Constraints to growth of street food enterprises in Ghana and effects of targeted business interventions on performance

The aim of this study was to the determine constraints to the growth of street food enterprises in Ghana and examine the effects of targeted business management interventions on the practices and performance of these firms. Specifically, the study sought to determine the factors that influence vendors’ decision to participate in business management intervention in the form of training. Also, attention was given to effects of only standard business management training (treatment 1) on business practices and performance of vendors as well as the effects of a combined intervention of standard business management training and training on street food vendors’ association (treatment 2). Lastly, the study analysed the extent of heterogeneity of the effects of above interventions and whether the effects of treatment 1 and treatment 2 on business practices and performance are significantly different. Data from a randomized field experiment of a freely offered business management course among 516 street food vendors in Kumasi and Tamale metropolises of Ghana were used to achieve the study objectives. Ordinary Least Squares (OLS) regression models were used to estimate whether vendors’ self-reported business constraints actually limit business growth whilst probit model was used to analyse determinants of participation in training interventions respectively. Difference-in-differences and instrumental variable analyses were used to estimate Intention to Treat (ITT) and Average Treatment Effect on the Treated (ATET) respectively. Descriptive analyses show that the street food sector is dominated by women with little or no formal education. Based on vendors’ self-reported constraints to business growth, high cost of production, limited access to credit, input price variability, inadequate knowledge in business management and limited access to reliable electricity (power) were ranked as the five most critical constraints. Results of OLS analyses also found inadequate managerial skills and financial constraints as the two most critical constraints to growth of street food enterprises, thus confirming assessment based on vendors’ perception. The study found formal education, the presence of trusted hands in the business and financial performance of firms to have a significant positive effect on probability of participation whilst vendors’ involvement in other economic activity (aside food vending), distance from vending premises to training centre and location of vendor significantly decreased probability of participation. Combined treatment of business management training and training on formation and management of vendors’ organization (Treatment 2) had statistically significant positive effect of 40.6% on the overall business practices index whilst record management index increased by 39.5%. Effects of this treatment on business practices were found to be heterogeneous. The study however did not find any significant effects on business performance of treated enterprises although treated vendors with high education experience a 10% increase in gross margin ratio. Treatment 1 (only business management training) on the other hand neither led to any significant improvement in business practices nor performance. The study explained the differences between effects of treatment 1 and 2 by the effects of extra module of formation and management of street food vendors’ organization on collective action parameters such as organizational membership, membership commitment and cooperation with other vendors to pursue mutually beneficial goals. Although these parameters may not directly affect vendors’ implementation of standard business management practices, they offered committed and cooperating members the platform and an opportunity for either further discussions among vendors on the training content or refresher training from external resource persons at virtually no fees. The study makes several recommendations to improve performance and regulation of the street food sector and also guide the design and implementation of future training programmes.

Source: KNUST