Branding to lead development in Ghana’s Informal Sector

The informal sector in Ghana dates back to colonial times, characterized by diverse labour, including peasant proprietors, agricultural labourers, distribution agents, transport owners, and more.

Despite the expansion of the modern economy, the informal sector has grown, now employing 80% of the labour force. Structural adjustments in the mid-1980s and the inability to provide sufficient employment led to a large unemployed pool gravitating towards the informal sector. By the 1990s, informal sector employment was five and a half times that of the formal sector.

Low educational attainment contributes to the growth of the informal sector, with about 31% of Ghanaians aged 15 and above never attending school, and 55.7% having only basic education. The formal private sector's failure to generate enough jobs has pushed many into the informal sector, exacerbated by a hiring freeze in the public sector and competition from foreign companies.

The informal sector in Ghana comprises micro and small-scale enterprises, including producers, wholesalers, retailers, and consumers, with various intermediary service providers. Informal workers are mainly self-employed, such as farmers, traders, food processors, artisans, and craft workers, with activities differing between rural (mainly agriculture) and urban areas (more non-agricultural activities)

This sector is characterized by underemployment, poor working conditions, uncertain work relationships, and low wages. A significant portion of the population is living with high-income insecurity, which poses substantial challenges to their well-being and economic stability.

Workers in this space often face harsh realities. Underemployment means that many individuals are working fewer hours than they would prefer or in positions that do not fully utilize their skills and capabilities. This underutilization leads to lower productivity and limited opportunities for career advancement.

The working conditions in the informal sector are frequently substandard. Workers may operate in environments that lack essential safety measures, adequate lighting, ventilation, and sanitary facilities. These poor conditions not only affect their health and safety but also reduce their overall quality of life.

Uncertain work relationships are another hallmark of Ghana’s informal sector. Many workers do not have formal contracts or clear terms of employment, leading to job instability and unpredictability in their incomes. This uncertainty makes it difficult for them to plan for the future, save money, or invest in their education and skills development.

Low wages are also a pervasive issue in the informal sector. Without the protections and advocacy that come with formal employment, workers often receive wages that are insufficient to meet their basic needs. This low pay exacerbates poverty in the country and limits their ability to access essential services such as healthcare, education, and housing. The high-income insecurity experienced by the majority of people in the informal sector further compounds these challenges.

Without a stable and predictable income, individuals and families struggle to cover their day-to-day expenses, let alone save for emergencies or invest in their future. This financial precariousness creates a cycle of poverty that is difficult to break.

Trade unions in Ghana face significant challenges in organizing workers within the informal sector. Despite their efforts to ensure that employees work in safe and fair conditions that meet their basic human needs, many obstacles hinder their progress. The lack of formal employment contracts, the dispersed nature of informal work, and the varying types of jobs within this sector make it difficult to mobilize and advocate for workers' rights effectively.

The existence of the informal sector and its challenges as outlined above cannot be ignored. To address these issues, it is crucial to implement strategies that enhance the conditions of the informal workforce one of which is branding the sector to help solve these challenges. By addressing the challenges faced by the informal sector, Policymakers and stakeholders across the country can work towards creating a more inclusive and equitable labour market that benefits all its citizens.

A brand can be referred to as the mental connection people have with an entity. It is the balance between the emotional and functional experiences a consumer has when they interact with a product or service. Branding is crucial for the success and sustainability of any business, acting as a valuable asset and legal statement of ownership. Despite the informal sector's challenges with sustainability and legal status, it can still effectively brand its products and services.

Here are nine strategies to brand the informal sector positively and drive its development:

1. Highlighting Contributions to the Economy

• Economic Backbone: Emphasizing that the informal sector is a vital part of Ghana's economy, contributing significantly to GDP and employment.

• Diverse Skills: Showcasing the diverse skills and entrepreneurship found in the informal sector, from artisans and craftsmen to small-scale traders and service providers.

2. Promoting Success Stories

• Success Narratives: Sharing stories of individuals and businesses that have thrived in the informal sector. Highlight their journeys, challenges, and successes to inspire others.

• Role Models: Identifying and promoting role models within the informal sector who can serve as ambassadors for change and progress.

3. Fostering Innovation and Entrepreneurship

• Innovation Hubs: Creating innovation hubs and incubators specifically for informal sector entrepreneurs to develop their ideas, access resources, and receive mentorship.

• Training Programs: Implementing training programs focused on business skills, financial literacy, and digital tools to help informal workers grow their businesses.

4. Improving Working Conditions

• Health and Safety Standards: Work towards improving health and safety standards in the informal sector to ensure workers have a safe and secure environment.

• Social Protection: Advocating for policies that provide social protection and benefits, such as health insurance and retirement plans, for informal sector workers.

5. Enhancing Market Access

• Market Linkages: Facilitating linkages between informal sector businesses and larger markets, including export opportunities, to increase their reach and profitability.

• E-Commerce Platforms: Developing and promoting e-commerce platforms tailored for informal sector businesses to help them reach a wider audience and increase sales.

6. Building Strong Networks

• Trade Associations: Strengthening trade associations and cooperatives within the informal sector to provide a collective voice, bargaining power, and access to resources.

• Networking Events: Organizing networking events, fairs, and expos to connect informal sector workers with potential clients, partners, and investors.

7. Public Awareness Campaigns

• Educational Campaigns: Launching public awareness campaigns to change perceptions about the informal sector, emphasizing its importance and potential for growth.

• Media Engagement: Use media platforms to highlight the informal sector's contributions and advocate for supportive policies and practices.

8. Government and Policy Support

• Inclusive Policies: Advocating for government policies that support the informal sector, including tax incentives, access to credit, and infrastructure development.

• Legal Framework: Working towards formalizing parts of the informal sector through simplified registration processes and legal recognition.

9. Leveraging Technology

• Digital Inclusion: Promoting digital inclusion by providing access to affordable internet and training on digital tools to enhance productivity and market access.

• Mobile Banking: Encouraging the use of mobile banking and digital payment systems to improve financial inclusion and security for informal workers.

By implementing these strategies, Ghana's informal sector can be branded as a vibrant, innovative, and essential part of the economy that is poised for growth and development. Although informal businesses face many challenges as highlighted above, they have a high potential for building brands.

Many start as crucial means of livelihood for their owners, experiencing both sudden success and unforeseen downfall. The risks and lack of business knowledge and formal ethics often lead to their collapse.

While initial success is common, sustaining prosperity is difficult. Branding among other factors is crucial for their sustainability and growth.

Most informal enterprises are unaware of branding techniques and benefits, but they can improve by addressing their deficiencies and learning proper strategies.

Effective branding can lead to increased customer engagement and profitability, potentially transforming informal businesses into bigger formal, legal entities with greater brand equity. This deliberate and positive branding can attract investment, support, and recognition, ultimately leading to improved conditions and opportunities for those working within the sector.