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The informal sector, while a vital engine of economic growth and employment in many developing countries, faces a myriad of challenges that can stifle its potential. One of the most pressing issues is the lack of access to formal financial services. Many informal workers and entrepreneurs operate outside the traditional banking system, making it difficult for them to secure loans, open bank accounts, or obtain credit.
This financial exclusion not only limits their ability to invest in their businesses but also makes it challenging to weather economic downturns or unexpected expenses. Another significant hurdle is the absence of training and skill development opportunities. Many individuals in the informal sector possess valuable skills but often lack formal training that could enhance their productivity or help them adapt to market demands.
Without access to vocational training programmes, these workers may find it difficult to upgrade their skills, which can hinder their professional growth and earning potential. Regulatory barriers also pose a substantial challenge. Informal businesses often navigate a complex web of bureaucratic hurdles, which can discourage them from formalising their operations.
The fear of inspections, taxation, and legal repercussions can lead many to remain in the shadows, limiting their ability to scale and compete effectively in the market. Finally, the informal sector is often vulnerable to economic fluctuations and external shocks. In times of crisis, such as during a pandemic or economic downturn, informal workers may find themselves without a safety net, leading to increased poverty and instability.
Addressing these challenges requires a comprehensive approach that includes targeted policies, supportive frameworks, and a commitment to empowering those who contribute significantly to the economy yet remain underserved. John Dramani Mahama's vision emphasises the need to tackle these issues head-on, ensuring that the informal sector is not only recognised but also supported in its quest for growth and sustainability.
