ROLE OF INFORMAL SECTOR IN EMPLOYMENT GENERATION IN NIGERIA. A RESEARCH PROJECT MATERIAL ON ECONOMICS
CHAPTER ONE
INTRODUCTION
1.1 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 countries.
According 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).
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