Effectiveness of Government Financial Interventions on Informal Sector Development in Nigeria

Abstract

In light of the fluctuations in oil prices and the imperative to foster economic diversification, the Nigerian government has undertaken many reforms and measures aimed at stimulating the non-oil sector of the economy, with particular emphasis on the informal sector. Government financial support in the form of initiatives could potentially alleviate the prevailing challenges associated with limited financial accessibility among participants in the informal sector. The extent to which financial accessibility impacts the economic performance of informal sector participants has received limited academic attention. Hence, this study sought to evaluate the efficacy of existing governmental interventions in the Nigeria informal sector, and provide feasible financial intervention framework. The study adopted survey design and utilized both primary and secondary sources of information. Primary data were obtained through the administration of questionnaires to a total of 700 informal sector participants who are mainly informal sector operators, selected through purposive sampling technique from the six states of Southwest Nigeria. Data were analysed with SPSS employing descriptive statistics. The analysis revealed several shortcomings in previous initiatives, including inadequate programme design, biassed allocation of financial resources, limited awareness of available facilities, and complex procedures for accessing government funding assistance. The findings indicated that while interventions targeting the informal sector are consistently in high demand, their effectiveness in facilitating growth among informal sector operators is usually flawed. The study thus recommended the implementation of Credit Guarantees and Insurance Scheme to ensure comprehensive coverage for all stakeholders involved in financing informal sector operators.

KEYWORDS: Development, Finance, Reforms, Informal Sector, Dependency