As Nigeria Reopens, The Informal Sector is Left Behind – Again

This week the Federal government announced new guidelines for reopening the nation’s streets. The biggest news, of course, was that churches and mosques were open for restricted public worship. Additionally, interstate flights are on track for resumption while interstate travel remains suspended. Markets and other shopping zones where the majority of Nigerian businesses operate remain closed around the country.

The effect of these lockdown on the economy is well documented but with a gaping hole where informal businesses are. This follows a long tradition of ignoring and undervaluing what is arguably the most important aspect of Nigeria’s economy – at least for Nigerians.

The Informal sector of Nigeria accounts for about 65% of Nigeria’s employed workforce and theoretically, it also contributes to the GDP. It represents the bulk of micro and small businesses that drive economic growth, keeps the ports busy and many Nigerians fed and clothed. Informal businesses while they may not contribute enough in taxes are one of the most resilient businesses in Nigeria.

In the wake of the pandemic and the government’s response, that resilience is being tested to breaking point. Perhaps, no business sector has been as hard hit as the Nigerians who have to go to a market to earn their daily upkeep and feed their families. Keeping their businesses closed ad infinitum is surely frustrating. More worrying is the fact that not much is being said about these small businesses.

While the government appears to have dodged (at least for the time being) an economic bullet, Nigeria cannot afford the mass discontent that the collapse of the informal sector. Palliatives and direct bank transfers are unlikely to stop the problem, what’s more, they are unsustainable. The real problem with the informal sector is a damning lack of data. Almost no one knows what is happening there. A few months ago, an FMGC expert shared the incredible story of how a roadside hawker in Lagos’ maddening traffic made an average of one million Naira every month. The responses to this revelation varied from disbelief to awe and finally nonchalance. The informal economy is not interesting.

That is its superpower, however. Small thriving businesses like that have the potential to add significantly to economic growth if they are recognized as being more than the poor man’s hustle. Ignoring it has meant ignoring a large pool of active resources. It also means that we do not really know how the pandemic or the government orders have affected the people beyond anecdotes. How do you create policy and implement effectively if you don’t know what it is, you’re supposed to solve?

Governments across all levels have the responsibility of engaging the informal sector beyond TraderMoni and other populist social welfare programs to provide a safe and responsible environment for businesses to resume, recover and thrive.

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