Impact of SME Formalization
Informality continues to shape Pakistan’s textile and automotive sectors, which, despite their economic significance, rely heavily on unstructured and informal practices. To understand barriers to formalization, a baseline study with 40 enterprises in Lahore and Karachi examined the reasons behind resistance, potential facilitation mechanisms, and policy incentives. Validated through multi-stakeholder consultations, the study found that formalization is a multidimensional process requiring trust, simplified compliance, and practical incentives. The final phase documents ten business cases - five each from textiles and automotive - detailing enterprises’ journeys toward formalization, the challenges faced, benefits gained, and the support systems that enabled their transition.
Voices
Hear directly from SME owners and workers on how formalization has impacted their lives.
Explore