A research on West African itinerant immigrant traders has proposed five policy actions for the government to consider to improve financial inclusion and promote the formalisation of migrant businesses in Ghana.
The proposed policy actions include differentiating enforcement of immigrant trade laws in Ghana; building a pathway from informal trade to visible compliant activities; and turning ethnic trade networks into bridges to business formalisation for itinerant traders, among others.
The study, titled “Driving factors and sources of capital for immigrant entrepreneurs in Ghana”, was conducted by Professor Elijah Yendaw, a professor of population and migration studies at the University of Business and Integrated Development Studies (UBIDS), Wa.
The data generated and analysed for this policy brief were a segment of a research project carried out in 2017 in the Accra Metropolis, which surveyed 779 respondents and conducted in-depth interviews with nine key informants, published in 2022.
It found that many migrant traders entered street retailing because they lacked alternative livelihood opportunities and that they relied largely on informal financing networks rather than formal financial institutions.
According to the policy brief, 31.1 per cent of the research participants reported start-up financing sources as involving goods obtained on credit from co-ethnics, while only 0.8 per cent involved loans from financial institutions in Ghana.
The study also found that 71.2 per cent of 779 respondents had no previous business experience before entering their current retail activities.
It identified ease of entry, limited alternative livelihood opportunities and the pursuit of financial achievement as factors that influenced their participation in itinerant retailing.
“For many respondents, limited livelihood alternatives pushed them into low-entry retailing, while ethnic and social networks supplied the credit that formal financial institutions rarely provided.
“This matters because a policy response aimed only at removing traders from particular spaces may leave the financing networks, livelihood pressures and regulatory invisibility that sustain the activity untouched.
When formal finance is almost absent, but businesses still start, policymakers should ask not only who is trading, but who is financing the trade, how trust is created, and how these networks can be brought into a more transparent economic system”, the brief explained.
The research, therefore, proposed that policymakers should differentiate migrant businesses before enforcing the country’s trade laws by considering legal status, scale of operations, nature of retail activity and applicable trading or investment rules.
It also recommended creating practical pathways, where legally permissible, for identification, registration, local-authority compliance and appropriate taxation to reduce regulatory bottlenecks.
The brief further proposed using established ethnic and trade networks as potential channels for financial literacy, compliance education, data gathering and referrals to formal financial services.
Additionally, it called for investigation into why formal financial institutions accounted for a small proportion of start-up financing, including possible barriers related to accessing such financial services.
The brief, however, recommended further research to understand the current national prevalence estimates for immigrant retailing to inform any major national policy decisions.
The brief said a durable response required coordination among trade and investment regulators, immigration authorities, tax agencies, local governments and financial-sector institutions.
