also to Self-employed, Bouaké: informal employees or employers. • It provides protection against (revenue shortfall due to inability to work caused by) illness, injury, maternity, and old age. “I think the contribution amount is affordable, because it • Participants contribute 12 percent of declared revenue (with sector specific thresholds). depends on the income you declare […] you can pay at your own rhythm and the amount you want. When I see • For higher earning workers, there is an additional scheme - Régime Complémentaire du my current amount of activity, it seems doable.” Travailleur Indépendant (RCTI), to support additional pensions savings. Recent start and limited enrolment: • Launch of the new regime in 2021. About 100,000 enrolled (June 2022), 54 percent men, 46 percent women. Self-employed, Abidjan: “The CNPS people came here. I asked them about the Insufficient coverage and protection: contribution conditions, and they said if I pay them the • There is still limited knowledge about the RSTI program among informal sector workers. money, I won’t get it back right away. So that ‘broke’ (discouraged) me. I thought I could get my money back if • The program helps with risk pooling but there is no fiscal incentive/subsidy. I needed it. They’re going to keep my money for years • The scheme is not adequate for lower earning workers – they find even before I can withdraw it. I would like to keep my money the minimum level of contribution difficult to achieve. as insurance for my kids, but if I have to wait six (6) • Most informal workers also need short-term solutions to withdraw funds to weather months to a year to take it out, that’s difficult. In my different shocks and therefore hesitate to tie up resources over the long-term in RSTI. opinion, it should work like a bank. • The most productive entrepreneurs do know of, and appreciate, the RSTI. 50 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Health: CMU (Couverture Maladie Universelle) is well known but has a poor reputation for access and quality of services52 CMU conditions: • Contributory and compulsory, although this is not enforced. • Contribution of 1,000 FCFA/month per individual. Self-employed, San-Pédro: Limited coverage: “According to what some people say about the • about 3.6M enrolled (in a population of 26M) by December 2022. CMU, it’s not operational yet. None of those who have signed up and paid their contributions has Suffers from low contribution rate and is underfinanced. received any benefits from the CMU yet because nothing has been done about it. So, no one in my small family has signed up for the CMU.” Not a good fit for informal sector workers: they are underrepresented relative to their share in total employment (29 percent vs 89 percent), they are underrepresented among beneficiaries of medical services (22 percent), and they contribute the least to the scheme (2 percent of total value). • Field work shows that CMU is quite well known (unlike RSTI), but not well reputed. Self-employed, Korhogo: • Limited capacity to reach the population for enrolment. • An overly complex administration “One day, I got sick and since I still contributed, I • A limited number of participating health service institutions, low quality of services, and figured I should give it a try. […] I went to almost all delays in delivery. the pharmacies in Korhogo and none of them Several reforms were adopted in 2022 to improve the functioning of the CMU: would take the CMU coupon. That means the CMU isn’t worth anything in the pharmacies. I had to pay • Automatic collection of contributions for the cotton, oil palm and village sugarcane sectors. for the medicine with my own money. Since then, • a reduction in the list of required documents and the possibility of enlisting people who do I’ve stopped contributing.” not administrative documents. RAM (Régime d’Assistance Médicale): • Non-contributory scheme, accessible to those below the poverty line and other vulnerable households. 51 • Some 370,000 people enrolled. User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Cash Transfers: Programme de Transferts Monétaires Productifs (PTMP) is comprehensive but still limited in reach 54 The PTMP is a productive safety net – it could in principle help alleviate chronic poverty and help beneficiaries prepare, manage and recuperate from shocks through strengthening of resilience. PTMP conditions By 2020 PTMP reached a cumulative 227,000 households (45 percent urban, 55 percent rural) • Uses geographical and proxy means-testing • The intention is to expand program targeting and community validation to by an additional 300,000 households identify households. by 2025, aiming to cover the vast majority of extremely poor (4.4 million individuals • Provides transfers (four per year, 36,000 FCFA in 2019). each, over 3 years) and phones to receive Mobile Money. • This will still leave a large number of the poor – the majority, in fact - uncovered, • Accompanied with savings mechanisms and as the total number of poor is estimated at 10 training in financial literacy, life skills, start-up million. grant, access to RAM. • And the program does not reach any of the • Focuses on delivering cash transfers non-poor that are vulnerable (estimated at to female household member. 53 percent of the population in 2019). 52 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Unique Social Registry (RSU): expected to improve the targeting efficiency of social programs, once it will be operational Vision Status In 2019, the government adopted the legal framework to establish Where it stands: a Unique Social Registry (Registre Social Unique, RSU). The RSU has a • Socio-economic data on 500 000 households collected by the Management Information System (MIS) containing socio-economic PTMP. data on vulnerable households or individuals to assess their eligibility for their enrolment in social programs. • Socio-economic data on 400 000 households collected by the CNAM. • The MIS is under development. Expected to be finalized and operational in the second semester of 2023. Role of the social registry in delivery chain • One the MIS operational, the socio-economic data collected by Enroll Provide Manage the PTMP and the CNAM will constitute the initial data base of the RSU. Assess needs and conditions • The development and management of the RSU is anchored within the Ministry of Solidarity and Fight against Poverty. Enroll Provide Manage Next steps: RSU PROGRAM 2 • Extend the coverage to cover all poor households in the country (collect socio-economic data and update data that is more than 3 years old). Enroll Provide Manage • Develop partnerships with a diverse range of programs to provide them with data on vulnerability. Source: Adapted from Lindert and al., 2022 53 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter More resilient workers have more insights and access to social protection system, but the low quality of services remains a key obstacle55 More resilient workers Less resilient workers (own-account) (salaried workers and own-account) Some level of adoption of social protection schemes, Low level of adoption of social protection schemes, marked by: marked by: • A good understanding of the CMU and limited • Little knowledge of the CMU and the RSTI as well as their knowledge on the RSTI. advantages (with sometimes biased information). • Some level of affiliation in the CMU but reluctance to • Low level of affiliation in the CMU due to a lack of contribute given problems related to access to services. interest and resources. • With the ability to contribute to both social protection • Salaried workers are not covered by the RSTI. schemes if their immediate (CMU) and long-term (RSTI) interest are well perceived. • Limited contributory capacity with willingness to benefit from subsidies. • Professional organizations play an important role in disseminating information on social protection relevant to informal sector. 54 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Content User guide and main messages 00 Conclusions and policy recommendations 05 01 06 Rationale: Why focus Annexes on the informal sector in • Annex 1: Methodology urban areas in Côte d’Ivoire? • Annex 2: Definition of firm, Côte d’Ivoire • Annex 3: Formalization programs: do they work? • Annex 4: Rwanda Ejo Heza savings scheme 02 Productivity and resilience: • Annex 5: Cluster analysis • Annex 6: Financial inclusion in Côte d’Ivoire a conceptual framework • Annex 7: Categories of shocks • Annex 8: Categorization of coping mechanism Annex 9: Good practice for promoting savings 03 • Increasing productivity in Côte d'Ivoire’s informal sector 07 End-matter • Endnotes • References 04 Strengthening resilience in Côte • Abbreviations • Acknowledgements d'Ivoire’s informal sector • Publication information 55 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Summary of main messages: overall messages The urban informal sector in Côte d’Ivoire is increasingly critical for livelihoods and job creation, especially for women. The COVID-19 pandemic and subsequent global instability and inflation has underscored the high vulnerability of firms, workers and households depending on the informal sector. The informal sector is diverse in needs, capabilities and productivity potential. Informality is a continuum rather than a clear-cut characteristic, and informal activities include low productivity, highly vulnerable subsistence activities and more productive and resilient activities. The size and diversity of the informal sector means that tailored policy options for raising productivity are needed to target different groups with different potential and different constraints, and that interventions must be scalable and cost-effective. Resilience and productivity are mutually reinforcing. Household vulnerability is strongly linked to productivity and precarity of livelihoods, and vulnerable households lack the capacity to protect and invest in raising productivity of their economic activities. Households differ in their capacity to deal with shocks and need different options. The social protection system needs to be significantly expanded and adapted to different capacities and protection needs. 56 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Summary of main messages: raising productivity The urban informal sector is diverse in needs, capabilities, and growth potential. Informality is a continuum, and the informal sector includes low productivity, highly vulnerable subsistence activities and more productive and resilient activities. The size and diversity of the informal sector means that tailored policy options for raising productivity are needed to target different groups with different potential and different constraints, and that interventions must be scalable and cost-effective. The majority of urban informal firms represent low productivity subsistence activities in the trade sector. But these firms coexist with higher productivity activities, with different characteristics and growth prospects. More productive firm owners have the skills, experience, and vision to expand and are primarily constrained by access to credit and markets. They are more resilient and have the capacity and resources to manage risks ex ante and weather shocks ex post. Two in three firms are managed by women but their growth potential is limited by norms surrounding entrepreneurship and gender affecting discrimination in value chains, lower levels of human capital, and difficulties in balancing family life and business. Firms remain informal because they do not see advantages of formalization and fear high costs of being formal. The degree of formality is a continuum – for example, some informal firms pay local taxes. 57 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Summary of main messages: supporting resilience Households differ in their level of resilience and need different policy options. The social protection system needs to be significantly expanded and adapted to different capacities and protection needs. Shocks are common, even in non-pandemic times, and affect poor and non-poor, formal and informal households. Households differ in their capacity to deal with shocks and in their capacity to contribute to social protection schemes. The social protection system has substantial gaps, as programs are not accessible for the majority (instrument gap), reach few of the target population (coverage gap), remain unknown and are inadequate (cost/level or quality of benefit) (service gap). Even with expansion of social protection, households will continue to rely on their own savings to manage and need access to appropriate savings mechanisms. Raising productivity is key to raising resilience by making space for personal savings (and, in time, contributions into social insurance). 58 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Summary: what do these findings mean for policy Premises Enhancing productivity Building resilience • Programs that support resilience will also • Distinguish potential high-growth vs • Foster own savings as a key mechanism. support productivity and vice versa. subsistence activities and different needs. • Adaptive social protection for non-resilient • Size of informal sector in Côte d'Ivoire means • Potential high growth: strengthening firm urban informal sector. Emergency cash scaling up must be possible – very cost- capabilities, focus on business environment, transfer program building on the delivery effective approaches needed. provide financing, access to diversified system of the PTMP (including social registry, markets (public procurement, etc.), resolve payment mechanism etc.). • Diversity of informal sector in regulatory obstacles, and provide critical Côte d'Ivoire requires tailored approaches, • Adapting social insurance schemes with infrastructure. depending on profile of firms and appropriate balance of contribution and non- households/workers. • Subsistence activities: economic inclusion contribution to ensure both protection and interventions that address comprehensive system sustainability. constraints simultaneously, e.g. with • Universal health coverage that will protect building/accessing capital, skills, labor. against health shocks (and, as such, increase • Formalization programs applicable for a contributory capacity towards social small set of firms. protection schemes). • Explore better synergies between the Statut de l’Entreprenant, the RSTI and the CMU with stronger coordination mechanisms. 01 02 03 59 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Overall recommendations Strengthening an ecosystem of instruments to promote resilience and productivity, and foster transitions Productivity Resilience RSTI: with financial and behavioral Targeting on the basis of firm and Transition management 2: Towards Non-poor incentives, as well as more flexibility when Businesses able entrepreneur characteristic formalization of firms households with providing services to enter the higher capacity to formal sector Incentives and support for formalization CMU: extending coverage and ensuring contribute quality services Transition management 1: Towards RSTI: with financial and behavioral better structured, more productive Non-poor incentives, as well as more flexibility in RSU: households with Businesses with and more market-integrated firms → low capacity to delivery growth increase Integrated service and support approach by contribute RAM-CMU: Expanding to households with potential coverage of the priority sector/sub-sector etc. (coordination low capacity to contribute poor; expand between technical training, access to to the PTMP: expanding coverage finance, regulations, infrastructure) vulnerable non- Prioritize women in economic inclusion poor; ensure RAM-CMU: increasing coverage and Households below programs dynamic data → the poverty line ensuring quality services Subsistence firms  updating Facilitating the inclusion of mature PTMP: Ensure economic inclusion measures are available to all beneficiaries savings groups in the financial system Cross-cutting measures: structural transformation and quality in service delivery 60 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Recommendations - Operationalize an ecosystem that ensures synergies between economic transformation programs and the strengthening of productivity and resilience of informal sector actors The ecosystem should offer: A functional and reliable targeting mechanism for different firm and worker/household profiles. Cross-referencing instruments between different initiatives on the productivity and resilience side and between the two. For example: Enrollment in CMU or RAM-CMU and RSTI compared to all beneficiaries of productivity programs. Have a unique number that facilitates access to services and allows interconnection between databases. Alignment of productivity programs with key priorities/economic transformation programs. Supra-sectoral leadership. 61 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Recommendations - Strengthening the social protection delivery chain (Contribute and) receive benefits Collect contributions from Assess beneficiaries Enroll beneficiaries Provide benefits beneficiaries Frequent data updates and Recurring Recurring cycle cycle eligibility verification Operationalize and expand the Strengthen access to contributory and non-contributory programs for all population groups, both on RSU and ensure periodic data the policy side and in practice (coverage and benefits): updates for the registry to • Expand coverage and review benefits: become a central element for • RSTI beneficiary identification for contributory and non- • CMU and RAM-CMU contributory schemes. • Cross-cutting: Coordinate enrollment between CMU and RSTI • Pre-condition to expanding coverage: Ensure that service/care/benefits delivery meets quality standard Source: Adapted from Guven, Melis, and Himanshi Jain. 2023. The Promise of Ejo Heza: A Brighter Future for All Rwandans. 62 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Recommendations - Improving resilience: RSU Objective Timeframe Manager Operationalize and increase coverage among poor Short term RSU (MSLP) households Make it more dynamic in order to have updated information RSU (MSLP) and on the socio-economic situation of households - make Medium term DGPS (MEPS) updates on demand (role of social centers) Reach out to those who are not below the poverty line, but who are vulnerable and at risk of slipping into poverty in the Medium term RSU (MSLP) event of a shock In connection with the previous point: conclude partnership agreements with RSTI and any entity working on economic Medium term RSU (MSLP) inclusion 63 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Recommendations - Improving resilience: RSTI Objective Timeframe Manager Increase coverage, including through outreach campaigns Short term CNPS specifically targeting women entrepreneurs Conduct an evaluation of the effectiveness, quality, and Short term CNPS equity of benefits Review service packages and integration of behavioral and financial incentives to accommodate different levels of Medium term CNPS contributory capacity Study the integration of additional benefits to meet the short-term needs of people working in the informal sector Medium term CNPS (housing, education, collateral to access financing) and analyze their financial viability Short to medium term Coordinate enrollment between CMU and RSTI CNAM and CNPS (ongoing) 64 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Recommendations - Improving resilience: CMU Objective Timeframe Manager Improve the supply of services/quality of care Short term - ongoing Ministry of Health Increase coverage across the board Short term CNAM Accelerate the extension of the RAM-CMU coverage to poor households and extend the scheme to non-poor households Medium term CNAM with a lower contributory capacity Short to medium term Coordinate enrollment between CMU and RSTI CNAM and CNPS (ongoing) 65 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Recommendations - Productivity enhancing measures (I) Recap: Three broad groups of firms needing (broadly) three For these measures sets of policy instruments to be efficient, targeting, 11% consolidation and 1st tier: Firm and owner profiles close to formal firms Well established high coordination productivity firms with • Incentivize formalization to increase productivity (by e.g. access to formal business across some connection to services) and increase formalization rate among firms markets, highest number programs of workers is key! 2nd tier : Some firms will have potential to grow • Firms for which policies addressing a few specific constraints (credit, key 25% training), rather than big-push efforts, are needed Second most productive firms, owned by older women, with some growth potential (11%) • For some, not all, help manage transition into “formalizing potential” Start-ups operating at low levels of productivity, but with young (transition into 1st tier firms) and highly educated owners, some with potential to increase productivity (14%) 3rd tier: Subsistence activities with very limited growth (job creation) potential but high poverty reduction potential 64% • Raise productivity to improve livelihoods by addressing Somewhat more productive firms, women-owned in commerce, “the comprehensive constraints average firm” (35%) • Economic inclusion, “big push” programs at individual and Subsistence firms with low growth potential (29%) household level 66 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Recommendations - Productivity enhancing measures (II) Firm and owner profiles close to formal firms. 11% Objective: incentivize formalization to increase productivity and formalization rate of firms. Well established high productivity firms with some connection to markets, highest number Based on what works: of workers • “Stick” policies: inspection, information • “Carrot” policies: formalization coupled with “regular” business on cost of non-compliance. support incentives and services that • Evidence has shown that these 25% help firms benefit from formal status: programs are most effective is • Example: certifications that provide targeted towards those firms with a Second most productive firms, owned by older women, with some growth potential (11%) access to formal markets. profile closer to formal firms. Start-ups operating at low levels of productivity, but with young and highly educated owners, some with potential to increase productivity (14%) Also: • Evaluate and capitalize on the pilot • Firms enrolled receive the project under the Statut de l’Entreprenant Statut de l’Entreprenant for 5 that developed an index along 5 years; status can be 64% dimensions (turnover and its growth extended by another 5 Somewhat more productive firms, women-owned in commerce, “the path; number of employees; number of years (replaces the average firm” (35%) years of entrepreneurial experience of administrative and tax the owner; gender of the owner; and registration of formal firms Subsistence firms with low growth potential (29%) age of the owner) to identify firms with a with the RCCM and the DGI). higher growth potential. 67 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Recommendations - Productivity enhancing measures (III) Some firms will have potential to grow (growth episodes) General: Coordination and consolidation: 11% • Evaluate and consolidate ongoing initiatives: • Choice of targeting to maximize Well established high • Map (broadly) ongoing policies and programs and absolute levels of productivity, productivity firms with build on what has worked, including lessons from relative change, or both: some connection to PEJEDEC: • Firms that have the potential to reach markets, highest number − Currently a fragmented and donor driven the highest levels of productivity may of workers landscape with weak coherence and synergies. not be the same firms for whom − Coordination mechanisms will be needed. programs will make the most significant difference (e.g. gender- − International research suggests impact of targeting for women’s economic policies geared to small firms is very varied, 25% suggesting context and design are critical, as is empowerment, youth-targeting for improved social cohesion). monitoring and evaluation. Second most productive firms, owned by older • Leverage professional associations women, with some growth potential (11%) for program delivery Start-ups operating at low levels of productivity, but with young and highly educated owners, some with potential to increase productivity (14%) Specific: Increasing financial resources and management capabilities: • Improve access to finance • Improve entrepreneurial • Foster financial inclusion and capabilities and business skills: 64% private savings as a means of • Ensure high quality increasing access to capital, training/trainers. Somewhat more productive firms, women-owned in commerce, “the integrated with the resilience average firm” (35%) agenda. Subsistence firms with low growth potential (29%) • Grants schemes for top-tier firms, where credit constraints are the main constraint. 68 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Recommendations - Productivity enhancing measures (IV) Subsistence activities with very limited growth (job creation) potential but high poverty reduction potential. 11% Well established high Objective: Raise productivity to improve livelihoods by addressing productivity firms with comprehensive constraints. some connection to markets, highest number of workers Based on what works: • Strengthen the referral framework to • Economic inclusion, “big push” better connect PTMP beneficiaries to 25% programs at individual and household level to address multiple constraints other programs and services in order Second most productive firms, owned by older to increase their access to markets. simultaneously. women, with some growth potential (11%) • Increase the coverage of the PTMP, Start-ups operating at low levels of productivity, but with young and highly educated owners, some with potential to which provides a comprehensive increase productivity (14%) economic inclusion program to poor households. 64% Somewhat more productive firms, women-owned in commerce, “the average firm” (35%) Subsistence firms with low growth potential (29%) 69 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Recommendations - Productivity enhancing measures (V): Applying a gender lens Women face specific constraints and interventions need to target these 11% 1st tier: Firm and owner profiles close to formal firms Well established high • Addressing gender norms in finance and value chains with information productivity firms with some connection to • Promote access to professional networks and associations, locally based mentoring, coaching markets, highest number of workers • Large-scale grants through e.g. business competitions 2nd tier : Some firms will have potential to grow 25% • Productivity enhancing interventions that focus on mindset, provide relatable role models and raise aspirations, including for entering less crowded/more profitable sectors and occupations Second most productive firms, owned by older women, with some growth potential (11%) • Foster own savings with mechanisms guaranteeing independence of access and use of resources, promote digital equity as means of financial inclusion Start-ups operating at low levels of productivity, but with young and highly educated owners, some with potential to increase • Raise agency by addressing norms surrounding family work responsibilities, entrepreneurship and productivity (14%) female economic empowerment using community work 3rd tier: Subsistence activities with very limited growth (job 64% creation) potential but high poverty reduction potential Somewhat more productive firms, women-owned in commerce, “the • As above average firm” (35%) • Continue to target women as the primary beneficiaries of the economic inclusion Subsistence firms with low growth potential (29%) package within the PTMP beneficiary household 70 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Content User guide and main messages 00 Conclusions and policy recommendations 05 01 06 Rationale: Why focus Annexes on the informal sector in • Annex 1: Methodology urban areas in Côte d’Ivoire? • Annex 2: Definition of firm, Côte d’Ivoire • Annex 3: Formalization programs: do they work? • Annex 4: Rwanda Ejo Heza savings scheme 02 Productivity and resilience: • Annex 5: Cluster analysis • Annex 6: Financial inclusion in Côte d’Ivoire a conceptual framework • Annex 7: Categories of shocks • Annex 8: Categorization of coping mechanism Annex 9: Good practice for promoting savings 03 • Increasing productivity in Côte d'Ivoire’s informal sector 07 End-matter • Endnotes • References 04 Strengthening resilience in Côte • Abbreviations • Acknowledgements d'Ivoire’s informal sector • Publication information 71 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Annex 1. Methodology overview Quantitative analysis based Qualitative analysis Deep dives on pre-COVID-19 data Productivity quantitative analysis • Productivity and resilience qualitative • An overview of the informal sector in • Identifying « clusters » of firms analysis. Côte d’Ivoire including the definition according to characteristics, • Focus on providing updated and of formality; social protection policies including productivity. nuanced insights into productivity and programs; financial inclusion; and resilience issues. and gender in the informal sector. • Establishing important correlates with productivity (OLS). Resilience quantitative analysis Consultations • Focus on identifying “clusters” of households according to shock • Technical consultations were held through the Comité emploi, a multisectoral exposure, level of resilience and technical committee led by the General Director of Employment of the Ministry of household characteristics. Employment and Social Protection throughout the study. • Establishing important correlates • Moreover, high level consultations led by the Prime Minister’s office on the final with resilience. study results were conducted between March and June 2023. Draws on additional work, in particular World Bank Economic Update 2020 (COVID-19), the Côte d'Ivoire Poverty Assessment (WB 2021, unpublished) 72 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Annex 1. Methodology: Quantitative analysis of productivity Premises Three blocks of analysis • Based on informal sector 1 Descriptive statistics (firm and owner characteristics, constraints to business, infrastructure, etc.). module of Enquête Régionale Intégrée sur l'Emploi et le Secteur Informel 2018 (ERI-ESI 2 Profiling the urban informal sector through cluster analysis 2018). • A descriptive and exploratory technique that attempts to group objects based on their similarity. • The data covered a sample • Follows Cunningham and Maloney (2001). of 2,343 urban informal • Number of clusters is not predetermined, follows from analysis. firms, representative at • The cluster analysis includes three broad classes of endogenous variables: national and regional levels. • characteristics of the firm owner (education, experience, gender). • Labor productivity • characteristics of the firm (age, number of workers, permanence of work site). measured by output worker • entrepreneurial dynamics proxied by the firm owner regarding his plans and needs per month (firms with more for financing and access to services. than worker) or average • The exogenous variables used include age of the firm owner, gross monthly sales, reason for starting the firm and monthly income (own- challenges facing the firm including access to savings and credit, and operating environment. account workers). • Caveats: (i) Pre-COVID- 19 data (ii) hours of work not 3 Assessing determinants of productivity: available which may distort • Two steps: productivity measure (iii) • Ordinary Least Squares (OLS) regression of logged values of labor productivity in XOF/person on female cannot compare with ownership, and then controlled for key variables (owner, firm and context characteristics). formal sector. • Oaxaca-Blinder decomposition following Oaxaca (1973) and Blinder (19) to separate out differences in endowments vs. returns on endowment (e.g.: are productivity differences driven by the fact that women have lower levels of education, or that they have lower returns on education). 73 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Annex 1. Methodology: Quantitative analysis of resilience Based on Enquête Harmonisée sur les Conditions de Vie des Ménages 2018-2019 (EHCVM 2018). Sample: 5,245 urban households, representative of Côte d’Ivoire’s urban population. Sample size Abidjan Other urban areas Total 776 households (80% of 3 330 households (77% of Male headed households) 4 106 households) 195 households (20% of 974 households (23% of Female headed households) households) 1 169 Total 971 4 304 5 275 Definitions A household is poor if the A household is formal if any member is A household is resilient if it experienced a shock but did household per capita equivalent formally employed (eligible for not resort to negative coping strategies (reducing food consumption is below the employer-provided benefits include consumption, selling productive assets, taking children national poverty line. sick leave, vacation, and pensions). out of school, or forced to migrate. Descriptive statistics using the definitions to categorize Caveats: (i) Pre-COVID-19 data (ii) cross-sectional, households according to resilience and household cannot trace shock impact or resilience over time. characteristics that may influence resilience. 74 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Annex 1. Methodology: Qualitative analysis of productivity and resilience The qualitative study focuses on The qualitative study was It was undertaken in 4 cities: For each of these locations, data from providing updated and nuanced undertaken in August Abidjan, Bouaké, Korhogo, San- ERI-ESI 2017-2018 were used to insights into productivity and 2022, at the end of the Pédro to represent the identify the 6 most prominent resilience issues. COVID-19 pandemic. economic diversity of Côte economic sectors (importance for jobs d’Ivoire’s cities. and livelihoods). In each sector and location, the survey targeted male and female, as well as 3 categories of informal sector actors: Employers (employing paid non- Own-account workers (managing firm Informal employees (not managing firms, 1 2 3 employed, but without contract or social family members). with no paid employees). protection). Actor Gender Abidjan Bouaké Korhogo San-Pédro Employer/ Male Repair Transport Retail Wood work Micro-firm Female Food service (restaurant) Hairdressing Food preparation Food service (restaurant) Male Trade, general Tailoring Repair Carpentry Own-account Female Food crop trade Food trade Trade, general Hairdressing Male Transport BTP Transport Trade, general Employee Female Domestic help Sewing Food service (restaurant) Domestic help Two-step process to identify participants: Focus group discussions (FGD; 6 in each city, 24 in total), Participants were selected for key informant interviews according 1 involving 6-8 participants. Participants were identified with the 2 to different profiles (productive, less productive, resilient, less support of professional associations (CNM-CI; FENACCI, CITEF). resilient) (18 in each city, 72 in total). Selection based on FGDs as well as recommendations from participants of the FGDs. Back to main text 75 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Annex 2. Definition of firm, Côte d’Ivoire Enterprise Maximum annual Reglementary/ Fiscal criteria Social criteria Employment criteria category turnover administrative Own-account • 5 million FCFA per annum • Entrepreneur’s • Registered with RSTI communal tax (0 employees) • Contributing to CMU • Statut de l’Entreprenant (Côte d’Ivoire PME) or RCCM (Guichet Unique of the CEPICI) depending on the • Employees registered with • Registered with RSTI + Direction Générale du Travail Micro-firm • Between 5 & 50 million nature of the Contributing to CMU + Maintaining an updated entrepreunership project Entrepreneurs state tax (1 to 9 employees) FCFA per annum and sector of work • (employer) employer registry • Enterprise and employees • Conforming with registered with the CNPS employment regulation (SST, PDFT) • Employees registered with • Registered with RSTI + Direction Générale du Travail Small firm • Between 50 & 200 million • RCCM (Guichet Unique du • Tax regime for micro-firms Contributing to CMU + Maintaining an updated (10 to 49 employees) FCFA per annum CEPICI) (fiscal annex 2021) (employer) employer registry • Enterprise and employees • Conforming with registered with the CNPS employment regulation (SST, PDFT) • Employees registered with • Registered with RSTI + Direction Générale du Travail Contributing to CMU Medium firm • Between 200 and 1 billion • RCCM (Guichet Unique du • Regular tax regime (RNI) (employer) + Maintaining an updated FCFA per annum CEPICI) employer registry (50 to 199 employees) • Enterprise and employees • Conforming with registered employment regulation with the CNPS (SST, PDFT) Back to main text The categorization of firms proposed in this table is a simplification, postulating a link between business turnover with its size (number of employees). However, there are examples that do not fully fit the classification, for instance firms with a substantial turnover (ex: > 50 million FCFA) but with less than 10 employees. 76 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Annex 3. Formalization programs: do they work?56 Formalization programs can bring several benefits if effective, for the state, Evaluations suggest formalization programs do not lead to higher for firms, and for workers: formalization rates – whether focusing on sensitization, reducing costs, or • The state may encourage formality in order to increase the tax base, to ensure access to training or financial services. level-playing field for formal firms. • The state may also wish to help protect workers through employment regulations, to expand social protection, and increase knowledge and access to firms for emergency relief in shocks. Moreover, formalized firms do not perform better or improve their access to • Firms may benefit through increased access to larger and formal markets, finance. financial services, and government services (including SME programs); they may also avoid costs related to detection of the irregular status (e.g. fines from inspection). • Workers may benefit if firms improve working conditions including providing For the vast majority of very small and low productivity firms, formalization access to social protection. likely brings very limited benefits, due to their limited revenues: • Incorporating them in formal sector will not sizably increase the tax base. But there are also costs: • They also have very limited contributory capacity for social insurance, even if they • Firms spend time and money on registering the firm and acquiring licenses. qualify for access to such programs. • Formal statis implies paying taxes, social charges, and complying with different regulations. • Formalization programs carry costs for the state – so are they cost effective? For higher performance firms, often with some degree of formality, Programs typically focus on “carrots” (providing benefits from formalizing) formalization may work better: rather than “sticks” (penalties for not complying with laws and regulations). • “Carrot” policies: coupled with “regular” business support incentives and services that help firms benefit from formal status – for example through certifications Activities have included information/sensitization activities, reducing costs that provide access to formal markets (example from Sri Lanka). associated with formalizing (licensing, registration fees, etc.) or providing one- • “Stick” policies: inspection, information on cost of non-compliance – positive time grant for formalization, and reducing costs associated with being formal impact on formalization in Brazil. (tax regime, social charges) – often time-bound. Back to main text 77 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Annex 4. Rwanda Ejo Heza savings scheme Strong points include: • Well-funded: Sufficient government investment to roll out and operate the scheme. Ejo Heza (“Better Future”) is a voluntary long-term • Accessible and coordinated: a digital platform that facilitates savings scheme, open to all Rwandan nationals and individual access as well as coordination across relevant legal aliens. government entities. • Outreach: Collaboration with cooperatives and professional organizations to facilitate information and enrolment. • Inclusive: With 1.85 million participants since its launch in 2018, • Not conditional on employment status, open to all. Ejo Heza has seen spectacular success in fostering individual savings for the uncovered: • Means-based fiscal incentives (matching), especially for the low-income population. • The informal sector, makes up 87 percent of • Adapted to informal sector conditions, especially fluctuations participants and 67 percent of savings. in both earnings and spending needs. • Women, make up half of the participants. • Flexibility in means (mobile money, bank office, credit card, etc.), frequency and size of deposits. • Possibility to retrieve savings in case of key investments related to education, health, or housing. Back to main text 78 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Annex 5. Results from Cluster Analysis (I) Firms in cluster 1, representing 35 percent of all urban informal firms, composed mainly of female owners with low education, running young Cluster firms in the commerce sector with limited productivity and are more or less unconnected to the market. 1 2 3 4 5 Total OWNER Age in years 39 27 29 45 57 37 Cluster 2 represent 14 percent of firms and is composed of young Startups, Education most educated with least work experience and operating in the service None 44% 18% 49% 50% 59% 44% sector. They have the lowest productivity, lowest access to electricity and Primary 28% 13% 28% 32% 27% 26% internet . Firms in this cluster have some access to production factors and Secondary education 23% 51% 20% 18% 13% 24% the ability to do business with Tertiary education 5% 17% 4% 1% 2% 6% big firms. Years of education 2.4 9.8 2.3 2.5 1.1 3.3 Years of work experience 31 11 21 37 50 28 Cluster 3 however, is composed of older firms (29 percent) than cluster 1, Female 68% 51% 65% 39% 72% 62% operating by young and female owners . They have the least permanent FIRM Age of the firm in years 5 3 7 26 10 8 work site, least telephone, least to buy from Sector of activity public and second least productive. Industry 15% 18% 22% 36% 12% 20% Commerce 62% 50% 57% 47% 67% 58% Firms in cluster 4 (11 percent) are oldest firms operating in the industry Service 23% 32% 20% 17% 21% 22% with the largest number workers, highest productivity and the least female Number of workers 1.40 1.25 1.43 1.80 1.28 1.42 owners. Firm size Self-employed 77% 85% 78% 63% 81% 77% 2-4 Workers 22% 14% 20% 30% 18% 21% In cluster 5, firms are operated by the oldest entrepreneurs, mostly female, 5+ Workers 2% 1% 2% 8% 1% 2% least educated with the most work experience. Cluster 5 firms seem to be Gross labor productivity established and with a profile similar to that of formal firms; they are (Output in FCFA/person per 328’249 216’944 295’480 577’644 329’293 329’141 connected to public services and most of them have a fixed location with month) access to established suppliers and clients. % of the sample (weighted) 35% 14% 29% 11% 11% 100% Observations 761 297 611 284 328 2281 79 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Annex 5. Results from Cluster Analysis (II) Cluster FIRM 1 2 3 4 5 Total FIRM 1 2 3 4 5 Total Capacity of the firm to import or Small firms 27% 28% 31% 35% 26% 29% 32% 35% 37% 34% 28% 33% doing business with other large firms Individual 61% 57% 55% 56% 65% 59% Access to electricity [dummy] 29% 35% 27% 28% 25% 29% Financing to start firm: Access to clean water [dummy] 16% 14% 11% 12% 12% 13% Bank and MFI 1% 0% 0% 1% 0% 0% Access to telephone at work premise Private Loans 28% 32% 28% 23% 26% 28% 57% 60% 54% 62% 61% 58% [dummy] Access to internet at work premise Personal savings 69% 65% 67% 72% 67% 68% 3% 7% 2% 4% 3% 3% [dummy] Credit (Clients-suppliers) 3% 3% 6% 5% 7% 4% Site Additional financing Permanent work site 42% 37% 32% 40% 51% 39% Too costly 13% 7% 10% 13% 12% 11% Mobile work site 58% 63% 69% 61% 49% 61% Do not need 40% 40% 42% 32% 40% 40% Clients Process too complicated 31% 33% 33% 35% 31% 32% Big firms 2% 6% 5% 2% 5% 4% Did not meet your needs 5% 5% 4% 6% 3% 4% Small firms 5% 2% 6% 7% 7% 5% Did not apply for other reason 8% 11% 9% 11% 10% 9% Individual 92% 92% 89% 91% 89% 91% Applied, did not get 2% 2% 2% 2% 2% 2% Suppliers % of the sample (weighted) 35% 14% 29% 11% 11% 100% Big firms 12% 15% 14% 10% 8% 12% Observations 761 297 611 284 328 2281 80 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Annex 5. Results from Cluster Analysis (III) Cluster FIRM 1 2 3 4 5 Total FIRM 1 2 3 4 5 Total Why did you start this business Lack of space/ lack of suitable 6% 4% 6% 5% 6% 6% premises Did not find salaried work (large 6% 16% 4% 4% 8% 7% Difficulties in accessing equipment 31% 31% 32% 26% 32% 31% company) Did not find salaried work (small firm) 8% 11% 6% 4% 4% 7% Technical difficulties in manufacturing 36% 32% 35% 35% 39% 35% Higher pay than salaried 33% 23% 26% 31% 39% 30% Technical management difficulties 6% 5% 6% 5% 3% 5% To be independent (own boss) 37% 36% 39% 33% 29% 36% Lack of management skills 8% 9% 9% 8% 7% 8% Family tradition 8% 3% 11% 16% 9% 9% Too much regulation, tax and duties 13% 10% 14% 12% 13% 13% Other reasons 8% 13% 14% 13% 11% 11% obsolescence of equipment 5% 4% 6% 5% 5% 5% Problems Problems with power outages 12% 11% 11% 18% 13% 12% Difficulties in the supply of raw Problems related to insecurity 5% 4% 4% 3% 5% 4% 15% 13% 16% 22% 18% 16% materials Lack of customers 36% 34% 36% 45% 44% 38% Staff instability 8% 6% 7% 10% 6% 7% Problems related to other Too much competition 46% 36% 36% 44% 42% 41% infrastructure 4% 0% 3% 4% 2% 3% (water/telephone/internet) Difficulties in accessing credit 22% 25% 19% 24% 30% 23% % of the sample (weighted) 35% 14% 29% 11% 11% 100% Difficulties in Recruiting Qualified 17% 17% 13% 22% 23% 17% Observations 761 297 611 284 328 2281 Personnel Back to main text 81 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Annex 6. Financial inclusion in Côte d’Ivoire Current status: Opportunities to foster financial inclusion: • Progress made on greater financial inclusion in recent years, with 77.9% • Informal savings and credit dynamics (VSLA, tontines) to pool resources using financial services. and finance informal entrepreneurial activities. • The majority are using Mobile Money and only a minority use the • Increase in public funds that support different target groups (women, traditional financial services offered by MFIs/Banks. youth) and reduce the lack of access to credit. • Women have a lower level of financial inclusion (13.9%) than men • Rapid evolution of digital financial services that reduce transaction costs (27.3%), particularly when opening an IMF/Bank account. and generate financial data to assess the creditworthiness of the • Mismatch between what is offered by financial institutions and the customer (nano credits). demand from informal actors (slow procedures, cost of credit, collateral • Fintech sector is highly competitive, which promotes lower prices and required). innovation and pushes the traditional financial sector (IFM, Bank) to • Majority of informal actors finance themselves through their own funds reinvent and develop itself and set up partnerships. or rely on informal credit networks. • Operationalization of the entrepreneur status which makes it possible to register the upper segment of the informal sector and to promote the connection with financial institutions. Recent initiatives in the realm of financial inclusion: Recommendations to promote financial inclusion: • Creation of the Agency for the Promotion of Financial Inclusion (APIF) • Relax regulatory requirements regarding KYC procedures facilitating responsible for coordinating stakeholders, implementing the SNIF and bank account opening and/or access to digital financial services. deploying a financial education program. • Conduct an audit and reform of public support funds in order to pool • Rise of digital financial products through multiplication of services and resources and limit market distortions. diversification of services (e.g. pico credits offered by TELCOs based on • Strengthen the institutional weight of APIF to enable it to play its role as user scoring). leader and coordinator of financial inclusion programs. • Role of supporting organizations (CGA, Cote d’Ivoire PME) in • Structure and support the development of VSLAs so that they promote strengthening MSMEs' accounting and financial skills and supporting the financial inclusion of populations and operate a connection with their funding applications. traditional financial institutions/ act as link with traditional financial institutions. Back to main text 82 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Annex 7. Categorization of shocks Natural Farming Labor Market Price/financial Health and Other Shocks Disaster Shocks Income Shocks Shocks shocks family events Drought Crop disease Job loss Inability to pay back Family conflicts Law suit loan Flood Damage to crop Collapse firm Change in food prices Person joined the Victim of crime household Storm Livestock disease Better pay / work Change sale prices Divorce Political/Religious crisis Change in agricultural Lack of food Illness Destruction of prices housing Lack of financial Serious Injury resources Change in money Death of bread earner received from social networks Death of other household’s member Back to main text 83 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Annex 8. Categorization of coping mechanism57 Shocks Shock Resilience is defined as the Non-resilient Resilient capacity of a household to absorb economic shocks without resorting to negative coping strategies – that hurt welfare over long or short term. Reduce food Sell Take kids out Forced to Draw from Borrow from Help from Increase consumption productive of school migrate savings Bank family, labor supply assets friends, goverment However, over time, resilient coping strategies For covariate shocks, it will also be more difficult may not be sustainable, for example as a to increase labor supply (in the case of general households’ own savings are depleted or credit low demand) or drawing on personal network with personal network is exhausted. (who are also affected by the shock). Back to main text 84 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Annex 9. Good practice for promoting savings Internal (behavioral) and external (norm) pressures not to Interventions with “commitment” features circumvent some maximize profitability, invest or save optimally affect of these constraints. entrepreneurial choices as well as the use of finance. In the case of Côte d’Ivoire, providing entrepreneurs with access For example, low income and urgent household needs result to saving mechanisms through “blocked accounts” where family absorb firm resources that should have been used for reinvesting and friends could not know about firm profits/savings, increased or for savings. income by 11 percent, through more effort. Women may face more complex constraints relating to Providing a “commitment account” reduces pressures from control of the use or savings of income in the household. oneself, family, and friends to spend resources and helps foster long-term goal setting. For example, norms influence women entrepreneurs to invest • An experiment in Malawi60 provided assistance to farmers to open standard capital input or own profits in their (male) partner’s firms savings account or one with commitment features (“frozen funds”) . Only the (evidence from Ghana, Sri Lanka and India).58 commitment account had significant positive effects on land under cultivation (9.8 percent), agricultural input used (27.4 percent), and crop output (21.8 percent). A key mechanism was the need to set targets for deposits after crop sale. • An experiment in Ghana61 provided (i) cash grants or (ii) in-kind grants that Pressure from personal network reduces value of effort: could not be diverted into household expenditures but “stay in the business”. In-kind grants had significant positive effects on larger female a new (2022) study in Côte d’Ivoire59 shows evidence of a owned firms compared to control groups. significant “marginal social tax” where firm owners that manage to acquire additional resources find themselves under pressure • An experiment in rural Kenya62 provided bicycle taxi-drivers (mostly men) and market vendors (mostly women) with access to non-interest bank to transfer more of this to family and friends, and this lowers accounts (de facto negative interest rate), only women increased their incentives to earn more. savings, even with negative interest rates, suggesting that they face more pressures to spend “visible” cash. Back to main text 85 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Content User guide and main messages 00 Conclusions and policy recommendations 05 01 06 Rationale: Why focus Annexes on the informal sector in • Annex 1: Methodology urban areas in Côte d’Ivoire? • Annex 2: Definition of firm, Côte d’Ivoire • Annex 3: Formalization programs: do they work? • Annex 4: Rwanda Ejo Heza savings scheme 02 Productivity and resilience: • Annex 5: Cluster analysis • Annex 6: Financial inclusion in Côte d’Ivoire a conceptual framework • Annex 7: Categories of shocks • Annex 8: Categorization of coping mechanism Annex 9: Good practice for promoting savings 03 • Increasing productivity in Côte d'Ivoire’s informal sector 07 End-matter • Endnotes • References 04 Strengthening resilience in Côte • Abbreviations • Acknowledgements d'Ivoire’s informal sector • Publication information 86 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Endnotes 1. Dieppe 2021. 14. Guven and Karlen 2020, Guven et al. 2021. 2. Bowen et al 2020. 15. World Bank 2022, Guven and Karlen 2020, Guven et al. 2021. 3. Based on ILO’s lnternational Cassification of Status in Employment 16. Beegle et al. 2019. (ICSE-93). 17. Adapted from Guven et al. 2021. 4. Based on ILO’s International Conference of Labour Statisticians 18. Estimates based on quantitative analysis of ERI-ESI 2018. (ICLS-93). 19. Estimates based on quantitative analysis of ERI-ESI 2018. 5. Estimates based on World Development Indicators. 20. Estimates based on quantitative analysis of ERI-ESI 2018. 6. World Bank 2017. 21. Estimates based on quantitative analysis of ERI-ESI 2018. 7. World Bank 2021. 22. Estimates based on quantitative analysis of ERI-ESI 2018. 8. Based on quantitative analysis of Enquête Régionale Intégrée sur l’Emploi et le Secteur Informel 2017-2018 (ERI-ESI 2017-2018). 23. Results from Enquête Qualitative sur la Productivité et la Resilience des Acteurs Informels Urbains en Côte d’Ivoire (EQL 2022). 9. WB 2021. 24. Based on Financial inclusion Deep Dive, analysis of ERI-ESI 2018, and 10. WB 2020. EQL 2022. 11. Adapted from Syversen 2011,World Bank 2019, Johansson de Silva 25. Estimates based on quantitative analysis of ERI-ESI 2018. et al. 2020. 26. Based on EQL 2022. 12. Adapted from Guven et al. 2021. 27. Based on Financial Inclusion Deep Dive. 13. Based on de Mel et al. 2013, Jayachandran 2020, Johansson de Silva et al. 2019, J-PAL 2022, and World Bank 2019. 28. Based on Financial Inclusion Deep Dive, analysis of ERI-ESI 2018, and EQL 2022. 87 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Endnotes 29. Estimates based on quantitative analysis of ERI-ESI 2018. 46.Estimates based on EHCVM 2018 (urban households). 30. World Bank 2019. 47.Estimates based on EHCVM 2018 (urban households) and EQL 2022. 31. Estimates based on quantitative analysis of ERI-ESI 2018. 48.Based on EQL 2022. 32. Based on EQL 2022. 49.Estimates based on EHCVM 2018 (urban households). 33. Based on EQL 2022. 50.Based on EQL 2022. 34. Based on EQL 2022. 51.Estimates based on World Bank Global Findex Database. 35. Based on EQL 2022. 52.Estimates based on EHCVM 2018 (urban households). 36. Estimates based on EHCVM 2018 (urban households). 53.Deep Dive Social Protection Note and EQL 2022. 37. Estimates based on EHCVM 2018 (urban households). 54.Deep Dive Social Protection Note. 38. Estimates based on EHCVM 2018 (urban households). 55.Based on EQL 2022. 39. Estimates based on EHCVM 2018 (urban households). 56.Based on de Mel et al. 2013, Jayachandran 2020, Johansson de Silva et al. 2019, J-PAL 2022, and World Bank 2019. 40. World Bank 2020. 57.Adapted from Guven et al. 2021. 41. Estimates based on EHCVM 2018 (urban households) and EQL 2022. 58.Bernhardt et al. 2019. 42. 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World Bank, Washington, DC. 90 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Abbreviations AEJ Agence Emploi Jeunes, Youth Employment Agency Fonds d’Appui aux Femmes de Côte d’Ivoire, Côte d’Ivoire’s Women FAFCI Support Fund AFD Agence Française de Développement ; French Development Agency Fonds d’Appui aux Acteurs du Secteur Informel​; Support Fund to ASA​ Advisory Services and Analytics FASI Informal Sector Actors ASP​ Adaptive Social Protection​ FGD​ Focus Group Discussions​ Bureau de Coordination des Programmes Emploi; Coordination BCPE​ FSS​ Fonds de Soutien et de Solidarité​; Support and Solidarity Fund Office for Employment Programs CMU​ Couverture Maladie Universelle​; Universal Health Coverage ILO​ International Labor Office​ Caisse Nationale d'Assurance Maladie​; National Health KII​ Key Informant Interviews​ CNAM​ Insurance Fund PME​ Petites et moyennes entreprises​; Small and Medium Enterprises Caisse Nationale de Prévoyance Sociale; National Social CNPS​ Programme de Transferts Monétaires Productifs​; Productive Cash Insurance Fund PTMP​ Transfer Program DGI​ Direction Générale des Imports​; General Directorate on Taxes Enquête Nationale de l’Emploi 2019​; National Employment Survey RAM​ Régime d’Assistance Médicale​; Medical Assistance Scheme ENE 2019​ 2019 Registre du Commerce et du Crédit Mobilier​; Trade and Property EHCVM Enquête Harmonisée sur les Conditions de Vie des Ménages 2018; RCCM​ Credit Registry 2018 Harmonized Survey on Household Living Conditions 2018 Enquête Qualitative sur la Productivité et la Résilience des Acteurs Régime Complémentaire du Travailleur Indépendant​; RCTI​ Informels Urbains en Côte d’Ivoire​ 2022; Qualitative Complementary Scheme for Self-Employed Workers EQL 2022​ Survey on Productivity and Resilience of Urban Informal Sector Actors in Côte d’Ivoire 2022 World Bank’s Rapid Social Response-Adaptive and Dynamic RSR-ADSP​ Social Protection Enquête Régionale Intégrée sur l’Emploi et le Secteur Informel 2017- ERI-ESI 2018; Integrated Regional Survey on Employment and Régime Social du Travailleur Indépendant​; Social Scheme for Self- 2017-2018​ RSTI​ the Informal Sector 2017-2018 Employed Workers 91 User Guide Rationale Framework Productivity Resilience Conclusions and Policy Annexes End-matter Acknowledgements Technical and financial 01 Main Report 02 Background notes 03 support and consultations • Prepared by a team composed of Raphaela Karlen, Under the overall supervision and guidance of Consultations with national authorities, including Solene Rougeaux, Sara Johansson de Silva and Raphaela Karlen and Solene Rougeaux, the following through the multisectoral employment committee Simon Barussaud. background notes were prepared: chaired by the General Director for Employment in the Ministry of Employment and Social Protection, • Comments by Wendy Cunningham and Amer S. • Qualitative data collection and analysis: Simon technical experts at the CNAM, the CNPS and Ahmed at concept stage and Wendy Cunningham, Barussaud, Stéphane Reuse, Camille Compaoré, and Côte d’Ivoire PME, as well as high level consultations Melis Guven and Maria Kim at decision stage. Lydie Kouamé; and data collection assistants: anchored at the Prime Minister’s office. Moreover, Baudelaire Abié, Boris Kambo, Serge N'Da, Armand • Strategic guidance from Coralie Gevers, Christian throughout the task, consultations were held with the Dizo, Laurent Mélan Kouakou, and Fidèle Boza. Bodewig and Jehan Arulpragasam. ILO and the AFD. • Quantitative productivity assessment: Gabriel Lawin • Administrative support by Oumou Kassi-Coulibaly, The task has benefitted from financial support from the with support from Wendy Cunningham on Kanga Grant-Marcelle, Amoin Baudouine Kouadio AFD, executed through the BCPE, which the team the methodology and interpretation of results, as and Mariam Denise Brain. greatly acknowledges. well as comments from Eduardo Malasquez Carbonel and Oscar Barriga Cabanillas. The Social Protection and Jobs team furthermore wishes to recognize the generous award of a grant from • Quantitative resilience assessment: Clement Joubert the World Bank’s Rapid Social Response Adaptive and and Hugues Champeaux. Dynamic Social Protection (RSR-ADSP) Umbrella Trust • Notes on informality in Côte d’Ivoire and on social Fund Program, which is supported by the Russian protection: Simon Barussaud. Federation, United Kingdom, Norway, Sweden, Australia, Denmark, and Bill and Melinda Gates • Note on women in the informal sector: Racky Balde. Foundation without which this work would not • Note on financial inclusion: Josué N’Tia and Cathy have been possible. Seya with inputs from Maria Pagura, Corinne Riquet and Youssouf Traore. 92 Publication information © 2023 International Bank for Reconstruction and Development / The World Attribution – Please cite the work as follows: Karlen, Raphaela ; Rougeaux, Solene ; Bank. Johansson de Silva, Sara ; and Barussaud, Simon, 2023. 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