Acknowledgments - PDF document

2 Acknowledgments This report wa
2 Acknowledgments This report was prepared by Victor Pouliquen and Massimiliano Santini, with inputs from Louis Akakpo, Theodore Anthonioz, Laurent Corthay, Tonagnon Dadjo, David McKenzie, Hamidou Sorgo, and Alain Traore. TOe report Nuilds on tOe Impact Evaluation’s preliminary report delivered to tOe Government of Benin on October 20, 2014. All information and data previously provided have been revised and updated. Sections 6, 8, 9 and 10 are new additions to the report. This report owes much to the cooperation and support by the Government of Benin, particularly the Ministre cOargé de l’évaluation des politiques puNliques et des programmes de dénationalisation, Mr. Antonin Dossou, and the Directeur Général des réformes structurelles, Mr. Abdoulaye Gounou. The pilot phase of the entreprenant legal status was rolled out with the invaluable cooperation of the implementing entities, CGA (Centres de Gestion Agrées), GUFE (Guichet Unique de Formalisation des Entreprises), Bank of Africa, and Orabank. Many thanks to IREEP (Institut de Recherche Empirique en Economie Politique) for successfully running both the baseline and the midline survey. The team is grateful for the support provided by the Benin Country Office. The team owes particular appreciation to all the experts and colleagues who contributed to the design and implementation of the entreprenant program and its impact evaluation (in addition to those listed above who provided comments to this report): Zoubir Benhamouche, Najy Benhassine, Julien Bornon, Matina Deen, Magueye Dia, Benedicta Houetchenou, Ferdinand Ngobounan, Adrien Pawlik, Dolele Sylla, Kjartan Sorensen, and Adama Tiendrebeogo. Research for this report has been supported by the World Bank Group (WBG), the U.S. Agency for International Development, the U.K. Department for International Development (DFID), Foreign Affairs, Trade and Gevelopment Canada (GFATG), tOrougO tOe Impact Program managed Ny tOe WBG’s Trade and Competitiveness GloNal Practice; Ny tOe WBG’s Gevelopment Economics ResearcO Group; and Ny tOe Private Enterprise Development for Low-Income Countries (PEDL) initiative managed by the Centre for Economic Policy Research (CEPR) and DFID. For questions or comments, please contact Massimiliano Santini (phone: +1-202-458-2967; email: msantini@ifc.org). 3 Abbreviations and acronyms CGA Centres

de Gestion Agrées GUFE Guichet Uniqu
de Gestion Agrées GUFE Guichet Unique de Formalisation des Entreprises IE Impact Evaluation IFU Identifiant Fiscal Unique INSAE Institut National de la Statistique et de l’Analyse Economique IREEP Institut de Recherche Empirique en Economie Politique OHADA Organisation pour l'Harmonisation en Afrique du Droit des Affaires TPU Taxe Professionnelle Unique TPS Taxe Professionnelle Synthétique SOGEMA Société de Gestion des Marchés Autonomes WBG World Bank Group 4 Table of Contents Acknowledgments ......................................................................................................................................... 2 Abbreviations and acronyms ......................................................................................................................... 3 Executive summary ....................................................................................................................................... 5 1. Informality in Benin .............................................................................................................................. 7 2. Impact Evaluation of the entreprenant status........................................................................................ 7 3. Methodology ....................................................................................................................................... 10 4. Sampling strategy and study population ............................................................................................. 12 5. Program implementation ..................................................................................................................... 16 5.1. Package A – Information on the new registration system, and tax filing and payment .............. 18 5.2. Package A – Regulatory simplification ...................................................................................... 19 5.3. Package B – Provision of business services and trainings .......................................................... 19 5.4. Package B – Support with bank services .................................................................................... 20 5.5. Package C – Provision of tax preparation support and tax mediation services ........................... 20 6. Midl

ine survey results ...................
ine survey results ......................................................................................................................... 21 6.1. Impact on formalization .............................................................................................................. 22 6.2. Impact on business performance ................................................................................................. 25 6.3. Impact on intermediary outcomes ............................................................................................... 26 7. Qualitative analysis ............................................................................................................................. 27 8. Cost-effectiveness analysis ................................................................................................................. 30 9. Comparison with similar reforms in other countries ........................................................................... 35 10. Conclusion and Next steps .................................................................................................................. 36 Annex 1: CGA implementation protocol by group ................................................................................. 38 Annex 2: Sectors of Dantokpa market surveyed ..................................................................................... 40 Annex 3: Statistics of program population by location (baseline-listing data 2014) .............................. 41 Annex 4: Balance checks (baseline-listing data 2014) ........................................................................... 43 Annex 5: Matching program data to administrative data on formalization ............................................ 44 Annex 6: Impact by subgroups (GUFE administrative data and Baseline data 2014) ............................ 46 Annex 8: Impact on intermediary outcomes (midline data 2015) ........................................................... 50 Annex 9: Estimate of tax revenue in the new tax system ....................................................................... 52 Annex 10: Program implementation costs .............................................................................................. 53 5 Executive summary In April 2014, the Government of Benin launc

hed the pilot phase of the entreprenant
hed the pilot phase of the entreprenant status, a simplified legal regime offered to small informal businesses to enter the formal economy. During this phase, which lasted about a year, the Government partnered with the World Bank Group (WBG) to test the impact of three different versions of the entreprenant status on business registration decisions, each version including specific incentives to registration. In May 2015, the Government officially launched the entreprenant legal regime. Based on the results of the impact evaluation, the Government will scale up the version of the entreprenant that resulted more attractive to businesses. During the pilot phase, a sample of 3,600 informal businesses was selected through a survey conducted in Cotonou in March 2014. In this sample, businesses were highly representative of the overall population of informal businesses of Cotonou, except for street vendors. On average, selected businesses were relatively small, had 1.2 employees, an average monthly profit around FCFA 43,000 (approximately USD 74), and were created more than one year before the survey. 60% of businesses were owned by women, 55% were traders, and more than half paid taxes. The businesses selected were randomly allocated into three groups that received the entreprenant program. In the first group, informal businesses were offered to register at GUFE in a day and at no cost as entreprenants, in addition to receiving information on the taxes to pay; in the second group, businesses received also business trainings, and support with commercial bank services; in the third group, businesses received all of the above, plus tax preparation support, and some form of protection in case the tax inspectors abused their power. A fourth group of businesses served as a comparison group. The incentives were delivered by CGA (Centres de Gestion Agréés), GUFE (Guichet Unique de Formalisation des Entreprises), Bank of Africa, and Orabank. Each informal business selected for the pilot phase received a first visit by a CGA advisor that explained the benefits connected with the entreprenant status, followed by a second visit to provide short personalized business training. Afterwards, business owners had to decide whether

to register as entreprenants at GUF
to register as entreprenants at GUFE. Those who chose to register could benefit from additional services, like longer business trainings and access to a commercial bank account at favorable conditions. The pilot phase of the entreprenant ended in February 2015. In April-May 2015, the WBG conducted a midline survey to measure the short-term impact on formalization, business performances, and other intermediate outcomes. The entreprenant program had a significant impact on formalization rate: 9.3% businesses in group 1 decided to register at GUFE, as well as 12.8% businesses in group 2, and 15.5% businesses in group 3. In other words, considering group 1, over 9% additional informal business owners (that could register their activity at no cost and in a day, in addition to being provided with information on how to file and pay taxes) decided to register with respect to business owners that did not know about the quick and cheap option to register; following the same interpretation, almost 13% additional businesses from group 2 registered, while over 15% additional businesses from group 3 decided to register. The effects in group 2 and 3 are significantly higher than in group 1, for many informal businesses seemed to be attracted by services like counselling, trainings, bank access, and tax mediation, to register at GUFE and become formal. Formalization rate in the control group was less than 1%: in the absence of the program, only few businesses decided to formalize. The program had a higher impact on male businesses owners, with more education, operating outside Dantokpa Market, in sectors other than trade, and that before being offered the incentives to formalization had characteristics similar to businesses already formal. Also, only 53% of business owners had a passport or an ID card. Since this is a requirement to register at GUFE, the lack of proper identification was a relevant barrier to formalization. 6 Formalization has no short-run impact on business performance, according to the midline survey. In addition, there were no effects on access to banking, business knowledge and practices, trust, and perceived well-being. These effects could be observed during next year’s endline survey, after businesses had formal he opportunity to fully benefit from their acquired

formal status as entreprenants. S
formal status as entreprenants. Since most businesses that formalized received a tax exemption during the first year of operations, the direct impact of the program on the amount and number of taxes paid in 2014 is significantly negative. Formalization seems to provide some protection against tax harassment, as the number of businesses receiving multiple visits from tax inspectors diminished. The variable cost of every business registered in group 1 was smaller than of those in group 2 and 3. As a result, even if the impact on formalization was higher in groups 2 and 3, the cost of incentivizing a business to register was smaller in group 1. The same cost in all treatment groups was considerably higher than the potential benefit coming from an increase in tax revenue that formalization generates. Implementation costs could probably be reduced during the program scale up through a better targeting of businesses that are more willing to formalize. The case for formalization may rest also on higher business performances, which will be tested during the endline survey next year, and on promoting a culture of formality that increases future tax compliance. In fact, a high number of informal businesses in the economy shows that obeying the law is not mandatory, and this may discourage prosperous informal businesses to formalize or pay taxes. Monitoring medium- and long-term effect of formalization on business performance and tax behaviors is key to understand better how the entreprenant program functions. The WBG plans to conduct the next survey in March 2016. 7 1. Informality in Benin In Benin, the great part of the GDP comes from the informal sector, and the overwhelming majority of the Beninese works in the informal economy. In 2008, the informal sector value added to the GDP was 70.3% of the total, and it represented 95% of employment in Benin (INSAE, 2009).1 Agricultural activity was almost exclusively informal, and the economic activity in industry and services was largely informal too (63% and 75%, respectively). By converse, Benin’s formal economy is dominated Ny cotton, wOicO is tOe main source of income for more than half of the farmers. Regional trade is high, in particular with Nigeria, but a large part of it remains informal. Oil products, in particular, are almost entirel

y smuggled from Nigeria. Transport, bank
y smuggled from Nigeria. Transport, banking and insurance depend greatly on this informal cross-border trade too. However, the informal sector contributed to less than 1-3% of national fiscal revenues, according to INSAE and CES.2 However, evidence of the impact of informal employment on poverty and the living standards is not univocal. For example, about 80% of households employed in the informal sector use gas lamp to light their houses, whereas about 64% of households in the formal sector use electricity.3 While informal jobs provide a safe valve for the unemployed, they do not provide the same standard of living of formal jobs. According to a small survey of informal businesses conducted by the WBG in 2011,4 the productivity gap between informal and formal businesses is significant, with the gap being smaller for the large informal businesses. About 60% of small informal businesses complained about fiscal harassment: once they became known to the fiscal authorities, they reported being subjected to repeated audits and bribes. Understanding the main determinants of informality in Benin, and introducing mechanisms to decrease the size of the informal sector, are among the top priorities for the Government of Benin. 2. Impact Evaluation of the entreprenant status Following technical assistance provided by the WBG and other donors, OHADA member countries (Organisation pour l'Harmonisation en Afrique du Droit des Affaires) have adopted a revised General Commercial Law in December 2010, which came into effect in May 2011. The new law, immediately applicable to all OHADA members, introduced the entreprenant status, a simplified legal regime specifically designed for small entrepreneurs, whose intended objective is to facilitate the migration of businesses operating in the informal sector into the formal sector. However, the law did not explicit how the entreprenant status practically functioned, nor the specific combination of incentives that it would include, allowing instead each country to fill in the vacuum through ad-hoc secondary legislation and institutional changes. Benin, as a member of OHADA, is the first OHADA country to roll out a pilot version of the entreprenant legal status, with support from the WBG. 1 INSAE, 2009. “Comptes nationaux,” INSAE, Cotonou.

2 In 200D, tOe percentage was less tO
2 In 200D, tOe percentage was less tOan 3%, according to “Questionnaire unifié du bienêtre de base (QUIBB) 2005,” INSAE, Cotonou. In 2011, it was less 1%, according to “Le Secteur Informel au Bénin: Problématique et Perspectives de ContriNution à l’Economie Nationale,” Conseil Economique et Social (CES), 2011. 3 N. Benjamin and A. A. Mbaye, 2012, “TOe Informal Sector in Francophone Africa. Firm Size, Productivity, and Institutions”, World Bank. 4 Ibidem. 8 The entreprenant status can apply to a physical person running a small business, with a limited turnover,5 involved in any type of activity. Formalization with this new status is easy, free of charge and fast. Once the small business adopts the entreprenant status, the turnover threshold should not be exceeded for more than two consecutive years. Otherwise, the business will lose entreprenant status and adopt the individual entreprise status. In October 2012, the Government of Benin and the WBG have decided to conduct a rigorous impact evaluation of different versions of the entreprenant status, with the goal of assessing which one would be more effective to attract informal businesses to the formal sector, and increase business performance.6 The impact evaluation estimates the cost-effectiveness of each version of the entreprenant status too. The Government will then use the impact evaluation findings and the cost-effectiveness analysis to decide which version of entreprenant status to adopt and how to scale it up. Specifically, the impact evaluation addresses the following broad questions:  Do businesses voluntarily move into the formal sector if the costs of formalization are highly reduced?  What is the optimal package of incentives that increases formalization?  To what extent the fear of the tax administration is a relevant barrier to formalization?  What is the effect of becoming formal on business performance and access to credit? The impact evaluation tests three different versions of the entreprenant status, which were defined through consultations held with the Government and the private sector (formal and informal). Each version includes one or more of the following packages of incentives to formalization. Package A includes the following components:  Regulatory simplification: a streamlined b

usiness registration process, including
usiness registration process, including a reduction in number of steps, time and cost to register;  Provision of information on the new registration system, which is given in-person to business owners;  Provision of tax information: information and clarifications on the tax regime applicable to the entreprenants. Package B includes the following components:  Services and training: services include support to entrepreneurs in the formalization process, help in drafting financial statements and business plans, support in bookkeeping; training include basic accounting and business management, initiation to legal and tax obligations;  Support with bank services: creation of a bank account (checking or saving) with a commercial bank. Package C includes the following components:  Provision of tax mediation services: support on preparing tax declarations; provision of safeguards against arbitrary practices from the tax administration through mediation. 5 Article 30, paragraph 2, of the OHADA General Commercial Law defines the entreprenant as having an annual turnover below FCFA 30 million (approximately USD 51,600) for trading activities, FCFA 20 million (approximately USD 34,400) for crafting activities (artisans), and FCFA 10 million (approximately USD 17,200) for services. 6 For the purpose of the impact evaluation, a business formalizes when it registers at GUFE in the Registre du Commerce et du Crédit Mobilier, RCCM. 9 Drawing on the literature on business regulation,7 package A of incentives is based on the assumption that the entreprenant status will encourage formalization by making business registration and operations simpler, cheaper, and faster. As for package B of incentives, the team hypothesizes that formalization alone may not be sufficient to improve business performances. Other services like business counselling, business training or access to banking services could be useful to newly formalized businesses. Finally, package C of incentives is based on the idea that some informal businesses may think that formalization could increase (i) the risks of harassment from inspectors, and (ii) the uncertainty coming from unclear tax systems. Tax mediation services provided by an organization outside the tax administration to defend the interest

s of the newly formalized tax payers co
s of the newly formalized tax payers could incentivize businesses to formalize. A first group of informal businesses selected to test the entreprenant status received package A of incentives, a second group received packages A and B of incentives, and a third group received packages A, B and C. A fourth group of informal businesses served as comparison group (see Figure 1 below). Figure 1: Impact Evaluation design 7 For a literature review see: Miriam BruOn, Gavid McKenzie, 2014. “Entry regulation and formalization of microenterprises in developing countries”, World Bank Research Observer, 29(2): 186-201. Cirst group 1200 informal businesses Samples of informal businesses Control group -Regulatory simplification -Provision of tax filing and payment information Package A + Second group Package B Package A + -Regulatory simplification -Provision of tax filing and payment information Third group Package B Package A -Regulatory simplification -Provision of tax filing and payment information Package C -Provision of tax preparation support -Tax mediation services -Provision of business services and trainings -Support with banks services -Provision of business services and trainings -Support with banks services 300 informal businesses 900 informal businesses 1200 informal businesses + 10 The entreprenant status was introduced concurrently in seventeen West African states, and the lessons learnt by the Government of Benin from this impact evaluation may have broad policy relevance in other West African states, particularly on their policy interventions focused on the informal sector. 3. Methodology This impact evaluation is a randomized control trial, as this method provides the best way to assess whether the changes in formalization decision or business performances can be attributed to the entreprenant program. The random allocation of informal businesses to treatment and control groups ensures that businesses in different groups have on average the same characteristics prior to program implementation (i.e. the delivery of the various packages of incentives to informal businesses). The only difference between the control group and the three treatment groups is t

he type of program received (or not rec
he type of program received (or not receiving any program, in the case of the control group). The outcomes observed after the program implementation will therefore show the effects of the program. An eligible population of 3,600 informal businesses was identified through a listing-baseline survey conducted in Cotonou in March 2014. Sampling criteria used during this survey are detailed below in section 4. The key outcomes of interest of the impact evaluation are:  Increased level of formalization, defined as the registration at GUFE (Guichet Unique de Formalisation des Entreprises) of a business as a legal entity  Improved business performance (i.e. increased turnover, increased profits) Intermediary outcomes include:  Improved business skills  Improved accounting systems  Increased level of trust  Increased access to new markets  Increased level of advertising  Increased access to banking  Increased number of tax payments  Increased amount of taxes collected  Increased investment Long-term impact indicators are:  Increased employment  Better standards of living These outcomes were measured through in-person interviews with business owners. The first survey of the selected sample of businesses was conducted in March-April 2014 prior to program implementation. A follow-up survey was conducted in April-May 2015 to measure short-term effects one year after the program started. A final survey will be conducted in March 2016 to measure the medium-term effects after two years. The surveys were designed to measure the outcomes previously listed and understand the underlying mechanisms of impact. Figure 2: Impact Evaluation timeline 11 Administrative data on business registration from GUFE were collected every month. This database includes the complete list of all newly registered businesses for all legal entities. The team matched this list with the list of business owners who participated to the program. The difference between formalization rates in a given treatment group and the rate in the control group yields the impact of the program in that group. Two important features characterize this measure of formalization:  Formalization rate is captured for all legal entities. In fact, this

outcome should be measured in the exac
outcome should be measured in the exact way across treatment and control groups. If the formalization rate were only referring to the entreprenant status, its impact estimate would probably be biased upward;8  Matching businesses in the GUFE database with businesses in the program database involved several steps. In order to match two businesses, the team used variables such as business owner names, business address, gender of the owner, sector of activity and phone number; however, in some cases name spellings were different in both databases, and most of the times addresses were not precise. For this reason, the team used a conservative definition of a match between the business names in tOe two dataNases as “two businesses with a close surname, and at least one close first name, and either the same phone number, or the same sector of activity and an address in the same neigONorOood.” Using tOis definition, tOe likeliOood tOat a Nusiness in tOe program dataNase was considered as formal, whereas the business was in reality not formal, was very low. The opposite case (i.e. a business was considered as informal, whereas it is in reality formal) is however more likely, so this measure of formalization most probably underestimates the actual number of businesses which formalized in all groups. This does not imply that the measure of program impact is biased, but just that formalization rates in both treatment and control groups are underestimated by the same percentage. A detailed description of the matching process is provided in Annex 5. Program implementation data were also collected to better understand the quality of services delivered. These included detailed monitoring data from CGA (Centres de Gestion Agrées) and qualitative surveys. Finally, in order to conduct a cost-effectiveness analysis, data on program costs were also collected. The impact evaluation of the entreprenant status was designed to measure both short-term and medium-term effects of the program. For this reason, the impact evaluation is expected to be completed by mid-2016. The main steps of the impact evaluation are detailed in Figure 2 above. 8 Most businesses in the control group are not aware of the new entreprenant status, so they are probably more likely to choose another legal status if they wanted to formalize. If this

is the case, looking only at formalizati
is the case, looking only at formalization using the entreprenant status would overestimate the impact of the program. April-May: Midline survey June: Second preliminary report April-May: Endline survey June: Final report April 29th: Program Launch 2014 2015 2016 March-April: Listing-baseline survey October: First preliminary report 12 4. Sampling strategy and study population The listing-baseline survey was designed to address three main goals:  Representativeness of all informal businesses operating in Cotonou;  Definition of eligible population;  Collection of baseline data on important business characteristics. The impact evaluation targets informal businesses in all Cotonou, including Dantokpa market. Since conditions are different in Dantokpa and in the rest of Cotonou, two different sampling methods were used:  Sampling framework for Dantokpa market: the team used a detailed map of the market made by SOGEMA (Société de Gestion des Marchés Autonomes), the public company managing markets in Benin. This map allowed the team to divide geographically the market in small areas, and to randomly select areas where 50% of the businesses were surveyed (with fixed location).9  Sampling framework for other neighborhoods of Cotonou: The team obtained detailed maps of each of the 144 neighborhoods in Cotonou, which allowed the identification of ilots (blocks), i.e. the official administrative unit below the neighborhoods. The team used this administrative unit as a reference for the survey sampling, in addition to information given by the tax administration (and confirmed by the survey company) in order to categorize neighborhoods as having high or low firm density areas. The team then randomly sampled 38% of ilots in high density neighborhoods and 10% of the ilots in low density neighborhoods. In each ilot, 68% of businesses were surveyed on average. In each ilot, all businesses with a fixed location were eligible to the survey with the following exceptions: international or nationwide companies (like banks), public companies, and professionals (like doctors or lawyers). The listing-baseline survey took place on March 4th-April 12th, 2014. It was carried out by IREEP (Institut de Recherch

e Empirique en Economie Politique) and
e Empirique en Economie Politique) and closely monitored by the World Bank Group. On the 1,170 ilots sampled for the project outside the market and 558 sidewalks sampled in the market:  1,164 ilots (99.5%) and 558 (100%) sidewalks were successfully visited by surveyors;  1 ilot was excluded from the project because businesses in that block were having issues with the local administration and refused to answer surveyors’ questions;  5 ilots were not found by the surveyors. These ilots either did not exist anymore, or the maps used for the sampling were not up to date. Overall, 19,246 businesses were listed by surveyors. Among those businesses, 9,938 were randomly selected to be surveyed.10 Among the selected: 9 Few areas in the market were excluded from the survey because most businesses in these areas were very small and would probably not have been interested in the program (see Annex 2 for the map of areas surveyed in Dantokpa). 10 Outside the market, 16,193 businesses were listed by surveyors. Among those, 8,266 businesses were randomly selected to be surveyed. Among the selected: - 6,644 (80%) businesses were surveyed successfully; - 741 (9%) businesses refused to be surveyed; - 881 (10%) businesses were dropped because the business owner was not available or was not reached after 4 attempts. 13  7,945 (80%) businesses were successfully surveyed;  1,000 (10%) businesses refused to be surveyed;  995 (10%) businesses were dropped because the business owner was not available or was not reached after 4 attempts. The completion rates were considered highly satisfactory. Indeed, sensitive questions were asked in the survey, like the profit, sales and taxes paid: the refusal rate could have been considerably higher. The team decided to survey only business owners or managers in charge of day-to-day decisions, since the program targeted only business owners. Figure 3 below summarizes the sampling strategy and the completion rates of the listing survey. Figure 3: Sampling strategy and Survey completion rates Table 1 below provides baseline descriptive statistics on business characteristics for the whole population of informal businesses surveyed, for businesses selected to receive an offer to register as

entreprenant (“selected sample”)
entreprenant (“selected sample”), and for businesses already registered at GUFE (“already formal”). Inside the market, 3,053 businesses were listed by surveyors. Among those, 1,672 businesses were randomly selected to be surveyed. Among the selected: - 1,299 (78%) businesses were surveyed successfully; - 259 (15%) businesses refused to be surveyed; - 114 (7%) businesses were dropped out because the business owner was not available or was not reached after 4 attempts. 14 The sample is composed by relatively small businesses with 1.2 employees on average. The great majority of businesses were created over a year before being surveyed (86%), 55% of businesses were involved in trade activities, 26% worked in services, and 16% were craftsmen. 63% of businesses sampled for the study were owned by women. This reflects the high share of female owners in Dantokpa market (See Annex 3 for descriptive statistics of business owners operating inside and outside the Dantopka market). Around 30% of businesses owners never went to school, and less than 20% of the businesses were keeping some type of accounting. Interestingly, the majority of businesses paid some form of tax (54%), but the great majority complained about not knowing in advance the amount of taxes owed to the tax authority (74%). Formal businesses had on average 3.2 employees and monthly profits was around FCFA 210,000 (USD 361), while informal businesses had 1.1 employees and a monthly profit of FCFA 43,000 (USD 74).11 Formal businesses also had more access to the banking system: 80% of them owned a bank account, whereas only 20% of informal businesses did. The selected sample is highly representative of the overall population of informal businesses in Cotonou. In fact, Table 1 shows that the sample selected for the study and the overall sample of informal businesses are very similar. In particular, the share of female owners, the average age of the owners, the amount of monthly profits, and the average number of employees are very close in both samples. The 3,600 informal businesses selected were then randomly allocated into three treatment groups and one control group. In order to ensure that all groups were well balanced, and to have a high statistical power, tOe randomization was Nased on stratification on firm

s’ cOaracteristics: Nusiness located i
s’ cOaracteristics: Nusiness located in Gantokpa, gender of the owner, sector of activity, amount of profits, amount of sales and number of employees. The team also ran statistical tests to compare averages of relevant business characteristics across groups, to check that all groups were similar prior to program implementation. Results of these comparisons are presented in Annex 4, and they show that businesses in each group have similar characteristics and can be considered as comparable. 11 USD 1 = XOF 581 (OANDA, 06/12/2015). 15 Table 1: Descriptive statistics on selected sample (1)(2)(3)(4)(5)(6)Mean [SD]NMean [SD]NMean [SD]NFirm owner characteristicsFemale owner0.57672150.62936000.347608[0.494][0.483][0.476]Age of the owner39.343707239.454356143.582589[11.203][10.386][10.581]0.71572060.71235950.9606[0.451][0.453][0.3]Firm characteristics Trade0.46372160.54936000.534608[0.499][0.498][0.499] Services0.31172160.26236000.287608[0.463][0.44][0.453] Craft0.18472160.1636000.106608[0.388][0.367][0.308]Business created less than one year ago0.20172150.14436000.148606[0.401][0.351][0.355]Firm area in m²20.117720318.72359459.237606[55.398][43.479][111.074]Number of employee1.10272151.17636003.229608[1.687][1.687][5.073]The firm does any form of accounting0.15372110.17935980.644604[0.36][0.383][0.479]Total amount of sales in an average week72962.24673660553.353600457216.6528[274532.1][56492.2][3474582]Amount of profit in the last month43315.24643846671.93600212615.9490[108199.1][46558.47][630401.8]Firm owner owns a bank account0.20870100.22235170.807582[0.406][0.416][0.395]TaxesFirm pays taxes0.44471090.54735640.846597[0.497][0.498][0.361]Amount of taxes paid in the previous year42530.11313334883.341873301443.9435[40723.19][28646.3][2000564]0.73750010.74426690.703520[0.44][0.436][0.457] SELECTED SampleAlready formalAll informal firms Notes: Sources: Baseline- Listing data 2014. For colomns (1) and (5), means and standard deviations are calculated using sampling weights (to be representative of all businesses in Cotonou)Firm owner has at least some formal educationThinks that it's difficult or very difficult to know in advance how much taxes he/she will have to pay16 5. Program i

mplementation The three packag
mplementation The three packages of incentives described in section 2 were delivered by the following institutions:  CGA, formed by two non-profit organizations based in Cotonou whose mission is to provide small and medium enterprises with business management, accounting, and tax consulting services. Twenty four advisors, one hotline assistant, and one supervisor were hired at CGA, with WBG support, to implement the program;  GUFE, the one-stop shop for business registration based in Cotonou. Two additional staffs were hired with WBG support to assist with entreprenants registration;  Two commercial banks, Bank of Africa (BoA) and Orabank. The advisors from CGA delivered the program to each business owner following four steps (see Figure 4): 1. First visit. A CGA advisor conducted a first visit to each business to explain the benefits of becoming an entreprenant, specific by group, and to distribute informational leaflets. If a business owner was not present on the day of the visit, the CGA advisor attempted to call the owner on the phone. If the owner could not be reached, the CGA advisor made another attempt by trying a visit or a call in different moments of the day. After 4 attempts (visits or calls), the business was considered as not interested; 2. Second visit. For businesses in group 2 and 3, the same CGA advisor called, arranged, and confirmed a meeting, which took place approximately two weeks after the first visit, and provided 1-2 hours of personalized training. If a business owner was not present on the planned day of the second visit or could not be reached, the CGA advisor made another attempt by trying a visit or call in different moments of the day. After 3 attempts (visits or calls), the business was considered not interested. Registration at GUFE was not mandatory to be eligible to this second visit. In group 3, the CGA advisor devoted additional time in reviewing the procedures to calculate the taxes to pay, and the option of receiving tax mediation help, if necessary; 3. Formalization decision. After having learnt the potential benefits of formalization, business owners decided whether or not to register as entreprenants at GUFE; 4. Provision of additional benefits. Businesses in group 2 and 3 could also register to CGA

, and receive counselling and busines
, and receive counselling and business training (group sessions). Businesses in group 3 could benefit from tax mediation services with CGA, if needed. Finally, businesses could open a bank account with specific conditions at BoA or Orabank. The program was implemented on a rolling basis: CGA advisors started to reach out to informal businesses on April 29th, 2014, and completed both visits on February 15th, 2015. The advisors are currently offering group trainings to the entreprenants that did requested after the registration. Between April 29th, 2014 and January 15th, 2015, 2,400 “first visits” (100% of total) were attempted Ny CGA, and 2,344 were completed with success (98% of total). First visits were considered as not completed successfully when CGA advisers were not able to locate the business. Between April 29th, 2014 and February 15th, 2015, all businesses who received a first visit in groups 2 and 3 were offered a second visit by CGA. Only 932 of these second visits were completed with success (44% of total). Many businesses were not interested by the second visit or did not have time to receive it. Most of the group training sessions applicable to businesses in groups 2 and 3 were conducted after September 2014. As of April 15th, 2015, 251 businesses registered to CGA (12% of total in groups 2 and 3), and 143 businesses participated in a group training session at CGA (7% of total in groups 2 and 3). Since businesses had first to register to GUFE in order to be eligible to register to CGA, and thus receive the trainings, the percentage of businesses that did registered to CGA is sizeable. In fact, 78% of the businesses 17 in groups 2 and 3 that formalized (322 businesses in total) decided to register to the CGA, and slightly less than 45% decided to obtain trainings. Business owners in group 2 and 3 who decided to register as entreprenant had also the possibility to open a bank account at BoA or Orabank. As of April 15th, 2015, 69 businesses opened a bank account (3.2% of total).12 Table 2 below summarizes the program implementation progress until May 15th, 2015. Figure 4: Program implementation 12 For Orabank, data are available until April 15th, 2015, and for BoA until November 30th, 2014. VISIT 1 - Done by a CGA advi

sor - Explain and promote the e
sor - Explain and promote the entreprenant status - Deliver program leaflets - Explain other benefits specific to group 3 VISIT 1 - Done by a CGA advisor - Explain and promote the entreprenant status - Deliver program leaflets - Explain other benefits specific to group 2 VISIT 1 - Done by a CGA advisor - Explain and promote the entreprenant status - Deliver program leaflets STEP 1 VISIT 2 - Done by same CGA advisor - Deliver a 1-2h personalized business training -Re-explain program benefits specific to group 3 - Some time spent on tax- mediation VISIT 2 - Done by same CGA advisor - Deliver a 1-2h personalized business training -Re-explain program benefits specific to group 2 STEP 2 STEP 3 FIRM OWNERS HAVE TO DECIDE WHETHER OR NOT TO FORMALIZE ADDITIONAL BENEFITS TO FORMAL FIRMS - Access to CGA counselling - Access to CGA group trainings - Access to bank account at specific conditions - Access to tax mediation services with CGA. STEP 4 ADDITIONAL BENEFITS TO FORMAL FIRMS - Access to CGA counselling - Access to CGA group trainings - Access to bank account at specific conditions GROUP 1 GROUP 2 GROUP 3 18 Each business selected to be part of the impact evaluation received one or more of the incentives to formalization described in section 2 above. The following paragraphs describe in details all the program components. 5.1. Package A – Information on the new registration system, and tax filing and payment CGA advisors visited each business selected and explained the benefits of becoming an entreprenant. Different leaflets were given and explained to business owners: one leaflet described the entreprenant status, its advantages and requirements, one leaflet explained the registration process at GUFE, and one leaflet explained the tax regime applicable to entreprenants. Before the reform of the tax system affecting microentrepreneurs was introduced in 2015,13 which will be used to calculate the tax owed in 2016, there were four different tax regimes that could apply to entreprenants in Cotonou, depending on their economic activity and location. This was the tax scenario that the informal businesses selected to participate in the impact evaluation faced. The third leaflet spec

ifically reviewed how to calculate th
ifically reviewed how to calculate the tax owed in each regime.14 One regime, likely the most commonly applicable to entreprenants in the Cotonou jurisdiction before the tax reform, was the Taxe Professionnelle Unique (TPU), which was calculated based on the rental value of the business premises. In the majority of cases, taxpayers did not have a lease contract, the only official and opposable proof of rental value. As a result, the law provided for the tax administration to be responsible 13 On December 2014, the Beninese Parliament adopted a new MSE tax regime. This regime introduced the Synthetic Professional Tax (TPS: Taxe Professionnelle Synthètique) which replaces the four taxes that micro and small enterprises were subject to before the reform. This new tax introduces a major shift by changing the basis of tax calculation from the rental value to the use of turnover. This reform creates more predictability and transparency in the calculation of the amount of tax due and prevents small businesses from abuses of tax officers. MSEs will start paying the TPS in 2016 based on their 2015 turnover. All entreprenants will pay the TPS. 14 TOe four tax regimes were tOe following: “Taxe Professionnelle Unique” (TPU), “Taxe Unique sur les Transports Routiers” (TUTR), “Régime du forfait des revendeurs de tissus et divers”, and “Régime du bénéfice réel simplifié”. Table 2: Program Implementation as of May 15th 2015Total%NTotal%NTotal%NStep 1:Visit 1 done successfully29899%30187697.3%900117097.6%1199Step 2:Visit 2 done successfully---37241.3%90056046.7%1199If visit 2 conducted, time between the two visits (in days)----83.8370-85.6498Step 3 and 4:Business registered to CGAs---10111.2%90015012.5%1199Business attended to at least one group training at CGAs---546%900897.4%1199Oppened an Entreprenant Bank Accountα---Group 1Group 2Group 369Notes͗ Administrative data from CGAs͘ α͗ total for both groups 2 and 3, data from Orabank (until Aprils 2015) and BOA (until November 2014). 19 for assessing the rental value. This assessment would leave a door open for discretion, and it could not be explained or clarified using the informational leaflet only. 5.2. Package A – Regulatory simplification The informal busin

esses that decided to formalize sub
esses that decided to formalize submitted an application at GUFE to obtain the entreprenant card. As per an inter-ministerial decree, the Government removed all direct costs of formalization, and the entreprenant card is free.15 The process of formalization at GUFE included the following steps:  The entrepreneur filed at GUFE the declaration form, duly completed and signed, as well as the following required documents: - Copy of the identity card or passport; - Copy of the extract of birth certificate; - TOe “extrait de casier judiciaire”. In the absence of this document, the businesses could sign an affidavit attesting that the applicant had not been banned by any Court to engage in commercial activities. The affidavit was available at the GUFE; - Passport Photo.  GUFE officials validated the declaration and the supporting documents, processed the registration with the Company Registry (Registre du Commerce et du Crédit Mobilier, RCCM) and the Tax authority (DGID), and shared information with the Department of Labor (Direction Générale du Travail).  The entrepreneur went back to the GUFE, less than a day later, to receive the entreprenant card and an acknowledgment statement containing the RCCM and IFU numbers. 5.3. Package B – Provision of business services and trainings When necessary, CGA advisors help entreprenants with the formalization process at GUFE, including filling in the declarations and preparing all the required accompanying documents. See Annex 1 for a description of the protocol followed by CGA advisors. CGA advisors delivered tOe Nusiness trainings and services via a dedicated “entreprenant unit,” using modules customized and developed with WBG support. Following the first visit to each business, CGA advisors organized a second visit to deliver a 1-2 hours personalized training session. In addition to the business training, the purpose of this visit was to nudge business owners to participate to the entreprenant program. Once the informal business registered at GUFE and received the entreprenant card, it agreed with the CGA advisors on additional specific trainings that it might need. The advisory services and trainings were carried out on a one-on-one basis with the businesses at their premises

and during group sessions organized
and during group sessions organized at CGA. The group sessions included four workshops: three mandatory and one optional. The mandatory workshops were:  Basic accounting (cash book, billing, pro-forma preparation);  Initiation to tax obligations; 15 Arrêté Interministériel n. 2014/018 of March 19th, 2014. 20  Financial education and awareness (products and services offered by commercial credit and microfinance institutions—where and how to obtain financial services, requirements for creating a bank account or obtaining financing); Businesses were then invited to choose one optional workshop among three options:  Basics of microenterprise management (working with budget, controlling cost, cash flow management, stock management, basics of HR management);  Initiation to Sales development and access to markets (including small business development, customer’s relations management, dealing/negotiation with suppliers).  Basic of business plan development (preparation of bankable proposals, new business, expanding business); Once the business owner completed a certain number of training sessions with CGA, he/she received an official diploma, and a sticker acknowledging that he/she received the training. 5.4. Package B – Support with bank services In addition to registration simplification, provision of information on the entreprenant status, and provision of training and services, businesses in groups 2 and 3 also received support from CGA in opening a bank account. This support was not mandatory, and the entreprenant could decide to open a bank account autonomously. The bank account is directly linked to the entreprenant activity and it is not a personal account. The banks partners of the impact evaluation (Orabank and Bank of Africa) designed a specific banking product for the entreprenant, with dedicated services and simplified banking access conditions, including:  Debit card  Bank account consultation with mobile phone  Cash transfers  SMS-banking  Internet Banking  Mobile money CGA advisors assisted the entreprenant in presenting the information needed to open a bank account and give the necessary training to the entrepreneur on how to use the account. 5.5.

Package C – Provision of tax pre
Package C – Provision of tax preparation support and tax mediation services The CGA tax advisors offered (a) tax preparation support and (b) protection in case tax inspectors abuse their power when assessing and collecting the taxes owed. The advisors were assigned to those businesses that formalized under the third group, and they offered help in preparing the tax forms (including tax returns and supporting documentation). However, given that most businesses were subject to the TPU, and that the amount of TPU to be paid by a given business is determined Ny tOe tax administration witOout any form Neing filled Ny tOe Nusiness, tOis “offer” was not tecOnically implemented. It will, however, be implemented starting in 2016 when the new TPS tax regime comes into force. The advisors also left their contact information in case the entreprenant had any complaints about future tax payments and inspections. 21 Advisors then took action when an entreprenant asked for help in interacting with the tax administration, and they served as intermediary between the tax administration and the entreprenant in order to provide solutions that satisfy both parties, in case of complaints. In particular, some entreprenants reported that the tax administration requested for tax payments even on the first year after registration, a waiver explicatively granted by the new regulations. The CGA advisors helped them to solve these issues as they arose. 6. Midline survey results The midline survey was implemented by IREEP, with close monitoring by the WBG, on March 30th – May 20th, 2015, and it collected data on formalization, business performances, and intermediary outcomes. A team comprising forty enumerators, eight controllers, three supervisors from IREEP, in addition to a project manager and a research coordinator from the WBG, were in charge of implementing in-person interviews with business owners. Enumerators used tablet devices with an interface created for the midline survey. Out of the 3,600 businesses in the study population, 2,887 (80% of total) were surveyed successfully. In addition, 59 (2% of total) businesses that moved to another town were surveyed by phone with a short questionnaire. For the remaining businesses, reasons for non-response were the following:  251 busin

esses owners (7 % of total) refused or w
esses owners (7 % of total) refused or were not available after multiples attempts;  230 businesses (6% of total) shut down (including 13 businesses for which the owner deceased);  74 businesses (2% of total) moved to another location and were not reached for the short interview over the phone;  66 businesses (2% of total) were not found, because contact information from the listing-baseline survey were not correct, or because businesses moved and nobody in the neighborhood knew the new address;  31 businesses (1% of total) were not surveyed for other reasons, including the owner was sick during the survey, or was on maternity leave. Overall, taking into account that for business which shut down we have information on key outcomes (formalization, profit and sales), the survey rate was 88.1%. Table 3 below shows survey rates and reason for non-response per group. 22 6.1. Impact on formalization As detailed in section 3, a business is formal if it registered with GUFE. This definition of formalization is preferable over others that use midline survey data because administrative data included information on all study population, whereas survey data would only have information on those who were surveyed. Moreover, survey data are subject to declaration bias. Table 4 presents the results on formalization one year after the program started:  The impact of the program on the formalization rate was 9.3% in group 1, 12.8% in group 2, and 15.5% in group 3. All these effects are statistically significant. In other words, considering group 1, 9.3% additional informal business owners that could register their activity at no cost and in a day, in addition to being provided with information on how to file and pay taxes, decided to register, with respect to business owners that did not know about the quick and cheap option to register;  The effects in group 2 and 3 are significantly higher than in group 1, and the effect in group 3 is significantly higher than in group 2. Both sets of additional incentives included in package B (counselling, trainings and bank services) and in package C (tax mediation) seemed to be valued by informal businesses as incentives to register;  The formalization rate in the control group was only

0.9%. In the absence of the program
0.9%. In the absence of the program, only few businesses would have formalized;  Alternative measures of formalization that combine survey and administrative data show consistent results. Impact rates in group 2 and 3 are always considerably higher than in group 1, and impact rates in group 3 slightly higher than in group 2. Using data collected during the baseline-listing survey, the analysis shows effects specific to different sub-populations (see graphs in Annex 6):  Male business owners formalized more than female business owner. In fact, slightly above 10% of businesses owned by women formalized in groups 2 and 3, compared to more than 20% for those owned by men. This result is also true outside Dantokpa Market;  In all groups, formalization rates were lower in Dantokpa market than outside the market (around 7-10% in the market versus 16-18% outside the market); Table 3: Midline Response RateControlGroup 1Group 2Group 3Data collected with success88.1%90%87.1%88.7%Including: Survey completed81%81.7%79%79.9% Business shut down or owner deseased6.1%6.3%6.8%6.4% Small survey on phone (for businesses which moved to another location)1%2%1.3%2.4%Reasons for non-response: Resused the survey or not available6.6%6%7.2%7.5% Moved to another location and not reached on the phone2.2%2.4%2.5%1.6% Not found2.2%1%1.9%1.7% Other reason (sickness, traveling during the survey, maternity leave...)1%0.7%1.3%0.4%Note: Data from midline survey 201523  Businesses operating in the trade sector had lower formalization rates than in other sectors (especially craftsmen). This result is probably correlated with the previous result on Dantokpa market, since almost all businesses operating in the market are traders;  The program was more effective on businesses with an owner who went at least to secondary school;  Businesses that received more than one visit from a tax inspector in the year prior to program implementation were more likely to formalize.  Formalization rates were higher among informal businesses that were similar to formal businesses before program implementation. Using baseline data on business characteristics (sales, profits, number of employees, access to banking, level of education, location, sector of activity, gender and age) for both formal and informal businesses, the team generate

d a score of “predicted formality”
d a score of “predicted formality” for each business in the sample (see Annex 7 for more details). According to this score, 18% of businesses in the sample resembled formal business. This result is especially large in group 3, as businesses with characteristics similar to formal businesses in this group formalized 24.3 percentage points more than the same businesses in the control group. These findings can help to better target the program to the types of businesses that would benefit the most. For example, targeting “OigO ends Nusinesses,” already close to formalization, seems Ne an effective way to increase formalization rates. At the same time, the program may be redefined for those types of businesses that seemed less interested in the intervention, in order to adapt it to challenges that they encountered. For example, CGA advisors could adapt the message to businesses owned by women and organize awareness campaigns with their husbands. Some consultations with business owners operating in Dantokpa market may also be needed to understand how to make this program more attractive for them. 24 Across the three groups, informal businesses were presented with a quick and cost-free registration process at GUFE. However, some indirect costs remained, including the time spent in the formalization process and the cost to gather the required documents. Table 5 below presents data on formalization costs and on the requirement for identity documents. Consistently with qualitative feedback received, registration costs and time were greatly reduced for businesses benefiting from the program: the formalization process took on average 12 days and cost FCFA 12,000 (USD 21).16 In contrast, businesses in the control group spent on average 26 days and more than FCFA 130,000 (USD 224). In addition, the formalization process at GUFE required for a Beninese ID or a passport. However, only 53% of business owners had one, and this was a significant barrier to formalization. Shares of business owners in the study population that have a birth certificate or the LEPI card (electoral card) were much higher, and adding any of these documents to the list of IDs that could be presented during the formalization process could help overcome this barrier.

16 This number is
16 This number is driven by a small number of businesses in treatment groups which chose to formalize with another legal status than the entreprenant status. Thus, they had to pay a high price for formalization. More than 85% of the businesses in treatment groups did not pay anything to formalize. Table 4: Impact on Formalization RatesGroup 1Group 2Group 3Group 1 and 2Group 1 and 3Group 2 and 3Impact on formalization:0.9%9.3%***12.8%***15.5%***3600-********[9.5](2.127)(1.322)(1.182)Robusteness checks (alternative measures): Formalized: Declared4%4.1%*11.2%***12.2%***3173******-***[19.5](2.396)(1.513)(1.344) Formalized: Showed a document1.8%4.9%**9.2%***9.7%***3173***-***[13.3](2.045)(1.291)(1.147)1.8%6.3%***11.4%***12.5%***3173*****-***[13.3](2.202)(1.39)(1.235)2.3%10.3%***14.8%***16.4%***3173-**-***[14.9](2.5)(1.578)(1.402)4.4%8.2%***14.6%***16.1%***3173*****-***[20.6](2.662)(1.68)(1.493)Note: Reading: The formalization rate in group 1 was 9.3% higher than in the control group.Column 1: Standard deviations presented in brackets. Columns 2-4: coefficients and standard errors (in parentheses) from an OLS regression of the firm owner/firm characteristic on treatment dummies, controlling for strata dummies (dummies for each triplet). Administrative data from GUFE ("Guichet Unique de Formalisation des Entreprises") from May 2014 to April 2015 . ***, **, * indicate significance at 1, 5 and 10%.Showed a document that justify formal status or found in GUFE data Formalized: declared formality or found in GUFE data (upper bound)Formalized according to GUFE data Formalized:Declared formality and showed a document or found in GUFE dataMean [SD] in Control GroupDifference between […]and Control groupNStatistical difference between…Joint test G1=G2=G3=025 6.2. Impact on business performance One year after rollout, the program did not show impact on business performances, including on sales, profits or number of employees (see below Table 6).17 Since the program was implemented on a rolling basis, it took some time to reach all businesses (more than a third of the businesses registered between October 2014 and April 2015). Moreover, some important components of the program, like the second visits and the group trainings, were implemented mostly after O

ctober 2014. The endline survey in M
ctober 2014. The endline survey in March 2016 may show results about the effectiveness of the program on business performances.18 17 However, the team cannot exclude small size effects of the program on performance in the short-run. 18 Since the sample size of group 1 is much smaller (300 businesses) than that of the other groups, results are relatively more imprecise. The significant negative impact on profits in group 1 could therefore be not relevant. Table 5: Barriers to formalizationGroup 1Group 2Group 3Group 1 and 2Group 1 and 3Group 2 and 3Formalization process: (only on businesses which said that they are formal)26.55-26.05**-20.94**-16.37**322---*[27.08](11.61)(8.27)(6.99)131276-136062***-102502***-85927***318---***[162172](41852)(29965)(25206)0%88.2%***84.5%***85.7%***318---***[0](21.789)(15.6)(13.123)Legal barriers:53.1%-2.8%2.7%0%2877----[49.9](4.226)(2.654)(2.364)12%1.9%0.1%4.3%**2877--***[32.6](3.06)(1.922)(1.712)84.9%-2.9%2.4%-0.7%2877----[35.9](3.02)(1.897)(1.69)73.6%-5.2%4.7%**2.5%2876****-*[44.1](3.653)(2.296)(2.044) Number of days it took to formalize Share of business which did not pay anything for formalizing Business owner has a passport or a Beninese ID card Business owner has a LEPI card (electoral card) Business owner got a passport or an ID card in the last year Business owner has a birth certificate Amount paid for formalizationηNote: Data from Midline survey 2015. Column 1: Standard deviations presented in brackets. Columns 2-4: coefficients and standard errors (in parentheses) from an OLS regression of the firm owner/firm characteristic on treatment dummies, controlling for strata dummies (dummies for each triplet). Administrative data from GUFE ("Guichet Unique de Formalisation des Entreprises") from May 2014 to April 2015 . ***, **, * indicate significance at 1, 5 and 10%. α͗ truncated at the 99th percentile͘ Β͗ controling for baseline value͘ η͗ Top-coded at the 99th percentileMean [SD] in Control GroupDifference between […]and Control groupNStatistical difference between…Joint test G1=G2=G3=026 6.3. Impact on intermediary outcomes Similarly to the absence of effects on business performances, the program did not show impact on several intermediate outcomes, most likely because

many program components were only im
many program components were only implemented over the last six months. However, here below are some preliminary findings that were observed in the midline survey (see Tables A4 and A5 in Annex 8):  Most businesses which formalized in group 2 and 3 also attended a business training in the last 12 months. This is consistent with the information provided by the CGA, and it shows that most business owners that choose to formalize where also interested by the group trainings offered by the CGA;  There were some negative effects on business practices for businesses in group 1, most likely due to the small sample size in this group;  More businesses in group 2 and 3 are keeping some accounting (this result is statistically significant for businesses in group 3). This shows that the support from CGA can help businesses to start doing some accounting, and it is particularly relevant in the context of the new tax system for microentrepreneurs that will be applied starting from January 1st, 2016. Indeed, accounting books will allow to measure business turnover, which is the base of the new tax system;  Besides this effect on accounting practice, no other short-term impacts were observed on business knowledge and practices in group 2 and 3. This is not surprising since most businesses which formalized in these groups only started to benefit from counselling and trainings services few months before the survey; Table 6: Impact on Business PerformanceGroup 1Group 2Group 3Group 1 and 2Group 1 and 3Group 2 and 3Total sales in the last dayαβ 17373555724-7323033----[34872](2699)(1699)(1514)Total sales in the last weekαβ999844691-5881-41603054----[175069](12950)(8221)(7311)Last month profitαβ53313-11747**-2318-24392969----[74584](5667)(3585)(3198)-0.02-0.06-0.07*-0.042896----[0.78](0.06)(0.04)(0.03)Total number of employeesα1.14-0.12-0.04-0.053143----[2.16](0.17)(0.11)(0.1)Note: Data from Midline survey 2015. Column 1: Standard deviations presented in brackets. Columns 2-4: coefficients and standard errors (in parentheses) from an OLS regression of the firm owner/firm characteristic on treatment dummies, controlling for strata dummies (dummies for each triplet). Administrative data from GUFE ("Guichet Unique de Formalisation des Entreprises") from May 2014 to April 2

015 . ***, **, * indicate significance
015 . ***, **, * indicate significance at 1, 5 and 10%. α͗ truncated at the 99th percentile͘ Β͗ controling for baseline value͘Summary index of sales and profit αβMean [SD] in Control GroupDifference between […]and Control groupNStatistical difference between…Joint test G1=G2=G3=027  The program had a negative and significant impact on the number of tax payments and on the amount of tax paid in 2014. In fact, most businesses that decided to formalize received a tax exemption for the current year. It also means that formalization was advantageous in the short run, from a tax perspective. Monitoring tax behavior in the future is therefore very important since this advantage may involve some strategic behaviors and some business owners that formalized may try to come back to the previous system (for example, by closing their formal business and starting a new informal one);  The program had a negative impact on the probability of receiving more than one visit from a tax inspector. This result could be interpreted as evidence that the entreprenant status may reduce the risk of harassment from tax inspectors;  No impacts were measured on level of investments, access to banking, trust in institution and subjective well-being. 7. Qualitative analysis Qualitative information were collected during program implementation with the following objectives: 1. Check whether the program was properly implemented and the study design respected; 2. Assess program understanding by beneficiaries; 3. Understand whether beneficiaries were interested in the program and its perceived benefits; 4. Get feedback from implementing partners on program delivery; 5. Assess whether businesses not selected to receive the program were aware of the program. Following these goals, different types of qualitative data were collected between May and October 2014:  Semi-structured qualitative interviews with program participants after they received the first or the second visit (22 interviews completed mainly on businesses in group 2 and 3);  Field visits with CGA advisors during the first or the second visit (29 visits);  Semi-structured qualitative interviews with informal businesses not selected for the program (61 interviews completed);  Semi-structured interviews with program participant who decid

ed to take up on formalization (8 inter
ed to take up on formalization (8 interviews completed).  One focus group with all CGA advisors and the CGA supervisor;  One focus group with GUFE staffs in charge of the entreprenant status;  One focus group with BoA and Orabank staffs in charge of entreprenant accounts;  Regular communication between the CGA supervisor and the impact evaluation team. A large majority of interviews were conducted outside Dantokpa market. In fact, since businesses in the market are so close to each other, the team chose to limit interviews there because they could have generated questions from business owners, change their behavior, and bias the impact evaluation. For these reason, results presented below are only applicable to businesses operating outside the market. 1. Check whether the program was properly implemented and the study design respected Overall, the study design was respected and the program properly implemented. Only few minor mistakes in program implementation were found and they were all corrected quickly after being discovered. For example, once the program started, it was not clear that GUFE staff was supposed to offer help to business owners in filling the declaration form. This was clarified during the first weeks following program rollout. 28 CGA advisors were intensively trained before program rollout, received constant monitoring, and were offered frequent training sessions to improve their performances. Also, CGA advisors were assigned to clusters of businesses that belonged to the same group. With regard to the formalization process at GUFE, it took less than 24 hours, as planned, and the protocol as described in section 5.2 was respected. All business owners interviewed, who decided to formalize, declared that the formalization process was considered as easy, fast and was free. Finally, with respect to opening a bank account at Orabank or BoA, the program worked properly. However, it took a few months for both banks to be ready for the program. In particular, BoA had problems with the software in charge of the entreprenant accounts during the first weeks of the program. All these issues were solved. 2. Assess program understanding by the beneficiaries Interviews with program participants several days or weeks after a visit from a CGA advisor revealed that program understanding was sufficient among beneficiaries. Only few business ow

ners did not remembered very well the p
ners did not remembered very well the program or were confused. Overall, business owners better remembered program components that most interest them, and often forgot the others. This is not surprising given the program complexity, especially for groups 2 and 3. The access to banking component was well understood and around 80% of respondents in group 2 and 3 said that the program will allow them to open a bank account once they will be formal (although only 25% were able to cite BoA and Orabank). On the training aspect of the program, it seemed that business owners were confused about what the CGA advisors offer and under what conditions businesses are eligible to business trainings. This could be explained partly by the fact that the definition of business training is not the same for all the business owners, and most of them are not considering the second visit as a business training. Also, business owners in group 3 probably understood better the fiscal aspect of the project and 60% of them were able to detail how taxes are working under the entreprenant status. This percentage was much smaller (25%) among businesses in group 2. In addition, it seems that the tax mediation was well understood by business owners in group 3, and 65% of them were able to detail it correctly, 20% just mentioned that there will not be issues with the tax administration, and only 15% did not understand it at all. Finally, most business owners were able to locate precisely the GUFE when they were asked about where formalization should be done. Few of them were confused and reported the location of CGA. 3. Understand whether beneficiaries were interested in the program and the perceived effects of the program Business owners interviewed few days or weeks after a visit from a CGA advisor were very positive about the program. However, when asked about the utility of the program for their own business, about one third said that they did not think the program could be very useful for them. Most of these respondents own very small businesses and said that they were too small for the program. Some female business owners said that they were interested in the program, but that they had first to ask for tOeir OusNand’s permission before they could formalize. Two thirds of beneficiaries who said that the program could interest them mentioned different reasons. About one third said that the program would mainly be useful be

cause it gives access to business traini
cause it gives access to business trainings. 29 15% said that formalization would increase the value of their business, and 20% were not very precise and mentioned multiple program components. Importantly, 30% of the respondents in both groups 2 and 3 said that it would be very difficult to formalize because they did not have any ID card, and the LEPI card (electoral card) was not accepted. 50% of the business owners who decided to formalize in group 2 and 3 said that it did not change anything for them yet. The remaining 50% said that the counselling and business training provided by the CGA were useful and that they implemented some changes like starting to do some accounting or issues receipts.19 4. Get feedback from implementing partners on program delivery Focus groups were hold with most people in charge of the program implementation, in particular with CGA advisors and the CGA supervisor, with some GUFE staff, and with some commercial banks staff. The main result from the focus group with CGA advisors and their supervisor is that, overall, the program is working well and beneficiaries are satisfied. Some other important points were mentioned, in particular:  It was difficult to find the Nusinesses’ location, and find time when owners were available. CGA advisors often had to come back several times at the same business before they could complete the first visit and explain all program components;  Lots of businesses were too small to be interested in the program;  Explaining the program and business trainings was difficult with illiterate business owners;  For the second visit with the personalized training, it was difficult to make appointments with businesses and they often did not respect their appointments;  Organizing group training with entreprenants who formalized and registered to CGA was difficult for logistical reasons;  Some business owners not paying taxes did not want to register because it would mean paying taxes;  Most CGA advisors said that business owners were not very interested by the tax aspect of the program. This may come as a result of the leaflet on taxes being not too easy to comprehend, or as a result of the tax regime itself being too complicated;  Some BoA and Orabank branches were not able to open bank accounts for entreprenants because of the absence of entreprenant account interface in their so

ftware systems. Discussions with GU
ftware systems. Discussions with GUFE highlighted that the formalization process is working properly, and that the GUFE team would be ready to register more businesses if needed. Few problems were also mentioned, including that, since the entreprenant card is free, it is difficult for the GUFE to recover its operating costs. Also, according to the GUFE, business owners who took the entreprenant card where very satisfied with the program. However, some of them signaled some concerns:  Whether the program will be extended after the two years of the pilot;  The entreprenant status allows to record only one activity;  Whether the fact that the card is only valid for two years will be a problem if they want to get a loan from a commercial bank. 19 All interviews were conducted before all business training session were completed by the respondents. So the results may be different after the completion of all trainings. 30 Representatives of BoA and Orabank were also positive about the project, but both noted that, only few businesses opened an entreprenant account so far. All implementing agencies (CGA, GUFE and commercial banks) reported that the communication and cooperation between agencies could be improved. Regular meetings between them should be organized more frequently. 5. Assess whether businesses not selected to receive the program were aware of the program Two months before the launch of the entreprenant program, new regulations simplified registration procedures and reduced costs for existing legal status like individual entrepreneurs and limited liability companies.20 TV shows discussed these new regulations, and the media coverage could have impacted behaviors of business owners in the control group. Following the program launching ceremony, at least one newspaper wrote about the entreprenant program.21 These media coverage could generate externalities on businesses in the control group that could potentially bias the impact evaluation. Out of 50 interviews made on first week of May 2014 (the week following the program rollout) with business owners not selected for the program, only 4 of them confirmed that they heard in a TV show the government was launching new regulations targeting small entrepreneurs. None of them was specific about what kind of reform or was

able to cite the entreprenant progr
able to cite the entreprenant program. 11 additional interviews of this type were conducted three months later, and none of the respondents had heard of any program targeting small businesses and helping them to formalize. Most probably very few businesses not targeted by the program were aware of the new reforms on formalization, including the entreprenant status. Taken as a whole, these results suggest that there were not a sizeable number of externalities. Indeed, none of the business owners surveyed had ever heard of the entreprenant status or of any program related to formalization targeting small businesses. 8. Cost-effectiveness analysis The team collected data on program implementation costs at GUFE and CGA (fixed and variable costs). Table 7 below presents a summary of program costs, which refer to a period of 18 months from March 2014 to August 2015. This period was chosen in order to include all the support (e.g. counselling, business training) provided by the CGA to businesses in group 2 and 3. Annex 10 details all the cost listed below: Data collected from GUFE 1) Fixed cost:  development of the software to edit the entreprenant card: FCFA 5 million (USD 8,606)  1 server: FCFA 3 million (USD 5,164)  3 computers: FCFA 1.5 million (USD 2,582)  1 printing device for entreprenant cards: FCFA 7.5 million (USD 12,909) 2) Variable cost: 20 Arrêté Interministériel n. 2014/018 of March 19th, 2014. 21 Cover page of “La Nation”, wOicO puNlisOed tOe article on April 30th, 2014. 31  salary of 3 staffs dedicated to the entreprenant registration: FCFA 21.6 million (USD 37,179)  maintenance of hardware and software: FCFA 6.8 million (USD 11,705)  maintenance of office supplies: FCFA 5 million (USD 8,606) Data collected from CGA 1) Fixed cost:  training advisers: FCFA 13.5 million (USD 23,236)  hardware and software: FCFA 35.5 million (USD 61,104)  office and mobile phones: FCFA 1.3 million (USD 2,237)  advisers motorbikes (including insurance): FCFA 19.2 million (USD 33,048)  upgrading CGA office: FCFA 1 million (USD 1,721) 2) Variable cost:  salaries of 14 advisors, 1 hotline and the

supervisor during 18 months. and 10 a
supervisor during 18 months. and 10 additional advisors during 10 months : FCFA 175 million (USD 301,218)  CGA overheads: FCFA 13 million (USD 22,376)  gasoline: FCFA 18.6 million (USD 32,015)  phone credit: FCFA 11.1 million (USD 19,106)  maintenance of hardware and software: FCFA 6.1 million (USD 10,500)  rent for the new office: FCFA 9.6 million (USD 16,524)  organizing group training sessions: FCFA 16.5 million (USD 28,401) Summing up all these items, the total estimated cost of the program for 18 months is appox. FCFA 371 million (USD 639,000):  Fixed cost to set up GUFE and scale up CGA capacity: FCFA 87 million (USD 151,000)  Variable costs: FCFA 284 million (USD 488,000) Program costs are allocated between the three treatment groups using different assumptions:  For costs related to the GUFE, the cost per business was the same for all groups. These costs were therefore divided equally between each group in function of its size (12.5% for group 1, 37.5% for group 2, and 50% for group 3);  For costs related to the CGA, the protocol for each business is not the same for each group. Costs related to the visit 2 (counseling or business trainings) are only applicable to businesses in group 2 and 3. In addition, more businesses from group 3 registered to CGA and participated to group training, meaning that CGA dedicated more resources to this group. To account for these differences, the team asked CGA to estimate the approximate time and resources spent on each group. CGA cost were allocated as following (see Annex 10 for more details): 5.1% for group 1, 42% for group 2, and 53% for group 3. 32 By combining data on costs with the program impact on formalization, the team estimated the cost of incentivizing each business in the three groups to register at GUFE. Table 8 below presents these results for both the total costs and the variable costs. For a given group, the cost per formalization is given by the following formula: �݋ݏݐ ݐ݋ �݊ܿ݁݊ݐ�ݒ��݁ ܽ ܾݑݏ�݊݁ݏݏ �݊ �ݎ݋ݑ݌ � ݐ݋ ݎ݁݃�ݏݐ݁ݎ=(ܶ݋ݐ݈ܽ �݉݌݈݁݉݁݊

ݐܽݐ�݋݊ ܿ݋ݏݐݏ ݂
ݐܽݐ�݋݊ ܿ݋ݏݐݏ ݂݋ݎ ݃ݎ݋ݑ݌ �)(ܵ��݁ ݋݂ ݃ݎ݋ݑ݌ �)∗(�݉݌ܽܿݐ �݊ ݃ݎ݋ݑ݌ �) The estimated total costs per business that decided to register were equal to FCFA 764,000 (USD 1,314) in group 1, FCFA 1.3 million (USD 2,307) in group 2, and to FCFA 1 million (USD 1,809) in group 3. From a policy perspective, it is important to focus on the variable costs per formalization, since this cost is more representative of what would be the cost of any additional firm that formalizes following a scale up of the program (in this case, fixed cost should be highly reduced). The variable cost per formalization is smaller for businesses in group 1 (FCFA 560,000, or USD 960) than for businesses in group 2 (FCFA 1 million, or USD 1,769) and to a less extend than for businesses in group 3 (FCFA 800,000 or USD 1,386). For group 1, the incentives provided were much smaller and therefore they cost over two times less than incentives in the other groups. Even if the impact on formalization were higher in groups 2 and 3, the cost per formalization would be smaller in group 1. Formalization is also expected to provide additional tax revenue for the Government. With the assumptions discussed above, the team used data collected to estimate this increase in tax revenue, which corresponds to the amount of taxes the business will pay after formalizing, minus what they would have paid if they remained informal: �݀݀�ݐ�݋݈݊ܽ ݐܽ� ݎ݁ݒ݁݊ݑ ݂ݎ݋݉ ݂݋ݎ݈݉ܽ��ܽݐ�݋݊=(ܶܽ�݁ݏ �݂ ݂݋ݎ݈݉ܽ)−(ܶܽ�݁ݏ �݂ �݂݊݋ݎ݈݉ܽ) Table 7: Program Costs (18 months of program implementation)TOTALGroup 1Group 2Group 3TOTALGroup 1Group 2Group 3GUFE GUFE Set up costs17 000 0002 125 0006 375 0008 500 00029 2603 65710 97214 630GUFE variable costs33 602 3444 200 29312 600 87916 801 17257 8357 22921 68828 918Total costs GUFE50 602 3446 325 29318 975 87925 301 17287 09510 88732 66143 548CGACGA Set up costs70 463 0003 603 22229 626 48937 233 290121 2796 20250 99264 085CGA variable cost250 13

0 56011 376 335105 795 285132 958 939
0 56011 376 335105 795 285132 958 939430 51719 581182 092228 845Total costs CGA320 593 56014 979 557135 421 774170 192 229551 79625 782233 084292 930Total ProgramTotal Set up costs87 463 0005 728 22236 001 48945 733 290150 5399 85961 96578 715Total variable costs283 732 90415 576 628118 396 164149 760 111488 35326 810203 780257 763Total Program371 195 90421 304 850154 397 653195 493 401638 89136 669265 745336 477Notes: 1 USD = 581 FCFA (exchange rate on June 12, 2015)FCFAUSD33 Taxes paid by businesses that choose to formalize Businesses that formalized, registered with CGA, and that had not paid taxes before, obtained a tax exemption for 2014, in addition to a reduction of 40% in the amount of taxes due for the following 3 years. In the new tax system introduced in 2015, taxes are equal to 1.25 percent of turnover for businesses operating in trade, and to 2 percent of turnover for those operating in other sectors. However, the amount of taxes owed by businesses with a turnover inferior to FCFA 20 million is determined by a scale (See annex 9 for more details on the new tax system). The level of turnover in 2014, measured during the midline survey, serves as an estimate of future turnovers. Businesses that formalized because of the program had an average annual turnover around FCFA 8 million (USD 14,000) in the trade sector, and around 3 million (USD 5,200) in other sectors. This gives an expected amount of annual taxes of FCFA 100,000 (USD 175) for traders, FCFA 60,000 (USD 105) for the other sectors, and FCFA 77,000 (USD 133) on average. Taxes paid by the same businesses if they remained informal Table 8: Cost Effectiveness AnalysisGroup 1Group 2Group 3Group 2Group 3Cost per formalizationNumber of businesses3009001 2009001 200Program impact:9,3%12,8%15,5%12,8%15,5%28115186115186Total costs…71 016171 553162 911295280763 6151 340 2571 051 0402 3071 809Variable costs…51 922131 551124 800226215558 3021 027 744805 1621 7691 386Cost effectiveness (only in term of tax revenue)51 26251 26251 262888811,921,416,921,416,97,210,39,010,39,0… per business included in treatment8996188FCFANumber of years to cover the cost of formalization assumming a 10% increase in turnover per yearβExpe

cted increase in tax revenuNumber of ye
cted increase in tax revenuNumber of years to cover the cost of formalization (using variable costs)βImpact on formalization (%)Number of firms which formalized because of the program… per formalization… per business included in treatment… per formalizationNotes: 1 USD = 581 FCFA (exchange rate on June 12, 2015). β: taking into account the 100% tax exemption in the first year after formalization and the 40% exemption in the next 3 years, for businesses registered at CGA which were paying taxes before the program.2812211,97,2USDGroup 13009,3%1 31434 Taxes paid by the same businesses in 2013 (when they were still informal) can be used to estimate the taxes that they would have to pay, had they remained informal. The average amount of taxes paid in 2013 was FCFA 18,000 (USD 31) in the trade sector,22 FCFA 31,000 (USD 54) in other sectors, and FCFA 26,000 (USD 44) on average. Additional tax revenue The following assumptions need to be accounted when estimating the additional tax revenues for the Government: - Businesses declare the same turnover to the tax administration than the turnover they declared during the survey; - Cost per formalization will remain the same. This cost could be highly reduced in the program scale up if there were some economies of scale; - CGA incurred in cost related to tracking of businesses during the impact evaluation. In the program scale up, these cost would be most likely reduced, since CGA would operate without the constraints of the impact evaluation; - The new tax system introduced in 2015 will apply only to formal businesses, and informal businesses will pay the same amount of taxes as before program implementation;23 - Businesses that formalized will remain formal and they will start to pay taxes once the tax exemption they benefited during the first year expires. The expected increase in tax revenue is FCFA 85,000 (USD 146) for traders, FCFA 28,000 (USD 48) for the other sectors, and FCFA 51,262 (USD 88) on average.24 This increase comes mainly from businesses that were not paying taxes before the program (they will start paying taxes after becoming formal), and to a small extent because the new tax system leads to higher levels of taxes from businesses that choose to formalize (because of the program). If we compar

e this finding with the cost per formali
e this finding with the cost per formalization, the additional benefits in terms of increased tax revenue are considerably lower than the costs (FCFA 51,000 versus FCFA 560,000 for group 1). The next step in the analysis is to compare the cumulative tax revenue that the Government will receive in a period of time, with the initial cost of having registered a firm. If business performance of formalized firm does not improve in the years following the registration at GUFE, it would take more than 12 years for this program to be cost effective in term of tax revenue received from businesses in group 1 (21 years from businesses in group 2, 17 years from businesses in group 3 (See Table 8 above). The alternative assumption is an increase in business performance of firms that decide to formalize. For example, if we assume that business turnover will increase by 10% per year after the registration, the costs of formalization in the three groups previously calculated will be compensated after 7.2 years in group 1, 10.3 years in group 2, and 9 years in group 3 (See Table 9 below). Even if businesses increase their profit, the program as it was implemented will only be cost effective in the medium to long-term. 22 This average is lower than the minimum TPU that was required by the law, i.e. FCFA 21,600, because it takes into account businesses that did not pay any taxes. 23 If we release this assumption, and consider that the new tax reform will also impact informal businesses, we get an estimate of the increase tax revenue that is smaller by 15%. Conclusions remain the same. 24 See Annex 9 for details on the new tax system and the calculation of expected increase in tax revenue. 35 9. Comparison with similar reforms in other countries The literature on business regulation and formalization is summarized in Bruhn and McKenzie (2014).25 Most studies that measure the causal effect of business regulation reforms on formalization and on firm performance come from Latin America and Eastern Asia, and to our knowledge, the only study from Africa is currently implemented in Malawi with only short-term results available. Overall, results suggest that reforms easing business formalization have had only limited impact on formalization rates. In Mexico, Bruhn (2013)26

finds that a significant simplification
finds that a significant simplification of the registration process had very limited impact on informality. In Sri Lanka (de Mel et al. (2013)27) and in Bangladesh (De Giorgi and Rahman (2013)28), programs providing information and cost reimbursement had no effect on formalization rate. In Brazil, Andrane et al. (2013)29 evaluate the impact of three different interventions on business formalization. Providing information on the registration process and removing the cost of formalization had no effect on formalization rate, but municipal inspections increased formalization rate by 25 Miriam BruOn, Gavid McKenzie, 2014. “Entry regulation and formalization of microenterprises in developing countries”, World Bank Research Observer, 29(2): 186-201. 26 Miriam Bruhn, 2013. “A Tale of Two Species: Revisiting tOe Effect of Registration Reform on Informal Business Owners in Mexico” Journal of Development Economics 103: 275–83 27 Ge Mel, S., G. McKenzie, and C. Woodruff. 2013. “TOe demand for, and consequences of, formalization among informal firms in Sri Lanka.” American Economic Journal: Applied Economics 5 (2): 122–50. 28 Ge Giorgi, G., and R. RaOman. 2013. “SME’s Registration: Evidence from an RCT in BangladesO.” Stanford University, Stanford, CA, and World Bank, Washington, DC. 29 Andrade, G. H., BruOn, M., McKenzie, G. 2013. “A Oelping Oand or tOe long arm of tOe law? Experimental evidence on what governments can do to formalize firms”, MimeograpOed. World Bank. Table 9: Expected increase in tax revenue assumming a 10% increase per year after formalizationNumber of yearsTurnover with 10% increase per year Taxes if formalTaxes if informalη Increase in tax revenueCumulative tax revenus Turnover with 10% increase per yearTaxes if formalTaxes if informal Increase in tax revenueCumulative tax revenus 1β5 107 13465 52125 72038 47738 4778 7901134466662β5 617 84882 85125 72057 31595 7929 66914344991653β6 179 63289 47325 72063 632159 42410 636154441102744β6 797 59699 27925 72073 463232 88711 7001714412640157 477 355114 66225 72090 268323 15512 8701974415555668 225 091124 68825 720101 808424 96314 1572154417573179 047 600137 10825 720114 274539 23715 5722364419792889 952 360146 25625 720123 422662 65917 1

30252442121 141910 947 596166 326
30252442121 141910 947 596166 32625 720144 895807 55418 843286442491 3901012 042 355180 35125 720159 610967 16420 727310442751 6651113 246 591194 99925 720175 2761 142 44022 800336443021 9661214 571 249215 27525 720196 6271 339 06725 080371443382 3051316 028 374237 12525 720219 3661 558 43327 588408443782 6821417 631 212255 91825 720239 7201 798 15330 346440444133 0951519 394 332281 53725 720267 0722 065 22533 381485444603 555FCFAUSDNotes͗ η ͗ no increase in turnover if the business remain informal͘ β͗ taking into account the full tax exemption in the first year after formalization and the 40% exemption in years 2-4 for businesses registered at CGA which were paying taxes before the program. 1 USD = 581 FCFA (exchange rate on June 12, 2015)36 22 to 27 percentage points. This finding suggests that enforcement of the law may be an effective way to bring informal businesses into formality. In Peru, Alcãzar et al. (2010)30 find that offering a subsidy for the cost of obtaining a municipal license led to a 10 to 12 percent of informal businesses obtaining it. In Malawi, Campos et al. (2015)31 find that offering assistance with costless business registration and (separate) tax registration had large impacts on business registration, with 75 percent of those offered assistance obtaining a business registration certificate, but only a limited impact on tax registration. Evidence on the effect of becoming formal on business performances suggest that whereas some firms may see some benefits from formalization, like being able to advertise more or issuing receipts, these benefits are smaller than the costs associated to formalization in terms of additional taxes. The study in Sri Lanka is the only one finding some impact of formalization on business profits. This impact is driven by a handful of firms for which profit increased considerably. In Malawi, one version of the program was also offering some support to open a bank account as an additional incentive to formalization. Short-term effects showed some impacts on the number of businesses owning a bank account, on savings, and on the use of complementary financial products. The impact of formalization on tax revenue is highly dependent on the context and on whether formalization also means paying taxes or not. But overall, evidences suggest that small scale businesses

are likely to contribute very little to
are likely to contribute very little to taxes if they formalize. In Brazil, inspecting large informal firms was found to be cost effective in terms of added tax revenue. This was due to the large effect that inspections had on formalization. 10. Conclusion and Next steps In light of the literature presented above, the impact of the entreprenant program on formalization in Benin seems to be higher than impacts found in similar studies. This is especially true considering studies that focus on program easing formalization, providing information, or reducing formalization costs. The absence of impact on business performance in the short-term in Cotonou is consistent with the literature too. However, since the entreprenant program in Benin includes counselling and business training components, it is important to wait for the results of the endline survey (expected by June 2016) to see whether formalization combined with these forms of support may impact business performances or access to banking. This evaluation shows that there is demand for the entreprenant status. The Government of Benin may consider developing GUFE capacity in order to make this new status available to all businesses in Cotonou and elsewhere in the country. The cost-effectiveness analysis suggests also that increased tax revenues are not likely to be high enough to justify a full-fledged scale-up of any of the components of the program additional to the simplified registration procedures. The great majority of informal businesses are microbusinesses and they would pay a small amount of taxes even if they become formal. While scaling up the exact same program on the same population would not be effective, the Government could target those businesses that proved to be more responsive to formalization incentives (See section 30 Alcãzar, L., R. Andrade, and M. Jaramillo. 2010. “PanelCtracer study on tOe impact of Nusiness facilitation processes on enterprises and identification of priorities for future business enabling environment projects in Lima, Peru – Report D: impact evaluation after tOe tOird round.” Report to tOe International Finance Corporation. World Bank Group, Washington, DC. 31 Campos, Francisco & Goldstein, Markus & McKenzie, David, 2015. "Short-term impacts of formalization assistance and a bank

information session on business registr
information session on business registration and access to finance in Malawi," Policy Research Working Paper Series 7183, The World Bank. 37 6.1). For example, “OigO-ends” Nusinesses in group 3, with characteristics similar to formal businesses before the program, had a formalization rate 24.3 percentage points higher than the same businesses in the control group. Targeting this type of businesses could reduce the cost per formalization. Program costs could be reduced by improving the program delivery and removing all aspects of the intervention that were related to the impact evaluation. For example:  In the pilot phase, each CGA advisor had to target specific businesses in many different locations. This business-level targeting was implemented at a high cost since it implied that advisors were only able to visit limited number of businesses per day. Instead of doing this specific targeting, CGA advisors could target ilots or neighborhoods.  For the second visits (personalized training provided to all businesses in groups 2 and 3), CGA advisors tried to reach each business at least three times before giving up. But less than 50% of the business owners were available and interested for this second visit. The CGA could therefore reduce the number of attempts and only organize the second visits for business that are strongly interested in them. The program could also be redefined to the types of businesses on which it was not very effective. For example, CGA advisors could adapt the message to businesses owned by women and organize awareness campaigns with their husbands. Some consultations with business owners operating in Dantokpa market may also be useful to understand how to make this program more attractive for them. In addition to cost-effectiveness, the case for continuing to incentivize formalization includes other reasons like increase in business performances, which was not observed shortly after having introduced the program, but may well be found next year, as additional small informal businesses that formalized may actually grow to become medium-scale operations; the encouragement of a culture of formality, which would promote future compliance with the rule of law. In fact, while tax revenues do not increase in the short-term, the Government broadens the tax base, making the business environment fairer. 38

Annex 1: CGA implementation proto
Annex 1: CGA implementation protocol by group When? Objectives Document to use or to give to the business owner Group 1 2 3 300 900 1200 Visit 1 Providing information on the new status and explaining the business owner of its benefits. Share GUFE forms and explain what they need to do. Offer to help to fill it out. - Leaflet on formalization at GUFE and on the tax system applicable to entreprenants. - Show an example of entreprenant card - GUFE forms Yes Yes Yes Providing information on Package B: Share forms for each of the two partner banks. Offer to help them fill the information and explain benefits. - Leaflet on CGA full services -Show an example of CGA diploma and sticker - Leaflet on Banking services available to entreprenant. -Forms for each banks No Yes Yes Gathering information on business characteristics and needs in terms of business training - CGA business follow-up form (to be filled during the visit) No Yes Yes Proposing a second visit for a 1-2 hours personalized training. Even if the business owner does not have the entreprenant card yet, he is eligible for this 2nd visit. No Yes Yes Providing information on Package C: Explain the support they will receive from CGA advisors (fill tax return, be there in case inspector asks for more, etc.) - Leaflet on tax mediation and advising. No No Yes Right after visit 1 Entering information of the CGA business follow-up form in the monitoring file - CGA business follow-up form - CGA Monitoring file No Yes Yes Filling CGA advisors agenda with next callback date - CGA adviser agenda No Yes Yes Callback 1 (1-2 weeks after visit 1) Taking an appointment with the business for a second visit, enquiring whether they have registered with GUFE Prepare material for Visit 2 (including specific training material in function of the business owner needs). - CGA business follow-up form - CGA monitoring file - CGA adviser agenda - All material for visit 2 to prepare No Yes Yes 39 When? Objectives Document to use or to give to the business owner Group 1 2 3 300 900 1200 Visit 2 1-2 hours business training personalized to the business needs. - CGA toolkit/ manual on business training to microentrepreneurs

No Yes Yes Providing information o
No Yes Yes Providing information on the new status, and on package B of incentives. - Leaflet on formalization at GUFE and on the tax system applicable to entreprenants - Leaflet on Banking services available to entreprenant - Leaflet on CGA full services No Yes Yes Providing information on Package C Explain tax obligations. Leave simple tax declaration form and offer help to fill it up. Explain follow-up support they would get in terms of tax filling/protection/mediation. - Leaflet on tax mediation and advising. - Toolkit on taxes calculation No No Yes Right after visit 2 Entering information of the CGA business follow-up form in the monitoring file - CGA business follow-up form - CGA Monitoring file No Yes Yes Filling CGA advisors agenda, with next callNack’s date - CGA adviser agenda No Yes Yes Callback 2 (1-2 weeks after visit 2) Checking if the business formalized with the entreprenant status - CGA business follow-up form - CGA Monitoring file No Yes Yes If the businesses did formalize: - Offering additional business training sessions with the CGA - Offering help if necessary for opening a bank account - CGA agenda for group training No Yes Yes If the businesses did formalize: - Offering tax counseling services - Offering a third visit if necessary on tax question - CGA adviser agenda No No Yes Group training - 9 sessions of group business training - CGA training toolkit - CGA official diploma and stickers - CGA business follow-up form No Yes Yes After a group training session -Fill the CGA business follow-up form for the businesses who attended the group training - CGA business follow-up form No Yes Yes 40 Annex 2: Sectors of Dantokpa market surveyed 41 Annex 3: Statistics of program population by location (baseline-listing data 2014) Table A1: Descriptive statistics on selected sample Outside Dantokpa(1)(2)(3)(4)(5)(6)Mean [SD]NMean [SD]NMean [SD]NFirm owner characteristicsFemale owner0.58960120.57728180.327507[0.492][0.494][0.47]Age of the owner38.775590938.768279642.817492[11.094][10.097][10.228]0.7260030.73728130.893505[0.449][0.44][0.309]Firm characteristics Trade0.43760130.44528180.501507[0.496]

[0.497][0.5] Services0.32560130.
[0.497][0.5] Services0.32560130.32428180.312507[0.468][0.468][0.464] Craft0.19860130.19728180.108507[0.398][0.398][0.311]Business created less than one year ago0.21260120.17228180.162505[0.409][0.378][0.369]Firm area in m²20.798600122.014281261.234505[56.067][48.608][114.66]Number of employee1.1160121.32128183.323507[1.721][1.816][4.923]The firm does any form of accounting0.15760090.18528170.652503[0.364][0.388][0.477]Total amount of sales in an average week56130.47559750442.312818559062.5433[242788.6][44295.88][4875532]Amount of profit in the last month37663.07530245525.472818233726398[76589.99][44961.8][787680.9]Firm owner owns a bank account0.20358350.24127510.813482[0.402][0.428][0.39]0.0258090.01227350.15452[0.139][0.111][0.358]0.20858260.2427470.26450[0.406][0.427][0.439]TaxesFirm pays taxes0.38459090.45227830.806496[0.486][0.498][0.395]Amount of taxes paid in the previous year46406.85210445792.591202486102.6341[40484.29][29740.37][3228705]0.71939100.67619650.682424[0.45][0.468][0.466]Already formalNotes: For colomns (1) and (5), means and standard deviations are calculated using sampling weights (to be representative of all businesses in Cotonou)Firm owner has at least some formal educationFirm owner ever went to a bank to apply for a loanFirm owner ever went to a microfinance institution to apply for a loanThinks that it's difficult or very difficult to know in advance how much taxes he/she will have to payAll informal firms SELECTED Sample42 Table A2: Descriptive statistics on selected sample in Dantokpa(1)(2)(3)(4)(5)(6)Mean [SD]NMean [SD]NMean [SD]NFirm owner characteristicsFemale owner0.82712030.8177820.881101[0.378][0.387][0.325]Age of the owner42.846116341.96276547.79497[10.802][11.028][11.072]0.62912030.627820.842101[0.483][0.486][0.367]Firm characteristics Trade0.9312030.9267821101[0.255][0.262][0] Services0.03212030.0377820101[0.177][0.189][0] Craft0.02812030.0277820101[0.166][0.162][0]Business created less than one year ago0.04112030.0417820.01101[0.198][0.198][0.1]Firm area in m²7.48612026.8767828.703101[4.695][3.657][5.392]Number of employee0.75112030.6567821.139101[0.975][0.939][1.105]The firm does any form of accounting0.18112020.1577810.594101[0.385][0.364][0.49

4]Total amount of sales in an average w
4]Total amount of sales in an average week216164.6113996989.32782465157.995[462011.9][77013.46][1010340]Amount of profit in the last month93277.62113650803.17782176817.992[300297.1][51727.23][351317.1]Firm owner owns a bank account0.18711750.1557660.67100[0.39][0.362][0.473]0.03611760.0087660.19896[0.186][0.088][0.401]0.23111830.2177700.42796[0.422][0.412][0.497]TaxesFirm pays taxes0.89212000.8877810.98101[0.31][0.316][0.14]Amount of taxes paid in the previous year17472.0210291534167131980.8594[12956.72][10552.01][26929.89]0.9310910.9357040.91796[0.255][0.247][0.278]Already formalNotes: For colomns (1) and (5), means and standard deviations are calculated using sampling weights (to be representative of all businesses in Cotonou)Firm owner has at least some formal educationFirm owner ever went to a bank to apply for a loanFirm owner ever went to a microfinance institution to apply for a loanThinks that it's difficult or very difficult to know in advance how much taxes he/she will have to payAll informal firms SELECTED Sample43 Annex 4: Balance checks (baseline-listing data 2014) Table A3: Descriptive statistics and balance checkFirm owner characteristicsGroup 1Group 2Group 3Female owner0.6290-0.001-0.00236000.584[0.483](0.003)(0.002)(0.002)Age of the owner39.2371.1790.594-0.17235610.102[10.743](0.731)(0.455)(0.405)0.707-0.034-0.0020.02635950.161[0.456](0.032)(0.02)(0.018)Firm characteristics Trade0.55-0.0030.0010.00236000.561[0.498](0.003)(0.002)(0.002) Services0.2590.004-0.0020.00636000.95[0.438](0.023)(0.014)(0.013) Craft0.166-0.008-0.01-0.00936000.872[0.372](0.023)(0.014)(0.013)Firm area in m²19.0175.957-0.209-2.31335940.056*[42.083](3.149)*(1.957)(1.751)Business connected to electricity network0.618-0.0050.004-0.00135980.994[0.486](0.034)(0.021)(0.019)Number of employee1.18-0.044-0.0210.01636000.86[1.681](0.092)(0.057)(0.051)The firm does any form of accounting0.1730.013-0.0010.01535980.677[0.378](0.027)(0.017)(0.015)Amount of sales in an average week60822.03103.944308.831-1036.82436000.753[57009.83](2258.173)(1402.742)(1254.206)Amount of profit in the last month46195.02105.283295.6261146.51336000.791[44824.93](2136.986)(1327.462)(1186.897)Firm owner owns a bank account0.2200.0030.00435170.087*[0.414]

(0.003)(0.002)*(0.001)**Firm pays ta
(0.003)(0.002)*(0.001)**Firm pays taxes0.561-0.011-0.016-0.02235640.7[0.496](0.033)(0.021)(0.018)Firm owner has at least some formal educationNotes: Column 1: Standard deviations presented in brackets. Columns 2-4: coefficients and standard errors (in parentheses) from an OLS regression of the firm owner/firm characteristic on treatment dummies, controlling for strata dummies.Mean [SD] in Control GroupDifference between […]and Control groupNP-values of joint test group1=group2=group3=044 Annex 5: Matching program data to administrative data on formalization This Annex describes the protocol to match businesses in the administrative database on formalization provided by the GUFE (around 550 businesses every month) with the program data (3600 informal businesses prior to the program start). Information available: We had the following information in both databases:  Surname of the business owner. It can be written with different spellings in each database.  Between 1 and 5 first names. In GUFE data we usually have more than one first name. In the program data we only have one first name in most of the cases.  The business activity as described by the owner (no codes). The business activity is missing for 30% of businesses in the GUFE data.  Business addresses. In the GUFE data addresses were given by the business owner whereas in the program data, we are using “official” addresses used by the tax administration (there are 144 neighborhoods in Cotonou). In practice only neighborhoods can be matched. In GUFE data, there are few missing variables and some cases for which the neighborhood does not belong to the official list of neighborhoods.  Gender of the business owner.  Phone number of the business owner Definition of a match: We consider it to be a match if: (i) the surname, at least one first name, the activity, and the neighborhood match or (ii) if surname and at least one first name match and either the activity, the neighborhood or the phone number also match, and the others are missing (or does not exist for the neighborhood or the phone number). Method of matching: We used first tOe Stata command “reclinck” designed for fuzzy name matcOing. TOis command uses record linkage methods to generate matching scores. For this first step, we used tree varia

bles: surname, first name and gender. A
bles: surname, first name and gender. As a second step, we looked manually (in an Excel file) to all matches and validate each match only if names, activity and neighborhood were consistent in both databases. TOe “reclink” command allows inputting different weigOts to matcO on eacO of tOe tOree variaNles used (surname, first name and gender). In order not to rely on the weights used, we reiterate the process with different weights until no additional matches were found. Since it is possible that the first name in the program data corresponds to the second name in the GUFE data, we also reiterate the whole process for all combinations of first to fifth names. Surname and first name were inverted in one of the two databases. So we also reiterate the process with other combination of surname and first names. Checking that the matching method is working: To assess whether our matching method is working efficiently, we used the following methods: 1. First we looked at whether we could find additional matches using a more usual method of matching. That is looking at the two lists (sorted by surnames) and trying to find each business of 45 the GUFE data in the program database. So it means looking mainly at businesses with surnames starting with the same letters. We were not able to find any additional matches. 2. Secondly, we looked at the proportion of business which formalized with the entreprenant status during the first 3 months after program launch. Indeed, most businesses which formalized with the entreprenant status should be also in the program data (in theory they are the only businesses aware of this new status). We matched 78% (119/153) of the newly registered entreprenants. 3. We then took the 34 businesses which formalized with the entreprenant status and were not matched with the program data and we tried harder to match these businesses. We took the program data and looked at all the businesses in the same neighborhood as the unmatched businesses. We were able to find 6 new matches. These 6 matches are very imperfect matches with surnames somewhat different and first name sometimes different. For two cases, the match was not done with our main method because the surname is missing in the program data. 46 Annex 6: Impact by subgroups (GUFE administrative data and Baseline data 2014) Graphic 1: Formalizatio

n rates by gender of the business owner
n rates by gender of the business ownerGraphic 2: Formalization rates by location (inside or outside Tokpa Market)47 Graphic 3: Formalization rates level of educationGraphic 4: Formalization rates in function of whether the business looked close to formal businessesGraphic 5: Formalization rates in function of number of Tax Inspector visits in the year before program launch48 Graphic 6: Formalization rates by sectorGraphic 7: Formalization rates by gender (sample restricted to other sectors than trade outside Tokpa)49 Annex 7: Creation of a score of “predicted formality” The similarity between an informal and a formal business is based on the predicted probability of being formal from a logit of formality status on baseline characteristics. This logit uses the data collected during the listing-baseline survey on 7,829 businesses that accepted the survey. Among them, 608 (7.8%) were formal at the time of the survey. The team uses the following baseline characteristics in the logit: operating in Dantokpa market, gender, age, only primary education, only JHS or SHS level, higher level of education, operating in services, craftsman, business created less than 1 year ago, firm connected to electricity network, total number of employees, firm is doing some accounting, have done any advertising in the last 6 months, log of total amount of sales in an average week, log amount of last month profit, firm owner owns a bank account, the firm pays taxes (and controls for missing levels of these variables). Using the “predict” command in STATA, the team classifies as “looking more like formal” 6D4 (18.2%) businesses out of the 3,600 in the study sample. 50 Annex 8: Impact on intermediary outcomes (midline data 2015) Table A4: Impact on intermediary outcomes: business knowledge and practisesGroup 1Group 2Group 3Group 1 and 2Group 1 and 3Group 2 and 3Business knowledge and practises:3.3%1.3%10.2%***13.1%***2897**********[17.9](2.562)(1.626)(1.442)65.2%4.6%**0.5%0%2881****-*[21.4](1.854)(1.163)(1.036)28.4%-5.6%***0.3%0.9%2866******-***[17.6](1.479)(0.939)(0.836)21.3%-11.4%***2.9%4.4%**2893******-***[41](3.435)(2.185)(1.941)79.9%-6.1%*-0.1%-1.6%2817----[40.1](3.601)(2.27)(2.02)9.3%-1.2%1.2%1.4%2796----[29](2.64)(1.662)(1.482)13.4%-1.6%-2.3%-1.9%2826----[34.1](2.939)(1.8

57)(1.654)Investment: 5721353833-47
57)(1.654)Investment: 5721353833-47627861822799--**-[1324861](101669)(63653)(56819)490158-2175831435388592822----[838305](70953)(44522)(39691)Joint test G1=G2=G3=0 Have gained a new regular customer in the past three months Value of inventories and raw materialsα Total value of business tools, machinery, equipment, furniture, and vehiclesα Note: Column 1: Standard deviations presented in brackets. Columns 2-4: coefficients and standard errors (in parentheses) from an OLS regression of the firm owner/firm characteristic on treatment dummies, controlling for strata dummies (dummies for each triplet). ***, **, * indicate significance at 1, 5 and 10%. α͗ truncated at the 99th percentile͘ Β͗ controling for baseline value͘ Share of Business Knowledge Questions Correct (7 questions) Business practises score (24 questions) The firm does any form of accountingΒ Has sold goods to the public administration or to a large company in the last three months Have done any type of advertising in the last 6 monthsΒ The business owner has attended business training in the past yearMean [SD] in Control GroupDifference between […]and Control groupNStatistical difference between…51 Table A5: Impact on intermediary outcomes: Access to banking, tax behaviors, trust and subjective well-beingGroup 1Group 2Group 3Group 1 and 2Group 1 and 3Group 2 and 3Access to banking:26.7%-0.2%0.6%1.5%2918----[44.3](3.639)(2.312)(2.05)14%-0.9%1.2%1.6%2922----[34.7](2.966)(1.878)(1.666)Tax behaviors:25%-7.8%**-6.8%***-5.4%***2828---***[43.3](3.447)(2.168)(1.927)54.5%-7.2%*0.8%-6.1%***2889*-******[49.8](3.84)(2.44)(2.163)20290-5517**-2190-5045***2859--****[32968](2438)(1549)(1377)0.66-0.131**-0.016-0.103***2887*-*****[0.693](0.053)(0.034)(0.03)Trust and subjective well-being:-0.0020.076-0.0010.0682621----[0.809](0.074)(0.047)(0.042)4.602-0.084-0.0380.0442791----[2.061](0.175)(0.11)(0.099)8.6380.0580.131-0.0052724----[1.909](0.165)(0.104)(0.093)Joint test G1=G2=G3=0Note: Column 1: Standard deviations presented in brackets. Columns 2-4: coefficients and standard errors (in parentheses) from an OLS regression of the firm owner/firm characteristic on treatment dummies, controlling for strata dummies (dummies for each triplet). ***, **, * indicate significance at 1, 5 a

nd 10%. α͗ truncated at the 99th perc
nd 10%. α͗ truncated at the 99th percentile͘ Β͗ controling for baseline value͘ η͗ Top-coded at the 99th percentile Subjective standard of living on a Cantril ladder of life questionη Anticipated Subjective standard of living in 5 years on Cantril ladderη The business owner has a loan from a commercial bank or a microfinance institution contracted in 2014-2015Β Received more than 1 visit by a tax inspector in the last 6 monthsΒ The business owner is paying any tax for its activityΒ Sum of all taxes paid in 2014Β Number of different taxes paid in 2014Β Standardized index of trust in the institutions The business owner has a bank accountΒMean [SD] in Control GroupDifference between […]and Control groupNStatistical difference between…52 Annex 9: Estimate of tax revenue in the new tax system Table A6: New Tax System (Taxe Professionnelle Synthétique)Turnover (FCFA)TradersOther activities0 - 1 000 0006250100001 000 001 - 2 500 00021 87535 0002 500 001 - 5 000 00046 87575 0005 000 001 - 10 000 00093 750150 00010 000 001 - 15 000 000156 250250 00015 000 001 - 20 000 000218 750350 00020 – 50 million1,25% of turnover2% of turnoverTaxesTable A7: Expected increase in tax revenuAllTradersOther sectorsAllTradersOther sectors3281331953281331955 107 1348 162 5973 023 1528 79014 0495 20354,5%52,6%55,8%54,5%52,6%55,8%47 70234 19256 75382599825 72017 87331 26044315477 497101 91360 84513317510551 26284 64627 6978814648Notes: 1 USD = 581 FCFA (exchange rate on June 12, 2015)USDAverage anual turnover (2014)Share of businesses which paid any tax in 2013Expected increase in tax revenu: (Amount of tax in new system - Average paid in 2013)Average amount of tax paid in 2013Expected tax amount after formalizationNumber of businesses which formalizedAverage amount paid among those who paid any tax in 2013FCFA53 Annex 10: Program implementation costs Table A8: Implementation costsType of costTOTAL COST (FCFA)TOTAL COST (USD)Share Group 1Share Group 2Share Group 3COSTS ASSOCIATED TO GUFE (one-stop-shop for formalization)1salary of GUFE entreprenant staff: 3 staffs with a monthly salary of FCFA450 000 each. 2 staffs during 18 months, and 1 during 12 months21 600 00037 17712,5%37,5%50%2Set up costs of Hardware and Sofware:3 computers at fcfa 500 000 each, 3 million

for the serveur including installation
for the serveur including installation4 500 0007 74512,5%37,5%50%3Variable costs of Hardware and sofware:Maintenance for 2 years at fcfa 9083125. We multiplied by 0.75 for 18 months6 812 34411 72512,5%37,5%50%4Cost of Editing Entreprenant cards: fcfa 7.5 million for the printer and fcfa 5 million for the software to edit cards12 500 00021 51512,5%37,5%50%5other variable costs:Office supplies5 190 0008 93312,5%37,5%50%COSTS ASSOCIATED TO CGA1salary of CGA staffs:Monthly (gross) salary of CGA advisor fcfa 352000 during 18 months for 14 advisors and 10 months for 10 advisors; salary of Hotline fcfa 200 000 per month during 18 months ; total taxes on salaries fcfa 24 240 000 ; salary of CGA supervisor during 18 months 175 144 000301 4535,1%42,0%52,8%2CGA overheads: Printing business forms fcfa 736 560 ; Admin fees fcfa 7.5 million ; office supplies fcfa 2700000 ; water fcfa 183000 ; Electricity fcfa 186000012 979 56022 3405,1%42,0%52,8%3Initial training of CGA advisors13 450 00023 1505,1%42,0%52,8%4Set up cost of transportation:motobikes for each CGA advisor at fcfa 500 000 each ; Insurance fcfa 300 00019 200 00033 0465,1%42,0%52,8%5Variable cost of transportation:gasoline fcfa 50 000/CGA advisor/month18 600 00032 0145,1%42,0%52,8%6Cost of buying office and mobile phone1 250 0002 1515,1%42,0%52,8%7Communication:Phone calls: fcfa 50 000/CGA advisor/month11 160 00019 2080,0%44,3%55,7%8Set up costs of Hardware and sofware: computers, serveurs and equipement35 553 00061 1935,1%42,0%52,8%9Variable costs of hardware and sofware:Maintenance6 147 00010 5805,1%42,0%52,8%10Set up costs of upgrading CGA office1 010 0001 7385,1%42,0%52,8%11 Variable costs for renting office:Rent fcfa800 000/month9 600 00016 5235,1%42,0%52,8%12Cost of organizing group trainings: For 300 participants: Office supplies fcfa1500*4 training sessions ; coffee break fcfa 3500*14 days of training (3 mandatory sessions +1 optionnal)16 500 00028 3990,0%44,3%55,7%Notes: 1 USD = 581 FCFA (exchange rate on June 12, 2015)54 Table A9: allocation of CGA ressourcesGroup 1Group 2Group 3Allocation of CGA adisors during the period: March 2014- Aug 2014 (14 advisors)266 Sept 2014 - Oct 2014 (14 advisors)68 Nov 2014 - Jan 2015 (24 advisors)21012 Feb 2015 -Aug 2015 (24 advisors)1014Total Staff X Months18148186% per group5,11%42,05%52,84%Source