Shaping Nigeria’s Informal Economy : Government policies and their role in socioeconomic development and growth potential

Nigeria’s informal sector is at the heart of Nigeria’s economy. The informal sector accounts for about 65% of Nigeria’s gross domestic product (GDP) and close to 90 % of the workforce in this country. In spite of its importance, workers in this sector have a lot of challenges and among them; the lack of formal contracts, social protection and financial security. As a reaction to this, this study examines the impact of government policies on the informal sector, particularly in terms of its’ economic mobility, social inclusion and the overall sustainability of informal businesses. This study conducted qualitative in-depth interviews with eight individuals working in the informal sector and applied the WPR (what’s the problem represented to be) methodology for policy analysis. The findings from the study revealed that the lack of consistent policies and frequent regulatory changes made by the government prevents informal businesses from growing and staying sustainable for long term. In line with this, the result also shows that corruption within government institutions prevents resources meant for the informal sector from reaching the intended beneficiaries leaving the informal workers excluded from the support they need. Also, from the findings, it is clear that being workers in the informal sector means they struggle to get credit, financial help and access key infrastructure, hindering their business progress. The study reveals that, although the informal sector is central to the Nigerian economy, the absence of stable and explicit government policies, exclusion from social protection and difficulties of formalization are the aspects that prevent these businesses from flourishing and developing. Therefore, the study recommends that efforts to restructure government policies should be undertaken so as to fill these gaps, and the efforts are offering better and more stable regulations, financing, and development of infrastructures to support the growth and sustainability of informal businesses and lessen social inequality.