4. Regression Analysis
8.3 POLICY RECOMMENDATIONS
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and Accra. The inadequacy of housing coupled with high rental charges tends to push people into settling in slums. In urban Ghana, about 7 million housing units have to be built by 2020 to address the existing deficit and cater for new households. This situation led to the government of Ghana putting together a housing policy, with the aim of addressing the huge housing deficit in the short term and in the long term ensure that, the low income sector is able to own or rent houses (Government of Ghana, 2015). To attain this objective, it is recommended that the government creates an enabling environment for the private sector to provide affordable housing for Ghanaians, which in turn may reduce slums and enhance graduation of firms from the informal to formal sector. The high cost of land and building materials make it difficult for individuals to build their own houses. However, if the government involves the private sector, traditional authorities, municipal and communal societies in providing housing, with the use of local and cheaper building materials, cost may be reduced to make the houses affordable.
Considering the high unemployment and the low labour absorption rate of the formal sector (14%), the informal sector serves as the best employment alternative enabling individuals to earn a living in Ghana. Lack of employment opportunities and avoidance of government regulations were identified as the primary underlying reasons for pushing individuals into slum activities in Ghana.
De Soto (2000), points out that, cumbersome and costly bureaucratic procedures are responsible for most micro-entrepreneurs going into informal sector activities. Hence, policies geared towards removing some of the stringent procedures of operating in the formal sector may help curb the growth of the informal slum sector. Furthermore, policies geared towards the creation of sustainable jobs are needed. For instance, projects aimed at training the youth in modern agricultural practices is very crucial as the Ghana’s Ministry of food and agriculture refers to the country’s farming population as ageing. Life expectancy in Ghana is about 60 years, whereas the average age of a farmer was 55 years in 2011. As agriculture is one major sector for Ghana’s development, engaging youth in it will in the long run, lead to economic development and job creation.
The second level of conceptual framework describes the operation in slum activities. While operating in these slum activities, operators face many growth constraints, namely, lack of business knowledge, infrastructural challenges, difficulty in accessing credit, lack of tools and materials,
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security problems, poor communication and social networking. Slum operators’ lack of business management, accounting and financial management expertise hamper their growth, as it was found out that about 79% of these slum operators either have no formal education or only had primary education. Hence, the human, social and financial capital of the surveyed operators need to be strengthened by appropriate institutions in Ghana. Demeke and Amha (2000) also reiterate the idea of training, suggesting that governments should put in place policies that encourage the private sector and NGOs in increasing the establishment of technical training, which is crucial in the SME business sector. Training workshops from people who have practical business knowledge are recommended. This will assist the informal slum operators in learning the “best practices” in conducting business, from skilled resource persons. Kirsten and Sindane (1994), suggest that, training programmes for informal operators must be practical and consider participants’
educational level. The programmes must also be suitable in terms of time, affordable and relevant to trainee needs.
The average daily income earned by operators in the AL and S&G regions were found to be significantly different. This stemmed from the differing income generating capabilities of the economic activities present in the slums. AL operators are mostly involved in the trading of agricultural goods, such as maize, rice and kola nuts as well as a wood, which is a raw material for industries in Kumasi. Government’s assistance with the acquisition of storage facilities for rice, maize and kola nuts will help these enterprises grow. In terms of the wood enterprises, the provision of tools and machinery is crucial, as the lack of tools and materials is one main constraint faced by the surveyed operators. Hence, government and private sector partnership in the provision of basic tools and machinery that enables operators carry out their daily activities more efficiently, is critical in assisting these slum enterprises grow. In S&G, it was discovered that the majority of the operators are engaged in the provision of basic services, as earlier stated. The provision of training programmes for the operators in these activities will help them improve in their service provision. Therefore, training workshops to assist operators in activities, such as sewing, hairdressing, electricals and food catering, can help improve their income generation.
Exiting slum enterprises represent the third level of the conceptual framework. At this stage, operators’ resource needs for formalisation, as well as factors that prevent the slum operators from
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formalising are presented. According to Welch (2005), the formalisation of informal activities helps curb unemployment as well as broadens the tax base of an economy. Also, informal slum operators through formalisation, will allow them access to government programmes and services.
In order to realise the objective of formalising informal activities, the current study found that, if slum operators are helped with capital acquisition, they will be willing to formalise. The ILO (2014), found limited access to finance in the informal sector as a reason why it lacks the ability to expand and improve productivity. Hence, it is recommended that, policies that will encourage the provision of micro-finance services to the informal sector are crucial in helping slum enterprises grow into the formal sector. On the other hand, even though helping the surveyed slum operators overcome infrastructure challenges will not prompt them to formalise, addressing infrastructure may help them grow in the economic activities they perform. Hence, the improvement of basic infrastructure in Ghana, such as access to clean water, sanitation, good roads, adequate supply of power, storage facilities and information and communication technologies, is key to helping informal operators grow.