An examination of the informal sector’s role in fostering economic resilience in Nigeria: Evidence from Lagos State.
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Background of the Study :
The informal sector plays a critical role in supporting economic resilience, particularly in developing economies where formal employment opportunities are limited. In Lagos State, the informal sector has emerged as a vital engine of economic activity, providing livelihoods for a significant portion of the population from 2000–2020 (Akinyemi, 2023). This sector encompasses a range of activities including small-scale trading, artisanal production, and service provision, which collectively contribute to income generation and poverty alleviation. Studies indicate that the informal sector acts as a buffer during economic downturns by absorbing labor market shocks and maintaining consumer spending (Olalekan, 2024). Despite its importance, the informal sector often operates under challenging conditions with limited access to finance, formal credit, and regulatory support. This study examines how the informal sector contributes to economic resilience in Lagos State by analyzing its role in stabilizing employment, sustaining household incomes, and promoting entrepreneurial activities. The research employs both qualitative interviews with informal sector participants and quantitative analysis of economic data to provide a comprehensive picture of its contribution to the overall economy (Babatunde, 2025).
Statement of the Problem
Despite its significant contribution to economic resilience, the informal sector in Lagos State remains under-researched and under-supported. Many informal enterprises face challenges such as limited access to formal credit, inadequate infrastructure, and regulatory constraints that hinder their growth and stability. This disconnect between the sector’s potential and its operating conditions raises concerns about its long-term sustainability and its capacity to act as a safety net during economic crises. This study seeks to address the gap by investigating the specific mechanisms through which the informal sector supports economic resilience, and to identify policies that could enhance its productivity and stability (Akinyemi, 2023).
Objectives of the Study:
1. To evaluate the contribution of the informal sector to economic resilience in Lagos State.
2. To identify challenges faced by informal enterprises.
3. To propose policy interventions to support informal sector growth.
Research Questions:
1. How does the informal sector contribute to economic resilience in Lagos State?
2. What are the key challenges faced by informal enterprises?
3. What policy measures can enhance the sustainability of the informal sector?
Research Hypotheses:
1. The informal sector significantly supports economic resilience.
2. Limited access to finance hinders informal sector growth.
3. Policy support improves the stability of informal enterprises.
Significance of the Study (100 words):
This study is significant as it highlights the critical role of the informal sector in fostering economic resilience in Lagos State. Its findings will inform policymakers about the challenges faced by informal enterprises and guide the development of supportive measures to enhance their contribution to the economy. By addressing the gaps in policy and infrastructure, the research aims to promote inclusive growth and stability in Nigeria’s dynamic economic landscape (Akinyemi, 2023).
Scope and Limitations of the Study:
This study is limited to examining the role of the informal sector in Lagos State. It focuses on income generation and resilience factors and does not extend to formal sector dynamics.
Definitions of Terms:
1. Informal Sector: Economic activities that operate outside the formal regulatory framework.
2. Economic Resilience: The ability of an economy to withstand and recover from shocks.
3. Entrepreneurial Activities: Business ventures and initiatives driven by innovation and risk-taking.
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