# **Conclusions**

This paper has analyzed new registrations and company‐level tax records with a focus on three specific questions. First, of the large number of companies registered in recent years, how many are currently ‘formally’ active? Second, using the number of registered companies in a sector as proxy for interest, which sectors and subsectors have received the most attention from investors and entrepreneurs? Third, what has been the contribution of newly registered businesses to the overall economy in terms of taxes, tax‐bearing employment, and exports, and how does this vary across sectors and subsectors?

This paper finds approximately 40 percent of registered companies (up to 2012) to be active. While this might seem low, the growth in newly registered and active companies is impressive — with approximately 9,300 companies added between 2008 and 2012, and approximately 1,000 additional companies expected to become active in 2013.

Registrations in the services sector have dwarfed the other sectors, comprising 75 percent of total company registrations. Within services, half of these registrations have been recorded in the wholesale and retail trade. There are a number of possible explanations for the dominance of trade in registrations. First, the move to diversify away from agriculture — particularly as retail trade constitutes a low start‐up capital alterative. Second, increasing domestic purchasing power could justify growth in internal trade. Third, existing informal businesses may have decided (or have been strongly encouraged) to formalize their operations via registration.

Newly registered companies contributed 24 percent of the increase in tax declarations, with 19 percent coming from the services sector and 4 percent from industry. The contribution from the services sector can be explained by two factors: the large number of businesses in trade, and the entry into the market of major telecommunications operators. Industry is driven by the subsectors of mining, manufacturing, and construction. The marginal role of agriculture is likely due to its largely tax‐exempt status.

Newly registered companies have helped to widen the tax base. Since 2008, a number of large companies have entered the market, which partly explains the large increase in tax declarations. The 10 leading newly registered taxpayers accounted for approximately one‐ third of additional declarations in 2012, with the rest coming from medium‐sized newly registered companies.

Newly registered companies made a sizable contribution to employment growth. From a starting point of approximately 650 jobs, or 0.7 percent of taxable employment, the number of taxable jobs at newly registered companies increased 46‐fold between 2008 and 2012, reaching 11 percent of the total and contributing 16 percent of the growth in taxable employment (with 7 percent from the services sector and 6 percent from industry).

The additional formal jobs and tax receipts generated are mostly attributable to medium and large sized companies. Despite their numbers, the contribution of small companies to tax declarations and taxable employment is limited.

Newly registered companies in mining and quarrying have delivered the highest number of new jobs. The increase in employment in industry is due to mining and quarrying (44 percent), manufacturing (22 percent), and construction (32 percent). In particular, a spurt in mining and quarrying has contributed to a 3 percent growth in total taxable employment.

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