Social services provision and stakeholder engagement in the Nigerian informal sector: A systemic concept for transformation and business sustainability

• Published date: 01 June 2022
• Author: Daniel E. Ufua,Olusola J. Olujobi,Hammad Tahir,Victoria Okafor,David Imhonopi,Evans Osabuohien
• Date: 01 June 2022
• DOI: http://doi.org/10.1111/basr.12271

ORIGINAL ARTICLE

Social services provision and stakeholder

engagement in the Nigerian informal sector: A

systemic concept for transformation and

business sustainability

Daniel E. Ufua

1,2,3

| Olusola J. Olujobi

4

| Hammad Tahir

5

|

Victoria Okafor

2,6

| David Imhonopi

7

| Evans Osabuohien

2,6

1

Department of Business Management,

College of Management and Social

Sciences, Covenant University, Ota,

Nigeria

2

Centre for Economic Policy and

Development Research (CEPDeR),

Covenant University, Ota, Nigeria

3

Honorary Research Fellow, ILMA

University, Karachi, Pakistan

4

Department of Public and International

Law, College of Law, Afe Babalola

University, Ado-Ekiti, Nigeria

5

Department of Business Administration,

ILMA University, Karachi, Pakistan

6

Department of Economics and

Development Studies, College of

Management and Social Sciences,

Covenant University, Ota, Nigeria

7

Department of Sociology, College of

Management and Social Sciences,

Covenant University, Ota, Nigeria

Correspondence

Daniel E. Ufua, Department of Business

Management, College of Management

and Social Sciences, Covenant University,

Ota, Nigeria.

Email: daniufua@gmail.com

Abstract

The informal business sector has made enormous con-

tributions to Nigeria's economic growth and develop-

ment, but this sector is not given the necessary

attention to transforming these businesses toward sus-

tainability. This study explores the depth of informal

business sector practices in Nigeria. It underscores the

inputs of stakeholders in the transformation of busi-

nesses in the Nigerian informal sector to increase tax

remittances and employment generation for job secu-

rity in the Nigerian economy. Also, it underpins value

chain performances to transform the informal sector

and rescue it from liquidation through voluntary com-

pany arrangements, administration, merger, takeover,

and acquisition schemes. The study adopts a concep-

tual review. The research relies on extant literature

relating to the antecedence of informal business sector

activities in Nigeria. It relies on reports from tertiary

data sources such as academic articles, books, newspa-

pers, the Internet, and website sources. It further

explores the views of researchers, covering the informal

sector development and the support of the provisions

of the social services in Nigeria. There is the absence of

a model for the transformation and sustainability of the

Received: 21 September 2020 Accepted: 1 May 2022

DOI: 10.1111/basr.12271

© 2022 W. Michael Hoffman Center for Business Ethics at Bentley University.

Bus Soc Rev. 2022;127:403–421. wileyonlinelibrary.com/journal/basr 403

informal sector enterprises in Nigeria. This study rec-

ommends a model approach to address informal sector

enterprises' issues and challenges necessary to trans-

form the businesses into a formal status while

supporting their sustainability and resilience.

KEYWORDS

government policy, informal sector, social transformation,

stakeholder engagement

1|INTRODUCTION

The operations of the Nigerian economy consist of various sectors. These sectors include

several business enterprises that operate informally. This means that these businesses are not

formally recognized; they are prone to several challenges as they are broadly operated as

private businesses that bear their risks alone. These informal sector businesses contribute to

overall economic growth (Williams & Kosta, 2020). However, they tend to get minimal social

services support to enhance their substance and support their transformation to a formal

status in the Nigerian economy. Examples of social services needed to support the informal

sector business include proper data record keeping that provides details of the operations of

these businesses in an economy. These can also facilitate a reliable platform for informed

decisions and actions by the public sector in the provision of other social services. These

include security of these businesses, water supply to informal sector business locations like

abattoirs, provision of access road for movement of goods and services, support for better

residential and business locations that meets health and safety standards, and good health

facilities that can provide support for the sustenance and transformation of the Nigerian

informal sector (Nwaka, 2005).

Businesses run in the informal sector tend to be small in size and, as a result, might suffer a

lack of essential support for growth, such as poor funding and competition. The informal sector

is yet an effective absorber of the labor force in Nigeria. For instance, it is speculated that up to

46% of the Nigerian women in the labor force are engaged in the informal sector. However, it is

also perceived that the informal sector can contribute to the Nigerian GDP on incremental rate

(Fapohunda, 2012). Nevertheless, most businesses in the Nigerian informal sector are not recog-

nized by the government. Depending on the policies and the backing of legal regulations, they

can sometimes be denied the freedom to operate in particular locations and times. Such enter-

prises include street hawking, bistro operators, and the sale of agricultural produce in remote

areas (Fagbenle & Oluwunmi, 2010; Osabuohien et al., 2018).

Soyibo (1997) provided an inconclusive trace to the origin of informal sector operations in

Nigeria. While the author noted obvious shreds of evidence that suggested the informal sector

was initially more popular in the rural areas, it is observed that the broad spread of its practices

has continued to cover both the urban and sundry interiors in Nigeria. Transformation is a

departure from the state of unrecognized status assumed by businesses in the informal sector to

a state of being duly recognized and provided access to social services support. This can position

these businesses to improve their scope of operations and contribute further to the national

GDP (Mghenyi et al., 2021). They can also assume a regular status to meet obligations such as

404 UFUA ET AL.