What really is an Informal Business?
People try to give a lot of definitions to what an “informal business” is; the most widely accepted definition is “a business which is not taxed or banked”. I beg to differ from this rather skewed definition of informal businesses and I’ll tell you why;
Over a year ago, my team and I started a company called KudiGo; our goal was to develop solutions for informal retailers and the retail industry in Africa. During this journey we came across some amazing statistics, some peculiar to Ghana others applicable across Africa; eg.
- 90% of the consumer retail industry in Africa is made of informal retailers
- Less than 10% of informal retailers used any tech
- Less than 15% of informal retailers are banked
- Average annual revenue from informal retail in Ghana & Nigeria is over $3 billion USD
One interesting fact we came across was 7 in every 10 informal businesses in Ghana pay some Tax to government
Six (6) out of 10 informal retailers in Ghana accept mobile money as payment and owned a mobile money wallet specifically for this.
Armed with these facts, its quite clear that the definition of informal retail is rather flawed; talking to these informal businesses this is how these see themselves
Informal business are easy going entities with product and pricing flexibility at will, without regard for bureaucracy.
I tend to agree with this definition, what do you think?
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