Social Policy Gaps and the Welfare Burden of Informal Sector Workers in Nigeria

The informal economy has consistently contributed to social and economic development through income and job creation, thereby enhancing people’s well-being. This paper examines the implications of existing policy gaps in Nigeria’s informal sector and how these gaps contribute to the welfare burden on informal-sector workers. The study provides a description of the informal economic sector and offers a general overview based on relevant literature. Data from the Nigerian Bureau of Statistics (NBS), the International Labor Organization (ILO), and the International Monetary Fund (IMF) were used to assess the size and components of Nigeria’s informal economy, as well as its role in the country’s economic growth and the welfare of its people. The study finds that informal sector significantly supports welfare through job creation and functions as an economic shock absorber. The study concludes that the government should recognize and prioritize the informal economy in its development policies and implement a more inclusive and equitable social protection framework to lessen the welfare burden on informal-sector workers.