An assessment of the role of the informal economy in Nigeria’s employment sector: A case study of Kano State (2000–2020).
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Background of the Study :
The informal economy plays a significant role in Nigeria’s employment sector, particularly in regions such as Kano State where formal job opportunities are limited. Over the past two decades, a large segment of the workforce has engaged in informal economic activities to sustain livelihoods (Lawal, 2023). This sector encompasses diverse activities including small-scale trading, artisanal work, and home-based enterprises that are critical for poverty alleviation and economic resilience. Despite its importance, the informal economy is often characterized by inadequate regulation, low productivity, and limited access to formal financial services. These factors create both opportunities and challenges for sustainable development (Ibrahim, 2024). Recent initiatives aimed at integrating informal workers into the broader economic framework have met with mixed success, reflecting the complexities inherent in formalizing such a heterogeneous sector. This study critically examines the contribution of the informal economy to employment in Kano State, analyzing its structural characteristics, growth drivers, and socio-economic impacts over the study period (Suleiman, 2025).
Statement of the Problem
While the informal economy provides vital employment in Kano State, it faces significant challenges including regulatory exclusion, limited access to credit, and low productivity levels. These issues hinder the sector’s potential to contribute more substantially to national development. The lack of formal recognition and support for informal enterprises results in precarious working conditions and restricted growth opportunities. This study seeks to identify the key obstacles that limit the productive capacity of the informal economy and to evaluate the extent to which these challenges impede broader employment and economic development (Lawal, 2023; Ibrahim, 2024).
Objectives of the Study:
To assess the contribution of the informal economy to employment in Kano State.
To identify the challenges affecting informal sector productivity.
To propose strategies for better integration of the informal economy into formal structures.
Research Questions:
What is the role of the informal economy in employment generation in Kano State?
What challenges hinder the productivity of informal economic activities?
How can policy measures facilitate the formalization of the informal sector?
Research Hypotheses:
H1: The informal economy significantly contributes to employment.
H2: Lack of regulatory support adversely affects productivity.
H3: Formalization initiatives can enhance the growth of the informal sector.
Significance of the Study
This study is significant as it examines the pivotal role of the informal economy in sustaining employment in Kano State. The findings will inform policymakers about the structural challenges and potential integration strategies, contributing to improved economic stability and job creation. By addressing the obstacles faced by informal workers, the study supports the development of inclusive economic policies that promote sustainable growth (Suleiman, 2025).
Scope and Limitations of the Study:
Limited to the topic only.
Definitions of Terms:
– Informal Economy: Economic activities that are not regulated by the state.
– Employment Sector: The part of the economy concerned with job creation and labor.
– Kano State: A major economic region in northern Nigeria serving as the study area.
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