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Why informal sector enterprises in Uganda do not want to register

This brief presents the nature, extent and reasons why Micro, Small and Medium enterprises remain informal in Uganda. The findings reveal that Uganda has two types of informality, namely legal and fiscal; characterized by the absence of a trading license due to non-registration by the Uganda Registration Services Bureau and Local
Governments. Besides legal informality, businesses in Uganda can also be fiscally informal, meaning that they are not registered with the Uganda Revenue Authority and hence do not pay taxes. In this regard, the evidence reveals that 30.1 percent of informal businesses are not registered with Local Authorities, 91.7 percent are not registered
with URSB, 99.2 percent are not registered with URA and 26.3 percent do not have a trading license. The reasons businesses put forward for non-registration include; the perceived high cost of business registration with authorities; lack of incentives to attract businesses to register; poor service delivery within Local Governments and the absence of a supportive policy and legal framework for reducing informality in the country. Given the above reasons, there is a need to increase business awareness about the benefits of registration through mass media campaigns. In addition, the Government needs to deepen coordination and institutional funding to enable URSB, URA and Local Governments to widen the scope of business registration

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