The Office of the Registrar of Companies (ORC) has been urged to prioritise direct logistical support to Micro, Small and Medium Enterprises (MSMEs), after a new study found that hands-on assistance is the most effective way to encourage business formalisation.
The study, conducted by the University of Ghana Business School (UGBS) and the International Growth Centre (IGC) in collaboration with the ORC, involved nearly 3,000 MSMEs in Accra and assessed three interventions, direct logistical support, fee waivers and education on the benefits of registration.
Researchers found that helping business owners fill out forms, queue, submit documents and receive their certificates increased registration rates by 7.2 percent. In contrast, waiving registration fees or providing educational sessions showed no statistically significant effect.
Professor Patrick Asuming, Lead Researcher and Development Economist, told the media that the biggest barriers to formalisation were the transaction costs, time, distance and complexity, not the financial cost.
“Physical presence at the ORC, queuing, and even knowing which forms to complete are major constraints for many businesses,” he said.
Prof. Asuming added that fear of taxation was another critical deterrent, as many MSMEs believed that registering automatically placed them under strict tax scrutiny, potentially creating financial pressures during early business stages.
“The fear of taxes is powerful and overshadows the benefits of formalisation, even though formalising often enables businesses to benefit from tax laws rather than fear them,” he said.
To improve formalisation rates, he recommended decentralisation and digitalisation of ORC services through mobile units and fully online processes to reduce travel and waiting times.
However, he cautioned that physical support must remain available for entrepreneurs who struggle with digital platforms.
He also urged policymakers to explore separating business registration from tax registration to address long-standing fears.
This, he said, would require collaboration between the ORC, Ghana Revenue Authority and Ministry of Finance to redesign procedures in a more user-friendly manner.
Dr Henri Telli, Senior Country Economist at IGC Ghana, also emphasised the need for inclusive reforms. He said a hybrid approach combining digital registration with human-assisted support would ensure no entrepreneur is left behind.
“If we truly want widespread formalisation, then the process must be inclusive. Putting everything online will exclude many people who cannot navigate digital systems,” he said.
Dr Telli noted that misconceptions about immediate tax penalties continue to prevent many business owners from registering, depriving them of access to government support, financing opportunities and productivity-enhancing programmes.
He said institutions such as the ORC, Ghana Revenue Authority and Ghana Investment Promotion Authority must intensify public education to dispel fears and provide direct assistance to improve formalisation nationwide.
