Ghana’s informal economy continues to expand despite successive reforms aimed at improving business registration, tax compliance and financial inclusion, raising fresh questions about whether the country’s largest business ecosystem represents an engine of resilience, an untapped source of growth, or a persistent gap in economic policymaking.
Data from the Ghana Statistical Service’s Integrated Business Establishment Survey (IBES I) show that 92.3% of business establishments operate informally, even as the total number of businesses has grown to about 1.87 million. The findings highlight an economy dominated by micro-enterprises, many of which generate relatively modest annual revenues but collectively support millions of livelihoods.
Neighbourhood retailers, market traders, artisans, transport operators and digital merchants collectively make up the backbone of Ghana’s informal economy, which has become the country’s primary source of employment and entrepreneurship. While these businesses provide income where formal employment opportunities remain limited, their continued expansion also exposes structural weaknesses in regulation, productivity and access to finance.
Economists argue that informality should not be viewed solely as tax avoidance. Instead, it often reflects barriers that prevent businesses from entering the formal economy, including registration costs, limited access to credit, regulatory complexity and uncertainty over the benefits of formalisation. A recent policy study estimates that roughly 90% of non-household businesses remain unregistered despite efforts to simplify registration procedures, suggesting that administrative reforms alone may be insufficient.
The persistence of informality has significant implications for productivity. Businesses operating outside formal systems frequently struggle to obtain bank financing, participate in public procurement, secure larger commercial contracts or invest in long-term expansion. Further research examining Ghana’s economy found that stronger financial development, increased trade openness and broader internet access contribute to reducing informality over time by improving access to formal economic opportunities.
The challenge also extends to fiscal policy. Although informal businesses are often portrayed as outside the tax system, recent research on Accra’s informal economy indicates that many operators already pay multiple taxes, levies and market fees. The study found that these payments can be unevenly distributed and, for lower-income enterprises, relatively burdensome compared with their earnings. Rather than simply expanding tax collection, researchers suggest improving the fairness and transparency of existing systems.
This creates a delicate policy balance. Governments seek to broaden the tax base and improve regulatory oversight, while businesses expect formalisation to deliver tangible benefits through better access to finance, legal protection, social security, digital services and business development support.
Digitalisation is viewed as part of the solution. Mobile money adoption, digital payments, online business registration and electronic tax systems are gradually lowering the cost of participating in the formal economy. These technologies can improve record-keeping, strengthen credit histories and enable micro-enterprises to qualify for financial products that were previously inaccessible.
Policy experts argue that the objective should not simply be reducing informality through enforcement, but creating incentives that make formal participation commercially attractive. Measures such as simplified tax regimes, affordable registration, targeted financial products, entrepreneurship support and stronger digital infrastructure could encourage voluntary compliance while preserving the entrepreneurial dynamism that characterises Ghana’s small business sector.
As Ghana pursues economic transformation and private sector-led growth, the informal economy remains impossible to ignore. It continues to provide employment, sustain household incomes and support domestic commerce on a scale unmatched by the formal sector. The policy question is no longer whether the informal economy matters, but whether future reforms can convert millions of survival-driven enterprises into productive, competitive and sustainable businesses without undermining the resilience that has allowed them to thrive.
