Abstract

The Mozambican Government has long realized that the only way to solve the unemployment problem is by encouraging entrepreneurship amongst the youths through the formation of small enterprises. Legally operating enterprises will also contribute to the government’s coffers through taxations, exercise duties and contributions to the provident fund. The government introduced two accessible licenses for small firms namely the convenience license and the simplified license with the hope that more enterprises will start-up and those operating informally will register and legalize their activities. A study was carried out in Greater Maputo representing Mozambique as a whole to determine if these simplified licenses actually ease the registration of start-ups and informal firms. A sample of 485 small firms was drawn from the population of firms in Greater Maputo, using stratified random sampling method. Face to face interviews were conducted using structured, close-ended questionnaires to collect primary data. The study employed the quantitative methodology, and data were analyzed by the use of descriptive statistics that generated frequencies and percentages results.The study found that although a lot of red tapes and hindrances to firms licensing were eased, the new measures were still inadequate to bring about more small firms registration, and attract those operating informally to become formal. It was suggested that more reforms in the licensing structures be implemented, including the removal of registration fees for the first years of operation and allowing tax exemptions of up to five years for newly formed small firms.

Key words: Convenience license, provident fund, simplified license, small firms, taxation, youth unemployment.