In the past two decades, research on theinformal sector has emphasized the heterogeneity of thispart of the economy, example in terms of entry costs, firmsize, and access to credit, forward- and backward linkagesas well as human and physical capital endowments. Yet, notmuch research has investigated the causes of thisheterogeneity and the implied inefficiencies. This is truein particular for Sub-Saharan Africa, where informalitydominates urban labor markets. Understanding these causesand the implied inefficiencies is however necessary todesign policy interventions that are able to remove the mostbinding constraints for informal entrepreneurs. This notesummarizes the main findings and policy conclusions from aresearch project that analyzes the quantitative importanceof various constraints to informal enterprises in WestAfrica and Madagascar.