African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4062

Full Length Research Paper

Effect of simplified licensing on registration and formalizing of start-ups in Mozambique

Alen Sawaya
  • Alen Sawaya
  • Faculty of Commerce and Law, Department of Postgraduate Degrees, Zimbabwe Open University, Zimbabwe.
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Shepherd Bhero
  • Shepherd Bhero
  • Department of Chemical, Materials and Metallurgical Engineering, Botswana International University of Science and Technology, Botswana.
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  •  Received: 10 July 2018
  •  Accepted: 21 August 2018
  •  Published: 14 September 2018

Abstract

The Mozambican Government has long realized that the only way to solve the unemployment problem is by encouraging entrepreneurship amongst the youths through the formation of small enterprises. Legally operating enterprises will also contribute to the government’s coffers through taxations, exercise duties and contributions to the provident fund. The government introduced two accessible licenses for small firms namely the convenience license and the simplified license with the hope that more enterprises will start-up and those operating informally will register and legalize their activities. A study was carried out in Greater Maputo representing Mozambique as a whole to determine if these simplified licenses actually ease the registration of start-ups and informal firms. A sample of 485 small firms was drawn from the population of firms in Greater Maputo, using stratified random sampling method. Face to face interviews were conducted using structured, close-ended questionnaires to collect primary data. The study employed the quantitative methodology, and data were analyzed by the use of descriptive statistics that generated frequencies and percentages results.The study found that although a lot of red tapes and hindrances to firms licensing were eased, the new measures were still inadequate to bring about more small firms registration, and attract those operating informally to become formal. It was suggested that more reforms in the licensing structures be implemented, including the removal of registration fees for the first years of operation and allowing tax exemptions of up to five years for newly formed small firms.

 

Key words: Convenience license, provident fund, simplified license, small firms, taxation, youth unemployment.