Why over 50% of Nigerians rely on informal jobs – Report

The latest informal sector report 2024 by Jobberman has revealed that the informal sector has become a core part of the Nigerian economy, influencing over 50 percent of household income.

The informal sector includes all legitimate economic activities and services that are unregulated or not covered and recorded for tax purposes by formal institutional arrangements. It includes street vendors, freelancing, online training, social media marketing and other self-employment in small unregistered enterprises.

The report titled, ‘Nigeria’s informal sector: A pathway to sustainable economic transitions for young people,’ highlighted that the sector also influences about 90 percent of new jobs, 80 percent of non-agricultural employment, and 90 percent of female jobs.

“The informal sector includes traditional and emerging forms of business and employment structures that are unofficial-institutionally unrecognised or not properly integrated into formal institutions which could depict the resilience of youth and women,” the report said.

Fuelled by unfavourable macroeconomic conditions, post-COVID employment trends, and accelerated digitisation, the dynamics of the future of work are looking largely informal.

According to Jobberman, the budding innovation and entrepreneurship ecosystem with a quest for more creative, optimal and flexible work expressions are shifting youth and women’s employment choices away from rigid formal employment structures.

“As economies become more globalised, the casualisation of the labour market has become inevitable, with a greater proliferation of gig jobs, part-time and casual employees,” it said.

It added that the globalisation of markets and increased technology adoption are expanding opportunities for workers, shifting the employment and business landscape in almost every industry.

Digital platforms are facilitating access to local and global labour markets, affording individuals with specialist skills the opportunity to work as freelancers in the gig economy.

“The informal sector has earned the economic spotlight of many developing countries partly because of its employment potential and precariousness. In Nigeria alone, the informal sector accounts for about 90 percent of all new jobs, 60 percent of urban jobs, 50 percent of the nation’s GDP, and 80 percent of all non-agricultural employment,” the report said.

In a highly competitive and unfavourable business environment, youth-led small businesses across the country leverage peer-to-peer engagements, creating niche networks on social media for business collaborations and skills development.