United Nations Department of Economic and Social Affairs Sustainable Development
Publications

Improving MSME Formalization through the Cooperative Enterprise Model

Publication Year: 2020 Publisher:

Related Goals

1 2 5 8 9 10

Background

MSME formalization requires a multifaceted and multi-stakeholder approach. To support formalization, government departments need to establish policies and create distinct regulatory bodies. Through creation of linkages – such as knowledge and excellence hubs - governments could enable already formalized entities to mentor informal MSMEs, supporting their preparations for the transition to formalization. The cooperative business model can be emulated within the context of MSME formalization. Cooperatives are people-centred businesses entities that are value- and principle- driven with focuses on local communities. As such, cooperatives can serve both as a stimulus and a catalyst for engagement in the formalization process, and as a means of eliminating the many existing barriers to the successful completion of the formalization process.