The Small Entrepreneur in Fragile and Conflict-affected Situations

This report is part of a broader effort by the World Bank Group to understand the motives and challenges of small entrepreneurs in fragile and conflict-affected situations (FCS). The report’s key finding is that, compared to entrepreneurs elsewhere, entrepreneurs in FCS have different characteristics, face significantly different challenges, and thus may be subject to different incentives and have different motives. Therefore, it is recommended that both the current analytical approach and the operational strategy of the World Bank be informed by the findings that follow. The report summarizes findings of recent World Bank Enterprise Surveys (ES) conducted across Sub-Saharan Africa (SSA), Asia, and the Eastern Europe and Central Asia (ECA) Region as well as Doing Business indicators and additional World Bank Group studies and field observations. The report finds that the majority of entrepreneurs in FCS countries are small, informal, and concentrated in the trade/services sectors. According to the ES, and after controlling for the level of development (that is, GDP per capita), 1. The average FCS firm in SSA and the ECA Region produces less output than non-FCS firms2. The average FCS firm in ECA is by 20 percent less likely to innovate (that is, to introduce/upgrade new products and services) than its non-FCS counterpart.3. FCS firms start smaller and grow significantly more slowly, or even shrink (in the number of employees) over time, compared to non-FCS firms in the Regions analyzed.The report also highlights the differences in sector and business environment characteristics between FCS and non-FCS business environments.