Most MSMEs in the Dominican Republic are informal

SANTO DOMINGO, DOMINICAN REPUBLIC — Results from the National Survey of Micro, Small and Medium Enterprises (MSMEs) have found that the overwhelming majority of MSMEs in the Dominican Republic are in the informal sector.

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MSMEs drive economic growth in the Caribbean. (Photo by RF Studio on Pexels)

This can pose a significant challenge for labour in the country, given the informal sector leaves workers highly vulnerable to external shocks and without the economic protections that would help keep them afloat if the worst were to happen.

However, government officials acknowledged the importance of this survey in helping to identify areas where support and allocation of resources are most needed.

In a Dominican Republic Central Bank (BCRD) release, Minister of Industry, Commerce and MSMEs Víctor Bisonó Haza was quoted as saying: “These results open the doors to a range of transformative policies, such as initiatives to improve access to financing; reduce barriers to business formalization; stimulate innovation and technological adoption; and strengthen training and the development of new and improved business skills that respond to the particular needs of each industry and region.”

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    MSMEs are pulling their weight

    One of the reasons why these results are so significant is that MSMEs contribute a fair share to gross domestic product (GDP) and account for a large portion of employment.

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    MSMEs account for a large share of employment in the Caribbean as a whole. (Photo by Paul Efe on Pexels)

    This is the case not just in the Dominican Republic but in the Caribbean as a whole, as noted by the Caribbean Development Bank (CDB).

    The CDB has noted that MSMEs are “integral to Caribbean socio-economic development”, accounting for 60-70% of GDP and 50% of employment.

    Additionally, between 70% to 85% of all Caribbean enterprises are MSMEs, according to the CDB’s data.

    Results of the Dominican Republic’s National Survey seem to reflect this, as it found that around 62% of the country’s total employment came from MSMEs.


    Informality challenge

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    Job informality has dramatically increased in the Caribbean since the COVID-19 pandemic. (Photo by lascot studio on Pexels)

    However, while MSMEs in the Dominican Republic account for a large share of employment, just a fraction of those jobs have the security that comes with being in the formal sector.

    Results indicate that just around 15% of the more than 400,000 economic units associated with MSMEs in the nation are registered as formal.

    The remaining 85% are informal, meaning they are not registered companies under the National Taxpayer Registry (RNC) and may not comply with regulations or other labour requirements of a formal business.

    Informality in the Caribbean has been on a perilous upswing since the onset of the COVID-19 pandemic. The trend has been noticeable to the point where international organizations have called for governing bodies in respective Caribbean nations to take urgent action to address it.

    Informal jobs leave Caribbean workers even more vulnerable to external shocks such as COVID-19, and while they present an immediate way for one to earn a living and provide for one’s family, the risks and vulnerabilities that come along with it can often be a burden on resources in the long-run.

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