Professor Olurinola Prescribes Policies to Boost Informal Sector in Nigeria
A senior faculty at Covenant University, Professor Isaiah Olurinola has said that government’s commitment to the implementation of the national agenda for economic recovery and growth as articulated in the Economic and Recovery Growth Plan (ERGP) document, together with the active strategic support of the educational and research institutions, will assist in the process of transition of informal sector actors (ISAs) from the informal status to formality.
Professor Olurinola, made this assertion on Thursday, October 19, 2017, when he delivered the 10th Inaugural Lecture of Covenant University.
Speaking during the lecture titled, ‘A Ladder out of Poverty or Cul-De-Sac? Repositioning the Informal Economy for Employment Creation and Entrepreneurial Development in Nigeria’, the Inaugural lecturer said the informal sector concept relates to the economic activities of the low-income group among the urban labour force, with the informal sector enterprises characterized by ease of entry, small-scale and labour intensive operation, adapted technology and skills acquired outside the formal school system.
Professor Olurionola, who stated that the lecture was geared towards x-raying the powers of the urban labour market in providing jobs for the ever-increasing labour force migrating to cities in search of jobs primarily in the formal sector, said that when such formal sector jobs are not available the migrants turn to the informal economy.
“However, the industrial development reality in developing nations is that the urban industrial production processes are not labour-absorbing but labour-displacing due to the technology employed. Thus, those migrants that determined not to return to their rural origin started to provide for themselves in the cities by taking advantage of the income and self-employment opportunities in the informal sector through the provision of services and/or trading in commodities with low capital requirements,” the Professor of Economics explained.
The lecturer said that the informal economy supplies the greatest number of jobs in Nigeria as well as in the other developing economies of the world. For instance, according to him, in the 1970s, total wage employment in the Nigerian labour market accounted for a meagre 5.8 percent of the total labour force, while those engaged in the 'self-account, unpaid household workers and unpaid apprentices' (analogous to the informal sector employment) were over 94 percent. And by the year 1985, these figures were 11 percent and 89 percent respectively.
He stated that given the size of the informal economy in Nigeria, which was estimated to be about 50-60 percent of non-agricultural employment, the sector deserves the attention of policy makers.
The lecturer averred that the increasing rate of absorption of the educated young people into the informal sector in the last five decades was a product of two important phenomena, which he said were the increasing rate of formal educational attainment of the general public, and the low absorptive capacity of the formal sector to provide gainful employment for the high outputs of the formal educational systems.
Highlighting ways by which the informal sector enterprises have been of benefit to the Nigerian economy, Professor Olurinola said that the informal sector promotes growth and development of formal sector; has been shown to represent a veritable seed-bed for formal business start-up and incubation prior to their graduation to formal status; and the acceleration of enterprise establishment and hence, the rapid creation of employment opportunities relative to the formal sector organisations.
On whether the informal sector is a ladder out of poverty or cul-de-sac, the Inaugural Lecturer said that the answer was neither a straight Yes or No, as it depends on which perspective one is taking a look at the issue. “However, we have seen that for many of the informal sector workers who are in the Own-Account, Employer and Employee categories, their reported earnings are a multiple of the national minimum wage. The earnings vary directly with the level of, and quality of skills, formal educational attainment and on the job experience,” he stated.
Professor Olurinola said that the studies carried out showed that there were three categories of operators (enterprises and workers) in the informal economy. These, he noted, included those that were doing well and above the poverty line, those that were just on or a little above the poverty line, and those that were in poverty.
In enumerating policy prescriptions that will assist the repositioning of the informal sector in Nigeria, he posited that each of the identified groups needs policy actions that will improve their position in the informal economy, while the formal sector should also be programmed for employment generation and growth to reduce the current high rate of unemployment.
“Policy measures that will encourage these enterprises to be incorporated and thus link them up with the formal financial sources and markets, together with the expected improvement in the macro-environment, will further enhance the ability of the informal sector as a ladder out of poverty,” he remarked.
In her remarks, the Secretary, Education, Living Faith Church Worldwide, Professor Bridget Sokan, representing the Chancellor and Chairman Board of Regents, Covenant University, Dr. David O. Oyedepo, congratulated the inaugural lecturer, saying that he had presented a well-researched and well thought-out lecture. She described Professor Olurinola as an active researcher who has researched not only in and around the catchment area of Covenant University, but also in Ibadan, Ile-Ife, Badagry, and Ebonyi in the South-east.
Professor Sokan bemoaned the situation whereby government or the formal sector put up a hostile attitude towards the informal sector, and expressed hope that Professor Olurinola’s prescriptions will prompt a paradigm shift and attitudinal change “because we know that the only reason that the Nigerian economy has not collapsed is because of this informal sector”.
She emphasized that the Nigerian economy, despite the assault on the nation’s treasury and stealing not only by politicians but by public officials, has not collapsed due to the strength of the informal sector, adding that it would be a good idea to look at how the informal sector can be empowered, to enable it contribute more to the Nigerian economy.
“I thoroughly enjoyed the research carried out by the lecturer, and I have pertinent things to take away for the Chancellor, one of which is the inaugural lecturer’s proposal of Covenant University partnering with the informal sector, to grow employment. There are a lot of pertinent points that he has raised that will definitely get back to the Chancellor. I want to pray that God will continue to uphold Covenant University,” said Professor Sokan.
Earlier in his welcome speech, the Vice-Chancellor, Covenant University, Professor AAA. Atayero, had extolled the virtues of the inaugural lecturer, describing him as an erudite professor of Economics. He assured the audience that they were in for an intellectually-stimulating session that will be full of facts and figures.
He said that Professor Olurinola had come up with ideas concerning the repositioning of the grey economy, with a view to harnessing its potentials for the emergence of a new economic dawn for Nigeria in particular, and by extension the African continent.
Also present at the lecture were other members of Management of Covenant University, Principal Officers, members of the University Senate, distinguished guests including family members of the inaugural lecturer, faculty, staff and students.
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