{"id":1189,"date":"2020-05-30T14:01:25","date_gmt":"2020-05-30T14:01:25","guid":{"rendered":"http:\/\/vor.org.ng\/?p=1189"},"modified":"2022-08-14T08:17:23","modified_gmt":"2022-08-14T08:17:23","slug":"coronavirus-nigerias-informal-economy-hit-hard","status":"publish","type":"post","link":"http:\/\/ictnetworldltd.com\/newvor\/2020\/05\/30\/coronavirus-nigerias-informal-economy-hit-hard\/","title":{"rendered":"Coronavirus: Nigeria\u2019s informal economy hit hard"},"content":{"rendered":"
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By\u00a0Toyin Adeniji<\/strong><\/div>\n
Executive Director of Micro Enterprises, Bank of Industry, Nigeria<\/div>\n
\"\"<\/div>\n

Nigeria\u2019s informal economy has grown considerably over the last decade.<\/p>\n<\/div>\n

These are the individuals and micro-enterprises whose economic well-being is birthed and buoyed on the fringes of the formal economy; business activities that remain unregulated, and oftentimes, completely unknown.
\nInitially, much of the rhetoric centred on the need to \u2018manage\u2019<\/strong>\u00a0this ever-expanding behemoth that the informal sector was becoming. This narrative has since evolved into one that seeks to formalise these businesses, by catering to their needs and providing them with much-needed support.<\/p>\n

Providing \u201cno-interest micro-loans\u201d<\/h3>\n

This is what we have focused on through our Bank of Industry capacity building initiatives, and our microcredit schemes, which are designed to provide no-interest micro-loans to micro-enterprises to support their growth.
\nAs a result of these initiatives, we have been able to gain a better understanding of what these micro- and small businesses in the informal sector truly need: firstly, access; secondly, skills; and thirdly, tailored service delivery and channels of access.
\nWith the onset of the coronavirus pandemic however,<\/strong>\u00a0the challenges we had previously begun to understand have been magnified considerably.
\nThe sector is vast and encompasses a host of activities, ranging from agriculture and food production to mining, trade, transportation, accommodation, and even recreation services, amongst many others.
\nVarious reports over the past few years have surmised that the sector, which accounts for\u00a0over half of global employment<\/a>, could be worth approximately N40 trillion in Nigeria.<\/p>\n

Lagos\u2019 growing informal sector<\/h3>\n

In Lagos state alone, the informal economy<\/strong>\u00a0employs about 5.5 million people<\/a>\u00a0\u2013 about three-quarters of the state\u2019s 7.5 million labour force. A study released in 2016 revealed that the informal sector made 41%3 of contributions to Nigeria\u2019s national GDP; a few years later, in 2018, this portion had risen to 65%.
\nIf one were to proffer an estimation, it could very well be posed that with steadily increasing growth and activity, the informal sector\u2019s contributions to our 2019\/20 GDP would potentially surpass 70-80%.
\nHowever, this year is unlike any we could have imagined \u2013 and for those whose welfare are reliant on the daily income of the informal sector, and who cannot \u201cwork from home\u201d, the reality is bleak.
\nDespite the delayed onset of the virus in the Nigerian environment, compared to the West, the impact of government measures to curb the spread of the pandemic, though necessary, have affected almost all micro businesses.<\/p>\n

Take Salewa, for example<\/strong><\/h3>\n

She runs a small market stall at Mushin, selling cosmetic products; for years, this has been a reliable source of sustenance for Salewa and her growing family. With the income from her shop, Salewa contributes to funding the education of her two sons and cares for her ageing mother. As the population of Lagos has steadily increased, so has demand for her products, and ultimately, her revenue.
\nIdentifying the benefits that business expansion could create, she acquired a small loan early this year, and invested in a second stall at another market; it wasn\u2019t long before she began to see returns on her investment.
\nThat was in February.
\nToday, however, since the government imposed lockdown<\/strong>\u00a0and restricted movement measures across the country, demand for her products (for which she had relied on foot traffic) has come to a complete standstill and restocking any previously sold stock is proving difficult and more expensive.
\nIn less than two months, Salewa\u2019s household has become a single-income household. Her husband, who runs a private taxi service, has gone from approximately twenty customers a day, to about three to four customers a week.
\nStill, despite this harsh reality, Salewa and her family are in a better position than the millions of individual construction workers, tradesmen and women, restaurant service workers, street vendors, market salespeople, and the millions of low-income Nigerians whose livelihoods have disappeared.
\nA few weeks ago, the National Bureau of Statistics released a\u00a0report<\/a>\u00a0which revealed that 4 in 10 Nigerians currently live below the poverty line \u2013 an estimated 41% of the population (82.9m individuals).<\/p>\n

\u201cInformal sector remains incapacitated\u201d<\/h3>\n

This was an improvement from the rate of poverty in 2018<\/strong>\u00a0(which was at nearly 50%, an estimated 86.9m people), and yet, as the informal sector remains incapacitated, the ripple effect will eventually lead more people to regress into abject poverty, undoing much of the progress that may have been made in recent years.
\nThe challenges are multi-tiered, and the current outlook looks bleak, but the road ahead will be determined by the responses of various stakeholder groups today. There is no doubt that for these micro-enterprises and entrepreneurs in the informal sector, the rebuilding process will outlast the existence of the virus. So, where do we begin?
\nIt goes back to my earlier statements regarding the needs of the informal sector:<\/p>\n