# **1 Introduction**

The number of firms operating in Africa and their characteristics remain challenging to ascertain due to the limited and inconsistent availability of establishment censuses and business statistics across the continent. This paper aims to bridge this knowledge gap by mapping existing sources of firm-level data, integrating employer information from household and labor surveys, and applying a simple statistical model to estimate the total number of firms in African countries, categorized by size and formal status. The scarcity of data on the number of firms in Africa starkly contrasts with the extensive, up-to-date, and comparable firm-level information available in advanced economies. For instance, the OECD’s Structural and Demographic Business Statistics and the European Union’s Business Demography data exemplify the comprehensive nature of firm demographic information available for these regions. Previous studies have emphasized the importance of these estimates for Africa (Teal, 2023b,a; Tsaedu et al., 2023), but often focus on a few particular countries for which firm data is available.

Firm demographic indicators are crucial for policymakers as they provide insights into the structure and dynamics of the economy, enabling targeted and effective decision-making. These indicators help identify which sectors and firm sizes drive growth and highlight challenges, such as limited access to technology needed to boost productivity. They are also instrumental in making decisions related to taxation, social security, and policies aimed at fostering job creation. Additionally, firm demographics are vital for assessing economic vulnerabilities, designing tailored crisis responses, and evaluating the long-term impact of policies. A recent article by The Economist (2025) suggests that “Africa has too many businesses, too little business” emphasizing the lack of large enterprises on the continent as a key constraint to economic growth. Better estimates of the distribution of firms by size and formal status, along with the distribution of workers associated with them, can provide greater clarity on the magnitude of this gap.

Estimates on business demographics are also relevant for investors and the private sector. This information can be used to estimate the potential markets for intermediary inputs and the demand for finance, along with population demographics indicators, which are already widely used for these purposes. An example of an application is provided by Cruz, Salgado, and Tran (2024), combining our estimated number of firms by various characteristics across African countries to analyze the potential for digital upgrades by businesses across the continent. Another example of application is the MSME Finance Gap Report (IFC, 2017), which uses estimates on the number of firms to analyze the gap and potential demand for finance by micro, small, and medium enterprises.

This paper estimates the total number of firms in all African countries, distinguished by size and informality status. It contributes to the broad research agenda on firms in developing countries by producing a dataset with the basic demography of African businesses. The dataset is the result of applying statistical methods to information from national censuses and surveys as well as data from the International Labor Organization (ILO) and the World Bank Enterprise Surveys. First, we estimate the number of African firms at the aggregate and country levels based on employers. Second, we differentiate between formal and informal firms. Lastly, we estimate the size distribution for both formal and informal firms. We then validate our results by comparing our 2