KWAME NKRUMAH UNIVERSITY OF SCIENC AND

TECHNOLOGY, KUMASI

COLLEGE OF ARCHITECTURE AND PLANNING

FACULTY OF PLANNING AND LAND ECONOMY

PROGRAMME: MSc. DEVELOPMENT POLICY AND PLANNING

(DEPP)

THE IMPACT OF PETTY TRADING ON URBAN POVERTY REDUCTION IN

THE EASTERN REGION- CASE STUDIES OF

AKIM ODA AND ASAMANKESE

BY: CHARITY ADUSU

JULY, 2008

PROPOSED SUPERVISOR: PROF. S. E. OWUSU

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1.0 Introduction

Unemployment in Ghana is rife and self-employment in the informal sector is a ready alternative

for a lot of people due to the ease of entry and low capital outlays of such businesses. In Ghana,

the informal sector employs about 90% of the working population (NDPC 2006). As Ghana is

grappling with the problem of how to find jobs for large number of the youth of the country

especially in the urban centres, the informal sector and especially petty trading provides a safe

haven for earning a living and also a means of reducing urban poverty. As one of the sub-sectors

of the informal sector, petty trading plays a significant role in the economy of Ghana engaging a

large number of people in employment. Indeed, petty traders are an integral part of the urban

economy providing a continuum of cost effective products and services to urban dwellers on

daily basis (Srinivas 2005).

Despite the facts that in the course of carrying out their activities petty traders cause a lot of

inconveniences such as waste generation, congestion and pollution, it is important to appreciate

the challenges they face in trying to make a living. Inadequate basic urban infrastructure and

services such as designated areas for their trading activities, sanitation and water facilities,

harassment by city authorities and limited access to credit facilities are but a few of the

challenges faced by the urban informal sector.

The government’s Poverty reduction drive emanated from the realization that, even though

poverty is being reduced through job creation and increased access to social and economic

infrastructure, a lot more is required to target vulnerable groups and assure greater equity. It is in

this direction that the Ghana Poverty Strategy (GPRS II) laid emphasis on empowering the

private sector as “the engine of growth”.

The implementation of the decentralization programme also calls for effective collaboration

between the public and the private sectors towards poverty reduction. Yet the issue of urban

poverty reduction remains crucial and leaves many questions to be tackled. One thing which is

clear and needs to be recognized is that petty trading responds quickly to market needs and

customer demands much more than the formal enterprises.

1.1 Problem Statement

The rapid increase in poverty in urban centres is a problem in many developing countries

especially in Africa. It is a challenge to emerging economies such as Ghana where with the

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increase in urbanization, the theatre of poverty is gradually moving to urban centres. The poor in

the urban areas usually have extremely limited resources, no assets and very few livelihood

choices. Most get absorbed into the informal sector where they try to make a living through

activities such as vending and hawking of small quantities of various goods. The most visible

groups of petty traders are those who work on the streets or in the open air in urban centres. City

streets and lanes in Ghana are characterized by vendors of perishable and non perishable items

ranging from vegetables and other food items to assorted clothing and cosmetics to electronic

goods. Again, with the advent of the explosion of technology in the telephone industry, many

communication centers and table-top-operated communication business have sprang up in every

urban center and village alike in Ghana (Hallow 2007).

However people engaged in the sector face several challenges that limit their contribution to the

economy. Some of the key challenges are; poor work protection, poor infrastructure for their

business, inadequate access to credit and savings facilities, weak managerial skills and lack of

adequate data to comprehensively track the level of activity especially in the informal sector

hindered any meaningful policy formulation. NDPC (2006)..

Akim Oda and Asamankese are some of the Municipalities in the Eastern Region of Ghana with

high population densities that attract petty traders for income generation and poverty reduction.

Very little studies have been conducted in the informal sector in relation to poverty reduction in

urban areas.

According to Boateng (1990), poverty is a state in which an individual or group of persons

cannot meet the necessities of life either because they cannot afford them or the necessities are

not available or both. He stated that poverty manifests itself in terms of low income, poor

housing conditions, high level of unemployment and high literacy rate among others. Though

petty trading generates self employment and income for most people in the study area, there are

still many questions regarding their activities.

1.2 Research questions

The research questions which this study seeks to answer based on the above discussions are that;

1. Do petty traders generate enough income to cater for their households?

2. Do petty traders meet their tax obligations?

3. Do the activities of petty traders have a positive impact on the level education of their

households?

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4. Has their activities improved upon their household assets, general health status?

5. Do the activities of petty traders encourage child labour?

6. Are the activities of petty traders prone to risk?

7. Are there byelaws regulating petty trading?

It is based on this background that the researcher is investigating into the impact of petty

trading on urban poverty reduction in Akim Oda nand Asamankese Municipalities of the

Eastern Region of Ghana.

1.3 Objectives of the study

1.3.1. General objective

The overall objective is to assess the nature of petty trading and its contribution to improving the

quality of life of the urban population and for that matter to urban poverty reduction in Ghana.

1.3.2. Specific Objectives

1. To identify the various types of petty trading in the study area.

2. To examine the conditions under which petty traders carry out their activities.

3. To assess the income and profit levels of petty traders.

4. To assess the tax obligation of petty traders.

5. To examine the educational levels of the petty traders and their households.

6. To examine the assets of petty traders and their households.

7. To assess the health status of petty traders and their households.

8. To assess the extent of petty trading on child labour.

9. To make recommendations to inform decision making towards improving their support

services and working conditions of petty business to enable them contribute effectively

towards urban poverty reduction.

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1.4 Scope of the study

Geographically, the study would cover two major urban centres in the Eastern Region namely

Akim Oda and Asamankese.

Contextually, it would be centered on the nature of petty trading in the study area, their working

conditions, their income levels and the extent to which petty trading influence their socio-

economic conditions. The study will also look at collaborating institutions in the sub-sector and

agencies and their roles, and services provided towards the development of the sub-sector. This

approach will allow for enough investigation to be made.

1.5 Methodology

1.5.1. Sampling procedure and technique

The case study approach would be used to help establish the contribution of petty business to

poverty reduction in the Eastern Region. The selection of the study area was based on the size

and the volume of economic activity. A sample of 100 petty traders will be selected for the

interview. Stratified and random sampling would be adopted in the selection of respondents

taking into consideration the range of activities undertaken in the sub-sector.

1.5.2 Data collection

Data will be collected from both Primary and secondary sources. With primary sources, semi-

structured questionnaires will be used to collect information from petty traders and in-depth

interviews will be conducted with selected government officials and key personnel at the

Ministry of Local government Rural Development and Environment, Regional and Municipal

levels. These institutions are responsible for managing and implementing various poverty

reduction programmes in collaboration with the Private sector. Participant observations in the

field and focus group discussions would also be carried out to get first hand information to

complement field data.

The questionnaire will be designed to gather data on the various poverty reduction interventions,

institutions and collaboration agencies. history of petty business, changes in the mode of

operating petty business, changes in the relative contribution to basic needs of petty business and

other possible economic activity or linkages over time, changes in the socio-cultural practices

that have given sustenance to the urban poor, basic needs consumption pattern of the individual

and the household and their income from all economic activities and how these have changed

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overtime, the dynamics of the household’s decision-making process related to resource available

to the household.

Secondary data will be obtained through extensive review of written documents, which included

but will not be limited to policy documents such as the GPRS 1&11. Others will include; District

medium-term development plans, articles in newspapers, textbooks, articles on the internet and

publications.

1. 5.3. Data Analysis

The data will be analyzed with the use of descriptive and inferential methods. Descriptive

analysis will include frequency distribution, tables, percentages, graphs, bar and pie charts.

The inferential analysis will focus on matrices, gross margin analysis and other quantitative

methods.

1.6. Justification

The quest for poverty reduction has been a prime concern of the Government of Ghana. In line

with this, several poverty reduction programmes are being implemented in the country. One

thing that seems to be lacking is the knowledge about extent to which the various stakeholders

especially the informal sector is contributing towards the poverty reduction drive.

Employing about 90% of the working population, this sector constitutes a major component of

Ghana’s economy and the petty trading sub-sector forms an integral part of the urban economy.

This implies that there is the need to see this sub- sector not as a marginal or peripheral but a

basic component of the urban economy.

In other words any strategy to reduce urban poverty must place emphasis on the activities of the

informal sector. It is in this vein that this study intends to examine activities of the petty trading

sub-sector and their contributions to the urban poverty reduction, and prospects for improving

their working conditions. Results from this study will contribute to academic knowledge on the

urban informal sector, shaping policy on urban poverty reduction and improving the urban

informal sector. It is also expected to contribute to the development of data base on the petty

trading-sub sector in the study area which will serve as an input for decision making and

planning to for the purposes of developing the sub-sector. The study will also serve as the basis

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for further researches in the urban informal sector.

1.8 Organization of the Study

The study will be structured into five main Chapters. Chapter one will focus on the general

introduction, giving a background to the study, the problem statement, objectives, justification

and the scope of the study. Chapter Two will present a review of Literature on the understanding

of impact, petty trading, poverty and poverty reduction, urban poverty, poverty indicators and

child labour. Chapter Three will mainly feature on characteristics of the study area, methodology

to be used for data analysis and limitations of the study. The highlights of Chapter Four will be

on the analysis and the results of the study. Finally, Chapter Five will give a summary of the

study, conclusions and recommendations.

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References

1. Baharoglu, D. and C. Kessides, (2001). Urban Poverty: Draft for comets. At

http://www.worldbank.org/poverty/strategies/chapters/urban/urb0430.pdf

2. Balihuta, A.M. (2001). Approaches to Poverty Reduction in Urban Sub-Sahara Africa. At

http://www.worldbank.org/wbi/urban/docs/AproachestopovertyreductioninSSA Balihuta

3. Hallow, G.G (2007) Structural and Functional Changes in the Inner City of Accra:

Implications for Urban Poverty and Coping Strategies. Published MPhil. Thesis.

4. National Development Planning Commission (2005) Growth and Poverty Reduction

Strategy (GPRS 11) (2006-2009) Volume1 Policy framework, November 2005.

5. National Development Planning Commission (2007) Implementation of the Growth and Poverty Reduction Strategy (2006- 2009) ; Annual Progress report

6. Rakodi, c. and T. Lloyd-Jones, (eds.) (2002). Urban Livelihoods: A People-Centred Approach to Reducing Poverty: London, Earthscan Publications.

7. Sethuraman (1997) Urban poverty and the informal Sector: A critical Assessment of Current Strategies. New York.

8. Ronge, E., L. Ndirangu, and H. Nyangito, (2002) Review of Government Policies for the Promotion of Micro and Small Scale Enterprise. Nairobi, Kenya Institute for Public Policy Research and Analysis.

9. World Bank (2001) What is Urban Poverty? At http;//www.worldbank.org/urban/ poverty/defining.html

10. Boateng. E.O (1990). A poverty Profile for Ghana. The World Bank, Washington DC

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