Perceptions of Costs and Benefits of Informal-Formal Linkages: Market and Street Vendors in Accra, Ghana

Abstract

This paper investigates the ways in which linkages between the informal and formal segments of an economy yield benefits to, or impose costs upon, informal workers. The investigation is based on the self report of market and street vendors in Accra regarding their relationships with the formal economy and its institutions. The data are drawn from the Informal Economy Monitoring Study (IEMS) conducted in Accra, Ghana, with a World Bank study of informal household enterprises providing context for the IEMS a study and a basis for interpretation of its findings. Data from 15 focus groups and a survey of 150 vendors from both the center city and non-central locations of Accra are analyzed in terms of vendors’ relationships to the value chain, non-governmental institutions, the government, and the macro-economy. The last two are found to exert a strong, mostly negative influence on informal operators, offset to some extent by support from membership-based organizations and NGOs. Access to loans from micro-finance institutions is viewed both as a positive and negative influence on vendors’ work. Although there are few visible direct linkages between informal operators and formal firms, they are to some extent mutually interdependent as retailers and suppliers in the value chain. Taking advantage of the potential synergy in informal-formal linkages will require government and other actors to become more proactive toward facilitating, rather than denying, infrastructure, support services and adequate space for informal traders.