Don seeks robust policy actions to improve informal economy

Professor of Economics, Department of Economics and Development Studies, Covenant University, Ota, Ogun State, Isaiah Olurinola, has charged the Federal and State government to develop operational policy framework that would reposition the informal sector for economic prosperity.

Presenting a paper titled “A Ladder Out of Poverty or A Cul-De-Sac? Repositioning the Informal Economy for Employment Creation and Entrepreneurial Development in Nigeria,” at the 10th inaugural lecture series of the university, Olurinola said the informal sector like a pink elephant in the room is too big to miss and also too big to confront, thus the government, educational and research institutions must collaborate in this regard.

He said a healthy policy actions that will advance the sector is imperative, since research has proved that the sector has the potential to increase employment and output remarkably if properly nurtured and cultivated.

He said, “The study of the informal economy is growing. More work is needed as the sector is vast and expanding, especially in the developing economies of the world. The sector has proved to be a major employer of labour, not only for those displaced in the informal sector, but also for some persons who recognised the opportunities that the sector offers. We have seen that for many of the informal sector workers who are in the own-account, employer and employee categories, their reported earnings are a multiple of the national minimum wage.

“The earnings vary directly with the level of and quality of skills, formal educational attainment and on the job experience. For now, there appears to be a breakdown of mutual trust and confidence between the government and Informal Sector Actors (ISA) and unless this confidence gap is bridged, informal sector development will be a mirage. When the government makes it a duty to befriend and woo the ISAs, then the sector will respond with the generation of decent employment, quality output and robust tax revenues.

He continued, “As researchers, policy makers and practitioners, we must be bold enough to take the bull by the horn and tackle the problems facing the sector. So policy measures that will encourage their enterprises to be incorporated and thus link them up with the formal financial sources and markets together with the expected improvement in the macro-environment will further enhance the ability of the informal sector as a ladder out of poverty.”

Olurinola further stated that the commitment of the government to the implementation of the national agenda for economic recovery and growth as articulated in the Economic and Recovery Growth Plan (ERGP) document, together with the active strategic support of the education and research institutions, among others, will assist in the process of transition of ISAs from the informal status to formality.