The portrait of Uganda’s informal sector: What main obstacles do the sector face?

Using primary data collected from business owners, this paper examines the nature and obstacles in the informal sector of Uganda. The study finds that education level matters in the selection of enterprises, with businesses requiring no specialized skills mainly run by primary school dropouts. Secondary school dropouts show strong entrepreneurial spirit, motivated by business opportunities and failure to find formal employment. The empirical results show that access to finance, crime, theft and disorder, electricity, water, taxes, burdensome inspections, and informal gifts are significant obstacles to the operations of the informal sector in Uganda.