Formalisation of Entrepreneurship in the Informal Economy in Sub-Saharan Africa and the Role of Formal Institutions: An
Informal entrepreneurship has been for a long time a major lifeline for many living in rural and urban economies in developing countries especially in sub-Saharan Africa and more particularly Ghana. Formalising the informal economy has become prominent wi
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Department of Marketing and Entrepreneurship University of Ghana Business School, Legon - Accra, Ghana e-mail: [email protected] © The Author(s) 2017 A. Polese et al. (eds.), The Informal Economy in Global Perspective, International Political Economy Series, DOI 10.1007/978-3-319-40931-3_15
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the poor. In Ghana, however, it must be argued that in spite of the widespread recognition of its magnitude and even growth e ntrepreneurship in the informal economy has not received the attention it deserves in the employment policies of the government until now. There has been no clear policy direction from the formal institutions in terms of their role in formalising informal entrepreneurship. However, the commonly held assumption is that formalisation of economic life is the only route to progress, modernity and advancement and thus formalising entrepreneurship in the informal economy is the route to economic development. Not only has informal entrepreneurship thus become more and more widespread across various economic landscapes, but also the call for formalisation has become more prominent. Informal entrepreneurship for many represents the site of hopelessness and a road to economic underdevelopment or doom—what I call the “journey of no hope”. Since the discovery of the informal sector concept in the twentieth century, it has been widening and has even attracted more attention since the turn of the millennium. Until now, entrepreneurship in the informal economy has been dominated by the view that it is the marginalised and economically vulnerable population who make a living in this arena. Hence, little attention has been given to it. Regardless of the various depictions of informal entrepreneurship as backward, underground, underdeveloped, associated with the black market and so on, formal institutions have failed to prevent or eradicate informal entrepreneurship. For some time now, formalising informal entrepreneurship and ensuring that more decent jobs are available has been part of the development discourse heralded by the International Labour Organization (ILO). In 2015, the ILO overwhelmingly voted for the formalisation of the informal economy enshrined in Recommendation 204 (ILO 2015) The key question is what is/are the role(s) of formal institutions in ensuring that informal entrepreneurs play by the rulebook (Williams 2007)? Formal institutions are steeped in formal rules (laws and regulations). This chapter therefore seeks to evaluate critically the role of formal institutions in formalising entrepreneurship in the informal economy in Ghana. From the outset it is appropriate to define informal work to place the debate in perspective. Examining solely paid informal work, Williams and Windebank (1998 p. 1) define informal employment as the “paid production and sale of goods and services that are unregistered by, or hidden from, the state for tax, social security, and/or labour-law purposes but
FORMALISATION OF ENTREPRENEURSHIP IN THE INFORMAL ECONOMY...
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which are legal in all other re
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