ABSTRACT
Government authorities should not constrain the informal sector by unnecessary regulations. Some regulations, such as prohibiting the acceptance of customers’ deposits and requiring NGOs that use public or donor funds to account for the use of these funds, are unavoidable. However, more intrusive regulations, such as the 1997 regulations that put severe restrictions on money changers, should be avoided. Evidence from developing countries shows that government regulation of the informal sector has been ineffective and even counterproductive, and should be minimised.
