Ghana’s informal economy: Size, significance and human impact
The informal economy in Ghana encompasses small businesses and self-employment largely outside payrolls, company registers and conventional tax records. It includes food sellers, mechanics, tailors, minibus taxi operators, market traders, domestic workers, family farms and online traders. Much of this work is visible every day, yet hard to measure when payments stay in cash or in notebooks.
Recent figures show its scale. The Ghana Statistical Service’s 2023 Population and Housing Census estimated about 18.1 million people were informally employed, 82.2% of the employed population. A widely cited 2018 World Bank estimate placed informal output near 18.5% of GDP and informal employment at roughly 85% of non-agricultural work. The employment share is higher because average output per worker is low.
For Australian readers, Ghana’s experience should not be treated as a smaller version of the local market. Ghana relies much more heavily on informal trade, while Australia has stronger payroll, tax and labour institutions. Both nevertheless contain cash-based microbusinesses, casual work and sole traders. Comparing them reveals which support systems help workers enter the formal economy without losing income.
Work that keeps the economy moving
These enterprises perform essential market functions. Informal food vendors supply affordable meals, mechanics keep vehicles moving, traders connect farms to cities, and domestic workers care for households. Formal shops and manufacturers also depend on this network for deliveries, packaging, transport and low-cost services. A disruption to street trading can therefore affect larger supply chains.
Informality also provides an entry point when offices, factories and formal shops cannot absorb enough new workers. It can support household resilience through flexible hours, savings and income that may be divided among relatives. Yet choice and constraint often coexist: some traders pursue autonomy, while others shift between precarious work because formal jobs, childcare or credit remain inaccessible.
Measuring a hidden but visible economy
Measurement starts with definitions. Some surveys classify a business as informal by its size, registration or employment status; others ask whether workers have contracts and social-insurance coverage. The same activity can therefore produce different totals. Underreporting is common, since household businesses may be brief, seasonal or shared across several locations.
A credible estimate combines labour surveys, census counts, municipal permits and business registers with tax and mobile-payment data. No source is complete: digital records omit cash, while tax files miss traders below registration thresholds. More frequent regional surveys, disaggregated by gender and disability, would show where informality is falling and where policy support is most needed.
Livelihoods across cities and regions
Geography shapes the work. In Accra, Kumasi and Tamale, trading occupies pavements, bus terminals and neighbourhood lanes; in rural districts, informal work often centres on farming, food processing and seasonal labour. Urban markets provide dense customer networks, but congestion, eviction and poor sanitation can destroy income quickly. Rural workers face thinner transport and storage networks.
Entry barriers are usually practical rather than purely cultural. Traders may lack start-up capital, working space, childcare, safe storage or the records needed for bank credit. Rotating savings groups and family networks can bridge these gaps, while high-interest digital loans can deepen vulnerability. Policies that improve pavements, lighting, toilets, wholesale storage and market information can raise productivity as well as dignity.
Cash, mobile money and access to finance
Cash remains central to many transactions because it is immediate, trusted and useful for small amounts. Mobile money has changed the pattern rather than replaced cash, allowing vendors to receive transfers, pay suppliers and build transaction histories. A customer paying by mobile money can make one sale visible, but irregular activity still leaves an incomplete financial picture.
Finance is the next constraint. Informal workers often turn to savings clubs, associations or personal networks because formal lenders demand collateral, records or a registered enterprise that they do not have. Digital lending can open access, yet fees and aggressive repayment schedules require oversight. A simple bank or mobile account should complement these systems, not displace them.
A practical route to formalisation
Formalisation works best as a ladder. A one-time business registration, affordable tax thresholds, mobile onboarding and clear rules for market space can bring traders into official systems. Abrupt enforcement can instead push activity underground, reducing tax revenue while destroying livelihoods. Traders also need practical help with bookkeeping, permits, food safety and access to public procurement.
Social protection should reach people where they work. Portable benefits, basic health coverage, injury support and pension contributions can be designed around low and seasonal incomes, including domestic workers who may not share a formal employer’s payroll. Municipal authorities can improve sanitation, storage and dispute resolution, while trader associations provide useful local information. Formal status must improve security, not add paperwork.
Lessons from Australian markets and law
Australia offers a useful, though imperfect, comparison. In Sydney and Melbourne, high rents and council charges can make a stall or tiny shop difficult to sustain. Weekend and farmers’ markets remain lively, but stallholders commonly need permits, insurance and food-safety compliance. Contactless cards, EFTPOS and app-based payments are routine, helping owners record turnover while leaving some cash activity less visible.
Legislation also reveals the difference in institutions. Employees are covered by the Fair Work Act and National Employment Standards, while contractors operate under contract and state or territory rules. Sole traders have taxation and record-keeping duties, and many use an Australian Business Number. Ghana cannot copy Australia’s system, but the Australian lesson is clear: predictable rules work best when registration and compliance remain affordable.
| Dimension | Ghana | Australia |
|---|---|---|
| Enterprise structure | Often unregistered family businesses, stalls and self-employment | More registered sole traders, companies and platform work |
| Payment mix | Cash and mobile money | Cards, contactless EFTPOS, transfers and some cash |
| Records | Payroll and tax data miss much activity | Payroll, tax and bank data capture more, though cash and gig work can remain hidden |
| Worker protections | Coverage varies sharply by employer and location | Fair Work standards, superannuation and Medicare offer stronger baselines |
| Main policy risk | Enforcement can erase fragile livelihoods | High compliance and premises costs can push microbusinesses informal |
Building a fairer place for informal work
The strongest policy for Ghana is a safer path into visibility and rights. Regular data, simpler registration, portable protection and better market infrastructure would allow thousands of small enterprises to keep earning while contributing more visibly to public finances. Local authorities and national agencies must publish clear rules and test reforms in markets of different sizes.
Readers can help sustain informed coverage by following OkayGH’s latest news reports, sharing evidence-led analysis and supporting deeper reporting on Ghana’s economy and culture. Better visibility of informal work would give policymakers evidence, workers recognition and the public a truer picture of where national prosperity is created.