We identified several barriers which stop young founders and young informal business owners from registration:  Structural barriers within the registration process namely the cost of registration (1000+ USD), complexity and duration (70+ days). This administrative “sludge” has significant behavioural implications. Lack of knowledge of the process itself i.e. Registration.  Security concerns especially with regards to going to government offices in Mogadishu.  The need to have a network of people within the government or intermediaries to facilitate the registration process.  Different levels and parallel processes of business registration: Federal government, Federal state and district all which depend on where the business would operate and the sector of operation.  Access to finance.  The interconnection between business registration, access to finance and sectors of operation of the business. All these dimensions add to the complexity of the challenge and necessitate using a portfolio approach to this challenge. E.g. facilitating registration in itself is not helpful if then entrepreneurs are not able to access finance. Similarly, a bank account is required in order to complete the registration process.  Giving grants to entrepreneurs (seed funding or sponsoring registration fees) is not sustainable, particularly if entrepreneurs don’t see a benefit in registering that would incentivise them to renew their license. On the behavioral side we found an overall lack of understanding of the business registration process amongst the informal business owners and young entrepreneurs.  It was a surprise to find a digital platform for registration already set up by the government represented by the ministry of Commerce. However, there was mistrust from the public in using the platform (both due to data privacy concerns and a suspicion that the platform is not being properly staffed and supported on the back-end).  Digital transformation is led by the government, but it is not supported by solid infrastructure.  Legal vacuum on small and medium sized business policies covering registration among other laws to protect SME’s and manage risk.  Working directly with the government will be challenging, due to the elections, reliance on the government for data collection, and the lack of existing UNDP entry points in this space. Working with a partner like SIMAD University to do some small-scale testing of information materials would be more viable.

https://medium.com/@undp.innovation/one-behaviour-at-a-time-redesigning-entrepreneurship-pathways-in-the-arab-states-f2f45051bed9

1.     The postponed parliamentary and presidential elections from Feb 2021 until now with no foreseeable deadline for elections. The instability in government and the insecurity affected any work with government counterparts in this challenge and other Lab work .  2.     Structural barriers from the government side both in terms of cost and length of the registration process. Both issues can’t be dealt with without government involvement.  3.     The slow movement of government counterparts.  4.     No existing entry point between the ministry of commerce and UNDP which we could leverage in designing our behavioural solution. 

These data sources helped us define the problem and focus on registration process. Then to understand the registration process itself and where exactly entrepreneurs decided to stop the registration process. These qualitative methods were necessary to fill the data gaps from the government side as we have not numbers on registration. 

Behavioral insights helped us to redefine and focus our challenge on one desired outcome: informal business registration. As we found during our initial stakeholder meetings that the most important step for an entrepreneur to access much needed finances is registration their informal business. Additionally, this method helped us to find the barriers stopping founders from registering their informal business. Then in focus group discussions and exploratory surveys allowed us to navigate the system of registration in all its complexity and how people are colliding with it. Upon further investigation the behavioural aspects we want to modify which are the lack of understanding of the registration process.   

The academic partner was SIMAD university to which we have an ongoing partnership agreement. Our partnership gave us access to a large sample of students from SIMAD’s entrepreneurship training program. The students were either owners of informal business or early stage entrepreneur’s all trying to build their networks and knowledge in business. This was the ground for us to conduct surveys, focus group discussion and direct interviews. 

The Behavioural Insights Team (BIT) on a year long behavioural insights capacity building exercise along with 10 Arab States country offices. 

we haven't worked yet with any UN internal partner but we are trying to involve UNIDO at this stage. Leveraging their established relationship with government partners (Ministry of Commerce).