Insights into the Informal Economy: Household Enterprises in Pakistan

By Dr. Umer Khalid

Abstract

Household owned micro-enterprises play an important role in generating livelihoods in developing countries like Pakistan. This paper presents first of its kind estimates of household enterprises in Pakistan using data from the Household Integrated Economic Survey 2015-16, including businesses operating in a fixed location or in mobile form. The analysis shows a total of 7.35 million household establishments operating in the country during 2015-16, with a slightly higher share in rural areas (52 percent), while province-wise, the significant share is based in Punjab (72 percent). The sectoral distribution shows that more than half of all household enterprises (53 percent) are working in the wholesale and retail trade sector, followed by transport and storage (14.6 percent) and manufacturing (13 percent) sectors. These household owned businesses have been severely hit by the recent slowdown in economic activities brought about by the COVID-19 crisis and require urgent support from the government. However, as such businesses are not registered with any government agency, it would be difficult to identify and reach them with any assistance. This study presents a roadmap for bringing these businesses operating in unorganized sector into the formal economy.

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