Welcome to another week of financial learning. Today, I want us to discuss how we can reach out and save the informal sector. Data from the Ghana Statistical Service (GSS) has shown that the informal sector contributed about a fourth of the overall economy in the second quarter of 2019 via a report by Obed Attah Yeboah in the BFT on Tuesday, October 1, 2019.

In the same report, GSS explained that the major informal sector activities that contributed to this value were agriculture, industry, and services which happened outside business settings.

Other insightful findings from Obed’s article were the fact that 62% of commercial establishments in Ghana were in the informal sector.

For the Central government, their major concern will be the amount of taxes they can mop up from this sector. The report indicated that, out of the 70% of the country’s workforce who find themselves in the informal sector, only 2% pay tax!

This minute figure is similar to the percentage of workers in the informal sector who are enrolled in pension schemes. Before I go into the issues of focus today, I want us to refresh ourselves on what the informal sector is.

The informal sector is basically that part of the economy not properly taxed or monitored by the central government.

The original use of the term “informal sector” is attributed to the economic development model put forward by W. Arthur Lewis, used to describe employment or livelihood generation primarily within the developing world. In his book, he also defined the informal sector based on job security i.e employment security, work security, and social security.

In my earlier article on retirement, I made mention of conscious education for workers in the informal sector towards pension. We all know that quasi-pension houses for the informal sector have been established to meet the needs of the informal sector.

But the real question is, how many of the 70% of the country’s workforce in the informal sector know much about this scheme.

How many of the workers in the informal sector appreciate the need to be financially disciplined?

How many of the workers in the informal sector go through periodic business refresher courses ranging from proper bookkeeping to the use of IT for job development etc.

We cannot as a country continue to cry foul and complain about taxation hovering around the few formal sector workers when we constantly fail to address the needs of the informal sector workers.

Since the year 2000 to date, I have heard successive governments talking about widening the tax net to cover the informal sector. Yet, nothing much has changed in the so-called implementation process.


When workers in the informal sector are not given that needed respect and empowerment, policies upon policies will not yield any result.

Luckily, for us, almost all the workers in the informal sector have unions and associations that are always ready to be engaged in healthy discourse.

The purpose of such meetings should not be geared towards taxation.

It should be on how you want to improve their work before measures geared towards drafting them into the tax bracket.

The financial sector institutions are also not doing much when it comes to financial education for the informal sector workers. The drive I see mostly is towards mobilization deposits.

What happened to the education role of financial institutions? Corporate Social Responsibility should not just be limited to building pipe-borne water or a football pitch.

Massive education is also key!

A simple survey in our small towns will tell you the number of artisans who have no knowledge of why they need to maintain bank accounts for their business, which should be distinct from their personal accounts.

Can we blame the government for such basic information?

Yes and No! We have government agencies like the National Commission on Civic Education (NCCE) whose main goal is to educate Ghanaians on government policies and programs.

They can only educate when the government makes it a policy or program like 1D1F, Free SHS, etc.

The informal sector is calling for help. Our GDP can grow by more than 20% in the next 2 years if we start to empower the informal sector. The mantra “Ghana Beyond Aid” in my view rests so much on the growth of the informal sector.

People should be empowered with the use of technology. The carpenter on the Adeiso road goes before his bed to pray for customers who use that road while with IT he can easily market his products to other parts of the country.

This carpenter will never have this mindset until he is trained by deliberate government policy or that of a financial institution.

My advice to workers in the informal sector is to take up their own cross. They should begin to empower themselves. I must say, there has been some growth and initiatives by some artisans. They have upgraded their businesses and invested in technology and financial education.

The only way you can expand your business as an artisan is to invest in financial knowledge and constant skill training programs.

One of the easy avenues you can polish your skills as a worker in the informal sector is YouTube.

It is an avenue where knowledge is shared. Even if you cannot operate a company, ask for help from someone who can assist.

I have personally seen caterers who have learned new dishes via YouTube. Some hairdressers are learning new styles from YouTube. My channel, for example, Patrick TV GH on YouTube offers daily financial discipline and business ethics on YouTube. This has benefitted people who have watched my videos.

Information is easy to find in our time, thus, we have no excuse as workers in the informal sector to continuously blame the government and other bodies when we fail and suffer in our old age.

I have educative videos on YouTube about retirement.

The more you invest in these kinds of materials the better you become in your field.

Workers in the informal sector should also remember that technology is changing the face of many jobs in the world. In the near future, chances are that your current job will cease to exist. The implication here is that you will be unemployed!

The only way you will stay relevant in the next five years will be through skill upgrades and divestiture.

Financial education is therefore very important for all sectors more especially the major employing sector of the country.

If we have only 30 to 40% of our population running their revenues and income through the formal banking sector then we have a long way to go as a country.

Financial discipline is practically impossible without a bank account!

In conclusion, I will like to encourage churches and religious societies to take up this call of educating workers and artisans in the informal sectors through seminars and periodic workshops.

The more people are educated, the more enlightened they become. I will also urge the government to do what is needed before what is necessary.

What is needed now is to train and empower the informal sector workers before bringing on board the call for tax net expansion.

Financial institutions should also continue to train and offer free business expansion services. When informal sector customers feel loved by their institutions, they will always attribute their growth to you.


Patrick Baah is a chartered banker with over 5 years experience in main stream banking having worked in various capacities. He is currently at the Branch Manager Position of his institution. He has been a qualified member of the Chartered Institute of Bankers, Ghana with a good membership standing since the year 2013. He also holds EMBA and BA from Kwame Nkrumah University of Science, Technology, and the University of Ghana respectively. Patrick is the originator of the daily epistle dubbed “Savings Tip of the Day” which has been running for over a year on WhatsApp and Facebook. Patrick has also been teaching on the Topics Savings, Investment and Financial Independence for over 2 years and a research fellow for ILAPI Ghana. He runs a financial channel on Youtube by name “Patrick TV Gh” and has appeared a couple of times on the business segment of TV3 News 360. Patrick is into youth facilitation and counselling. I can be contacted via baasco2006@gmail.com and or 0243984492.


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