Formalisation and the MSD approach: business growth, resilience and improved working conditions

BEAM Grab the Mic webinar

Date: 4th March 2021

Judith van Doorn, Enterprise Formalization Specialist, ILO
Helen Bradbury, Team Leader, ALCP
Roel Hakemulder, Consultant
Merten Sievers, Global Coordinator, Value Chains and Entrepreneurship, SME (ILO)

Formalisation - the process of acquiring formal legal status through complying with business regulations - can help small informal businesses grow and provide greater security for workers. It can also contribute to fairer competition, increased government revenues, national economic growth and social cohesion.

The ILO selected the Alliances Caucasus Programme (ALCP) to conduct a field study on the links between market access, enterprise formalisation and decent work. The ALCP successfully used the MSD approach to encourage formalisation of farmers and agri-businesses in the Georgian dairy sector.

The webinar showed how this was achieved. It discussed the interventions used and the results in terms of growth, market access and improved working conditions. The ALCP story demonstrates that the MSD approach and formalisation strategies can be integrated to support the development of more sustainable and resilient enterprises.

The webinar also looked at how formalised enterprises were more resilient to the economic impacts of COVID-19. For example, they were able to apply for permits to distribute their produce during lockdown, while the informal markets were shut down.

Speakers drew on evidence from ALCP’s recent study, Better cheese, better work: ALCP’s impact on informality and working conditions in Georgia's dairy sector 

Watch the webinar

What is enterprise formalisation?
From the perspective of an informal enterprise, formalisation comprises the application of and compliance with existing procedures that formal enterprises have to observe. This includes, for example, having a formal legal status through business registration, following official accounting requirements, possessing and renewing necessary sectoral and professional permits, paying social security contributions and complying with labour laws and regulations, particularly when it employs workers.