Background to the study.
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 growth
and job creation. It should be noted that around the world, about two-thirds of
all employees work in the informal sector (World Bank, 2009) cited in Atal et
al 2013: 34). Informal sector constitutes a significant segment of the Nigerian
economy. 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. 2013: 32).
Available statistics in Nigeria also
shows that the informal sector contributes about 60 per cent of the nation’s
Gross Domestic Product (GDP). Like many other developing countries, the sector
is considered crucial to job creation as it accounts for about 90 percent of
jobs in the country. In South Africa, the sector generates 60 per cent of
employment and contributes about 28 per
cent to the nation’s Gross Domestic Product (GDP) (Federal Office of Statistic.
2012). The foregoing therefore, points to the fact that the informal sector
given the needed regulations and support could be a major player in the combat
against unemployment problem in Nigeria, as well as in other developing
to Onyemaechi (2013:62), the informal sector consists of units engaged in the
production of goods and services with the primary objective of generating
employment and incomes to the persons involved.
1.2 Statement of the problem
There has been a general outcry on
the persistent rise in the unemployment rate in Nigeria. This has led an army
of angry and desperate unemployed youths prowling cities and the unending
influx of youth into the urban areas which has now posed further threat to an
already precarious state of national security (Hernando 2013) cited in Atal et
al 2013: 34). Government at various levels has introduced various policies and
programme aimed at reducing this menace but to no avail. However, informal
sector contribution to economic development in the area of job creation can
help to reduce the unemployment problem. The informal sectors in
developing countries appear to have been steadily growing in recent times
because most people have decided to create their own source of livelihood for
survival (Onyemaechi 2013: 66).
the ongoing economic and financial crisis that characterizes the economies of
many African countries, including Nigeria, the informal sector has the
potential to provide the needed impetus for employment generation. Fapohunda (2012:
39) also notes that the informal sector plays several roles in the growth and
development of the Nigerian economy. It provides productive outlets for a large
number of people who prefer or have to be self-employed consequently
contributing to the national economy in terms of output and employment.
It is against this background that
this study aims to examine the role of employment generation in Nigeria.
Despite the fact the topic is well documented, efforts have not really been
made to explore the dynamism the sector has played and still playing in
creating jobs in Nigeria, hence this study aims to fill this gap.
1.3 Objectives of the study
main objective of this study is to examine the role of the informal sector in
employment generation in Nigeria. In order to achieve this objective, the
following are the specific objectives:
To understand the informal sector and their activities in Nigeria
To examine the relationship between the initial sector and enjoyment generation
To investigate role the informal sector has played in the employment generation
1.4 Research Questions
What are the activities of the informal sector in Nigeria?
To what extent has the informal sector been able to generate employment in Nigeria?
1.5 Significance of the study
study is very significant for its timely nature. It will explain the roles of
the informal sector in Nigeria and this will make the government pay attention
to using the informal sector as a tool for solving unemployment which is a
problem confronting the country. The research, policies and recommendations
will assist the government and other unemployed youths.
1.6 Scope of the study
study examines the informal sector in Nigeria including their activities, and
understand the role the sector has played in employment generation in Nigeria.
1.7 Limitation of the study
major constraint faced in this study is in gathering materials.
1.8 Definition of terms
Informal Sector: it refers to the unregulated, non-formal portion of the market
economy that produced goods and services for sale or for other forms of
remuneration. It also refers to the sector that consists of units engaged in
the production of goods and services with the primary objective of generating
employment and incomes to the persons involved (Becker 2004) cited in
(Onyemaechi 2012: 61)
Employment generation: this is the process involved in engaging the full labour
force in productive activities of the economy (Yusuf 2014: 4).
3.) Unemployment: this refers to a
condition of joblessness or lack of employment. In other words, anyone who is
fit and available to work but fails to get one may be considered as being
unemployed for the concerned period (Olubukola, 2013)
Attah, A. Audu, A and Haruna, P. (2012), "Strategy for Reducing Unemployment in Nigeria: The Role of
Informal Sector" International
Journal of Capacity Building in Education and Management (IJCBEM) 2(1):
Fapounda, T. (2013), "Women and the Informal Sector in Nigeria:
Implication for Development", British
Journal of Arts and Social Sciences 4(1): 35-45.
Onyemaechi, J.(2013), "Role of the Informal Sector in Development of the
Nigerian Economy: Output and Employment Approach", Journal of Economics and Development Studies, 1(1): 60-74.
Yusuf, S. (2014), "Informal Sector and Employment generation in
Nigeria", MPRA, Lagos.