Abstract

Savings among individuals in the informal sector is imperatively expedient if they are to have any decent and comfortable living conditions at retirement as savings in the informal sector become the obvious substitute for formal pensions. However, much is not known regarding the savings habits of informal sector, particularly, the fishing communities in Ghana. Apparently, this study investigates into the determinants of savings habit of the informal sector in Ghana, using the case of the Gbegbeyishie Fishing community. The data for the study was obtained through administering questionnaires and interviewing targeted respondents. A 120 sample size was randomly drawn from Gbegbeyishie fishing community in Ghana. This study employs the probit model in estimating the determinants of savings in the informal sector. SPSS and STATA statistical packages were employed in descriptive analysis and estimation of the probit model respectively.

It is glaring in this study that age, gender and income are statistically significant conditions for savings in the informal sector. It is also evincing in this study that Age has a significant negative effect on savings and aging decreases the propensity to save by 0.1577656. On the other hand, income has statistically significant positive effect on savings and that a one unit change in the income variable increases the propensity to save by 0.1292502. Also, the probability for a male, all other factors held constant, to save is higher than for a female to save and being a man increases the propensity to save by 0.2024894. The study also revealed that the main hindrance to savings in the Gbegbeyishie Fishing Community is Low income.

As a result, the authors recommend that men and married people should be targeted whiles paying little attention to the aged in stimulating savings among fishing communities in Ghana. Educational programs could also be organized for the workers in the informal sector as most of the workers have no education which could hinder their income earning capacity and for that matter savings. Further research could also be engineered to consider macro-economic conditions for savings habit in Ghana.

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