Performance of manufacturing firms in Africa : an empirical analysis

The studies based on the Enterprise Survey show that most African firms are small and that few are exporters. Because of their institutional environment, their labor productivity is low, and their labor costs also tend to be low. Key constraints to firm growth vary by country, by sector, and by firm size. The binding constraints for most large formal firms in Africa are access to finance and to electricity. The chapters use data from two main sources. Chapters two-four use data from the World Bank's Enterprise Survey program. The enterprise surveys provide information on representative weighted samples of formal firms in each country. Surveys have been completed in over 100 low- and middle-income countries, including most countries in Sub- Saharan Africa. Since 2006, the surveys have used almost identical questionnaires and sampling methods. They cover manufacturing firms with more than five employees in two to five cities in each country. Because firms are sample from lists provided by government statistical agencies, company registrars, and other official agencies and because of the size limit, the Enterprise Surveys focus on formal firms. Chapter five (Fafchamps and Quinn) uses data from the Quantitative Entrepreneur Survey, one-time surveys of small and medium firms in food processing, garments, leather, metal products, and wood products. The surveys were conducted in the largest cities of three countries in Africa (Ethiopia, Tanzania, and Zambia) and two countries in East Asia (China and Vietnam). Unlike the enterprise surveys, these surveys included informal and semiformal firms, as well as formal firms. Given that informal firms account for most employment in Africa and that these firms face unique challenges, chapter five complements the analysis of formal firms in the other chapters.