A new study sponsored by Jobberman Nigeria has found that the informal sector accounts for 76.7 per cent of employed Nigerians, underscoring its role as the backbone of the nation’s workforce.
The report, released in partnership with the Mastercard Foundation, highlighted the critical importance of the informal sector to Nigeria’s economy. It indicated that self-employment was a dominant trend, with 75.4 per cent of individuals engaging in informal work for at least one hour weekly.
It noted that the informal sector was particularly vital for youth, women, and vulnerable populations, offering essential job opportunities and survival pathways for millions across the country.
However, the study highlighted significant challenges facing the sector, including a skills gap in digital tools and business development that restricts growth potential.
It identified regional disparities between Northern and Southern Nigeria regarding skills rewards, talent retention, and access to training opportunities.
The rise of digital platforms further complicates the landscape, presenting both opportunities and regulatory challenges that the informal sector must address.
Unlike the informal sector, the issue of unpaid wages in the formal sector is reported. This is because its workers are covered by labour laws, have more organised work unions, and are mostly aware of their rights, things that informal sector workers lack.
The study’s lead researcher, Glory Aiyegbeni, stated, “This report unveils the informal sector as Nigeria’s hidden economic powerhouse.
It’s not just about survival—it is a hotbed of innovation and entrepreneurship.
“However, transitioning these businesses to sustainable models remains a significant challenge. We have found that many workers are trapped in survivalist businesses, unable to transition into sustainable enterprises and dignified work due to poor business environments and market conditions.”
The report highlighted the impact of digitisation on the informal sector, noting that the digital revolution had disrupted traditional informal work patterns, facilitated the formal aggregation of informal workers, and democratised upskilling platforms.
According to the report, the shift has necessitated the need for advanced, inclusive, and comprehensive work policies to address new forms of work, such as freelancing and gig work.
The chief executive officer of Jobberman Nigeria, Oreoluwa Boboye, stated, “Our findings provide a clear roadmap for harnessing the immense potential of Nigeria’s informal sector.
“By addressing the identified challenges, we can drive sustainable growth and create dignified employment for millions. It is crucial that we recognise and optimise traditional employment and apprenticeship models, such as the Igbo Apprenticeship Model, which has been recognised as one of the largest business incubators in the world.”
The report recommended several interventions to address the sector’s challenges, including the implementation of multi-channel training programs to bridge skills gaps, particularly in soft skills, financial literacy, and small business management.
It also advocated the building of marketplaces for fragmented verticals and optimising local associations to better serve young entrepreneurs.
It also called for the development of context-sensitive policies for informal workers and businesses and for recognising and enhancing traditional employment and apprenticeship models.
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