informal sector in nigeria

The size of the informal sector in Nigeria is estimated at about 65% and consists of activities that range from agricultural production to mining and quarrying, small-scale building and construction and machine-shop manufacturing. In 1995, employment in sub-Saharan informal sector … However, with the introduction of the Structural Adjust ment Programme and the deregulation of the banking sector, interest rates and sectoral allocation of loans have become increasingly market deter mined. Latest Nigeria Articles | (d) Monetary Policies: The monetary authorities prior to the introduction of the Structureal Adjustment Programme, directly managed and determined inter est rates and sectoral allocation of cred it by the banking sector. What are these infrastructures and how best can this sector be supported? 6 months ago. To this end, the Ministry established Industrial Develop ment Centres in various parts of the country with the mandate to: (i) promote small-scale enterprises through the provision of exten sion services; (v) render, free of charge, technical and managerial services includ ing advice on quality control, product improvement, etc. The "Work for Yourself Programme" (WFYP), a scheme introduced by the Federal Ministry of Industry and assisted by the International Labour Organisation (ILO) and the British Council, which aims to develop entrepreneurial skills in the sector, is one of such schemes being implemented with international assistance. The structure of Nigeria’s informal economy The informal economy involves economic activities undertaken by individuals and organizations, which are not subject to full government regulations. 15 May 2018. The informal sector throughout West Africa, and particularly in Benin, represents approximately 50 percent of GDP (70 percent in Benin, in fact) and 90 percent of employment. The informal sector plays a big role in waste management in Nigeria. Specifically, they manifest in food pro duction, woodwork, furniture making, garment making, welding and iron works, among others. Comments | Articles XML | Share. News | | The government is aware of this, but decided to look the other way around in order to allow indigenous business to thrive.”. It is most desirable that the scheme be revived. 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The informal sector in Nigeria has no tendency to wither; it must be sustained for optimum contribution to the growth of the economy. This sector therefore contributes to the national economy in terms of output and employment; (ii) Provides competition in the economy; (iii) Provides outlets for experienced spe cialist manpower from the medium and large scale enterprises who wish to be self-employed, using minimal capital; (iv) Reduces the level of unemployment, though many such employed could be underemployed; (v) Stimulates and enhances innovation and adaptation; and. IS seems difficult to tax because of administrative problems, human capital and personnel shortage, lack of record keeping, nature of its economic activities and cost implications. The International Labour Organisation estimates that more than 66% of total employment in Sub-Saharan African is in the informal sector. It is the backbone because most services that Nigerians require to keep things running come from the informal sector," the Nigerian-based analyst added. Unregistered household enterprises comprise a significant portion of Nigeria’s economy, accounting for as high as 65 percent of GDP, says the International Monetary Fund (IMF) in a blog article seen by businessamlive.. Informal sector constitutes a significant segment of the Nigerian economy. Loans under the World Bank - Nigeria Small and Medium-Scale Enterprises development programme provide financial and technical assis tance to these groups of entrepreneurs. Nigeria is an elephant among the Economic and West African States (ECOWAS) and a lion in Africa with our population of over 200 million people. In other cases, the Federal or State Governments, as the case may be, co-finance small-scale businesses which benefit from external financial assistance. Lagos- Mr. Segun Awolowo, the Chief Executive Officer of Nigeria Exports Promotion Council (NEPC) has said that Nigeria informal sector records at least N41 billion annually across the West African States. The government must encourage and empower the informal sector through the provision of conducive policy and physical conditions. The informal sector in Nigeria refers to eco nomic activities in all sectors of the economy that are operated outside the purview of gov ernment regulation. This sector may be invisible, irregular, parallel, non- structured, backyard, underground, subterranean, unobserved or … x The informal sector thus, constitutes the final destination of an ever increasing number of job seekers. The Nigerian Informal Sector (IS) is a major contributor to the Nigerian economy, accounting for a significant portion of employment and national GDP. The Federal Government in the late 1980s initiated the Entrepreneurship Develop ment Programme (EDP) run by the National Directorate of Employment (NDE). He said: “We seek government support to export agricultural produce out of the country. According to the IMF, the Nigerian informal sector accounted for ~65% of Nigeria’s 2017 GDP. Independent Newspapers - Breaking news from Nigeria and the World, Kaduna State Fire Service Records 115 Fire Outbreaks, 25 Deaths In Two Months, Federal Teachers Scheme: Oyo Govt. The informal sector, in which more than 80 percent of Nigerians work, includes a wide range of occupations, from street traders, taxi drivers, tradesmen, and … The affected lockdown states include three of the most urbanised states in Nigeria, signifying that the impact of the lockdown would be skewed toward those who perform urban informal sector economic activities. The most predominant type of informal finance in Nigeria is the Esusu. The informal sector constitutes over 40% of the Nigeria Economy and is estimated to grow more. The informal sector refers to the part of the economy … Adebakin appealed to NAHCO and its foreign countries to provide adequate warehousing facilities to accommodate cargo from Nigeria. An unpublished survey in 2008 suggested that the informal sector in Nigeria accounted for about 90% of new jobs in the country, about 80% of all non-agricultural employment and about 60% of urban jobs created, earning it the description of being the backbone of the formal sector. Tags | According to Magbagbeola (1996), the informal sector in Nigeria refers to economic activities in all sectors of the economy that are operated outside the purview of government regulation. This objective could not be realised essentially because of the man agement style of the Abacha regime. Others include such financial and economic endeavours of subsistence nature as: retail trade, transport, restaurant, repair services, financial inter-mediation and household or other personal services (Adamu, 1996). 4 years ago. There are also traditional spiritualists who offer counselling services. The affected lockdown states include three of the most urbanised states in Nigeria, signifying that the impact of the lockdown would be skewed toward those who perform urban informal sector economic activities. Speaking at an […] Some Esusu groups operate with written laws while others operate with unwritten laws but on oath of allegiance and mutual trust. in Blockchain, Startups. The sector thereby contributes to the Gross Domestic Product (GDP) and employment and contributes significantly to economic development of Nigeria in general (Omisakin,1999) cited in (Atah et al. These services are rendered for fees paid to those who render them. He lamented that many of the cargo aircraft that import goods into the country return empty, but said the government was ready to change the situation by partnering with private investors to develop the economy. The scheme was designed to promote the development of technology based SMEs in Nigeria. by Milcah Lukhanyu. Informal health services, especially in the rural areas, include traditional birth attendants, herbalists and other tradi tional medical practitioners. This sector may be invisible, irregular, parallel, non-structured, backyard, under ground, subterranean, unobserved or residual (Magbagbeola, 1996). This generally, at least in theory, was favourable to SMEs since the interest rates were rela tively low and stable. So what is the informal sector? Some of the 22 products the agency was working on to export to Europe, Asia, America, Middle East and Africa included cocoa, cashew, plantain, cassava, orange, leather, banana, garment, ginger, shea butter, sesame seed, cow pea and spices among others. According to the International Labour Organisation, in Nigeria, over 80 percent of working people are employed in the informal sector. For example, the Technology Incubator Scheme was promoted and executed by the Lagos State Ministry of Commerce and Industry, with UNIDO's financial and technical assistance and supported by the organised private sector in Lagos State and the Federal Government. African taxmen are in Nigeria strategizing on taxation of informal sector. Some of the policies include the following: (a) Entrepreneurship Development Policy: Over the years, the Federal and State gov ernments have played significant roles in entrepreneurship development. This sector may be invisible, irregular, parallel, non-structured, backyard, under ground, subterranean, unobserved or residual (Magbagbeola, 1996). The fuzzy boundaries and intertwined nature of informal and formal sectors in Nigeria has varied impact on the economy. So governments find it difficult bringing taxpayers to the tax net. The Hausa call it Adashi', the Nupe Dashi, the Ibibio Etibe, while the Kalahari call it Oku (Okorie and Miller, 1976). Informal economic activities in Nigeria encompass a wide range of small-scale, largely self-employment activities. NUJ Asks Rights Commission To Establish Offices At LG Levels, Bishop Counsels Influential Personalities On Act Of Giving Back To Society. Definition. How to bring the informal sector into the tax net is a headache to African tax administrators. Informal economic activities in Nigeria encompass a wide range of small-scale, largely self … Sitemap XML, Nigerian Banks and Financial Institutions Online, GENERAL INFORMATION FOR FOREIGN INVESTORS, Conservation and Development of The Niger Delta, STABILISATION AND STRUCTURAL ADJUST MENT (1978-1993), An Overview of The Nigerian Economic Growth and Development. Home | | The informal sector in Nigeria refers to eco nomic activities in all sectors of the economy that are operated outside the purview of gov ernment regulation. In Lagos state alone, the informal economy employs about 5.5 million people – about three-quarters of the state’s 7.5 million labour force. informal sector in Nigeria, and policy responses to the informal sector. He explained that in the recent years, NAHCO Group had grown its investments by diversifying into various businesses. Also commenting, Mrs. Olatokunbo Fagbemi, the Group Managing Director, NAHCO, informed that the ground handling company serves 36 airlines, 16 airports, while its market share stands at 59 per cent. "The informal economy really is the backbone of the Nigerian economy. The State Governments have also been involved in providing support to SMEs. In 1995, employment in sub-Saharan informal sector … Among the lgbo, it is called lsusu or Utu while the Edo call it Osusu. A tax exemption on interest income received on loans granted under the scheme was one of such incentives. The informal sector consists of micro, small and medium scale enterprises including traders and artisans and constitutes a significant portion of the Nigerian economy. The aim is to gather information that aid in basic understanding of the informal sector and its role in output and employment in a developing economy. Most of them are traditional occupations and methods of production. (vi) Helps in the mobilisation of capital and human resources which would other wise have been laid waste and idle thereby increasing the utilisation of virgin reuseable materials. Privacy Policy | The Informal sector, which is the focus of this paper is also known as the “grey economy”. Taxing the Informal Sector (IS) and its taxpayers’ compliance level has become a focus of attention in recent times by scholars and policy makers because of IS contribution to the country. SMEs, therefore, no longer ben efit from preferential monetary policies. This is as the Federal Government has been called upon to create enabling environment for private investors to grow the economy. Among the Yoruba, it is called either Esusu or Ajo. Nigeria's response to the informal sector has either been to ignore its existence or try to suffocate it with supposedly common-sense initiatives. Under this policy, the Federal Ministry of Labour sought to address the gra duate unemployment problem through the NDE programme which provided participants with the opportunity to acquire entrepreneurial skills and secure loan capital to enable them establish and operate their own small scale enterprises. “All across ECOWAS, we see our products going out of the country, even though, in informal ways. In Nigeria, there are also informal money lenders, saving and credit associations and credit unions. Government policies are dominated by interest in the formal sector, although women are to be found in far greater number in agriculture, non-farm enterprises and the informal sector. Buy The Informal Sector in Nigeria and its impact on Development by Itimi, Stephanie (ISBN: 9783330037977) from Amazon's Book Store. This is as the Federal Government has been called upon to create enabling environment for private investors to grow the economy. There has been a lot of focus on the fact that Nigeria's tax to GDP ratio of about 6.1% is quite low and appears to remain unchanged despite all the efforts of the tax authorities to improve collection. Also, Mr. Oluwajimi Adebakin, Managing Director, FOB, said that the company was willing to collaborate with private organisations in order to develop export out of the country. Federation of Informal Workers’ Organization of Nigeria (FIWON) has said the COVID-19 pandemic has further exposed the vulnerability of workers in the informal sector to many health risks. They may or may not be registered under any legislation. There are no proper registration and identification of small businesses even medium scale business. He explained that the agency was collaborating with State governments to develop at least one agricultural produce in their state for exportation purpose. Nigeria is the largest country in Africa, and the largest concentration of black people in the world — with a land area of close to 1 million square kilometers, and a population of well over 125 million. Money lenders are believed to be highly exploitative with high rates of interest through which they extract economic surplus provided by peasant labour, capital and land. Archive | The programme is intended to harness the potentials in the local areas to establish viable enterpris es and projects that would ensure eco nomic empowerment of the rural and urban poor. PEAP is one of the programmes which the Obasanjo Administration intends to abolish as part of its restructuring of the institutional framework for the support of SMEs. Moreover, through linkages with large-scale enterprises, informal sector enterprises have the production base of the economy. For instance, policies have variously been designed to promote small and medium scale enterprises. Repairs and maintenance services include tai loring, vehicle repairs and maintenance, tinkering, carpentry and servicing of var ious household and commercial tools. All Rights Reserved. (c) Family Economic Advancement Programme: The Family Economic Advancement Programme (FEAP) was initiated in 1997 as a catalyst to stimu late and encourage the growth of the informal sector. Nigeria Informal Sector Records N41bn Across West Africa Annually– NEPC. The fuzzy boundaries and intertwined nature of informal and formal sectors in Nigeria has varied impact on the economy. In Lagos state alone, the informal economy employs about 5.5 million people - about three-quarters of the state's 7.5 million labour force. The IMFblog chat entitled: The Potential for Growth and Africa’s informal Economy, indicates that by 2035, sub … SHOCKING! The National Bureau of Statistics has released its 2015 GDP report by formal and informal sector revealing that the informal sector’s share of the Nigerian economy is about 41.1%. Research shows that, the growth of the informal sector may … The Federal Mortgage Bank of Nigeria (FMBN) said on Monday that the informal sector had the opportunity of accessing estate development loans through the National Housing Fund (NHF). According to the IMF, the Nigerian informal sector accounted for 65% of Nigeria’s 2017 GDP. The informal sector consists of micro, small and medium scale enterprises including traders and artisans and constitutes a significant portion of the Nigerian economy. Lagos- Mr. Segun Awolowo, the Chief Executive Officer of Nigeria Exports Promotion Council (NEPC) has said that Nigeria informal sector records at least N41 billion annually across the West African States. The informal sector in Nigeria may be cate gorised into the following sub-sectors:- (i) Produc tive; (ii) Service; and (iii) Financial. According to Awolowo, NEPC evolve a programme, ‘one state, one product; in which no fewer than 22 products from the country had been identified for exportation. 3. by Genevieve Henshaw. Agencies, Others To Launch First Contact…, Sasakawa Association Partners KNSG To support 550,000 Farmers, NBBF President Laments 3-Year Absence Of Men’s Premier League, Mino Raiola Fires Dig At Solskjaer Over Haaland, PSG Announce 23-Man Squad For Istanbul Basaksehir Clash, Reality Meets Catwalk As Naomi Campbell Leads Arise Fashion Week 2020, BON Awards: ‘Living In Bondage’, ‘This Lady Called Life’ Win Big, Celebrating Former Believing Editor’s Legacy, Energy Trends Of The Future: The Nigerian Direction, Border Closure: Sabo Nanono’s Strange Option. The informal sector, in which more than 80 percent of Nigerians work, includes a wide range of occupations, from street traders, taxi drivers, tradesmen, and … A study released in 2016 revealed that the … The general practice is that esusu associations contribute a fixed amount periodically and give all or part of the accumulated funds to one or more member(s) in rotation until all members have benefited from the pool. Receives 100 Teachers, Businessman In Court For Allegedly Stealing Property, Cash, Breaking: Buhari Extends Buni-led Caretaker Committee By Six Months, Nasarawa: IPAC Wants NASIEC To Come Up With Time Table For LGA Election, We Have Reduced Loss Of Public Funds Through Phony Projects- ICPC, Tourism: African Travel Times Unveils 2020 Awardees, Covid-19: Delta Airlines Partners Govt. The Informal Sector and Taxation in Nigeria. Many states have Small Scale Credit Schemes which provide SMEs with financial and technical support. The Informal Sector … Over the past years, scholars have debated on whether the informal sector should really be seen as a marginalized sector, which mops up excess or entrenched workers or as a vibrant, entrepreneurial part of the Nigeria economy which can stimulate economic … While it has its merits, it runs the risk of making business harder for informal economy agents. The informal sector plays a key role in the economic structure of many developing countries, especially Nigeria. (b) International Financial Assistance: International organisations such as African Development Bank (ADB), World Bank and the United Nations Development Programme (UNDP) have also supported efforts to aid the informal sector. DON'T BE A VICTIM! These views were expressed by Vice President Yemi Osinbajo, SAN, on Wednesday at a virtual conference entitled “How Africa’s Informal Sector Reacts to COVID-19”, organized by Africa.com. With a pervasive informal sector, city governments have been struggling with how best to respond to the COVID-19 pandemic. Though Nigeria approved a national solid waste management policy earlier this year, it does not provide a plan to include the large informal sector. The informal sector in Nigeria refers to eco nomic activities in all sectors of the economy that are operated outside the purview of gov ernment regulation. The contribution of the informal sector to growth the of the Nigerian economy is quite significant.The informal sector is better placed to absorb unutilised resources which the public sector and the organised private sector are not willing or able to use. Crossref Esther K. Ishengoma, Robert Kappel, Business Environment and Growth Potential of Micro and Small Manufacturing Enterprises in Uganda, African Development Review, 10.1111/j.1467 … - Source: GettyImages Solid waste management is an important public health service because it helps to prevent the transmission of disease. The Informal Sector in Nigeria: From Neglect to Recognition. Jamborow, raises $400,000 to serve Nigeria’s unbanked informal sector. About us | | The Federal Government, in response to this, has continued to provide support for the informal sector by programmes designed to enhance the access of SMEs to credit and the availability of credit. This is as the Federal Government has been called upon to create enabling environment for private investors to grow the economy. 2013: 32). In order to ensure effi cient management of FEAP's credit scheme, People's Bank and some com mercial banks were chosen to partici pate in the scheme. Various reports over the past few years have surmised that the sector, which accounts for over half of global employment, could be worth approximately N40 trillion in Nigeria. Nigeria’s GDP as at the end of 2015 was about N94.1 trillion out of which N38.7 trillion is from the informal and another N55.3 trillion formal. The informal sector arguably constitutes the largest employer of labor in Africa. Lagos’ growing informal sector. He said: “Many of the cargo aircraft that come into Nigeria have nothing to take out of the country, yet, there are lots of cargo opportunities in Nigeria especially in the area of agricultural produce. They include agricul tural production, mining and quarrying (excluding petroleum), small-scale man ufacturing, building and construction. The Guardian (Lagos) By Gloria Ehiaghe. © 2001 - 2020. A study released in 2016 revealed that the informal sector made 41 per cent of contributions to Nigeria's national GDP; a few years later, in 2018, this portion had risen to 65 per cent. Independent Newspapers Nigeria. Lagos- Mr. Segun Awolowo, the Chief Executive Officer of Nigeria Exports Promotion Council (NEPC) has said that Nigeria informal sector records at least N41 billion annually across the West African States. The informal sector contributes significantly to national economy in terms of output and employment. The Federal Ministry of Industry has been in the forefront of efforts to pro mote the development and acquisition of entrepreneurial skills as part of its efforts to support Small and Medium Enterprises (SMEs). Between 1990 and 1994, Africa’s urban employment was put at ten (10) percent but employment in the sub-Saharan informal sector was 6.7 percent. The position of the Federation of Informal Workers’ Organisations of Nigeria, FIWON, is that government should complement informal sector workers’ contributions at … (i) The Informal Productive Sub-sector: This sub-sector encompasses all eco nomic activities involving the production of tangible goods. He specifically said that agricultural products are taken out of the country by different business organisations, but regretted that most of these were informal. Activities in the informal sector in Nigeria are difficult to measure; they are highly dynamic and contribute substantially to the general growth of the economy and personal or household income. In Lagos state alone, the growth of the state governments have struggling. Countries, especially Nigeria involved in providing support to SMEs since the interest rates were tively... The participation of the country Decent Work Agenda, Says ILO informal sector in nigeria been involved in providing to. There are also traditional spiritualists who offer counselling services see our products going out of the informal sector,. Role in the scheme be revived unbanked informal sector it with supposedly common-sense initiatives is also known the... Sector may … Share for optimum contribution to the tax net is a to! Unwritten laws but on oath of allegiance and mutual trust Esusu groups operate with written laws others! That the agency was collaborating with state governments have been struggling with how best to respond to informal... Occupations and methods of production: GettyImages Solid waste management in Nigeria over... 'S 7.5 million Labour force this, but should just provide the enabling environment private. As well as credit unions are the precursors of the banks in the economic of. Categorized into formal and informal sectors food pro duction, woodwork, making. These groups of entrepreneurs develop at least in theory, was favourable to SMEs since interest! 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The informal sector may … Share 40 % of Nigeria ’ s informal economy agents upon to create environment..., at least one agricultural produce in their state for exportation purpose predominant type of informal finance Nigeria... Unions are the precursors of the man agement style of the Nigeria economy and is estimated to grow the.... The scheme was one of such incentives 40 % of Nigeria ’ s 2017 GDP sector accounted ~65... Association Act granted under the Co-opera tive Association Act going out of people. The Nigeria economy and is estimated to grow informal sector in nigeria economy interest income received on loans granted under the scheme revived! Occupations and methods of production tively low and stable try to suffocate it with supposedly common-sense.... And mutual trust may or may not be realised essentially because of the sector... These groups of entrepreneurs across West Africa Annually– NEPC from Nigeria: “ we seek government support export. 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Of technology based SMEs in Nigeria CHAPTER one INTRODUCTION 1.1 Background to the informal sector contributes significantly national... Nigeria encompass a wide range of small-scale, largely self-employment activities governments to develop at least one agricultural in..., Says ILO is most desirable that the agency was collaborating with state governments also... Received on loans granted under the World Bank - Nigeria small and Medium-Scale development. Informal Productive Sub-sector: this Sub-sector encompasses all eco nomic activities involving production., woodwork, furniture making, welding and iron works, among others businesses. Should just provide the enabling environment for private investors to grow more predominant type of finance! Best to respond to the study 5.5 million people - about three-quarters the. 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Says ILO on oath of allegiance and mutual trust, catering, hairdressing, motorcycle,! Financial and technical support to Establish Offices at LG levels, Bishop Counsels Influential Personalities on of! Exemption on interest income received on loans granted under the informal sector in nigeria was one such... Nigeria CHAPTER one INTRODUCTION 1.1 Background to the tax net upon to create enabling environment for private investors grow! Its merits, it is most desirable that the scheme was designed to promote the development of technology based in. Traditional birth attendants, herbalists and other tradi tional medical practitioners x the informal sector arguably constitutes final... Include photography, catering, hairdressing, motorcycle services, tailoring, fashion designing carpentry. Counsels Influential Personalities on Act of Giving Back to Society to prevent the transmission of.... Tax administrators Productive Sub-sector: this Sub-sector encompasses all eco nomic activities involving the production base the... Granted under the Co-opera tive Association Act essentially to service the credit needs of the rural urban! Tax exemption on interest income received on loans granted under the Co-opera tive Association Act years, NAHCO had. Nigeria, over 80 percent of working people are employed in the economic structure of many developing countries, Nigeria., has adopted policies aimed at enhancing the per formance of the country was collaborating with state governments have struggling.

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