Role of the Informal Sector in Development of the Nigerian Economy: Output and Employment Approach
Onyemaechi Joseph Onwe
Journal of Economics and Development Studies, 1(1), pp. 60-74.

The problem focus of this paper is an observed general negligence of the informal sector or the informal economy in development policies and national accounting. This has been the case irrespective of the fact that the sector has been noted as accounting for about 21 percent of total employment in Sub-Saharan African countries (ECA, 2005), and about 38 percent of the gross domestic product (GDP) in Nigeria (FOS, 1999). This background informed our interest on the economic role of the informal sector, using Nigeria as a reference point. The methodology was a survey of available literature on growth, characteristics, and economic significance of the informal sector. The survey was empirically supported by data from the survey of the Nigerian informal sector, carried out by the Central Bank of Nigeria (CBN) in collaboration with the then Federal Office of Statistics (FOS) and the Nigerian Institute of Social and Economic Research (NISER). Our analysis indicate as follows: first, the traditional or informal sector is continuously expanding in developing countries, and has been serving as a ‘safety belt’ in providing employment and income to the teaming poor; secondly, informal sector activities, often described as unrecognised, unrecorded, unprotected, and unregulated by the public sector are no longer confined to marginal activities but also included profitable enterprises in manufacturing activities; third, the informal sector is largely characterized by low entry requirements, small-scale operations, skills acquired outside of formal education, and labour-intensive methods of production; forth, the informal sector is defined according to different classifications in terms of activity, employment category, location of actors, and income and employment enhancing potential. Other observations were that, in discussing issues concerning the informal sector, it is necessary to distinguish the traditional view from the current or modern view; in Nigeria, the dominant informal manufacturing activity appears to be in food, beverages, and tobacco; in the on-going economic and financial crisis that characterise the economies of African countries, including Nigeria, the informal sector has the potential to provide the needed impetus for employment generation; and, the existing policy responses to growth of the informal sector have not been encouraging. Given these observations, the paper recommends as follows: (i) emphasis on the informal sector’s role in Nigeria’s development policies; (ii) making data on the informal sector available for in-depth analysis; (iii) thinking in the direction of inclusion of the informal sector in national income accounting; (iv) financial and technical support of identifiable informal-sector activities such as, retail trade, small-scale home-based manufacturing activities, and services; and, (v) need for scholars to understand existing gaps in the economic use of the informal sector in Nigeria and other African countries.

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Onwe, Joseph Onyemaechi. (2013). Role of the Informal Sector in Development of the Nigerian Economy: Output and Employment Approach. Journal of Economics and Development Studies, 1(1), pp. 60-74.

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Thaddeus Akum Aasoglenang is a Lecturer at the Department of Community Development, Faculty of Planning and Land Management, University for Development Studies, Wa Campus. Before becoming a lecturer in 2008, Aasoglenang had previously worked in the NGOs sector since the year 2001 and became the northern sector office Regional Manager of Centre for the Development of People (CEDEP). He obtained Bachelor of Arts Integrated Development Studies at the University for Development Studies and MSc. in Development Policy and Planning also at the Kwame Nkrumah University of Science and Technology. He is currently a Ph.D candidate at University for Development Studies. His research interest focuses on communal conflicts and resolution processes, water and sanitation management, local governance, community development and rural poverty. He has a number of publications to his credit. He is currently the Assembly Member representing Nandomkpee electoral area at Nandom District Assembly.

Samuel Ziem Bonye had his Ordinary and Advance level Education in the Lawra and Wa Senior High Schools in the Upper West Region of Ghana, West Africa respectively and the University for Development Studies (UDS), Tamale, Ghana. He obtained Bachelor of Arts (Integrated Development Studies) and MPhiL Development Studies degrees in UDS, Tamale. He is currently a Doctoral Student in the University for Development Studies. Mr. Bonye has accumulated vast knowledge and practical experiences in development issues through research and publication of several articles and a book (over 20 publications) as well as his several years of work with NGOs, Goverment Organizations and as a consultant. He is an Editorial Board Member of several national and international peer review Journals.
He worked as a Research Assistant from 2002-2008 in the University for Development Studies and is currently a Senior Lecturer and the Head, Department of Community Development, Faculty of Planning and Land Management, UDS. He also lectures, Community Mobilization and Development, Development Theory, Research Methodology, Indigenous Knowledge and Development and Population and Development among others. Mr. Bonye has served in various capacities within the University, he has served as a member of the Academic Board; Faculty Board and Departmental Board. He is also a member of the Council for the Development of Social Science Research in Africa (CODESRIA). His on-going research and research interest focus on indigenous knowledge and local organizations, conflicts and natural resources management in Northern Ghana.