Informal economy key to transformational growth — Survey

A survey has identified the informal economy as the key to transformational growth, poverty reduction and consequently improving standard of living.

The study organised by Friedrich Ebert Stiftung, a German political non-profit organisation, showed that the informal sector was the largest employer with the sector accounting for 86.1 per cent of the economic active persons.

Considering its sheer numbers, the study indicated that the informal economy, which is dominated by wholesale and retail trade and services, had a huge potential for job and income generation.

 Incubator for business

Presenting the report dubbed “Understanding the Urban Informal Economy in Ghana,”  the researcher, Mr Eben Tawiah Anuwa-Amarh, said the informal economy could serve as an incubator for business development and an opportunity for on –the-job skills acquisition.

That he said was because the workers in the sector had real business acumen, creativity, dynamism and innovation as well as great entrepreneurial potential that could harness wealth creation.

The study was  to provide evidence-based research to help in the formulation of policies on the informal economy which  was based on 21 urban centres in the 10 regions of Ghana.

In order to achieve the full benefits of the sector, Mr Anuwa-Amarh, who is also a Commissioner at the National Development Planning Commission (NDPC) recommended the need for the government, donors and civil society to understand the sector.

Considering its importance and contribution to economic development, he noted that the informal sector should not be ignored, rather, the government should develop policies that would support their work.

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He also recommended that the state worked together with partners and stakeholders to remove barriers to enterprise growth and propose a formalisation roadmap for informal economy enterprise.

 Understanding the sector

The findings of the research further indicated that most of the people in the informal sector were between the ages of 15-35 with majority holding junior high and senior high school certificates.

Therefore, it recommended that entrepreneurial and financial literacy skills must be started early enough, possibly at the junior high school level to equip them.

Additionally, the survey recommended that established and existing state institutions in education and entrepreneurship development scale up capacity building initiatives for JHS and SHS leavers who wanted to start their own businesses.

The recommendation also suggested a database on the informal sector to help formalise their operations.

The President of the Ghana Chamber of Commerce and Industry, Mr Seth Adjei Baah, for his part said the government needed to pay critical attention to the informal sector and understand the issues pertaining to the sector.

The lack of understanding of the sector by the government, he said, was not helping to address the issues related to the sector.

He noted that the economy of the country was not growing because the sector that was supposed to be the engine of the economy was not given the necessary attention.