Nigeria: Job Dead Versus Job Rich - the Hidden Treasures in the Informal Sector
Toyin Olakanpo discusses the way forward to reap the benefits of the informal economy in Nigeria.
The Gala Sausage Roll is synonymous with life in Nigeria. It can be said that if you have never heard of the Gala Sausage Roll then you have never been to Nigeria.
The first Gala Sausage Roll was produced in 1962 by UAC Foods Limited and for almost 60 years now, it has been sold exclusively on the streets by street hawkers or by street vendors in small kiosks.
You cannot find the Gala sausage roll in any grocery store - other than perhaps in small convenience stores attached to a few petrol stations.
The point of my reference to the Gala Sausage Roll is not a PR stunt but to illustrate the fact that a major player in the formal economy, UAC Foods, is reliant on the power of the informal economy to market and sell one of its most profitable products. This, you will find is true of other major players in the FMCG sector, eg. Unilever, Proctor and Gamble, Promasidor. They all have unique products that arenexclusively sold through the informal economy and will likely notbsurvive without the informal economy.
Similarly, before the age of mobile airtime top -up, MTN and other mobile telecommunication companies in West Africa relied solely on the umbrella stands and street hawkers to sell airtime - 90% of their profits.
The informal economy involves economic activities undertaken by organizations, and individuals which are not subject to full government regulations, i.e have not been formally registered as a business concern with the Corporate Affairs Commission or workers who have no employment benefits and get paid without the usual tax deductions and pension contributions.
As such, most of the business activities in this sector are usually cash based and outside of the radar of the tax man.
Those engaged in the informal economy making a living include your local suya man, the photographer or DJ you hire for your son's party; the lady who tailored your outfit for your friend's wedding, yourbbarber, the private taxi driver, your domestic staff and gate man and all the street hawkers you see peddling wares on the streets of Lagos.
Nine times out of ten, the university graduate who cannot find a job in the formal sector will end up in the informal sector "hustling." Did you hear of the young lady who graduated with a first class degree in Oil & Gas Management from a UK university and could not get a job when she returned back to Nigeria?
She is now baking cakes for a living.
Indeed, the informal sector is growing jobs at a rate four times that of the formal economy ( c. Nite Bhan 2018) and is offering more job opportunities and income generating opportunities than the formal economy especially for the skilled and the un-educated, yet this economic activity is not captured by any data. It is not captured inncomputing GDP and is not captured in our employment data either.
The irony is that Nigeria's unemployment rate continues to rise because it is focused on the "job dead" formal economy and ignores the "job rich" informal economy which has been reported by the International Monetary Fund to represent over 60% of the Nigerian economy or just over $240 billion dollars annually.