Informal service sector of Bujumbura : a survey and critical analysis

The study involved interviews with 326 owners of informal general stores, banana beer bars, flour mills, restaurants, photo studios, hair salons, and electronic repair shops. The report concludes that the informal service sector accounts for a significant proportion of all commercial activity in Bujumbura, in terms of employment and numbers of enterprises, and it also makes a meaningful contribution to GDP. The sector"s fiscal contribution, however, is low in absolute and relative terms. Greater contribution to local government might be achieved through experimentation with various schemes to reduce tax rates and/or increase collection rates. In general, though, the government"s non-interventionist stance toward the informal service sector is beneficial. Greater regulation would be likely to depress productive activity, diminish employment, and induce greater degrees of informalization. Some improvements could be made through public assistance based on thorough cost-benefit analyses. Ultimately, however, the informal sector would most benefit from an overall strengthening of the national economy which would provide consumers with disposable income and enhance the investment climate.