For sub-Saharan Africa, the Informal sector is nothing new.  Indeed the types of activities carried out in this sector has existed even prior to colonialism.  Later, independence brought in the distinction between informal Vs. formal activities as countries around the region sought to formalize or “modernize” their economies.  The focus then (and indeed to some degree today) was rapid industrialization for much of the region.  If is the informal sector – not the formal sector – that is the growth engine.  It should be noted that around the world, about two-thirds of all employees work in the informal sector.  Thus how government treat the informal sector has profound impacts on employment, growth, equity and sustainability.

World Bank, 2009

The Informal sector is the part of the economy that is not taxed, organized, through legal but not monitored by the government or included in the GNP.  The informal economy was recognized in 1972, when the International Labour Organization (ILO) began its pioneering work on informality in the African economy with the Kenyan Multi-disciplinary employment missions.  ILO definitions include:

            “… the non-structured sector that has emerged in the urban centres as a result of the modern sector’s inability to absorb new entrants…”

International Labour Organization (1972).

            “… private unincorporated enterprises which produce at least some of their goods and services for sale or barter, has less than 5 paid employees, are not registered, and are engaged in non-agricultural activities including professional or technical services.

International Labour Organization (2002).

            The informal sector is characterized by a larger number of small-scale production and service activities that are individually or family-oriented and use simple labour-intensive technology.  The usually self-employed workers in this sector, have less formal education, are generally unskilled, and lack access to financial capital.  As a result, workers productivity and income tend to be lower in the informal sector than the formal sector.

            Nonetheless, some generalizations can be made about the causes of the informal sector’s growth in recent years include:

·         Bias by African leaders, international development agencies, international financial institutions to execute and support projects in urban areas, create laws and pursue development policies at the detriment of rural areas.

·         Recent migrants from rural areas who are unable to find employment in the formal sector.

·         Structural adjustment policies

·         Difficulty in establishing new firms.

·         Peace and the demobilization of military.

Their motivation is often to obtain sufficient income for survival, relying on their own indigenous resources to create work.  As many household are involved in the income-generating activities, including women and children, and they often work very long hours.  They generally lack public service such as electricity, water, drainage, transportation and educational and health services.  Others are less unfortunate, homeless, living on pavements, work temporarily as day labourers and hawkers under unhealthy weather condition.

            With the unprecedented growth rate of the urban population in developing countries, expected to continue and with the increasing failure of the rural and urban formal sectors to absorb additions to the labour force, more attention is devoted to the role of informal sector in serving as a panacea for the growing unemployment problem.

            The persistence and depth of poverty in Africa, and especially in the sub-Saharan region, appears to be strongly related to both the structure of employment and the very low level of productivity.  It is estimated by the ILO in Geneva, that 48 percent of non-agricultural employment in North Africa, is in the informal economy, and 72 percent in sub-Saharan region.  In rural areas some estimate are that the informal sector accounts for as much as 90 percent of non-agricultural employment.

            “Indeed informal sector employment in Uganda and Kenya now exceeds employment in the formal sector and nearly 90% of the labour force in Ghana comes from the informal sector.  Also many countries have not even collected data on the informal sector.”

African Union, 2008

            All the way from Lagos-Nigeria, to Moncef Bey – Tunisia, el hamiz – Algiers, Harare – Zimbabwe and the famous Derb Ghalef and Derb Omar Markets in Casablanca-Morocco.  Africans have resorted to the opportunities therein in the informal market, which makes breaking out seem to be a major development challenge.

            Zimbabwe, Tanzania and Nigeria have more than half their economies in the informal sector, while South Africa have just 28.4 percent (below the 41 percent average for developing countries world wide, but still more than the 18 percent in developed countries).

            The informal sector entails a loss in budget revenue by reducing taxes and social security contributions paid and therefore the availability of funds to improve infrastructure and other public goods and services.  This invariably leads to a high tax burden on registered labour, and of which the tax burden would be further pushed to consumers in form of high prices of goods and services.

            Finally, if economic growth is not associated with a movement into better employment opportunities or an improvement in the condition of employment in informal activities, the impact on poverty will be minimal.  This issue is central to realizing decent work, as a goal and for all workers, - to achieving the millennium development goals, and to promoting a fair globalization.  Please stay connected for more amazing insights…  Only Africans can save Africa.  Peace!

Obele Gospel Jesuite

CRO – Project Change Initiative

A 21^st Century Leadership, Organizational and Economic Development Strategist

For comments, please visit Obele Jesuite on facebook, @OBELEObele on twitter, gospel_obele@yahoo.com for email: or contact 08130070991.

Unemployment remains one of the most teething problems in the World. Although, it affects all age groups, its impact on the youth population is particularly vicious. In the past, most young people in Nigeria had easy access to white-collar jobs after their education but it is no longer the case today as the high level of graduate unemployment shows that education is no longer an immunity to unemployment in Nigeria.

GRADUATE UNEMPLOYMENT IN NIGERIA.

Graduate unemployment has assumed an unfortunate dimension in recent times as more graduates are being churned out of our tertiary institutions without having access to jobs. In 2011, the composite unemployment rate for graduates of tertiary institutions stood at 24.6% for first degree graduates, 13.7% for Master’s Degree holders and 17.8% for doctoral graduates (National Planning Commission, 2011). Taking cognizance of the fact that most of the so-called employed graduates are actually under-employed makes the whole picture of graduate unemployment in Nigeria more pathetic.

NIGERIAN GRADUATES AND EMPLOYABILITY SKILLS.

Many people have argued that the high rate of graduate unemployment in Nigeria is not only as a result of the unavailability of jobs but also the fact that most of our graduates lack basic employability skills and are therefore not employable. The unemployability of Nigerian graduates has been blamed on several factors. Chief among these factors is our poor curriculum system which has been criticized for not only lacking in content and quality, but is largely theoretical, stagnant and not tailored to market needs. Other factors usually mentioned include the poor learning environment in our educational institutions, the poorly trained teachers and the poor commitment of students to developing themselves. All these lead to poor learning outcomes amongst graduates and employers are usually very reluctant to commit resources to training and re-training such graduates since they might switch services to a competitor any day.

THE COST OF GRADUATE UNEMPLOYMENT.

The unemployability of Nigerian graduates effectively drains the reputation capital of our economy in general and our educational system in particular. As a matter of fact, the mere notion that our graduates are unemployable puts a question mark on the efficiency of our national expenditure on education and training and the actual benefit of schooling.

Moreover, not only does the problem of graduate unemployability retard the competitiveness of our graduates in the 21^st century global knowledge market, we are incurring very high national productivity losses as a result of the near ‘vegetative’ state of what should actually serve as our high-level manpower.

In the same vein, as the unemployability problem increases the rate of graduate unemployment; it poses a risk to the stability of society when these graduates resort to anti-social and criminal behavior to ‘help’ themselves. 

     

     IMPROVING ON THE EMPLOYABILITY OF NIGERIAN GRADUATES

The high cost associated with graduate unemployability makes it imperative for measures to be taken   to improve the employability of our graduates. There should not only be increased funding of             education across all levels to improve the learning environment and the quality of teachers (by way of training and re-training), measures should be put in place to overhaul our curriculum system  to not only reflect dynamism but focus on market needs and emphasize entrepreneurship

The Students Industrial Work Experience Scheme (SIWES) in our tertiary institutions should be overhauled to work better and should be extended to all fields of study to enable all students have a first-hand experience of how their industry works and know what skills are required to function effectively in such industries. The SURE-P Graduate Internship Scheme (GIS), a scheme which is like a stop-gap measure to improve the employability skills of existing graduates should be expanded to cover more grounds. Most importantly, students themselves should be committed to personal development by expending their resources on commercial and marketable skills and not on frivolities and a lot needs to be done to enlighten them in this regard.

Since the unemployability of Nigerian graduates effectively drains the reputation capital     of our economy in general and our educational system in particular, all hands must therefore be on deck to work towards repositioning our educational system to produce graduates that can compete effectively in the 21^st century global knowledge market.

Daniel Chimezie is a Research and Financial Analyst, Author and Social Commentator.