Carrying the Workforce on Low Revenue: Ghana’s Micro & Small Firms

If you look at the Ghanaian economy from a distance, you see a bustling hive of activity. But when you zoom in on the numbers, a fascinating and slightly worrying paradox emerges.

Data from the 2024 Integrated Business Establishment Survey (IBES) Volume 2 released by the Ghana Statistical Service, and the data tells a story.

As illustrated in our latest infographic below, Micro and Small businesses are carrying the weight of the nation's workforce, yet they are barely scratching the surface of the nation's revenue potential.

Defining the Players

Before we dive into the "why," let’s clarify who we are talking about. The IBES report categorizes businesses by the number of people they employ :

• Micro: 1–5 persons engaged

• Small: 6–30 persons engaged

• Medium: 31–100 persons engaged

• Large: More than 100 persons engaged

The Employment Paradox: Strength in Numbers

Here is the headline statistic: Micro and Small establishments employ two-thirds (4.6 million) of all workers in Ghana.

You might wonder, "How can businesses that employ only 1 to 5 people be the biggest employer?"

The answer lies in sheer volume. While a single large factory might employ 500 people, there are very few of them, only about 4,874 in the entire country. In contrast, there are over 1.6 million Micro establishments. Think of it like sand versus boulders. A boulder is heavy, but millions of grains of sand weigh far more. These Micro businesses are the "sand" that forms the foundation of Ghana's labor market.

Important Caveat: The data in our infographic refers specifically to establishments operating within physical structures (shops, offices, kiosks, containers). It excludes mobile vendors, hawkers, and open-space traders, who are covered in separate reports. This makes the findings even more striking even businesses "established" enough to have a physical roof are facing significant revenue ceilings market.

The Productivity Question: Where is the Money?

If these businesses employ nearly 7 million people combined, why is the revenue so low?

The data shows that more than 95% of these Micro and Small firms generate ≤ GH¢100,000 in annual revenue. The report suggests this is partly due to the sectors they operate in. The vast majority of the workforce (78%) is concentrated in the Services sector, rather than Industry or Agriculture. While the service sector creates many jobs, many of these roles are labor-intensive but low-output.

Essentially, we have a lot of hands on deck, but without the industrial machinery or high-value technology to multiply their output, revenue remains flat.

The Survival Secret: Who Pays the Workers?

This brings us to the most uncomfortable question: If a business makes less than GH¢100,000 a year (about GH¢8,300 a month) and employs 4 people, how does it survive?

The answer is often unpaid labor.

The report reveals a sobering statistic: 36.9% of workers in privately-owned establishments are unpaid. These are likely apprentices, family members helping out, or business owners paying themselves last.

This unpaid labor is the hidden subsidy keeping thousands of micro-businesses afloat.

So What? The Good, The Bad, and The Path Forward

Is this structure good or bad for Ghana? It is a double-edged sword.

• The Good: Micro-businesses are incredible "Job Creators." They absorb millions of people who might otherwise be unemployed, providing livelihoods and social stability.

• The Bad: They struggle to be "Wealth Creators." Because their revenue is so low, their contribution to tax revenue is minimal, which limits the government's ability to fund national development.

  
  

The Path Forward For Ghana’s economy to truly transform, we don't just need more Micro businesses. We need them to grow. The transition from "Micro" to "Small," and "Small" to "Medium," is where the magic happens.

As the report concludes, we need a business environment that supports this growth, moving beyond just "survival mode" to high-productivity, high-revenue operations that can pay fair wages and drive the nation forward .

Source: Ghana Statistical Service, 2024 Integrated Business Establishment Survey (IBES) Volume 2.