ABSTRACT

This chapter reviews each of the four possible policy goals available to governments, namely, taking no action, eradicating informal entrepreneurship, deregulating formal entrepreneurship or formalising informal entrepreneurship. Reviewing the possible goals of policy which are open to governments, there are logically four possibilities. Policy makers can select to either take no action, eradicate informal entrepreneurship, deregulate formal entrepreneurship or transform informal entrepreneurship into formal entrepreneurship. For customers, the advantages of formalising informal entrepreneurship and enterprise are that these customers will benefit from legal recourse if a poor job is done, will have access to insurance coverage, can benefit from guarantees with regard to the quality of the work conducted and can have certainty that health and safety regulations have been followed. The problem with using a hard compliance approach to change behaviour is that although this helps improve the power of authorities to elicit behaviour change, informal entrepreneurs are not always rational economic actors with perfect information available to them.