NATIONAL PRODUCTIVITY CENTRE THROUGH THE CAPACITY BUILDING DEPARTMENT ORGANIZES IN-PLANT TRAINING PROGRAMME ON “HIGH PERFORMANCE WORK PRACTICES FOR ENHANCED COMPETITIVENESS” FOR STAFF OF INDEPENDENT CORRUPT PRACTICES AND OTHER RELATED OFFENCES COMMISSION (ICPC) AT THE NPC CONFERENCE ROOM, ABUJA ON 7TH– 9THJUNE, 2023June 25, 2023
REPORT OF THE 7TH FOUNDATION DAY LECTURES HELD BY NATIONAL PRODUCTIVITY CENTREJune 25, 2023
Cross section of Speakers and Dignitaries at the National Productivity Summit
The summit commenced with the National Anthem and opening prayer (Second stanza of the National Anthem). The ceremony was declared open after the welcome address by His Excellency, Sen. (Dr) Chris Nwabueze Ngige, OON, the Honourable Minister Federal Ministry of Labour and Employment (FML&E), who was ably represented by the Permanent Secretary Federal Ministry of Labour and Employment, Ms Kachollom Daju mni. In his address, he stressed the critical role of civil and public servants in maintaining the stability of Nigeria’s economy. He commended the Centre for streamlining this year’s summit to this very critical sector of the economy. While expressing excitement at the array of seasoned and versatile resource persons that had been invited to speak at the summit, he wished everyone a fruitful deliberation and declared the summit open.
The synopsis of the summit was read by the Chairperson, Productivity Summit Committee, Mrs Rosemary Esekhagbe. She explained that the summit was organised based on the nation’s ardent need to boost productivity through the informal sector of the economy. She stressed that those vital elements of informal sector such as job creation, income generation, and providing for the needs of lower-level consumers were issues that needed serious discourse in order to be able to elicit ways of tackling their challenges while also increasing Productivity in the informal sector.
She outlined the pattern of the two-day summit and gave a brief run-down of the plenary sessions to take place as well as the technical papers to be presented. She revealed that the summit would be been enriched by the quality of papers to be presented and the erudite and notable industry experts drawn from the relevant sub sectors, that would serve as resource persons.
She gave a list of the following Papers to be presented which she said thoroughly addressed the theme of the summit:
- Enhancing the productivity of the informal sector in Nigeria for improved competitiveness.
- The role of raw materials in enhancing the productivity and increasing competitiveness in the informal sector.
- The role of financial institutions in the productivity and growth of the informal sector in Nigeria.
- The imperative of occupational Health, Safety, Environment, and social protection for improving the productivity of workers in the informal sector.
The Director General National Productivity Centre, Dr Kashim Akor, in his welcome address, welcomed the participants to the occasion. He highlighted the mandate of the centre as that of stimulating productivity consciousness in the mind-set of Nigerians. He further stressed the importance of productivity to the various sectors of the Nigerian economy.
The Director-General eulogized the representatives of the Honorable Minister, Federal Ministry of Labour and Employment Dr Chris Ngige, Ms Kachollom Daju mni, for her fervent support of the affairs of National Productivity Centre and its programmes. The DG extended his gratitude to the representatives of the Pan African Productivity Association (PAPA) and other productivity organizations for identifying with the Centre.
Finally, He noted that the purpose of the summit was to discuss issues bordering on productivity and to fashion out a way towards increasing productivity in Nigeria. He therefore enjoined participants to listen and participate actively and charged them to brainstorm and come out with positive ways of improving productivity in Nigeria.
The Permanent Secretary, whose address was read by Director, Trade Union Services, FML&E, Mr. Emmanuel Igbinosur, commended the Management and Staff of National Productivity Centre for their tireless efforts in striving for a more productive economy. She was ecstatic that this year’s summit highlighted the informal economy, which is larger than the formal sector and encompasses Agriculture, Commerce, Industries and more.
She stressed the significance of increasing National Productivity as a way to multiply the nation’s wealth – an issue the government takes very seriously.
She noted that, over time, the persistent lack of productivity in many industries had been a major challenge as it had hindered the nation’s the ability to reach their developmental goals and ambitions. Commending the government’s efforts in tackling low productivity, she praised the institutions put in place to ensure that policies and programs intended to boost productivity become ingrained in society. She also lauded the National Productivity Centre for leading the charge in this intervention. She expressed her confidence that the summit would culminate in meaningful conversations and resolutions, and concluded by wishing all the participants a fruitful and enjoyable deliberation.
Goodwill Messages were received from various organisations as follows;
- Tailors Association of Nigeria (TAN)
The representative of the Association, Comrade Paul thanked the DG for giving the association the opportunity to participate in the summit. He said the participation of the association was necessary because the sector was critical and contributes to the country’s GDP. He called on the government to continue to support the tailoring sector which was contributing so much to the employment of the youths in the country.
- Pan African Competitiveness Forum (Pacf)
The representative Mr. Garba Ibrahim Gusau stated that forum was established by the African Union of which Nigeria is a signatory. He called for collaborations with other relevant stakeholders in order to enhance their contribution to promoting productivity in the country. He expressed gratitude to the NPC for initiating such an important summit at this critical time of the country’s economy.
- National Small-Scale Industrialists (NASSI)
The representative of the association, Mrs. Juliet David, appreciated the Centre for the initiative to organize the program. She was also appreciative of the opportunity given to her organization to be a part of the Summit.
- Association Of Women in Trade and Agriculture (AWITA)
The representative of AWITA, Mrs. Evelyn Emeka, joined others in congratulating the organizers of the forum. She thanked the Centre for affording the Association the opportunity to attend the summit, which would afford their members the knowledge of productivity. She expressed dissatisfaction at government’s inability to make it possible for her Association to access land and loans to enhance their productivity. She pleaded that the government accord the sector the opportunity to access the needed entitlement of the association and the government to assist them in addressing the challenges being faced by the Association.
- National Automobile Technicians’ Association
The representative of the Association, Comrade Seyi Adetayo, thanked the Honourable Minister, Federal Ministry of Labour and Employment and the Centre for affording them the opportunity to participate at this summit. He said the sub-sector was one of the most critical sectors in the informal sector. He highlighted the challenges the sector was facing, such as lack of workplace, modern machinery and equipment to enable them to enhance their productivity. He called on the government to come to their aid as the sector contributes a lot to the economic growth of the Nation.
- Raw Materials Research and Development Council
The representative joined in congratulating the DG and the Centre for organizing the summit. She significantly recognized the Raw Materials, Research and Development Council as an important organization which harnesses the raw materials of the country for increased productivity.
The Director-General, Dr Kashim Akor, in his Vote of Thanks, praised the various sectors present at the summit for their vital contributions to Nigeria’s productivity. He also acknowledged the National Productivity Centre’s work in boosting productivity and underscored the importance of the sectors involved.
He expressed his heartfelt thanks to the Honourable Minister of Labour and Employment, Senator Dr Chris Ngige, and the Permanent Secretary, Ms Kachollom Daju mni, for their invaluable contributions in aiding him and the Centre to make great strides in productivity improvement in Nigeria.
He implored all stakeholders and participants to actively engage in the summit, so they could come up a communiqué that would provide the government with the insights needed to develop effective and actionable policies.
At the end of the closing ceremony, group photographs comprising the special guests, resource persons and participants were taken.
SUMMARY OF PAPERS PRESENTED
LEAD PAPER: Enhancing the Productivity of the Informal Sector in Nigeria for Increased Competitiveness
PRESENTER: Dr Emejuo E. Henry Md, Mph- Chairman, Innovative Impact Partners and Director, Nigerian Association of Small-Scale Industrialists (NASSI).
The presenter pointed out that the topic was germane, considering the current socio- economic conditions in Nigeria. He said the informal sector drives every economy, not only in Nigeria but in the entire world and that the sector is the backbone of the formal economy.
He stated that globally, about 60 percent of the population participate in the informal sector, and in Nigeria, according to the national bureau of statistics, the informal sector accounted for over 65% of the countries’ GDP in 2019.He further revealed that an unpublished survey in 2008 had suggested that the informal sector in Nigeria accounted for about 90% of new jobs in the country, about 80% of all non-agricultural employment and about 60% of urban jobs created, earning it the description as the backbone of the formal sector.
He added that Nigeria has a large informal economy, that is, economic activities that are not regulated or protected by the government, which include small businesses, self-employed individuals, and other economic activities that take place outside of the formal sector. Their activities span across trading, spare parts, transportation, construction, agriculture, livestock, food preparation, credit facilities, refrigeration, mechanical and electrical work, dressmaking, information technology and communication, footwear, distilleries, gold and silver smiting and traditional healing, just to mention a few.
He disclosed that there were different schools of thought on the concept of informal economy and that the International Labour Organisation (ILO) and the United Nations Development Programme (UNDP) generally agreed that informal sector could be viewed from a non-structured neo-structuralist approach and neoclassic approach. These deal with who and what it connotes.
Who they are:
- Informal entrepreneurs who choose to operate informally to avoid taxation.
- Informal entrepreneurs who choose to operate informally to avoid cumbersome bureaucratic procedures.
- Petty producers + unprotected workers subordinated to the formal economy.
What they do:
- Bringing informal enterprises under the regulatory environment.
- Simplifying the regulatory environment for informal enterprises.
- Regulating the relationship between “big business” + subordinated producers and workers.
- Providing government services to informal sector.
Problems of the Informal Sector
He stated that according to the World Bank, 47.3% of Nigerians, or 98 million people, live below the poverty line and therefore engage in the informal sector for survival. He said that according to the National Bureau of Statistics (NBS, 2023), unemployment rate hit 33.3%, under-employment 22.8%, youth un-employment 42.5%, youth under-employment 21.0% with inflation rate 21.91%, and that all of these factors negatively affect the informal sector.
He highlighted other problems of the sector to include:
- the high cost of working materials
- cost of electricity
Inability to pay workers’ salaries
- credit crunch
- lack of education and skill training
- poor physical infrastructure
- lacking in social protection
- ineffective linkages within the informal sector
- lack of social security
- lack of linkages between formal sector and informal sector – no effective support system from the formal sector and government
- weak regulatory environment
- inadequate power supply
He pointed out some major indicators of the informal economy in Nigeria as follows:
- Contribution to GDP
- Lack of Regulation
- Informal Financial Sector
- Vulnerability to Economic Shocks
Role of National Productivity Centre
The presenter stressed that the philosophy and mission of the Centre clearly speaks to the relevance of the theme of the 4th national productivity summit which is, “Enhancing Productivity Of The Informal Sector In Nigeria For Increased Competitiveness”, adding that the summit was aimed at promoting innovation – led productivity in a sustainable manner in all spheres of the national economy through holistic and inclusive approach by addressing the triple bottom line of economic, environmental and social, in addition to propagating productivity consciousness and culture amongst government, business and society.
Nexus between Enhanced Productivity, Informal Sector, and Increased Competitiveness in Nigeria
On the nexus between enhanced productivity, informal sector, and increased competitiveness of Nigeria, he stated that there was a strong connection and co-relation amongst the informal and formal sectors, their interlinking activities, their productivity, and their overall competitiveness, which can lead to the overall growth and development of the economy and its GDP. He buttressed the fact that to ignore the informal sector would be tantamount to “shooting ourselves on the foot” and stunt economic gains that could propel the nation’s economy to greater heights, adding that these sectors of the economy (formal and informal) were intertwined and tended to complement each other in an intricate manner that made them inseparable.
The presenter emphasized that countries paid adequate attention to matters of productivity because it is important and has been found to be the main factor driving growth and income levels, which are also very closely linked to human welfare.
Strategies for enhancing Productivity in the Informal Sector
According to him, some strategies for enhancing productivity of the informal sector that is essential for increasing competitiveness in Nigeria include the following:
- Access to Finance
- Skills Development
- Technology Adoption
- Access to Markets
Challenges of the Informal Sector
The presenter stated that the informal economy had grown dramatically over the last two decades but despite this, there were many challenges that have affected the progress of the Nigerian informal sector and had consequently prevented it from effectively contributing to enhanced productivity and increased competitiveness in the country. They include, but are not limited to:
- Elements related to the country’s economic context
- Decreasing levels of market regulation
- Weak policy frameworks and policy summersaults
- Socio-demographic drivers such as population growth, urbanization, rising unemployment, widening inequality between the rich and the poor
- Low-level education and rising poverty
- Lack of minimum wage, and the unlikeliest of workers to pay taxes, have no holiday, etc
- High rate of extortion of the informal sector, especially in the face of the cash crunch, unfavourable monetary change and exchange policies, coupled with inefficient network for online transactions
- Poor labour rights and frequent unsafe work conditions.
- Difficulty in obtaining microcredit since they lack economic stability and concrete employer-employee ties
- Dearth of data and information for use by the informal sector and
- Poor record keeping
- Multiple taxation and constant harassment by legal and illegal taskforces who claim to be collecting revenue for government.
- Deficits in basic infrastructure such as roads, water, electricity, etc, which are key enablers for efficient business operation, and which have all contributed to making business unattractive and unprofitable for the informal operators.
The Role and Contributions of the Informal Sector to the Economy of Nigeria
The contributions of the informal sector to the Nigerian economy as emphasized by the presenter include Economic Growth and Contribution to GDP; Economic structure of many developing countries, Home Of Bulk of Mixed Variety Of Heterogeneous Business Activities, Provider of Jobs and Wealth Creation; Provider of Goods and Services, Capital Saving and Mobilization; Capacity Building and Training, Use of indigenous and Local Technology; Entrepreneurial spirit and Industrialization, amongst others.
He stated that the major drivers of the informal were governance structures,
science technology and innovation. He mentioned that the formal and the informal sector were inter-twined and complement each other to grow, adding that women were significant players in the informal sector. He emphasized that Government must pay attention to the informal sector to make them sustain their productivity and competitiveness in Nigeria, and that the government should assist the sector to grow by:
- making the sector have access to loans and credit facility.
- providing adequate infrastructure to enable them to perform well.
- ensuring the informal sector collaborates and links with formal sector and the government.
- building their entrepreneurial skills.
- fashioning out and articulating programmes and policies in such a way as to enable them grow in their various engagements.
- reducing and or eliminating collateral in borrowing to enable the informal sector have access to loans.
- training and retraining the informal sector members on how to improve their productivity in order to make them compete domestically and internationally.
To enhancing productivity and ensure increased competitiveness of the Informal Sector in products and services, the presenter opined that:
- There must be a strong linkage and collaboration between the formal and the informal sectors for the development of complementary strength.
- Improved access to resources was required by the informal sector.
- National productivity Centre should build the productive capacity of the informal sector through the Productivity and Quality Improvement Programme (P&QIP) and other programmes of the Centre.
- There was need for improved coordination and technology transfer.
- Increased market access was of necessity.
- Nigerian industrialization policy has a gap between the formal and the informal sector and must be bridged.
- There was urgent need to embrace modern and cutting – edge technology.
- There was need for government to support the informal sectors.
The informal sector is a significant part of Nigeria’s economy, accounting for over 65% of the GDP, with estimates suggesting that over 70% of the country’s workforce is employed in the informal sector. The informal economy includes small businesses, self-employed individuals, and other economic activities outside the formal sector. The lack of regulation is one of the major disadvantages of the informal sector, but it also provides vital economic opportunities for those at the bottom of the socioeconomic ladder. The informal sector presents both challenges and opportunities for policymakers and individuals alike, but with the right type of legislation, proper administration and public awareness campaigns. The Nigerian government can tap into this wealth of capital, which is desperately needed for the provision of social goods in the country. To achieve enhanced productivity and increased competitiveness, it is crucial to provide proper support and encouragement to the informal sector. This can be achieved through implementing the right policies and providing appropriate infrastructure that incorporates science, technology, and innovation in doing business. The National Productivity Centre plays a crucial role in this regard.
Neglecting the informal sector will hinder Nigeria’s efforts to diversify its economy and become a great industrialized nation. Therefore, there must be efforts to upscale the informal sector into a formal sector, which will contribute maximally to employment generation, wealth creation, and overall GDP for sustainable socio-economic development; failing to do so would be detrimental to the development of the economy. However, informality can also have its strengths. By recognizing and building on these strengths, governments, and stakeholders can promote a more productive and inclusive economy that benefits all citizens.
The presenter recommended the following:
- Adoption of strategies and creation of effective policies that that support establishment of basic infrastructure on which productivity depends.
- Integration and facilitation of the formalization of the informal sector to enable it properly contribute to the economy and its GDP.
- Adoption of special Policy instruments by the government to promote the Small-Scale Industries through i) Financial Incentives ii) Fiscal incentives iii) General incentives, and iv) Special incentives in backward areas.
- Introduction of Quality standards and Conformity Assessment with an inclusive Management System that would enhance productivity and increase Nigeria’s competitiveness, especially in relation to regional (ECOWAS), continental (AfCTA) and global trades (WAITRO, AGOA, etc).
- Adoption of international Best Practices and benchmarking using effective collaborative models of Clusters, innovative parks, modern incubation centres, common facilities and operating within stipulated trade agreement like, trade liberalization, respecting rules of Origin, trade discriminations and biases.
- Increased Productive Capacity by introducing new Machines and Equipment that can assist production.
- Conducting R&D on sustainable basis, and updating, retooling and adoption of new, advanced and emerging technologies to stay at the frontiers of STI and doing the necessary catch-up where the nation is lagging behind.
- Introduction of efficient skills acquisition and capacity building training and retraining by establishing centres and identifying crack professionals as resources persons to give guidance and direction to what the informal sector is already doing through apprenticeship training, Industrial training schemes and other hands-on skills acquisition, adaptation, and promotion.
- Creating efficient Innovative Clusters, parks, etc and injecting of Science and Technology and Innovation (STI) components like the introduction of common facilities and infrastructure, equipment, and machinery where participants in the informal sector can process and package their products and render services paying little token to government.
- Encouraging patenting and commercialization of products and promotion, as well as the creation of associations and cooperatives societies, through programmes that can help unleash the potentials inherent in the informal sector.
- Continuous effort to improve Nigeria’s ranking on Ease of Doing Business (EODB).
- Government must come to terms with the fact that the informal sector recognizes the need for efficient solutions like fintech and other IT and online solutions that can reduce extortion and facilitate transactions in the informal economy. Central Bank of Nigeria (CBN) must begin to deliberately think of broadening and expanding the scope and efficiency of the e-Naira policy to carter for and service the informal economy in addition to creating CBN e-agents to deepen the penetration of transaction in the sector.
TECHNICAL PAPER 1: Role Of Raw Materials in Enhancing Productivity And Increasing Competitiveness In The Informal Sector.
PRESENTED BY: Engr. Obasi Ettu
According to the presenter, the informal sector, also known as the shadow economy, is an important source of employment and income for the poor, a seedbed for local entrepreneurship, and a potent instrument in the campaign to combat poverty and social exclusion. He gave a definition of the sector as defined by the International Labour Organization as employment categories that are not recognized, regulated, or protected by legal or regulatory frameworks. These categories include self-employment, wage workers, and employers of informal enterprises. He added that the sector encompassed a wide range of economic activities, including trade and commerce, vocation and artisanal skills, manufacturing activities, construction, and other services. Further, he described it as a heterogeneous mix that spans a wide range of economic activities that tend to be ignored in normal statistical economic analysis. The presenter added that the employment generation capacity of the informal sector activities was crucial in its contribution to the economy, especially at this time that the formal sector employment capacity was shrinking. Citing the International Monetary Fund, he disclosed that the informal economy employed approximately 5.5 million people in Lagos State alone and that over 80% of the Nigerian population worked in the informal sector. Therefore, the informal sector should be given necessary support and empowered to continue to make its fair share of contribution to GDP growth.
Definitions and Concepts of the Informal Sector, Productivity, Competitiveness, and the Role of Raw materials
The presenter stated that the informal economy refered to economic activities, enterprises, jobs, and workers that are not regulated or protected by the state. These include self-employment in small, unregistered enterprises and wage employment in unprotected jobs. He said even though the term ‘informal sector’ was criticized for being confusing and inconsistent in its definition, it was used to refer to micro or small businesses that range from ubiquitous services to production, processing, and cross-country trading. The confusion, was from the lack of theoretical consensus on the meaning of the term, “informal economic activity” and a reliable conceptual model to distinguish workers from entrepreneurs.
The presenter further added that the informal economy was a global phenomenon that included heterogeneous activities that have market value but were not formally registered, adding that it was difficult to measure and contributes more to the GDP of nations than was currently estimated, due to underestimation. Economic and business challenges, socio-demographic and socio-environmental constraints, governance, and science and technology factors were some drivers of informality while noting that the informal sector generates more employment opportunities than the formal sector, and is intricately tied to the formal economy, contributing 30-50% to the national GDP of developing nations. The presenter pointed out that COVID-19 had hit the informal workers particularly hard, especially women who form a greater majority as players in the sector. He observed that sector was a critical safety net for millions of people and it required a balanced approach to address its challenges. He further noted that the micro and small enterprises were engines of growth representing roughly 90% of all firms, were responsible for 50% of employment worldwide, as well as up to 40% of GDP in emerging markets. The sector was therefore an important source of livelihood for most of the Nigerian population, especially for women and youths engaged in various informal sector activities.
The presenter defined productivity as a measure of how efficiently production inputs such as labour and capital were being used to produce a given level of output, and was commonly measured as the ratio of output volume to input volume. He asserted that Productivity could be applicable to any formal or informal economy, small or large business, government, and individuals, adding that the goal of productivity was to maximize the utilization of resources to produce as many goods and services as possible at the lowest possible cost. He said the informal sector could also be considered in terms of productivity, as it involved activities based on inputs such as land, workforce, raw materials, capital technology, machinery, and equipment/tools that eventually bring about outputs in terms of goods and services to support livelihoods and contribute to the growth of the economy.
The presenter discussed the concept of competitiveness and its relationship with productivity, trade, and economic growth. He disclosed that the World Economic Forum defines competitiveness as “the set of institutions, policies and factors that determine the level of productivity of a country.” He revealed that the concept of competitiveness was global and used three requirements consisting of twelve pillars for measuring and ranking nations according to their progress and success based on set standards and parameters/factors by the World Economic Forum.
The paper also defined raw materials as unprocessed or minimally processed material obtained as mineral ores, natural oil, agricultural product that undergoes transformation for creating finished products in vast quantities. According to the paper, Raw materials are classified into agricultural-based and mineral-based materials and can be categorized into direct and indirect raw materials. The quality of raw materials can determine the quality of the products/goods that emanates from them. The paper emphasized that the introduction of new machinery and the deployment of ICT in the informal economy could be strong factors in enhancing productivity, bringing about increased competitiveness of the informal sector in particular and the nation in general.
The presenter stated that even though the informal economy was often referred to as the third economy, unorganized sector, parallel economy, shadow economy, and unregistered economy, it had become a vital part of developing nations and contributing significantly to economic growth, GDP, employment and wealth creation. He added that in Nigeria and West Africa, the informal sector encompassed activities such as manufacturing and production, trade, and commerce, technical or vocational works, transportation and logistics, farming/agriculture and geo-extractives (mining), service businesses, and other manual labour works. The sector also serves as a buffer against unemployment during economic downturns and plays a key role in cushioning the adverse impact of economic crises. Despite its productivity challenges, the presenter noted that the informal sector makes significant contributions to the nation’s GDP, economic growth, productivity, and competitiveness, representing up to 20-50% of Nigeria’s GDP. Globally, he said, the informal sector still accounts for about a third of low- and middle-income countries’ economic activity. He disclosed that as economies develop, the size of the informal sector decreases, but it remains a vital part of many developing nations’ economies.
He pointed out that the Nigerian economy had been heavily reliant on the oil sector since the 1980s, which had resulted in misplaced economic focus and made it difficult to take advantage of other resources to enhance economic growth. He said Nigeria had significant agricultural and mineral resources, such as coal, iron ore, lead, limestone, tin, and zinc, which could increase the country’s GDP if productivity was improved; adding that the sector plays a significant role in exploring, exploiting, processing and trading raw materials and finished products. He remarked that Nigeria’s crude oil and natural gas resources were the mainstays of the economy, but sporadic supply disruptions affect their production. He said Nigeria’s crude oil reserves were estimated to be 36.89 billion barrels in 2021, and was the leading crude oil producer in Africa. In 2018, Nigeria was the world’s fifth-largest exporter of liquefied natural gas (LNG) and had an estimated 159 Tcf of proven natural gas reserves in 2003. However, the country still heavily relied on crude oil and natural gas revenue, with non-oil revenue comprising only 3.4% of GDP, one of the lowest in the world.
The presenter discussed the importance of natural resources in Nigeria, particularly forest resources, animal raw materials and mineral raw materials. He stated that;
- Forests are essential to human life as they provide diverse resources, store carbon, aid in regulating climate, purify water, and contain a large portion of the world’s terrestrial biodiversity.
- Animal raw materials, such as livestock, are a significant source of wealth and capital for farm households, with hides, skins, and meat being sold locally and exported to neighbouring countries.
- Nigeria is also rich in mineral wealth, including solid minerals such as gold, coal, bitumen, limestone, iron ore, lead/zinc, and barytes, which have the potential to be considered world-class.
The paper revealed that the Nigerian government had identified and selected these seven strategic solid minerals for private sector participation and investment. Therefore, when ordering raw materials for business enterprise, it was essential to consider factors such as quality, availability, company appraisal, identity, purity, potency, shelf life, composition, and value.
While discussing the importance of natural resources in economic development, industrialization, and poverty alleviation, it maintained that natural resources such as crude oil, natural gas, agricultural products, and minerals could be used as raw materials for investment and diversification to create wealth for nations. These resources could also be exported to meet the global demand for raw materials, especially from emerging economies such as China and India. The sustainable extraction and processing of raw materials could be a catalyst for economic growth, exports, and poverty reduction. The paper further suggested that mineral development could assist countries to leapfrog the development process and create additional employment and infrastructure development. However, it emphasized the need for a holistic approach that could integrate sustainable practices in mineral development to mitigate the associated risks such as land use change, water use, waste generation, and air and gas pollution. The paper also highlighted the importance of clustering, for enhanced productivity, in different industries such as food supply, power, and energy, building and construction, and, apparel and clothing.
On the role of raw materials, the presenter stated that raw materials constitute about 50% of the total cost of production, and a reduction in cost would reduce the price and increase the profits of the manufacturing firms, adding that in the informal sector, most operators depend on raw materials, machinery, equipment, and tools to provide goods and services that could compete favourably in the markets. He asserted that raw materials were essential for the productivity of the informal sector and their availability affect productivity. He discussed how raw materials’ quality, availability, and management could positively impact productivity in the sector and also highlighted the role of the informal sector in generating employment and wealth in Nigeria.
While noting that the impact of COVID-19 was being felt in various ways, resulting in a reduction in total demand, he said the disruption of supply chains caused by COVID-19, as well as the global economic crises resulting from the Russian-Ukraine war and their associated effects, such as raw material shortages and production input shortages, suggested that the government should implement effective and cost-effective tax incentive packages to minimize the impact of the pandemic on the informal sector. Additionally, the dual cashless and currency change and swap policies have had a significant impact on the informal sector, requiring coordinated and deliberate efforts to alleviate the challenges faced by sector operators. He suggested that the government should also consider temporarily suspending taxes in critical areas in response to the crisis to support the informal sector and other businesses.
TECHNICAL PAPER 2: The Role of the Financial Institutions in The Productivity and Growth of The Informal Sector in Nigeria
Presenter: Mrs. Victoria Madedor
The presenter began by stating that productivity of a country could not happen without capital or the right funding and that the informal sector had suffered the most when it came to the issue of funding. She stressed on the need to scale down policies that stand as hindrances, so as to support the informal sector, enhance their performance and their contribution to the sector’s productivity and growth potential, as well as promote inclusive economic development in the country.
The presenter stated that the informal sector in Nigeria was a significant contributor to the country’s economy, accounting for over 65% of employment and 40% of GDP. She however said the sector was plagued by a lack of access to finance, which constrains productivity and growth of the economy. She said the paper was specifically aimed at exploring the role of financial institutions in enhancing productivity and growth in the informal sector, examine the challenges facing financial institutions in serving the informal sector, as well as potential strategies for addressing these challenges.
Mrs. Madedor revealed that the financial institutions in Nigeria faced major challenges in serving the informal sector because of limited collateral, high default rates, and lack of trust. However, she identified potential strategies for addressing these challenges which included developing innovative financial products and services, improving financial literacy, and establishing partnerships between financial Institutions and informal sector associations as they remain the major drivers of the economy.
The paper revealed that the informal sector was characterized by low productivity, limited access to finance, and low levels of technological adoption, which constrain its growth potential (African Development Bank, 2019). This lack of access to finance, she said, was a major challenge, with only 36% of Small and Medium-sized Enterprises (SMEs) in Nigeria having access to formal financial services (World Bank, 2020). She pointed out the inability of members of the informal sector to access fund due to difficulty in providing collateral and tax clearance structure experienced in the system.
Explaining how China refused to relegate their informal sector by creating clusters that support their economy, she expressed joy over the fact that the Nigerian chapter of Pan African Competitiveness Forum (PACF) had commenced the Cluster Initiatives in the country.
She opined that the informal sector was the vein of an economy and that several potential strategies had been proposed to address some of the challenges bedevilling the sector, some of which include: developing innovative financial products and services that are tailored to the needs of the informal sector could improve access to finance, improving financial literacy among informal sector borrowers could enhance their creditworthiness and reduce default rates, and, establishing partnerships between financial institutions and informal sector associations that could help build trust and promote sustainable lending relationships.
She intimated that the informal sector was viewed as beggars when it concerns accessing funds for their businesses which has informed the neglect from financial institutions or high interest rate on loans offered by these institutions. Some banks, she said, sat on the extreme side of the curve, demanding for stringent documentations and collateral before offering loans to informal sector.
She further stated that new policies and structures that fit the purpose need to be enacted to provide support for the informal sector, adding microfinance institutions could develop products that allow for flexible repayment schedules or offer smaller loan sizes to reduce the risk of default. She further emphasized that improving financial literacy among informal sector borrowers was also critical for enhancing their creditworthiness and reducing default rates. She suggested that policymakers could support the sector by investing in financial education programs and improving the regulatory environment for financial institutions serving the informal sector.
She explained that the informal sector should not function based on assumptions thereby allowing for real time to be able to unlock more opportunities and to create the needed impact in the economy. She further emphasized the need to shift from the mentality for free to the mentality for providing strong purpose for the informal sector since their peculiarities required financial products, processes and risk frameworks that would consider the level and features of informality but at the same time ensure risks were well managed to deliver optimal outcomes for both the lender and the informal sector.
The presenter recommended that efforts should be made to improve awareness and understanding of the activities of the informal sector and the information required by creditors and other investors in order to consider their demand for finance. She pointed out that entrepreneurs’ financial literacy and skills could be improved either through the education system, as part of a more general effort to teach entrepreneurship skills, or through specific programmes and advocacy, including in cooperation with the private and not-for-profit sector. She suggested approaches such as training, mentoring and coaching as things that could help the informal sector understand how different instruments serve different financing needs at specific stages of the life cycle; the advantages and risks implied; the complementarily and possibility to leverage different sources of finance; and how to approach different types of investors and meet their information requirements.
The paper concluded that financial institutions have a critical role to play in enhancing productivity and growth in the informal sector in Nigeria. She recommended that policymakers and financial institutions should work together to develop and implement effective strategies in addressing the challenges facing the sector while taking advantage of the economic power that the informal sector has on the economy.
LEAD PAPER: Exploring the Employment Potentials of Organized Informal Sector to Curb Rising Unemployment in Nigeria
PRESENTER: Gbenga Komolafe (General Secretary, Federation of Informal Workers’ Organizations of Nigeria, (FIWON))
The presenter gave an alarming, ugly spectre of unemployment in Nigeria and defined it as when people are ready, able and willing to work, but did not find work. He stated that 33.3% or 23.2 million of the about 70 million people who should be working in Nigeria were currently out of work, as against the acceptable level of 4%-6% unemployment. He stated that the country’s underemployment rate – that is people who work less than 20 hours a week was also high at 22.8% in 2020. He said the critically poor state of the economy was a major factor for the high rate of unemployment and underemployment.
The presenter reported that the Nigerian Economic Summit Group (NESG) had projected that the country’s unemployment rate would hit 37 percent this year and that in its 2023 Macroeconomic Outlook report titled “Nigeria in Transition: Recipes for Shared Prosperity, had stated that the country’s poverty headcount would also rise to 45 percent. According to the report, due to weak performance in the job-elastic sectors, and low labour absorption of sectors that would drive growth, the nation’s population growth estimated at 3.2 per cent would lead to a decline in real per capita income.
He stated that the recent Central Bank of Nigeria (CBN)’s implementation of a cashless policy had further deepened the negative trends, making the simplest transaction extremely cumbersome and expensive and sometimes impossible. Consequently, many informal businesses had collapsed, some others were severely distressed, and many other informal enterprises had been wiped out.
Contributions of the Informal Economy
The presenter stressed the importance of the Nigerian Informal Sector as a major contributor to the Nigerian economy, accounting for a massive portion of employment and national GDP. Quoting the IMF, she said the Nigerian informal sector accounted for 65% of Nigeria’s 2017 GDP, adding that the NBS figures were a bit more modest as they put its estimates at 41.4%. According to him, the informal economy represents the primary destination for both out-of-school and school graduates in most developing countries; often providing both skills training opportunities and a possibility of finding or creating livelihoods.
On the gender composition of the Informal Economy, he reported that the informal economy was sometimes said to have a ‘woman’s face’, the reason being that in most countries, women make up between 60 and 80 per cent of total informal employment. However, most women work in low productivity, lower-skill jobs (e.g. food processing, garment sewing and domestic services) and/or receive less money for doing the same work or work of equal value as men.
Speaking on the size of the Informal Economy, the presenter stated that the informal sector employs a humongous percentage of Nigeria’s Population. Based on a recent World Bank survey, 80.4 per cent of Nigeria employments were in the informal sector, 10 per cent in the formal sector and 9.6 per cent in households. Whereas total of 78.8 per cent of men were in the informal sector; 12.9 per cent of men were in the formal sector and 8.3 per cent in households. Other reports also revealed that 82.1 per cent women in Nigeria were in the informal sector; 6.9 per cent in the formal sector while 11 per cent were in households.
Definition of Terms
The presenter defined Informal Work as a diversified set of economic activities, enterprises, jobs, and workers that are not regulated or protected by the state. Although the concept originally applied to self-employment in small, unregistered enterprises, it has been expanded to include wage employment in unprotected jobs.
He explained that Productivity in general, measures how efficiently resources are used, adding that the basic definition of labour productivity was output, or value added, divided by the amount of labour used to generate the output. He emphasized that a principal defining feature of informality was low productivity which meant that as Nigeria’s economy was dominated by the informal economy, the overall capacity of the national economy for maximum creation of values was low.
Some critical questions discussed in the approaches to addressing productivity were as follows: Are there ways to make the financial return on work greater regardless of skill level? If skills are lacking, are there policies that directly help to close skills acquisition and other gaps?
He highlighted the main approaches to raising productivity in the informal economy to include:
- Improvements in work practices: this involves improvement in job quality, occupational safety and health as well as improving access to technology.
- Improving market access to tackle the underemployment challenge of the informal economy.
- Improvement in human capital either by providing workers already in the informal economy with skill upgrading or by providing young women and men with greater opportunities to access more relevant, and better quality, pre-employment education and skills training.
- The superstructure and infrastructure for boosting productivity.
Superstructure includes the education system, the health system. Infrastructure includes transport, education, and health (physical structures), energy, infrastructure to enhance innovation and technological adoption, financial infrastructure (especially better access to credit), improvements in a firm’s fixed capital, investing in fixed capital items such as machinery can lead to productivity improvements.
- Strengthening farm/non-farm dynamics; as improvements in agricultural enterprise productivity could result in improvements in non-agricultural enterprise productivity, and vice-versa.
- Providing an enabling policy and institutional environment; as putting employment creation at the centre of economic and social policies is a crucial part of an enabling environment so that there are more employment opportunities in the formal economy and people do not continue to overcrowd the informal economy.
While emphasizing on the importance of training for the productivity of the informal sector, he stressed that:
- Training must be demand-driven and tightly integrated with local development.
- Training must be targeted and needs-led.
- Skills training/ development initiatives for the informal economy needs to go beyond technical skills training and include empowerment skills (confidence building to acquire skills, negotiation, organizational skills, etc.) – especially for women, entrepreneurial skills directed at self-employed activities and basic skills (literacy, numeracy, learning skills, problem-solving skills).
- Training for examinations and official certificates should be de-emphasized.
- Training must be short, modest, and competency based.
- Training should be monitored and evaluated on an ongoing basis.
- There is need for effective coordination to stop the present scenario of duplication of efforts and needless training.
On promoting productivity with digital technologies, the presenter emphasized that digitalization creates new opportunities for gradual formalization. Digitalization of financial services and other services provided by public administration (e-government) influences the inter- action between the informal and the formal economy, creates new opportunities for interaction among diverse operators as a form of e-clustering, reduces direct and indirect costs of formalities (e. g. by simplifying processes) and dismantles barriers for access to loans.
This, she said, could be achieved through the following:
- Digital training courses which are made accessible to new target groups through Massive Open Online Courses (MOOCs). They are free to attend and (as a rule), can be certified if a fee is paid.
- Learning via mobile phones or smart phones (m-learning), is considered to have considerable potential for developing countries, for population groups that are disadvantaged or difficult to reach.
Government Financing in the Informal Sector
The presenter related government financing of the informal sector to pouring water in a Basket. He acknowledged the various programmes of government over time targeted at the informal economy. Some of these include the Peoples Bank, Operation Feed the Nation (OFN), Green Revolution, Nigerian Bank of Commerce and Industry (NBCI), Nigerian Agricultural and Cooperative Bank, Nigerian Economic Reconstruction Fund (NERFUND), National Directorate of Employment (NDE), Family Economic Advancement Programme (FEAP), Poverty Alleviation Programme (PAP) and National Social Investment Programme (NSIP).
He stated that the major factors that led to the failure of previous poverty alleviation programmes and social policies in Nigeria were:
- Politicization, ethnicity, favouritism, and nepotism.
- Unprecedented lack of transparency and accountability.
- Digitalization without embeddedness: Many of the programme application processes were digitalized hence could not work with the micro-scale of Micro producers in the informal economy which had a significant digital illiterate population.
He opined that these programmes, especially those coming from the federal government, were structured in such a way that limited the informal sector’s capacity to access them.
- Absence of Social Protection made informal Work Precarious: government investment in social protection and the social sector was extraordinarily low and the key obstacle to extending social insurance programmes to informal workers in the
country was a lack of political will.
He added that even though the Micro Finance Banks and Microfinance Institutions were supposed to be a last resort for the informal sector, but they too had not improved the access to finance for informal workers
The presenter detailed that formalization of the Informal Economy for Improved Productivity and Quality Job Creation means different things to different categories and it could take different forms: registration, taxation, organization and representation, legal frameworks, social protection, business incentives/support, and more.
He stated the benefits of formalization to include: legal recognition and protection of workers; rights and benefits of being formally employed, freedom from discrimination, minimum wage, occupational health and safety measures, employer contributions to health and pensions, right to organize and bargain collectively, membership in trade unions and workers’ (representation).
Nigeria is facing a critical unemployment crisis and the poor state of the economy is a major contributing factor. In 2020, Nigeria recorded its worst recession in four decades due to the COVID-19 pandemic and the unemployment situation is alarming. The Nigerian Economic Summit Group predicts that the unemployment rate will rise to 37% in 2023, with the poverty headcount increasing to 45%.
The Nigerian Informal Sector is a major contributor to the Nigerian economy, accounting for a massive portion of employment and national GDP. The informal economy is sometimes said to have a ‘woman’s face’ with women constituting between 60 to 80 percent of total informal employment in most countries.
It is evident that due to a large number of Nigerians engaged in informal work and its significant contribution to the national economy, the government must implement a range of well-coordinated interventions to facilitate the gradual transition of the informal economy to the formal sector. This transition is necessary to boost the overall productivity of the national economy and provide job opportunities for the majority of working people. To achieve this goal, existing and new structures must be aligned with informal sector organizations, development experts, relevant academics, and government agencies to implement effective interventions in various areas, including training, funding, technology adoption, workspace, and cluster development, and occupational health and safety training. The interventions must be guided by a policy and legal framework that reflects the realities of the country and promotes cost-effective, socially acceptable, and sustainable development practices to facilitate the transition from informality to a more formal and productive work culture. These approaches would help address the challenges of unemployment and underemployment in Nigeria.
The presenter recommended the following:
- Training in the informal sector must be demand-driven, targeted, need led and tightly integrated with local development.
- Training must be short, modest, and competency based as well as monitored and evaluated on an ongoing basis
- Skills training/ development initiatives for the informal economy needs to go beyond technical skills training and include empowerment skills (confidence building to acquire skills, negotiation, organizational skills, etc.) – especially for women, entrepreneurial skills directed at self-employed activities and basic skills (literacy, numeracy, learning skills, problem-solving skills).
- There was need to review of the 2017 National Social Protection
Policy, to explicitly address the specific needs of the informal economy; such as the realities of informal workers in the reform of key programmes (notably, the National Pension Scheme).
- There should be increased investment in Social and Solidarity Economy (SSE), noting that the cooperative movement remained the most versatile and enduring of all SSE methodologies. Therefore, it must be supported and strengthened as a traditional and yet persistently relevant business support structures for informal workers which is self – organized and social in nature to augment t he state supported and formal business funding schemes.
TECHNICAL PAPER 1: The Imperative of Occupational Health, Safety, Environment and Social Protection for Improving the Productivity of Workers in the Informal Sector.
SPEAKER: Mrs. Lauretta Adogu
The presenter referred to the informal sector as economic activities and jobs that take place in small and/or unregistered enterprises and that are not regulated by the government or protected by labour laws. This sector, she said, plays a crucial role in many developing countries, contributing to around 50% of the national output, 80% of total employment, and 90% of new jobs in low-income countries in Africa. She added that in Nigeria, the informal sector contributes approximately 70% of the country’s employment. She further said that the urban informal sector can be categorized as a range of economic units in urban areas that are mainly owned and operated by individuals, either alone or in partnership with members of the same household, and typically involve small-scale, unregistered businesses and self-employment. These units which were engaged in the production and distribution of goods and services were aimed at generating employment and a basic income to the persons concerned.
She said work in the informal sector was typically associated with small and undefined workplaces, unsafe and unhealthy working conditions, low levels of skills and productivity, low or irregular incomes, long working hours, and a lack of access to information, markets, finance, training, and technology, adding that workers in the informal economy were not recognized, regulated, or protected under labour legislation and social protection. She further disclosed that the prevalence of the informal economy poses a significant challenge to workers’ rights and decent working conditions and had a negative impact on enterprises, public revenues, government’s scope of action, soundness of institutions, and fair competition.
The presenter noted that the informal sector was often characterized by the lack of social security for stakeholders, unregulated economic activities that are difficult to track, and individuals or organizations engaging in precarious economic activities without fulfilling legal requirements. While informal sector provides significant benefits to the economy, including employment, innovation, flexibility, consumer choice, and economic growth, she observed that workers in the sector often face challenges such as low wages, lack of social protections, unsafe working conditions, discrimination, lack of job security, limited access to credit, and a lack of representation. These challenges made it difficult for informal workers to plan for the future, make long-term investments, and advocate for their rights and interests.
The presenter defined Occupational Safety and Health (OSH) as the science of anticipating, recognizing, evaluating, and controlling workplace hazards that could impact the health and well-being of workers, as well as the environment. While it is primarily concerned with preventive functions aimed at protecting and promoting workers’ safety and health at work, it is regulated worldwide by international and national laws and standards that are based on workers’ fundamental rights to safe and healthy work conditions, the right to information on existing hazards, and the right to compensation for work-related injuries and diseases.
She mentioned that OSH activities were guided by national legislation and international standards, including conventions, recommendations, protocols, declarations, and resolutions. Regional/sub-regional legislation applied to regional or sub-regional blocks, while national legislation applied to the country level and includes constitutions, policies, primary or principal acts or decrees, and subsidiary legislation such as regulations and codes of practice.
She stated that in Nigeria, there were several legal instruments that guide the implementation of OSH in workplaces, including the Nigerian Constitution, Factories Act, National Workplace Policy on HIV and AIDS, National Policy on Occupational Safety and Health, Labour Act, Fire Service Act, Mining and Minerals Act, and various subsidiary legislations such as Lifting and Allied Work Equipment (Safety) Regulations, Boiler and Pressure Vessels Regulations, and Diving at Work Regulations. She opined that the implementation of OSH laws and regulations was crucial for ensuring the safety and well-being of workers, as well as the protection of the environment.
The presenter buttressed further that the informal sector was associated with a range of health issues that could affect workers’ productivity and well-being. These include communicable and non-communicable diseases, mental health problems, occupational hazards, reproductive and maternal health issues. Addressing these challenges necessitate a comprehensive strategy that entails enhancing access to healthcare, promoting healthy work environments, and ensuring safety in the workplace. She saw poor health in the informal sector could result in a range of negative consequences, including reduced productivity, lower quality of life, and higher healthcare costs. It could also have a significant impact on the economy by reducing economic growth and increasing healthcare costs.
The presenter further noted that even though the health and productivity of workers in the informal sector were crucial for sustainable development, these workers faced greater health risks and had limited access to healthcare services. She said workers in the informal sector were exposed to various safety hazards such as physical, chemical, ergonomic, biological, and electrical hazards; adding that accidents and injuries could have significant costs for individuals, societies, and economies, including reduced productivity, increased healthcare costs, psychological costs, and economic costs.
However, to improve their health and productivity, she advised that governments and stakeholders must focus on improving access to healthcare services, providing health education, improving workplace sanitation and hygiene, addressing mental health issues, and ensuring safe work environments. She opined that productivity of workers in the informal sector could be improved by ensuring safety in the workplace, and this could be achieved by addressing occupational hazards, promoting safe working conditions, and providing appropriate safety equipment and training.
While noting that workers in this sector often faced various hazards, which could lead to long-term health issues and reduced productivity, she noted that prioritizing workplace safety can increase job satisfaction, productivity, and overall well-being of workers. Promoting and implementing safety measures in the informal sector was therefore crucial for improving its productivity and sustainability.
She pointed out that workers in the informal sector were faced with various environmental challenges that could impact their well-being, productivity, and the environment. Some of these challenges include inadequate waste management, limited access to clean water and sanitation facilities, exposure to air pollution, engaging in deforestation activities, and vulnerability to climate change. These challenges could lead to waste accumulation, pollution, the spread of waterborne diseases, poor hygiene practices, exposure to indoor and outdoor air pollution, environmental degradation, and increased vulnerability to the impacts of climate change. To address these challenges, she said, it was necessary to implement appropriate policies and interventions that promote sustainable environmental practices in the informal sector.
This presenter highlighted the significant costs associated with poor environmental conditions in the informal sector which include health, economic, environmental, and social costs. To address these there was need to prioritize the environmental imperative in the informal sector. These involve promoting sustainable practices, reducing waste and pollution, and improving access to basic resources. She was the opinion that improving the environment for workers in the informal sector could lead to healthier, more productive, and sustainable environments, promoting long-term sustainable development and improving the quality of life for workers and communities alike.
She explained that social protection according to the United Nations Research Institute for Social Development definition, as is a concept that aims to prevent, manage, and overcome situations that negatively impact people’s well-being, while the International Labour Organization defines social protection as a collection of policies and programmes intended to decrease and prevent poverty and vulnerability, which include access to child and family benefits, maternity protection, unemployment benefits, employment injury benefits, health protection, old-age pensions, disability pensions, survivors’ pensions, and sickness benefits.
Since most informal sector workers are not covered by social protection programs, she said social protection was an essential consideration for them. However, she noted that implementing social protection measures in the informal sector could be difficult due to the absence of government regulations. She further mentioned that the lack of regulations in the informal sector made it tough to impose social protection measures.
The presenter made critical points about the absence of social protection measures in the informal sector and how it presents a significant challenge for informal workers, particularly in developing nations. She observed that Informal workers were often deprived of essential social protections such as healthcare, education, and social safety nets. This lack of protection rendered them vulnerable to economic instability, health hazards, and other difficulties that could impede their productivity and well-being. Specific hurdles associated with the absence of social protection in the informal sector, she said, include restricted access to healthcare, which can cause a decrease in productivity due to workers’ inability to receive preventative care or treatment for illnesses; the absence of social safety nets, including pensions and unemployment benefits, which could lead to financial insecurity and poverty; and the scarcity of education and training opportunities also hinders the informal workforce’s ability to develop new skills and compete in the job market. She added that gender disparities, including limited access to healthcare, education, and financial services, pose additional challenges for women working in the informal sector.
She pointed out that lack of social protection in the informal sector is a significant challenge that impacts the well-being and productivity of workers, particularly in developing countries, as informal workers often lack access to basic social protections such as healthcare, education, and social safety nets, leaving them vulnerable to economic shocks and poverty. To address these challenges, she said it was imperative to promote access to social safety nets, improve education and training, and expand healthcare coverage to ensure workers can operate in healthier, more productive, and sustainable environments. She agreed that social protection was critical for promoting long-term sustainable development and improving the quality of life for workers and communities in the informal sector.
The presenter pointed out that future of work in the informal sector would be influenced by various factors, including technological advancements, changing labour market dynamics, global economic trends, and policy developments. Digital technologies, such as Smartphone’s and mobile apps, would facilitate new forms of work and provide workers with access to new markets and opportunities. She said the demand for flexible and on-demand work arrangements would continue to shape the informal sector, with more workers opting for gig work and self-employment while the on-going effects of globalization would create new opportunities for informal workers to participate in global value chains. The increasing recognition of the importance of informal work was also likely to lead to new policy developments aimed at supporting and formalizing the informal sector.
The presenter stated further that to improve the productivity of workers in the informal sector, a multi-faceted approach addressing key imperatives such as occupational health, safety, environment, and social protection was required. While acknowledging that the informal sector lacked formal regulations and standards that made it difficult to ensure safe and healthy working conditions for informal workers, she was optimistic that promoting awareness, leveraging technology, building partnerships, and advocating for policy changes would help to address these challenges and promote safer and healthier working conditions in the informal sector.
TECHNICAL PAPER 2: Bridging the Access to Finance for Nigerian Informal Sector
SPEAKER: Mr. Olushola A. Kayode
The presenter began his presentation by giving a history of the Small-Scale Credit Scheme by the government in June 1975 and also referred to the GAP studies done in 2022. He further enlightened the participants on Macro, Medium and Small-scale enterprise and shared his thoughts on how the participants and their various businesses could go global if the sector was properly financed and if products were properly branded to meet international standards.
He revealed that during the Babangida regime, both small and medium scale business and the naira went into comatose as a result of bad government policies and reminded participants on the role Peoples Bank played in serving as a community bank for the people before the CBN licensed and upgraded it to a commercial bank to give loans to petty businessmen and women. Unfortunately, he said, only women were diligently paying back their loans as at that time.
He stressed that the informal sector needed financial inclusiveness while also enlightening the participants on how the sector financing could improve their brand performance by way of;
- Improved product competitiveness.
- Improved product design.
- Improved Product quality
- Product training; and
- International certification of products.
With regards to financing, he noted that most informal businesses did not really understand their products, but they wanted money. He encouraged informal businesses to figure out how investors could come in to support their businesses. The availability of working capital, he emphasized, would help in the production of more products and adequate use of modern technology to improve performances in the informal sector.
The presenter listed some high-level principles on financing the informal sector as follows:
- Identify informal sector financing needs and gaps and improve the evidence base;
- Improve transparency in informal sector finance markets;
- Design regulation that supports a range of financing instruments for informal sector, while ensuring financial stability and investor protection;
- Promote financial inclusion for informal sector and ease access to formal services;
- Enhance informal financial skills and strategic vision;
- Strengthen informal sector access to traditional bank financing;
- Leverage the role of financial technologies, Fintech institutions and digital relationships to reduce barriers to informal sector access to finance;
- Strengthen the availability and uptake of sustainable finance for informal sector;
- Strengthen the resilience of informal sector finance in times of crisis;
- Design public programmes for informal sector finance which ensure additionality, effectiveness and user-friendliness;
- Adopt principles of risk sharing for government-supported informal sector finance instruments; and
- Monitor and evaluate public programmes to enhance informal sector finance.
He emphasized the need for clusters and revealed how that would improve the narrative on how the informal sector was viewed, especially, when it comes to organization. Citing an example of a cluster market with the furniture market at Kugbo, Abuja, he reiterated that such markets could be replicated in all other sub-sectors of the informal businesses to ensure quick access to funds and interventions from financial institutions and government when needed.
While acknowledging the fact said that government had undertaken initiatives to promote the growth and development of the informal sector and introduced numerous financial institutions which were aimed at providing finance to small businesses across this sector of the economy, he pointed out that there were challenges responsible for the huge funding gap that still existed. He observed that despite the numerous initiatives at both federal and state levels to improve the efficiency and effectiveness of the informal sector, some specific challenges had continued to limit the access to finance for the informal sector. These challenges include:
- Absence of an effective coordinating framework for informal sector funding in Nigeria;
- Absence of a suitable funding model tailored to cater for the peculiarities of informal sector in Nigeria;
- Absence of relevant data required for planning;
- Poor coverage of intervention funds especially in rural areas;
- Lack of preparedness of businessmen and women to access finance; and
- Lack of monitoring and evaluation (M&E) of intervention funds and programmes.
He concluded by giving several examples of business brands that small businesses could partner with, such as the Ekiya furniture in Switzerland, which usually partnered with production companies to help them sell their furniture.
- Considering that not all members of the informal sector may be conversant with the internet, they could always write to the NYSC to request for youth Corpers who are very knowledgeable in the use of internet to assist them.
- Official government sites are gov. ng, and are managed by galaxy back bone.
- Efforts made by government are not usually noticed, even though some relevant agencies are doing a lot in line with their mandates, to assist the informal sector.
- There is no country that does not have some levels of corruption. However, the Buhari administration has done significantly well to curb corruption.
- There is urgent need to address the challenges of multiplicity of taxes, levies, and charges in local government areas /area councils in Nigeria as they affect the informal sector.
The 4th productivity summit came to a close on Wednesday, 5th April, 2023.
On behalf of the participants, the Chairperson of Association of Women in Trade and Agriculture (AWITA), expressed her gratitude to the Director General, Dr Kashim Akor the Planning Committee of the Summit as well as the entire staff of National Productivity Centre for organizing the summit. She said the summit had helped the women to rediscover themselves, their values, and their importance. She noted that aside their efforts being for their family, they were now more aware of their contributions to the growth of the economy,adding that it had given them a sense of belonging. She hoped that the efforts of the National Productivity Centre would upgrade the informal sector and make more positive impacts.
In his closing remarks, the Director General of National Productivity Centre, Dr Kashim Akor, said he was overwhelmed with joy at the fact that participants were still seated and actively participating in the programme at that time of the day, regardless of the fact that the Muslims were observing their fasting.
He stated that the National Productivity was a catalyst for growth in the nation’s economy while also stressingthat the centre had identified where the needs are as well as who the succour providers are. He promised that they would match them to the benefits of the Informal Sector. He assured that from the experiences, knowledge and friendship gathered from the summit, the centre would do her best to advance the course of the informal sector, which holds the key to economic growth and providing solutions to unemployment problems of Nigeria. He assured the participants that the communiqué would be professionally worked on.
While appreciating everyone for their participation, contributions and patience, he promised that the centre would design more programmes, especially capacity building programmes, using practical application of productivity improvement tools and techniques at no cost to the SMEs, even if it meant bringing the programme to their workplaces.
He revealed that the centre, through partnership with JICA, had trained over 38 productivity consultants internationally and therefore, had enough consultants to go round to attend to the training needs of the informal sector,so as to enhance their productivity.
He prayed for journey mercies for everyone as they depart to their various destinations. Certificates of participation were presented to all participants.
COMMUNIQUE ISSUED AT THE END THE 4th NATIONAL PRODUCTIVITY SUMMIT CONVENED BY THE NATIONAL PRODUCTIVITY CENTRE AND HELD AT THE NIGERIAN ARMY RESOURCE CENTRE ASOKORO, FCT, ABUJA FROM 4th – 5th APRIL 2023.
The 4th National Productivity Summit organized by the National Productivity Centre, Nigeria took place at the Nigerian Army Resource Centre Asokoro, FCT, Abuja from 4th – 5th April 2023. The theme of the Summit was “Enhancing the Productivity of the Informal Sector in Nigeria for Increased Competitiveness”.
The National Productivity Summit is a core programme of the National productivity Centre designed to bring together, productivity practitioners and intellectuals from all fields of life and sectors of the economy to brainstorm on pressing productivity related issues, in order to increase productivity and competitiveness in the various sectors of the Nigerian economy.
The main objective of the 4th Productivity Summit was to create a national platform for a virile discourse on how to increase productivity and competitiveness in the informal sector of the Nigerian economy.
Other specific objectives included to:
- Identify challenges facing the informal sector of the Nigerian economy;
- Propagate the culture of productivity in the informal sector;
- Identify the drivers of growth in the various sub-sectors;
- Recommend the way forward for improving productivity across the sector in Nigeria, for a virile and globally competitive economy.
Highlights of the two-day event included various activities such as opening ceremony, goodwill messages, plenary and panel sessions, technical presentations, discussions, questions and answer sessions, communiqué drafting session and the Closing Ceremony.
Dignitaries at opening ceremony included His Excellency, Sen (Dr) Chris Nwabueze Ngige OON, Honourable Minister Federal Ministry of Labour and Employment (FML&E), who was ably represented by Ms Kachollom Daju mni, Permanent Secretary, Federal Ministry of Labour and Employment. The Chief Host was Dr. Kashim Akor, the Director-General of the National Productivity Centre.
The summit had about 150 Participants in attendance, drawn from the informal sub-sectors across Nigeria, representatives from the Bank of Industry and other funding institutions, regulatory and advisory agencies, non- governmental organizations, and other pertinent Government Ministries, Departments and Agencies (MDAs).
In the course of the two days summit, speakers, discussants and participants explored the theme and addressed a number of critical issues. Conversations were enriched by contributions from a diversity of participants, including representatives from the informal sector, government ministries and agencies, and other stake holders.
For those who were unable to attend, the NPC Digital Media Team streamed the programme live via the zoom platform, where we had participants from other states and some African countries. In addition, a dedicated team of Rapporteurs captured the essence of the summit conversation.
The summit was enriched by the quality of papers presented by the erudite and notable industry experts and resource persons drawn from across the nation. They include:
- Henry Emejo- Chairman, Innovation Impact Partners and Director, National Small Scale Industrialist (NASSI);
- Obassi Ettu, Deputy Director, Engineering Design& Development (RMRDC);
- Mrs Victoria Madedor, Group Head, Business Development, Bank of Industry investment Trust Limited.
- Gbenga Komolafe, General Secretary Federation of Informal Workers Organization of Nigeria (FIWON);
- Lauretta Adogu, Director/HOD occupational Safety and Health (OSH)
Papers presented that addressed the theme were:
- Enhancing the Productivity of the Informal Sector in Nigeria for Improved Competitiveness.
Panel discussion: The limitations, environment, enablers of productivity and competitiveness in the informal sector.
- The Role of Raw Materials in Enhancing Productivity and Increasing Competitiveness in the Informal Sector.
- The Role of Financial Institutions in the Productivity and Growth of the Informal Sector in Nigeria.
- Exploring the Employment Potentials of Organized Informal Sector to Cub Rising Unemployment in Nigeria.
Panel discussion: The role of organized informal sector in curbing rising unemployment.
- The Imperative of Occupational Health, Safety, Environment, and Social Protection for Improving the Productivity of Workers in the Informal Sector.
Beyond exploring the key theme and sub theme, the discussions vividly revealed that the informal economy is large, and its contribution to national economy and poverty reduction can no longer be ignored. The innovative papers presented in the summit buttressed the efforts the Governments and informal economy actors can make to institutionalize inclusion, social security, access to finance, access to market, health, and safety as well as partnerships that can transform the lives of informal workers, and substantially increase their economic output, while contributing positively to urban governance. However, this would require radical rethink and redesign of policies, laws, paradigms as well as inclusion of the informal economy in policies and strategies to provide a platform for informal workers in national economic dialogues.
Some key messages that emerged from the Productivity Summit:
- The recognition of different informal occupations as legitimate professions with sector-specific legislation and regulations designed to strengthen livelihoods, are key to reducing harassment and vulnerability.
- Need driven capacity building for workers’ organizations in the informal sector is key to strengthening their confidence and negotiating skills. Thus, allowing them to present collective views, so as not be left out of policy development.
- The critical need for Linkage between informal workers and formal actors through improving value chains. Hence, formalizing the informal sector could significantly improve the economic contribution of workers and this could be enhanced through formalization programmes, expanding access to social protection, microfinance and financial inclusion programmes, and other forms of partnership. It was also noted that improving linkages between informal workers and the formal institutional environment required collective action.
- Value chains could be enhanced by the formation of creative and innovative clusters as well as helping the women to rediscover themselves, their values and importance. Furthermore, adopting the cooperative model of Social and Solidarity Economy (SSE) would enable informal self-employed workers to access funds and support, rationalize working methods or access larger markets in the case of producers.
After robust discussions on issues relating to the theme, the participants arrived at the following communiqué:
- There is need to improve market access to tackle the underemployment challenge of the informal economy.
- There should be Improvement in human capital development by providing workers already in the informal economy with skills upgrading, or by providing young women and men with greater opportunities to access more relevant, and better quality, education, and skills training.
- Training for the informal sector should be need based, focused, relevant, functional and intentional.
- There is need to create efficient innovative clusters, and to inject Science and Technology, and Innovation (STI) components like the introduction of common facilities and infrastructure, equipment, and machinery where participants in the informal sector could process and package their products and render services while paying little token to government. This can give them a strong voice and solve other challenges facing the sector, such as workspace, workers protection/security as well as improve their overall productivity.
- Government should encourage patenting, commercialization of products and promotion.
- The intervention funds from the apex bank should be decentralized to enable informal sector access it.
- There is need for synergy amongst Ministries, Departments and Agencies
- The emergence of Nano enterprise should be supported to boost the informal sector productivity.
- There is urgent need to revitalize the informal sectors thrown out of business due to the Covid- 19 and the government recent cashless policy.
- The need to develop superstructure such as education and health system, and sustainable infrastructure which include transport, energy as well as financial infrastructure (especially better access to credit). for boosting productivity to enhance innovation and technological adoption in the informal sector.
- To investigate why the informal sector do not repay loans taken from banks, while the ordinary market women who access loans from microfinance banks and other lending outfits like ISUSU repay at the appropriate time.
- The businesses in the informal sector should be involved in fashioning out policies and training that affect the sector.
- National Productivity Centre should collaborate with other agencies to continue to organize this type of summit or training programs for the informal sector on a yearly basis.
- Government should improve the social capital by developing the national policy on social insurance and protection of the informal sector to address vulnerability of workers in the sector, especially women.
- The informal sector operators should be careful in collaborating with foreign partners with mischievous intent to exploit them, by engaging qualified lawyers to clearly define the agreements before engaging in such partnership.
- The informal sector should liaise with ITF and other institutions with training mandates to get part premium for trainings.
- There is need for sustainable collaborations amongst organizations such as NPC, BOI, BOA, SMEDAN, NDE, NAFDAC, and SON for necessary guide to the informal sector on accessibility of credit facility and standard/quality to boost their businesses.
- Productivity education and training is vital in the informal sector to enhance their performance and to fast track their growth and profitability.
- Governments at various levels should create an enabling environment for the informal sector to run their businesses since the informal sector has also been identified as contributing greatly to GDP growth and the nation’s economy generally.
- Since inadequate power supply has been identified as the major hindrance to the productivity growth of the informal sector the government should declare a state of emergency in the power sector. This would reduce the astronomical amount of money spent by the informal sector on fuel to run their generating sets.
- The Bank of Industry and Bank of Agriculture should relax their strict conditionality that inhibit the informal sector from accessing loans and agricultural facilities that would enhance their productivity.
- To tame the alarming rate of unemployment and youth effectiveness in the country, government should establish social security intervention scheme.
- Government should design sustainable guidelines and create awareness mechanism for strengthening occupational work, health and safety in the informal sector.
- Government should improve on the existing security architecture to ensure the security of lives and properties of the informal sector.
- The informal sector should explore and adopt renewable energy as an alternative source of power to serve as a solution to the epileptic power supply hindering their productive performance.
- Government should address the challenges of multiplicity of taxes, levies and charges in local government areas /area councils in Nigeria as they affect the informal sector, and the ease of doing business.
- Government should formulate the policy of posting youth Corpers to the informal sector, on request, to assist in addressing the issue of digital illiteracy in the informal sector of the economy.
- Government should, as a matter of urgency, propose a legislation to the national assembly for the enactment of a law on birth control as the population of the country is exploding at an alarming rate, thereby subjecting the efforts of the Government towards interventionist programs to null.
- Government should convert loans collateral structures and enact policies that can support the loan by recognizing cooperatives groups as entities for collateral rather than emphasizing on individual collateral conditions.
- There is need to have another alternate credit guaranty structure/scheme other than NIRSAL, to unlock the potential in other non- Agric based businesses.
- Government should design a participatory pension scheme as obtainable in the formal sector.
- Government should intensify efforts in fighting corruption since most of the Government intervention efforts do not get to the informal sector.