ROLE OF INFORMAL ECONOMY ON ALLEVIATING POVERTY AMONG LOW-INCOME IN OYE EKITI

TOPIC: ROLE OF INFORMAL ECONOMY IN ALLEVIATING POVERTY AMONG LOW-INCOME IN OYE EKITI

TOPIC IS SUITABLE FOR: 
1.Department of Economics

2.Department of Sociology

3.Department of Public Administration

This research material contains:

1-Chapter One to Five

2-Recent References/citations

3-Tables/Charts/Graphs in Chapter Four

4-Accurate Data Analysis

5-Table of Contents

6-Questionnaire

ABSTRACT
The aim of this study is focused on the role of the informal economy in alleviating poverty among low-income groups in Oye Ekiti. Specifically, the study investigated the types of informal economic activities prevalent in Oye Ekiti, assessed the contribution of the informal economy to poverty reduction among low-income households, the role of the informal economy in improving income level and living standards for households in Oye Ekiti, and the role of the informal economy on employment generation and access to basic amenities among low-income households in Oye Ekiti. The study adopted the survey research design and randomly enrolled participants in the study. A self-structured questionnaire was issued to three hundred and ninety-nine (399) participants who are players in the informal sector (330) and were returned and validated for the study. The study made use of descriptive analysis and inferential statistics, where data from the field survey was analyzed using simple percentages presented in frequencies and tables. The instruments were subjected to face, content, and empirical validations. Descriptive statistics, which include frequency, percentage, and tables, were used to present the data. The hypothesis was tested using the chi-square statistical package for social sciences (SPSS v23). The findings of this study reveal that informal economic activities play a vital role in the socio-economic development of Oye Ekiti, particularly among low-income households. Predominant activities such as farming, small-scale trading, artisanal crafts, and transportation services significantly contribute to household income, self-employment, and poverty alleviation. These activities enhance financial stability, food security, and access to essential goods and services, underscoring their importance in the community's livelihood strategies. The informal economy also fosters social inclusion by providing opportunities for women, youth, and unskilled individuals to engage in productive activities, thereby reducing unemployment and dependency on external support. Furthermore, the informal economy facilitates access to basic amenities through community-based initiatives and collaborations, contributing to improved living standards. Its impact on poverty alleviation is evident through consistent earnings, better access to healthcare and education, and reduced financial dependency. The hypothesis test with a p-value of 0.046 (<0.05) further confirms that informal economic activities contribute significantly to poverty alleviation in Oye Ekiti. The study, among others, recommends that the government should establish policies and programs aimed at formalizing aspects of the informal economy to provide better access to credit, training, and social protection for participants, enhancing their productivity and sustainability.

CHAPTER ONE
INTRODUCTION (Preview)
1.1 Background to the Study
Poverty remains one of the most widespread global challenges, profoundly impacting individuals, communities, and nations, particularly in developing regions. The World Bank (2023) defines poverty as a state of insufficient income, limited access to vital services, and an inability to fulfill basic human needs. Erude, Onavwie, & Okereka (2023) described poverty as the deprivation of essential necessities that give life meaning. Thus, an individual is considered poor if their income falls significantly below the poverty line and they lack real access to fundamental services such as healthcare, adequate housing, and education. Former World Bank President James Wolfensohn, as cited in Itiveh (2022), argued that the most severe form of poverty occurs in resource-rich nations, predominantly in developing countries. This suggests that poverty and inequality often stem not from a lack of resources but from inefficient resource management and unequal distribution.

In Nigeria the rising rate of poverty has become a significant concern. Despite being classified as a resource-rich nation and the second-largest economy in West Africa (OPEC, 2015; Etim & Daramola, 2020), Nigeria also holds the title of Africa’s largest economy by population and ranks as the 22nd largest economy globally. However, according to a 2023 report on the global population living in extreme poverty, 12% of those affected reside in Nigeria (Sasu, 2023). Over the years, the Nigerian government has implemented various poverty alleviation programs, including the National Poverty Eradication Programme (NAPEP), Better Life for Rural Women, the National Directorate of Employment, and the Mass Mobilization for Social and Economic Recovery (MAMSER). Other initiatives, such as the Green River Basin Development Authority (RBDA) and the Family Economic Advancement Programme, have also been introduced. Most recently, the Federal Ministry of Humanitarian Affairs and Poverty Alleviation was established to focus on these efforts. These programs, agencies, and ministries were developed under successive governments to promote informal economic activities and reduce poverty.

According to Ojima (2024), the informal economy has emerged as a key strategy for poverty alleviation in countries with large informal labor markets, providing employment opportunities for marginalized populations. It encompasses all economic activities that are not regulated by the government or included in the formal labor market. This sector includes activities such as street vending, domestic work, small-scale agriculture, and micro-enterprises, which contribute significantly to the livelihoods of many individuals, especially those in low-income communities. The informal sector serves as the lifeline for many low-income earners residing in rural areas. It encompasses that segment of the national economy whose activities are neither taxed nor formally monitored or included in the National Productive Index. This sector primarily engages in small-scale production of goods and services. A clear connection exists between poverty and the operations of the informal economy.

In sub-Saharan Africa, a significant portion of the population heavily relies on this sector for their livelihoods. Most informal economic activities are rooted in traditional artisan practices, which have sustained communities over time. Collier (2007), in Yelwa & Babalola (2022), noted that the United Nations' Sustainable Development Goals recognize the informal sector as playing a crucial role in poverty alleviation, yet it has not received the level of support and encouragement it deserves, despite some government initiatives. Nonetheless, economists argue that the informal sector offers a viable alternative for employment generation and addressing the challenges of poverty. According to Oladipo and Eniola (2021), informal enterprises have the potential to generate jobs, enhance income levels, and reduce poverty by providing a buffer against unemployment in the formal sector.

Expediently, informal businesses provide economic opportunities to individuals who might otherwise remain unemployed due to the lack of education, capital, or formal employment opportunities. Local traders, artisans, and farmers are integral to the survival and economic sustenance of most communities in Nigeria, as highlighted by Ojima (2024). The success of informal economic activities in such regions is largely driven by the availability of micro-credit, low entry barriers, and the flexibility of working hours. Despite the crucial role that the informal economy plays in alleviating poverty, it faces numerous challenges, including lack of access to formal credit systems, limited business support, and vulnerability to economic shocks. According to Gbenga, Ita, Eja, Ojah, & Okon (2023), informal workers often operate in a legal vacuum, with no social protections or guaranteed job security, making them highly susceptible to exploitation and poverty traps. While the informal sector contributes significantly to economic output, Nigeria still harbors a significant portion of the global poor, with many people living below the international poverty threshold. Upon this premise the study seeks to examine their role in alleviating poverty among low-income groups in rural areas such as Oye Ekiti.

1.2 Statement of the Problem

In recent times, poverty remains widespread among the low-income population. Despite measures taken by the government, Nigeria's poverty rate continues to rise. According to the 2022 Multidimensional Poverty Index (MPI), 40.1% of Nigerians are considered poor, while 63% experience multidimensional poverty (National Bureau of Statistics, 2022). Similarly, the World Bank reported in 2023 that 46% of Nigerians, approximately 104 million people, live in poverty. These reports further highlighted that sluggish economic growth and increasing inflation have pushed even more Nigerians below the poverty line. In rural Ekiti, where agricultural activities dominate, many households depend on subsistence farming and micro-enterprises for survival. However, these activities are often vulnerable to environmental, economic, and social challenges that hinder sustainable poverty alleviation.

While the informal economy provides essential employment and income opportunities for many individuals, its impact on long-term poverty alleviation remains unclear. Although previous studies, such as those by Erude, Onavwie, & Okereka (2023), have highlighted that the informal economy in Nigeria contributes to poverty reduction. Anecdotal evidence by Ekpounobi & Maikujeri (2022) suggests that while some individuals benefit from informal work, others continue to experience persistent poverty due to a lack of access to resources, training, and economic stability. Thus, understanding the dynamics of informal economic activities in Oye Ekiti and how they contribute to poverty alleviation is vital for designing effective poverty reduction strategies. Unarguably, the existence of limited research on the effectiveness of the informal economy in reducing poverty specifically in Oye Ekiti has led to gaps in understanding how informal economic activities can be leveraged to address the underlying causes of poverty in the region. The research will seek to answer questions related to the role of informal economic activities in alleviating poverty and whether specific informal practices such as street trading, small-scale farming, and artisanship provide sustainable solutions to poverty in the area. A key concern is how the informal economy in Oye Ekiti can be better integrated into formal economic structures to improve its poverty-reducing potential.

1.3 Objectives of the Study

The primary objective of this study is to examine the role of the informal economy in alleviating poverty among low-income groups in Oye Ekiti. Specifically, the study seeks to:

i.investigate the types of informal econosmic activities prevalent in Oye Ekiti.

ii.assess the contribution of the informal economy to poverty reduction among low-income households in Oye Ekiti.

iii.assess the role of informal economy in improving income level and living standards households in Oye Ekiti.

iv.assess the role of informal economy on employment generation and access to basic amenities among low-income households in Oye Ekiti.

Other parts of chapter one include:
1.4 Research Questions

1.5 Research Hypotheses

1.6 Significance of the Study

1.7 Scope of the Study

1.8 Limitations of the Study

1.9 Operational Definition of Terms

CHAPTER TWO
REVIEW OF LITERATURE (Preview)
This chapter critically examines relevant literature that would assist in explaining the research problem and, furthermore, recognizes the efforts of scholars who had previously contributed immensely to similar research. The chapter intends to deepen the understanding of the study and close the perceived gaps. This chapter therefore focuses on the concept of poverty, concept of poverty alleviation, concept of informal economy, types of informal economic activities prevalent in Nigeria, etc. The chapter is sub-grouped into the following major headings:
Conceptual Framework

Theoretical Framework

Empirical Review

CHAPTER THREE
METHODOLOGY (Preview)
Presented below is a snapshot of key areas of the study methodology, the full and detail chapter three methodology is contained in the instant download document.

Research Design: The study adopted a survey research design.

Population of the Study: The population of the study comprises residents of Oye Ekiti who are active participants in the informal economy.

Sample Size Determination: The study adopted the Taro Yamane formula to determine a sample size of 399 participants.

Sampling Technique: The study employed a stratified sampling technique and convenience sampling technique to select the individual respondents.

Research Instrument: The study utilized a structured questionnaire as the instrument for data collection.

Methods of Data Analysis: The collected data were analyzed using frequencies, percentages, means, and standard deviations to summarize and present the demographic characteristics of the respondents and their responses. Inferential statistics, such as Chi-square, were used to test the hypotheses.
Full outline for chapter three;
3.1 Research Design

3.2 Population of the Study

3.3 Sample Size Determination

3.4 Sampling Techniques

3.5 Instrument for Data Collection

3.6 Validity of the Instrument

3.7 Reliability of the Instrument

3.8 Methods of Data Collection

3.9 Method of Data Analysis

3.10 Ethical Considerations

CHAPTER FOUR: DATA ANALYSIS AND PRESENTATION 
MAJOR FINDINGS (Preview)
The analysis results were presented in tables and charts. Based on the results obtained from the analysis, the following major findings were made:

i. The study found that the predominant informal economic activities in Oye Ekiti include farming, small-scale trading, artisanal crafts, transportation services, and personal care services, as evidenced by the mean scores of 2.70, 2.62, 2.50, 2.80, and 2.52, respectively, with all items accepted. This implies that farming and transportation services are among the most prevalent informal economic activities in Oye Ekiti, providing important sources of livelihood and income for low-income residents.

ii. The study found that informal economic activities contribute to poverty alleviation among low-income households in Oye Ekiti, as evidenced by the mean scores of 2.84 for generating daily income, 2.66 for providing opportunities for savings and investments, 2.59 for supporting household food security, and 2.72 for enabling skills acquisition and self-employment, with all items accepted. This was further confirmed by the result of the corresponding hypothesis test, which showed a chi-square value of 12.079 and a p-value of 0.046 (p < 0.05), leading to the rejection of the null hypothesis. This implies that informal economic activities significantly contribute to poverty alleviation by providing income, supporting savings, improving food security, and creating self-employment opportunities among low-income households in Oye Ekiti.

iii. The study found that the informal economy plays a positive role in improving income levels and living standards among low-income households in Oye Ekiti, as evidenced by the mean scores of 2.68 for increasing household income, 2.64 for supporting access to better nutrition and healthcare, 2.52 for enabling parents to afford their children's education, 2.80 for providing funds for home improvements and basic utilities, and 2.63 for reducing dependency on external financial support, with all items accepted. This implies that participation in informal economic activities helps households meet essential needs, improve their living conditions, and reduce financial dependency.

iv. The study found that the informal economy contributes positively to employment generation and access to basic amenities among low-income households in Oye Ekiti, as evidenced by the mean scores of 2.68 for creating jobs for unskilled and semi-skilled individuals, 2.64 for providing economic opportunities for women and youth, 2.52 for supporting access to affordable local goods and services, 2.80 for encouraging community-based financial contributions towards basic amenities, and 2.81 for promoting informal collaborations to access electricity and water, with all items accepted. This implies that the informal economy creates employment opportunities, promotes social inclusion, and supports community efforts to improve access to essential services among low-income households in Oye Ekiti.

CHAPTER FIVE: SUMMARY, CONCLUSION, AND RECOMMENDATIONS
This chapter covers the following outline:

5.1 Summary

5.2 Conclusions

5.3 Recommendations

Reference
Appendix

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