The largest sector of the country's economy, the formal sector, has been hard-hit by the coronavirus pandemic's impact, causing it to contract for the first time in many years, a development that has exposed the vulnerability of a sector many analysts think holds the key to boosting government revenue.
Ghana Statistical Service (GSS) data have revealed that the sector contracted by 0.8% in the first year of the pandemic (2020), a sharp drop from an impressive 5.9% growth recorded in 2019, and indicating the pandemic had a great impact on the sector which is estimated to make up to 80% of the economy and where many Ghanaians find their bread and butter.
This comes as no surprise though, as the coronavirus pandemic led to a general slowdown of economic activities and, further, changed the way business is done in the country.
The entire economy grew by just 04% in 2020 against a revised government target of 1.9% due to restrictions introduced both locally and globally on trade and the movement of people.
The informal sector's contribution to the economy also dropped to 24.9% in the period compared with the 25.5% in 2018 and 27.1% in 2018: a sure cause for worry if government is to listen to calls to expand the tax base to cover the sector, as the data may well explain that the informal economy is not as robust as envisioned.
During the heat of the pandemic when some players in the formal sector were coming out with innovative ways of remaining in business in the midst of the turmoil through the heavy use of technology, players in the informal sector lacked the resources and knowledge to invest in IT infrastructure to turn their fortunes around.