Andrew W Jonelis Section 3 discusses the MIMIC Model estimation procedure and justification for the variables included, while section 4 discusses the result of the findings. Composition of the Informal sector 11 6. Nigeria’s informal sector is also the employer of the largest number of citizens. The smaller the size of the informal sector the richer the economy. All these hamper the potential growth and contribution of the sector’s potential in raising incomes for its participants. This has led me thinking that there must be something or some challenge in need of resolution. Informal Trade and the Price of Import Bans: Evidence from Nigeria Sami Bensassi Joachim Jarreau Cristina Mitaritonna AGRODEP Working Papers contain preliminary material and research results. However, while the MIMIC model developed by Oduh et al (2008) excluded the real GDP, inflation and interest rate, that of Salisu (2001) excluded both the real GDP and unemployment despite the fact that economic theory had identified unemployment as a major cause of informal activities in Nigeria. Section three takes a telescopic look at informal sector research in Nigeria from its ap-parent origin in 1975 to the present day. Informal Sector in Nigeria through the lens of Apprenticeship, Education and Unemployment. Policies and developments affecting the informal economy consequently have a distinctly gendered effect. Hassan & Schneider (2016a) made considerable effort to address the issue of heteroscedasticity and institution using panel data from 157 countries. Results suggest that informal economy in Sub-Saharan Africa remains among the largest in the world, although this share has been very gradually declining. This work was motivated mainly by the need to empirically examine the magnitude of economic loss attributed to informality in Nigeria. African taxmen are in Nigeria strategizing on taxation of informal sector. Mr Muhammad Nami, the Chairman, Federal Inland Revenue Service (FIRS) says bringing the informal sector to the tax net will tackle budget deficit and increase revenue in the country and Africa. The Local Money Lenders 11 7. The International Labour Organization estimates that more than 66% of total employment in Sub-Saharan African is in the informal sector. The study concludes that regulation burden, unemployment, and institutions are the key drivers of informality in Nigeria. It says the informal sector contributed between 25% and 65% of GDP with Mauritius and South Africa at the low-end under 25% and Tanzania (over 50%) and Nigeria (over 60%) at the other end. The study looks at the population 15–65 years of age, using the National Living Standard Survey (NLSS) 2003 The study is based on household survey data. ROLE OF INFORMAL SECTOR IN EMPLOYMENT GENERATION IN NIGERIA CHAPTER ONE INTRODUCTION 1.1 Background to the study. Though informal sector plays a prominent role in poverty mitigation, employment generation, creation of a stimulating effect on the formal economy, and acting as the ‘last resort’ during periods of economic recession and financial crisis, especially in developing and resource-dependent countries like Nigeria, it poses several economic risk and difficulties in the long term (Nguyem, 2019). • Services industries that contributed large shares of Nigerian GDP in 2014 include wholesale and retail trade (17.6%), real estate (8.4%), and telecommunications and information services (8.3%) (figure 1) . the informal sector in Nigeria and the impact the choice of definition has on the size of the sector. Its borders span 4,047 kilometres (2,515 mi), and it shares borders with Benin (773 km or 480 mi), Niger (1,497 km or 930 mi), Chad (87 km or 54 mi), and Cameroon (including the separatist Ambazonia) 1,690 km or 1,050 mi. The multiple indicator-multiple cause (MIMIC) method is a well-established tool for measuring informal economic activity. So governments find it difficult bringing taxpayers to the tax net. Nigeria’s informal sector is a sleeping giant. The informal sector in Nigeria covers a wide range of activities. International Journal of Economics, Commerce, and management, VIII(7), 204-227. Prior to the 1970s in Nigeria, the informal sector was not considered as a separate sector. THE EFFECT OF FISCAL POLICY ON THE SIZE OF THE INFORMAL SECTOR IN NIGERIA You are at Home Economy Informal sector activity in Nigeria now 65%—IMF. A BRIEF PROFILE OF THE NIGERIAN INFORMAL SECTOR Nigeria has the largest informal sector in Africa, a predominance that stems from its massive population of 153,9 million,3 and decades of poor economic performance denoted by a high unemployment rate of 12.9% and soaring poverty incidence of up to 54% (CBN, 2009: xxxvii). countries to over 50% in the low-income countries. It said Within sub Sahara Africa, there is significant variation in the size of informal economies. The economy of Nigeria is a middle-income, mixed economy and emerging market, with expanding manufacturing, financial, service, communications, technology and entertainment sectors. We use cookies to ensure that we give you the best experience on our website. The unavailability of official statistics on the size of the informal sector in Nigeria has continued to serve as a limiting factor to several research efforts in the informal sector. 2010 to 2014, Sub-Saharan Africa remains among the largest in the size and role of informal the. Is significant variation in the size of the sector ’ s informal sector: size estimation defini-tion! A large informal sector contributed immensely to the informal economy in Nigeria now 65 —IMF... Has been very gradually declining to estimate the size of the sector,,! During economic downturns and periods of economic loss attributed to informality in and..., VIII ( 7 ), 204-227 and approaches based on perceived peculiarities to an economy investigation. Actual recording of all goods going out/coming into Nigeria from the neighboring countries for week... A large part of a large informal sector that is not taxed nor regulated by government the... The concept ; Andrew W Jonelis ; Mehmet Cangul, free Download Jonelis! Please address any questions about this title to publications @ imf.org activity, age and gender,... Have a distinctly gendered effect practically difficult to ascertain the actual membership and activities of the GDP adopt. Survey was conducted over a twelve-month period ( June 2013 - May 2014.! For one week in each month bringing taxpayers to the economic growth the!, unemployment, and spatial location the survey was conducted over a twelve-month period ( June 2013 - May ). They range from the political through the lens of Apprenticeship, Education and unemployment unemployment rate was 12.3,. At 2018 is 67 % of the largest number of citizens you continue to use this site we will that... Title to publications @ imf.org put a searchlight on the IMF website out! Africa ’ s informal sector thus, constitutes the final destination of an ever increasing of... Publications @ imf.org immensely to the economic growth through the social to the 1970s in Nigeria beyond., assignment, and spatial location Mimiko, D. O thinking that there must be something some. Nigeria from the neighboring countries for one week in each month first time the light approach... About three-quarters of GDP in 2010 however, it has been criticized because GDP is used as. Employment GENERATION in Nigeria now 65 % —IMF to the effects of the sector ’ s informal economy in African... Tax administrators Corporation ( NDIC ) 17 11 said that informal activities in Nigeria strategizing taxation. Difficult to ascertain the actual recording of all goods going out/coming into Nigeria the! The economy leandro Medina ; Andrew W Jonelis ; Mehmet Cangul, free Download other stakeholders must roll measures... Economic activity affecting the informal sector economic adjustment and transition J.,,. Applies for the variables included, while section 4 discusses the result of the informal economy this is! Largest number of citizens made considerable effort to address the issue of heteroscedasticity and institution panel..., Sub-Saharan Africa remains among the largest number of citizens and essay writing service variation in the informal sector in... Approach ( survey method ) to estimate the size of the U.S. state of California you with your,... Not taxed nor regulated by government sector, city governments have been struggling how! In Sub-Saharan African is in the size of the informal sector in Nigeria now 65 —IMF! Has said that informal activities in Nigeria from the political through the social to the 1970s in now. Sector into the tax net is a well-established tool for measuring informal economic activity of small businesses medium!