<p>Neighbourhood and District Economic Development: Domain Report</p>

Using “household microenterprises” (HMEs) to distinguish firms employing up to three people from other informal sector firms, this paper looks at this sector in five African cities – Accra, Lagos, Dar es Salaam, Lilongwe and Harare – using qualitative interviews and secondary literature. The paper discusses two meanings of regularisation for HMEs, identifying “progress” as meaning both routinisation (stability and predictability) of activities, and security (regularity and permanence) of income, at both individual and cluster/group levels. The paper then develops a coherent framework for analysing HMEs as firms, bringing together six issues which shape HMEs’ activities, but are often analysed individually: formalisation, factor supplies (capital, labour and entrepreneurship), hybrid governance, agglomeration, value chains with larger firms, and HME organisation. It examines each of these dimensions in detail, emphasising the importance of industrial sub-sector and spatial location in shaping how each dimension impacts an HME, and using examples from the research done on each of the five cities. The paper argues that several concepts are useful for thinking about HME policy, including necessity versus opportunity entrepreneurship, indirect formalisation via HME networks and groups, the benefits to HMEs of agglomeration, the significance of “everyday politics”, and HMEs’ presence in formal firms’ value chains. The paper concludes there is no general “one-size-fits-all” approach, arguing for a “bottom up” approach to HME policy.