The impact of informal trading on household income in Oshodi-Isolo Local Government Area, Lagos State
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Background of the study
Informal trading remains a significant economic activity in many urban centers, especially in densely populated areas like Oshodi-Isolo Local Government Area, Lagos State. It contributes substantially to household income, particularly among low- and middle-income families who rely on informal markets for daily sustenance. Informal trading is characterized by its flexibility, minimal regulatory oversight, and resilience in the face of economic shocks (Ogun, 2023). Recent studies indicate that informal traders not only provide essential goods and services but also act as a buffer against economic uncertainties by generating immediate income (Balogun, 2024). However, challenges such as lack of formal credit, infrastructural deficits, and regulatory constraints often limit the growth potential of these enterprises (Adebisi, 2025). This study investigates the role of informal trading in enhancing household income and examines the socio-economic factors that influence its effectiveness. It explores how market dynamics, consumer behavior, and local governance policies interplay to shape the performance of informal trade. By using both quantitative surveys and qualitative interviews, the research seeks to provide a holistic picture of the economic contributions of informal trading, while identifying strategies to overcome the challenges faced by traders and improve their living standards.
Statement of the problem
Despite its importance, informal trading in Oshodi-Isolo faces significant challenges that affect its potential to improve household income. Traders often operate without adequate support from formal financial institutions, and infrastructural deficiencies further hinder business growth. In addition, regulatory uncertainties create a precarious environment that discourages investment and innovation among informal traders (Akin, 2023). The lack of integration into formal economic systems means that the benefits of informal trading are often limited and do not translate into long-term economic stability for households. This study seeks to clarify these challenges and explore practical measures that could enhance the contribution of informal trading to household income (Ibrahim, 2024).
Objectives of the study:
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To evaluate the contribution of informal trading to household income in Oshodi-Isolo.
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To identify the socio-economic challenges faced by informal traders.
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To recommend strategies to enhance the economic benefits of informal trading.
Research questions:
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How does informal trading affect household income levels?
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What challenges limit the potential of informal trading?
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What strategies can improve the economic outcomes for informal traders?
Research Hypotheses:
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Informal trading significantly increases household income.
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Infrastructural and regulatory challenges negatively impact traders.
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Policy interventions can improve the performance of informal trading.
Significance of the study
This study is significant as it examines the critical role of informal trading in supporting household incomes in Oshodi-Isolo. By identifying key challenges and proposing targeted interventions, the research provides practical recommendations for policymakers and development practitioners. The findings contribute to enhancing economic stability among informal traders and offer a framework for integrating informal economic activities into broader development strategies (Olusegun, 2023).
Scope and limitations of the study:
The study is limited to investigating the impact of informal trading on household income within Oshodi-Isolo Local Government Area, Lagos State, and does not extend to other forms of economic activity.
Definitions of terms:
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Informal trading: Economic activities conducted outside the formal regulatory framework.
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Household income: The total earnings of all members of a household.
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Economic resilience: The ability to recover from economic shocks.
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