31st December, 2014
By Tayo Ogunbiyi
The informal sector is an economic activity that is neither taxed nor monitored by a government; and is not included in that government’s Gross National Product (GNP); as opposed to a formal economy. It refers to very small-scale units producing and distributing goods and services, and consisting largely independent, self-employed producers in urban areas of developing countries. Opinion differs widely on what should be the appropriate attitude towards the informal sector. While some tend to see it in terms of popular development, a vital source of employment and income for the poor, the seedbed of local entrepreneurship and a potent instrument in the campaign to tackle poverty, others simply dismiss it as an anomaly, a source of disorder, and an obstacle to the development of a modern economy.
Whatever the standpoint, there is no doubt that the informal sector, particularly in developing economies, remains a sold bedrock for economic emancipation of the downtrodden. In Nigeria, the Lagos example amply reinforces the fact that, if properly regulated and harnessed, the informal sector possesses enormous wealth creation potential. In today’s Lagos, it is difficult to ignore the sector as it has become a veritable source of prosperity and employment for many. The transporters, vulcanisers, mechanics, battery chargers, fashion designers, hair dressers, barbers, traders, painters, welders, carpenters, bricklayers, farmers, etc. have so much become an integral part of our daily life that the formal sector cannot do without them.
Hence, any government that refuses to recognise the potentials of the sector as a catalyst for growth does so at its own peril. Consequently, the administration of Mr. Babatunde Raji Fashola (SAN), in Lagos, has evolved several policies and programmes that have accommodated and integrated the sector into the development process in the state. Some of the policies have helped to regulate the activities of the sector thereby ensuring orderliness and enhanced productivity.
In order to monitor and standardize the activities of the Tradesmen and Artisans, the State Government through the Enterprise Identification Law carried out the identification and registration of various Trade Associations in order to have a comprehensive data bank of the practitioners for planning purposes and to enable the government determine the infrastructure needs of this sub-sector so as to reduce the cost of doing business.
The long term plan of government in respect of the project, which was launched on Friday 24th August, 2007, is to add value to information collected and collated by using it to produce a comprehensive business directory to be called ‘Lagos Pages’ to expose all the legitimate businesses in the state to the international investors. With the law promulgated in 1989 as an Edict and reviewed in 2003 as an Act, the State Government has identified and registered various Trade and Artisan associations.
In order to improve the driving skill of commercial drivers in the state, government established the Lagos State Drivers’ Institute (LASDRI) on 13th May, 2009. Also, members of the Lagos State Cab Drivers Association were assisted to secure loans to purchase brand new Nissan cars to enhance the quality and scope of their operation in the state. It should equally be stressed that all the buses being used in the BRT operation are strictly owned by informal sector operators who only enjoy the conducive operational environ provided by the State Government through road segregation and upgrading of other road infrastructure. The National Union of Road Transport Workers (NURTW), for instance, owns some of the buses with funds secured from Ecobank Nigeria Ltd while another batch of the buses is owned by LAGBUS Assets Management Nigeria Limited. Buoyed by the widespread acceptance of the BRT scheme, the State Government has expanded the scope of its operation to other routes such as Yaba-Oyingbo, Ipaja-Egbeda-Igando, Oshodi-Sango Otta, Ojodu-Berger/Ikeja among others.
Another core area of the informal sector in which the Fashola administration has achieved remarkable success is food security. In terms of meat production and distribution, the Eko Meat Vans were introduced into the state’s meat distribution process to put an end to the health hazard associated with the crude style of distributing meat in the past as well as ensuring food security through modern and hygienic mode of meat transportation. To ensure the active involvement of butchers in the project, government introduced the Butchers Association to some commercial banks for the purpose of securing loans for the procurement of over 50 meat vans. In the same vein, modern equipment have been installed in some of the state’s abattoirs to ensure that they strictly comply with global best practice.
Similarly, in order to boost food production in the state, government conceived the rice for job scheme which is meant to assist local rice farmers to access fund and embrace modern technology which will enable them produce on a large scale. Also, government has put in place an agrinet project for farmers in the state to fast-track the dissemination of agricultural and natural resources information and technologies to farmers, upland dwellers, and rural entrepreneurs. Through this, government now makes information on all agro products in the state available electronically to provide strategic information for farmers, government authorities, and other stakeholders at the state and local government levels. Government is also developing and promoting ICT skills among agricultural extension workers and farmers. In the area of empowerment, through its many skill acquisition and vocational training centres, government has trained over 100,000 people across the state while many of the centres were recently upgraded into core entrepreneurship hubs. Similarly, over 24,000 entrepreneurs have been empowered with micro-credit facilities secured from the state’s EKO Micro-Finance schemes. Periodically, government doles out equipment such as pepper grinding machines, sewing machines, cameras, deep freezers, power generating sets among others to beneficiaries as a way of enhancing their socio-economic status.
Naturally, as government continues to construct more schools, roads, bridges, mother and child centres, flagship health centres, etc, more of the operatives of the informal sector are provided with unique opportunity to earn a living. Equally, the environmental regeneration programme of the state government has continued to create more jobs for people who survive on daily labour as they now have a more reliable source of income. Recently, some cart pushers involved in refuse collection were offered employment by the Lagos State Waste Management Authority (LAWMA). The on-going construction of the Lekki Free Trade Zone is another project that offers tremendous employment opportunities for operatives of the sector.
Perhaps more importantly, as the state government enhances the wealth generating capacity of the sector, more of its operatives are being systematically brought into the tax net, thereby improving the state’s IGR status. At a time when national oil revenue is diminishing, rejuvenating the informal sector and, indeed, other sectors of the economy remains an inevitable option. This is the path that Lagos has been toeing, and it is, indeed, a worthy path.
•Ogunbiyi is of the Features Unit, Ministry of Information & Strategy, Alausa, Ikeja.