Dynamics and growth of street food enterprises in Kumasi Metropolis.

The informal economy in developing countries such as Ghana employs a large section of the economically active population. However, governments are skeptical as to the extent to which they should seek to formalize informal economy businesses as opposed to investing in the sector while enterprises remain informal. This dilemma arises because of two viewpoints. Romantics view the sector to be bursting with entrepreneurs managing businesses with the potential to grow and that enterprises provide enough income to sustain the livelihoods of owners as well as their dependents. Cynics view the sector to be inundated with persons having limited business opportunities and who have to grapple with certain forces present in competitive markets. Literature supports both sides of the debate and this study attempts to contribute to the discourse with evidence from street food vendors in Kumasi Metropolis. The research question investigated was how and to what extent can evidence of a progression over time be found among street food enterprises located in Kumasi Metropolis? This study sought to identify the dynamics underlying street food vending in the study area and also evaluated how street food enterprises had progressed in their organisational life cycle. The main hypothesis was that over time, traditional vendors would upgrade their enterprises and the way in which business operations were conducted in an attempt to improve their statuses while meeting existing and emerging demand. Multistage sampling was used to select vendors of multiproduct street food enterprises located in three distinct location classes namely low, medium and high business activity areas. Data was collected using a semi-structred questionnaire and analysed using both descriptive and inferential statistics and two-step cluster analysis in SPSS software. The factors that could potentially drive the transformation of vending activities were identified as; motivation for engaging in street food trade, location of the enterprise, business training, financial assistance, certification and risk taking ability of vendors. The hypothesis that these forces will result in an evolution in the trade, in terms of business models, cuisine and assets was only partially validated. The implication is that there are insufficient dynamic forces driving the progression of street food enterprises in the study area. The conclusion is that even though most street food vendors have not made much progress in upgrading their statuses, the enterprises still have a potential for growth. It is recommended that vendors without business operating licenses must seek to register their enterprises for taxation and enterprise identification purposes. This will enable them to become visible economic units to justify any interventions from the government or other main stakeholder institutions in the sub-sector. Cluster analysis was employed to group enterprises into three stages of growth from the least to the most complex that is; emerging, transition and established phases. Socioeconomic factors influencing stage of growth include startup capital, daily net income and access to a permanent vending site inter alia. High cost of cooking ingredients was a major business challenge at all life cycle stages just as high taxes were. Operators of street food enterprises are advised to form strategic links with suppliers to ensure that they gain constant access to necessary inputs at discount prices. The study also recommends a review of taxes for street food enterprises in Ghana. Business strategies found to drive growth comprise sales promotion, personal selling, innovativeness, improvement of food quality and effective pricing strategy. Future researchers could modify the instrument used for the study so that a longitudinal study is conducted on street food enterprises in urban Ghana. More qualitative data could be sought from vendors to gain more insight into the determinants of growth of street food enterprises.

Source: KNUST