Regulatory frameworks and small and medium-sized enterprises growth in Sierra Leone: The mediating role of informality

Abstract

Business environment plays a vital role in enhancing SMEs formalisation and development. Accordingly, heavy regulation due to burdensome procedures and high cost of registration is detrimental for every business, more especially SMEs. This study therefore was undertaken to assess the nexus between regulatory frameworks and SMEs growth, by specifically investigating the mediating role of informality. The specific objectives were to assess the causes of informality among Small and Medium-sized Enterprises in Sierra Leone and to evaluate the effect of informality among small and medium-sized enterprises in Sierra Leone. The study adopted a descriptive research design that collected primary data from a sample of one hundred (100) using questionnaires. Descriptive statistical analysis was done using SPSS v26 and Microsoft Excel. Findings from the study assessed the causes of informality among SMEs and evaluated the effect of informality on SMEs by examining the problems faced by informal SMEs and the benefits of operating a registered business. The results showed that the problems faced by informal SMEs collectively affect their growth. The study concluded that the regulatory framework links SMEs to growth opportunities through the collective benefits derived from operating a registered business. The study further made recommendations on how to promote SMEs formalisation.