Ghana is on a mission to stabilize its economy, but a looming challenge threatens to derail these vital efforts: the vast informal sector. Accounting for a staggering 70% of economic activity, this segment of the economy operates largely outside formal structures, posing significant hurdles to sustainable growth.
Dr. Worlanyo Mensah, a respected economist, recently issued a stark warning to the Ghana News Agency. He emphasized that without deliberate, strategic measures to formalize this massive informal sector, the nation’s macroeconomic stability efforts are at risk of collapsing.
“Macroeconomic stability, including fiscal discipline and currency management, cannot be sustained when the largest segment of economic activity remains largely untaxed and unregulated,” Dr. Mensah explained. His point is clear: you can’t build a robust economic house on a shaky foundation. When such a huge portion of the economy contributes minimally to the tax base and operates without formal oversight, government revenues suffer, making it incredibly difficult to manage public finances, control inflation, and maintain a stable currency.
Formalizing the informal sector isn’t merely an administrative exercise; it’s a critical strategic imperative for Ghana. It means bringing these businesses and workers into the formal system, enabling them to access credit, social security, and legal protection, while simultaneously broadening the tax base and improving data collection for better economic planning.
For Ghana to truly achieve and sustain its economic goals, addressing the informal sector isn’t an option – it’s an absolute necessity. The future of its economic stability hinges on this crucial transformation.
Source: Original Article
