Coronavirus casts grimmer outlook for informal sector

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…as it records lowest share of GDP in 6yrs

The country’s largest employer and livelihood for many, the informal sector, has seen its lowest contribution to the economy since 2014, despite recording growth rate which more than doubled the 2018 figure.

Data from the Ghana Statistical Service (GSS) indicates the sector grew by 5.9 percent in 2019 against a 2.6 percent the previous year. Despite this impressive growth within the period, the sector’s contribution to the overall economy didn’t move in tandem as it rather declined by 1.6 percentage point to 27 percent in 2019.

This makes it the lowest contribution it has ever made to the economy in the past six years. In 2014, the sector contributed 29.2 percent to GDP but declined to 28.1 percent and 28.6 percent in the respective two years following it. Its contribution, however, inched up to 30 percent in 2017, making it the highest recorded for six years.

But the decline in contribution to GDP in 2019 seems to be a shadow of what is expected to come this year following the sudden appearance of the coronavirus pandemic. In fact, the entire economy is expected to record its slowest growth (1.5 percent) in 37 years since the infamous 1983 drought when it was plunged into a recession.

The informal sector is one of the sectors currently hardest hit by the coronavirus pandemic. Many traders are unable to replenish their stock due to restrictions on movement of people and closure of trade borders across the globe. Others have also lost their jobs and means of livelihoods or had their incomes shrunk significantly as people are now more cautious about patronising or consuming certain goods.

For example, due to bans on social gatherings, makeup artists, hair dressers, seamstresses and tailors, event organisers, decorators, graphic designers, caterers, and other related ancillary service providers have either ceased operations or had demand for their products reduced drastically, some to near zero.

Ruth Ackom, owner of Rutbed Catering Services, who operates from Mallam- Gbawe, a suburb of Accra, shared her plight with the B&FT, saying, the pandemic has consequently rendered her jobless as there has not been a single order from any of her clients ever since bans on social gatherings were effected in March 2020.

“Before the pandemic, at least every week I got some orders from my clients. Some were for funerals, weddings, and other parties. But ever since the ban on social gatherings was announced, all those orders have ceased outright.

What is even worst is that, there were some friends and clients who I supplied with ‘shito’ [a locally made chilly black sauce] on regular basis. But because everyone is now cautious about what they buy or eat, all these orders have stopped coming in. Some even call and ask me to show them how to prepare it because they have been advised to eat only foods prepared at home. So the pandemic has really put some of us out of business and we don’t know how we can recover from it, even after all fears of it are gone,” she said.

Mrs. Ackom says she plans on changing her beloved occupation to something else that would, at least, sell in the meantime until this whole pandemic brouhaha is over.

It must be noted that the informal sector is estimated to constitute 80-90 percent of the businesses in the country and any heavy impact on it will largely affect the general growth of the economy. Hence, it will be prudent that as government seeks to assist businesses affected by the pandemic with the GH¢1 billion stimulus, it doesn’t turn a blind eye to small businesses in the informal sector who even need such support more than ever.

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