Economists and experts have defined the informal sector as, “the part of an economy that is neither taxed nor monitored by any form of government, the activities of the informal sector are not included in the Gross National Product (GNP) and Gross Domestic Product (GDP) of a country. They are the workers who are self employed, people who earn a living through self employment, in most cases they are not on payrolls, and thus are not taxed. This sector may be invisible, irregular, parallel, non-structured, backyard, under ground, subterranean, unobserved or residual”.
According to statistics, the informal economy accounts for about 15% of employment in developed countries such as the United States. In sub-Saharan Africa, it is 72%, if agricultural employment is included it is beyond 90%. In other words the informal sector accounts for a higher percentage of employment in developing countries which means that the informal sector is a crucial tool in employment generation. It contributes to the general economy, in many developing world, the informal economy is an important source of livelihood for individual, families and communities. It is also a powerful tool in the fight against poverty.
In Nigeria, informal economic activities encompass a wide range of small scale, largely self employed activities. Most of which are traditional occupations and methods of production. They include the hair maker, barbers, shoe makers, artisans, domestic workers, traditional birth attendant, vulcanizer, thrift collectors, market women and so forth.
The informal sector constitutes over 40% of the Nigeria Economy and is estimated to grow more. Research shows that, the growth of the informal sector may be attributed to changing social or economic environment. In Nigeria, for instance the high rate of unemployment and economic recession account for the increased growth of the informal sector as a lot of white collar workers were relieved of their jobs, in the bid to survive many are becoming self employed. It is no doubt that the informal sector is a veritable tool for wealth creation, employment, grass root mobilization, growth and development.
Determined to build an inclusive, progressive government and vibrant economy the Lagos state Government is engaging the informal sector productively as it informs, enlighten and educate thus challenge the sector to be relevant and effective stakeholders in the state. The government was able to do this through the state Ministry of Information and Strategy which organized public enlightenment programmes for artisans, market women, traders, and the likes. The Ministry engages them through their various association on a daily bases in order to key them into the state government policies and programmes. As such, they become aware of government policies and activities and are not left behind in the scheme of things. It is important to note that these policies cannot be effective without the co-operation of the informal sector which is the major target of these policies.
Many informal workers do their business in unprotected and unsecured places, without formal contract, formal protection, workers benefit or social protection but that is fast changing, as Governments continues to invest in the sector for growth, productivity and regulation. For instance the Lagos State Ministry of Wealth Creation and Employment hosted the Stakeholders forum for Tradesmen and Artisans in the state. The target of the interactive forum was to stimulate greater interaction with the leadership and operators in the sector at various levels and also afford the state Government the opportunity to identify problems bedeviling the sector, problems such as obsolesce of equipment and skills of artisans, lack of access institutional finance and lack of institutionalized welfare/ Pensions scheme.
Identification and registration of Artisans was done by the Ministry of Wealth Creation and Employment and about 250 trade associations have been identified in the State till date, in addition over 80 Trades Associations have also been registered by the Ministry. The Ministry also provided means of identification for registered Artisans in Lagos State.
Through the Lagos State Ministry of Commerce, Industry and Cooperatives, the Government has also been able to render social services to artisans through their associations. This has exposed them to formal and informal trainings that have helped in upgrading their service. Artisans and tradesmen are also regularly trained to enhance their operations and provide competitive advantage.
As the center of commerce and business hob of Africa, Lagos State has taken critical steps to encourage growth in the informal sector. It also has policies that promote growth of small and medium scale enterprises. The state government is equally creating an enabling environment for businesses to thrive while also making registration of businesses less cumbersome though the ease of doing business initiative. The objective of all this is to attract more investment and encourage businesses that are not registered to come forward and improve Government regulation of the sector for optimal growth and economic sustenance.
At a time when the Federal Government is making efforts to reduce over reliance on oil, rejuvenating the informal sector and, indeed, other sectors of the economy remains an enthralling option. This is the path that Lagos is toeing.
Ogunbiyi is of the Ministry of Information & Strategy, Alausa, Ikeja