Exploring the Motives for Operating in Ghana’s Informal Slum Sector

In the developing world, slums house a sizeable amount of the urban population and most slum inhabitants are engaged in informal activities. In Sub Sahara African countries this sector has historically contributed above 50% to non-agricultural Gross Value Added. Informal sector activities in Ghanaian slums employ a substantial amount of people, who on average earn about $8 a day, a figure which is above the poverty threshold of $2 a day. Most of these slum activity operators reside in slums whereas a sizable amount reside in formal housing, a phenomenon which has led to the growth of Ghanaian urban slums. To assist these slum operators to grow and someday integrate into the formal sector, it is important to find out the factors that motivated them to engage in these activities in the first place. The study employed Exploratory Factor Analysis, on a sample of 344 drawn from the two biggest slums (Sodom & Gomorrah and Akwatia Line) in Ghana’s two major cities, Accra and Kumasi respectively. The results show a set of six clusters, explaining 61% of the variation in motives for slum activities. The avoidance of government regulation was found as the main motive for one’s involvement in slum activities. Other driving forces include the ‘luxury’ of working at one’s own time, making use of one’s talents and family relations, as well as the quest for earning a higher income.