Evaluating informal entrepreneurship in Nigeria : a study of Zamfara State

• Main Author: Ladan, Usman
• Other Authors: Heyes, Jason ; Latreille, Paul ; Williams, Colin
• Published: University of Sheffield 2016
• Subjects: 658.4
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.696055

This study is centred on informal entrepreneurship, an age-old economic endeavour and an integral part of economic activity in Zamfara, Nigeria. The aim is to evaluate informal entrepreneurship in terms of its nature and character; the reasons why different groups participate in it; and potential policy measures which could improve the conditions of entrepreneurs in the sector and facilitate the growth of their informal firms, and encourage their voluntary and gradual formalisation. The study adopted a nested two-stage survey method research design for the data collection (household and enterprise surveys). The household survey sample consisted of 75 enumeration areas drawn from nine localities cutting across rural, suburban and urban localities, while the enterprise survey comprised of 215 participants as a sub-sample of the first stage survey. On the nature and character of informal entrepreneurship, the study reveals that this phenomenon is highly heterogeneous and widely spread among different sectors of the economy with a considerable participation by both males and females. Also, empirical evidence from the study suggests the participants were regulated informally by their trade associations, contrary to the conventional belief that the sector is wholly unregulated. Adopting an eclectic theoretical approach, the study provides insights on the drivers of informal entrepreneurship from three theories with wider application in the field: theories of informal economy, institutional theory, and theory of motives of informal entrepreneurship. These are relevant in explaining the rationale for engagement in the activity and suggest the co-existence of multiple logics and the interplay of inter-institutional systems for engaging in informal entrepreneurship. The study further suggests that almost two thirds of informal entrepreneurs (64%) have dual motives at any one time, and that the primary motivation for informal entrepreneurship can change over time, with such changes following the start of an informal enterprise found among almost one-quarter (22%) of the respondents. Another contribution of the study to the literature is its finding that different groups of informal entrepreneurs vary in their characteristics and motives for starting up informal entrepreneurship. The study further suggests that public utilities and infrastructural services were very poor. The participants operated under poor conditions and unfavourable environments with a severe lack of critical resources, such as electricity supply, which seriously affected their productivity and earning capacities. As a way forward, the study proposes a strategic model comprising nine integrated measures that might help to improve the operating conditions facing informal entrepreneurs and facilitate their voluntary and gradual formalisation. Amongst the key measures proposed are favourable regulatory policies; enabling environments; access to critical resources (particularly electricity and finance); provision of incentives for formalisation; and enhanced security of life and property.