The Effects of Microenterprise Location Choice

This project addresses the business location choice of physically mobile, low capital microentrepreneurs, such as street vendors and motorcycle taxi drivers, in Kampala, Uganda. More than 50 percent of Kampala’s businesses are microfirms and their owners are quite poor. The World Bank estimates that approximately 90 percent of microentrepreneurs in Kampala live on less than US$1.90/day. Many are self- employed out of necessity due to a lack of other opportunities for paid employment. Among these firms, the most common occupation is retail, either street vending or shopkeeping, and the modal firm size is one employee—the owner herself (World Bank, 2018). Microentrepreneurs in street vending and transportation are physically mobile, own few assets beyond what they carry to conduct business, and tend to offer goods and services quite similar to their competitors, such that their location is a primary product differentiator. These businesses serve a limited market. They typically locate close to their homes in low-income neighborhoods, and more than 80 percent sell exclusively to other households who live within walking distance (World Bank, 2018). This project asks whether the spatial reallocation of mobile microentrepreneurs within the city could pose a cost-effective means of expanding market access and increasing incomes for the urban poor. In other words, to what extent could businesses increase profits by locating elsewhere?