Poverty in Kwara's Urban Informal Sector

Poverty in the Urban Informal Sector of Kwara State, Nigeria 2011
Ijaiya, GT., Bello, RA., Arosanyin, GT., Oyeyemi, GM., Raheem, UA and Yakubu, AT Page 1
CHAPTER 1
INTRODUCTION
1.1. Statement of the Problem
The activities of the people operating in the informal sector in most urban settlements in less developed countries cannot be ignored since they play significant role in the development of the economies of these countries. For instance, the sector employs between 35 percent and 65 percent of the labour force; and contributes between 20 percent and 40 percent of the Gross Domestic Product (GDP) in less developed countries (Braun and Laoyza, 1994). In Africa, the sector has grown to be a major source of income to a large population of urban poor and women. In fact, about 400 million African workers earn their livelihood in the informal sector and income generated supports additional 200 million others to survive (Grey-Johnson, 1992). In Nigeria, the sector is known to have contributed about 58 percent of the nation‘s Gross Domestic Income (GDI) and provided over 50 percent of urban jobs. The sector also provides most of the population with a means of livelihood or essential supplementary income. Most probably the sector is also the only reliable source of livelihood for women and the poor for whom the formal sector has no accommodation for economic upliftment (Fapohunda, 1978; Fapohunda and Lubell, 1978; Fapohunda, 1985; Ariyo, 1996, Schneider, 2002, Ijaiya and Chika, 2004; Arosanyin, et.al 2009).
Despite its contribution to economic development, the sector is still regarded as the sector where the bulk of the poor are found. Scientific studies on the prevalence of poverty in the informal sector are still scanty. It is therefore difficult for government and policy makers to provide pragmatic solutions to the poverty situation in the sector. In order to provide objective solution to the poverty situation in the sector in Kwara State, this study becomes imperative. The basic questions in this study are: To what extent are the people operating in the urban informal sector of Kwara State poor? What are the causes and consequences of poverty among the people operating in the urban informal sector of Kwara State? What intervention measures are needed in addressing the problems of poverty in the urban informal sector of Kwara State?
1.2. Objective of the Study
The main objective of the study is to examine the rate of poverty in the informal sector of Kwara State, Nigeria. The study has the following objectives:
 To examine the extent of poverty in the urban informal sector of Kwara State by measuring its prevalence.
 To determine the causes and the consequences of poverty in the urban informal sector of Kwara State.
 To proffer intervention measures that can be used in addressing the problems of poverty in the urban informal sector of Kwara State.

1.3. Justification for the Study
In Nigeria, significant efforts have been made to reduce poverty, but what some scholars found difficult to comprehend is its continuing and persistent increase1 despite the different strategies suggested and put in place by various governments, non-governmental organizations, community-based organizations and individuals at reducing it. The failure of these strategies (e.g. the Better Life for Rural Women Programme, the Family Support Programme, the Operation Feed the Nation, the Green Revolution, the Directorate for Food, Road and Rural Infrastructure, the Integrated Rural Development Programme, the Mass Transit Programme, the National Directorate for Employment and the recently introduced National Poverty Eradication Programme) can be traced to the lack of continuity in the implementation of the programmes. This lack of continuity have inhibited progress; and created a climate of uncertainties, budgetary constraints, mismanagement of the projects/programmes funds and corruption. Most importantly, the poor have not been adequately served by these programmes. Targeting the poor requires identification of who is poor? Why are they poor? And where do they live?
Drawing from the above, it becomes important that an analysis of poverty in order to capture those that are poor and why they are poor in the urban informal sector of Kwara State is carried out. Results from this study would be useful in understanding and designing appropriate poverty reduction measures by the government, its agencies and development partners for the people operating in this sector, which is hoped would fulfilled some of the aspirations of State‘s Economic Empowerment Development Strategy (SEEDS) and those of the Millennium Development Goals that include, among others, eradication of extreme poverty and hunger by 2015.
1 In Nigeria, the incidence of poverty that was 28.1 percent in 1980, increased to about 64 percent in the year 2004, with rural poverty increasing from 22 percent in 1980 to 68 percent in 2004. Similarly, Nigeria‘s rank in the Human Development Index remained low, being the 152nd out of 175 countries. The nation‘s life expectancy at birth that was 51.9 in 2001 also dropped to 44 years in 2005 (ADB, 2003; FOS, 2004; FOS various years; World Bank 2005ab, ADB 2010).

CHAPTER 2
INFORMAL SECTOR AND POVERTY
2.1. The Informal Sector
The earlier studies on the informal sector can be traced to the studies by the International Labour Organization (ILO) in Kenya in 1972 and Keith Hart in Ghana in 1973 (ILO 1972; Hart 1973; Amin 2002; Chen, et.al 2002; ILO 2002a; ILO 2002b; Thomas 2002). However, in theory the emergence of the study on the informal sector can be linked to Lewis (1954) and Hirschmann (1958) which conceptualized economic development as the emergence and growth of manufacturing sector (the ―modern‖ sector) through the absorption of labor being freed from agriculture (the ―traditional‖ sector), due to the more efficient means of production in the former (cited in Todaro 1987; Usman and Ijaiya 2000; Potts 2007; Arosanyin, et. al 2009; Srinivas 2009).
The study by Rogers and Swinnerton (2004) saw the emergence of the sector as a result of undesirable economic distortions and unfavourable policies of government. Studies by Loayza (1994, 1997), Azuma and Grossman (2002), Xaba et.al (2002) saw its emergence from the growth of urbanization and the problems that come with it- unemployment and low skills, heavy burden on taxes fees, labour market restrictions and inefficient government institutions. The studies also shows how the informal sector arises in a neoclassical model when some firms choose to remain small to enjoy legal exemption from a mandated minimum wage policy and tax which distorts resources away from first best allocations.
2.1.1. Definition and characteristics of Informal Sector
The informal sector covers a wide range of labour market activities that combine two groups of different nature. On one hand, the informal sector is formed by the coping behaviour of individuals and families in an economic environment where earning opportunities are scarce. On the other hand, the informal sector is a product of rational behaviour of entrepreneurs that desire to escape state regulations.
The two types of informal sector activities can be described as follows:
 Coping strategies (survival activities): casual jobs, temporary jobs, unpaid jobs, subsistence agriculture, multiple job holding;
 Unofficial earning strategies (illegality in business): (i) unofficial business activities: tax evasion, avoidance of labour regulation and other government or institutional regulations, no registration of the company; and (ii) underground activities: crime, corruption - activities not registered by statistical offices (GDRC 2009).
The simplest definition of informal economic activity is any exchange of goods or services involving economic value in which the act escapes regulation of similar such acts (Wikipedia 2008). ILO (2009) refers to it as all economic activities by workers and economic units that are – in law or in practice – not covered or insufficiently covered by formal arrangements. Their activities are not included in the law, which means that they are operating outside the formal reach of the law; or they are not covered in practice, which means that – although they are operating within the formal reach of the law, the law is not applied or not enforced; or the law discourages compliance because it is inappropriate, burdensome, or imposes excessive costs (see also Bernabè, 2002; Howell 2002; Musiolek 2002; Thomas 2002; Hussmanns

2004; Daza 2005; Adeyinka 2006). Blaauw, (2005) also defined the informal sector as unorganized, unregulated and mostly legal but unregistered economic activities that are individually or family owned and use simple, labour intensive technology.
The informal sector often referred to as subterranean economy, underground economy, shadow economy, non-corporate enterprises, micro-enterprises and petty producers is also defined as a large volume of self employed in developing countries who are engaged in small-scale intensive work such as tailoring, food preparation, trading, shoe repairing, etc. These people are often regarded as unemployed or underemployed as they cannot be included in the national employment statistics but they are often highly productive and make a significant contribution to national income. Their work in general is characterized by low- capital-output ratio, that is, the ratio of the level of equipment or capital relative to output is low (Hart 1972; Trager 1987; Steams 1988; Sanyal 1991; Pearce 1992; Cheaker and Nangbe 1998; Wickware 1998; Ijaiya and Umar 2004; Soares, 2005).
Fluitman (1989) saw the informal sector as a heterogeneous phenomenal which encompassed a wide variety of economic activities which tend to be overlooked in statistics including all sorts of manufacturing activities, construction, trade and commerce, repair and other services. For example, informal sector workers made beds, pots and pan, they repair watches, cars and radio, they write letters, lend money, run restaurant, and barber-shops in the side walk, they transport goods and people on their motorbikes, they sell fruits and cooking oil and cigarettes by the piece. Informal sector activities are mostly carried out in small units owned and operated by one or a few individuals with little capital, they are usually labour intensive activities which result in low quality but relatively cheap goods and services (see also Loayza 1997).
Many of the names by which the ‗informal‘ sector is called (black market, casual work, clandestine activities, community of the poor, family-enterprise sector, hidden sector, informal economy, informal opportunities, intermediate sector, invisible sector, irregular sector, lower-circuit of the urban economy, non-plan activities, non-westernized sector, one- person enterprise, parallel economy, people's economy, petty commodity production, shadow economy, trade-service sector, transient sector, underground economy, unobserved economy, unofficial economy, unorganized sector, unrecorded economic activities, unremunerated sector, unstructured sector, urban subsistence sector), essentially characterizes it in terms of what it is not: it is not the formal sector (non-formal), it is not controlled by the government (non-plan, hidden, unofficial, unrecorded), it is not legal (illegal, black, shadow) and it is not taxable (unrecorded, parallel). But recent research and exploration on the issue has resulted in a more benign approach, where the names and definitions have used the characteristics of the sector itself (casual, family enterprise). Some emphasize its poverty focus (subsistence, petty commodity, and one-person enterprise) as well as its 'temporary' nature (transient, intermediate). In reality, it is all of these taken together, that define all the characteristics of the sector (GDRC 2009).
2.1.2 Characteristics of enterprises in the informal sector
As observed by Women in Informal Employment-Globalizing and Organizing (WIEGO) (2009) early debates regarding the causes and characteristics of the informal sector were crystallized into four dominant schools of thought namely the dualist school; the structuralist school; the legalist school and the il-legalist school.

The characteristics of the informal sector include among others: ease of entry; predominant use of local resources, family ownership of the enterprises; small scale of operation; adaptation of largely labour-intensive technology; acquisition of skills mainly outside the formal system of education and training; and operation in an unregulated competitive market (ILO, 1972). The informal sector characterised to comprise these economic enterprises which employ less than certain number of persons (e.g. 5 or 10, depending on the country's official procedures) per unit, and which simultaneously satisfy one or more of the following criteria: (a) it operates in open spaces, (b) it is housed in a temporary or semi-permanent structure, (c) it does not operate from spaces assigned by the government, municipality or private organizers of officially recognized market-places, (d) it operates from residences or backyards, and (e) it is not registered. The ILO/ICFTU international symposium on the informal sector in 1999 proposed that the informal sector workforce can be categorized into three broad groups: (a) owner-employers of micro enterprises, which employ a few paid workers, with or without apprentices; (b) own-account workers, who own and operate one- person business, who work alone or with the help of unpaid workers, generally family members and apprentices; and (c) dependent workers, paid or unpaid, including wage workers in micro enterprises, unpaid family workers, apprentices, contract labor, home workers and paid domestic workers (El-Mahdi, 2002; Hussmanns, 2004; Daza, 2005; Slack, 2006; GDRC, 2009).
Looking at the enterprise side, there are also a number of defining features, which characterize these businesses in Africa. These include: low set up costs and entry requirements, which are presented above as key factors behind informalization. Operations are typically on a small scale with only a few workers. Skills required for the business activities are usually gained outside formal education. The production of goods and services is labour intensive. Again turning to the Doing Business Database compiled by the World Bank, it is interesting to consider the heterogeneity in some of the key business factors behind the development of the sector in Africa. The database contains figures for various indicators representing the ease of starting up a business, hiring and firing workers, registering property, getting credit, protecting investors, enforcing contracts, licensing requirements and closing a business. For example, based on certain assumptions regarding the nature and location of the business, sub-Saharan enterprises are required to complete 11 procedures on average in order to establish a new business, the equal highest amongst all regions. This process takes over 63 days in sub-Saharan Africa, the longest of any region. The cost of starting a business in sub- Saharan Africa (SSA) represents 215.3 percent of GNI per capita, which is over three times higher than the next most expensive region (Middle East and North Africa). This figure, however, masks the heterogeneity in SSA: the percentage ranges in fact from 8.6 percent of per capita GNI in South Africa to 1,442.5 percent in Zimbabwe. Overall, these figures show that establishing a business in the formal sector in SSA is a complex, lengthy and costly undertaking, which are all reasons for enterprises to remain informal (Verick, 2006).
Another barrier for enterprises to operate in the formal economy is licensing. In sub-Saharan Africa there are on average 20.1 licensing procedures for a business in the construction industry to build a standardized warehouse. These procedures include obtaining licenses and permits, completing notifications, inspections and submitting the necessary documents (see www.doingbusiness.org). The figure for SSA varies from 11 in Kenya and Namibia to 48 in Sierra Leone. The only region that has more licensing procedures than SSA is Europe and Central Asia (21.4). These procedures take approximately 251.8 days in sub-Saharan Africa, ranging from 127 in Ghana to 569 in Cote d‘Ivoire. On average the cost of registration amounts to 1,597.3 percent of GNI per capita, with a minimum in Mauritius of 16.7 percent

and maximum of over 10,000 percent for Burundi. This cost illustrates another barrier enterprises face when undertaking such an investment (Verick, 2006 ).
The different dimensions covered by the World Bank‘s Doing Business database allows for a more detailed empirical country-level analysis of the most important factors determining the size of the informal economy. A first look at the correlations between the size variable and other characteristics reveals that the following factors are positively and significantly correlated with the size of the informal economy: time to get a license; cost of registering a property; and the number of documents required for exporting. The relationship between the size and the cost of property registration is illustrated in Figure 3 above. This graph shows that an increase in the cost of registration by 1 percentage point is associated with an increase in the size of the informal economy by 0.6 of a percentage point. While there are many potential variables that influence the formation and growth of the informal economy, this preliminary analysis indicates that these barriers and costs to doing business are important factors behind this phenomenon (Verick 2006).
The informal sector in Africa is dominated by trade-related activities, with services and manufacturing accounting for only a small percentage of this sector. For example, in Angola, Nigeria, South Africa and Uganda, a majority of informal sector workers are active in retail trade. Most of these workers are self-employed, which accounts for 70 percent of workers in this sector in SSA, with the remainder in wage employment. Street vending is one particular informal activity that is prevalent on the continent. Available data in 1992 indicate that street vendors represented 80.7 percent of all economic units surveyed in urban areas in Benin, with women making up over 75 percent of vendors (Verick, 2006 ).
2.1.3. Informal Sector and Economic Development
The contribution of the informal sector to economic development is enormous. As Morgan (1989) puts it, ―though detail statistics on the enterprises are hard to come by owing to lack of extensive data bases. It is clear that in many countries their role is extremely important as contributors to the nation‘s wealth. Evidences from developing economies show that micro- enterprises are a major engine in industrial and commercial development.
The informal sector represents an important part of the economy and certainly of the labour market in many countries, especially developing countries, and thus plays a major role in employment creation, production and income generation. In countries with high rates of population growth and/or urbanization, the informal sector tends to absorb most of the growing labour force in the urban areas. Informal sector employment is a necessary survival strategy in countries that lack social safety nets such as unemployment insurance or where wages, especially in the public sector, and pensions are low. In such situations, indicators such as the unemployment rate and time-related underemployment are not sufficient to describe the labour market situation. In other countries, the process of industrial restructuring in the formal sector is seen as leading to a greater decentralization of production through subcontracting to small enterprises, many of which are in the informal sector (Akintoye, 2008; Hussmanns and Mehran, 2008).
Evidence from a number of countries has shown that an increased proportion of employment, income and output are originating from the sector. For instance, the International Labour Office (ILO) has estimated that in the poorest countries, 80 percent of workers operate in the informal and agricultural sector while for middle-income countries the informal/agricultural

figure exceeds 40 percent. On the average, 30 percent of workers in developing world cities are informal. In a few cases, this percentage is lower; in many it is substantially higher. According to a recent statistical compilation by the ILO of total urban employment the informal sector portion accounts for 49 percent in Peru, 40 percent in Ecuador and 54 percent in Columbia. Among 15 Sub-Saharan African nations urban informal employment as a percentage of total informal employment ranges from between 9 and 44 percent in Zimbabwe to 80 percent in Benin, 22 percent in Swaziland, 43 percent in Zambia, 89 percent in Ghana and in Nigeria one-third of urban labour force are found in the informal sector, with a median of 49 percent in five Asian countries, the corresponding percentages range from 17 percent to 67 percent (Wickware, 1998; Xaba, et.al 2002).
A study conducted in 1992 by the Economic Commission for Africa indicates that the informal sector‘s contribution to GDP in the African countries is estimated at about 20 percent and its contribution to the GDP of the non-agricultural sector stood at 34 percent. For instance, its contribution to GDP was 38 percent in Guinea, 10.3 percent in Tanzania, 30 percent in Burkina Faso, 24.5 percent in Nigeria and 20 percent in Niger. Available data show that trade represents about 50 percent of the production of the informal sector. Manufactured production represents 32 percent, while services and transport represent 14 and 40 percent respectively (Kankwanda, et. al 2000).
Its contribution to economic development can also be viewed from the interaction between the various operators in the sector and between the informal sector operators and the formal sector operators. According to Herchbach (1989) and Lanjouw (1998) the relationship among the operators in the informal sector and the relationship between the informal sector operators and the formal sector operators have contributed to the growth of the informal sector and to its contribution to economic development and poverty reduction. For instance, the linkages among the informal sector operators has helped improved the quality of goods and services produced by the operators thus making them compete favourably with what obtained in the formal sector. Their relationship with the formal sector has made them powerful distributors for the goods and services produced by the formal sector enterprises. And the formal sector enterprises are also known to provide inputs and services to informal sector enterprises through sub-contracting (see Abumere, 1995).
Grey-Johnson (1993) also reiterates that the linkages with the formal sector are strong, providing it with a wide array of intermediate and final products. For instance, there are more demands for informal goods from outside the sector than from within it. For instance, the informal sector operators consume only 5 percent of their products whereas 50 percent are consumed in the formal sector and the remainder in subsistence agriculture.
2.2 Poverty: Meaning, Measurement, Causes and Consequences
2.2.1. Poverty: Meaning and Measurement
Poverty has been a difficult concept to define due to its multi-dimensional nature. Earlier studies on poverty have always linked it to a situation where an individual is confronted with low income or low consumption-expenditure which is often used for the construction of poverty line. However, over the years various theories have been advanced in order to put in proper perspective the mechanics of poverty. The orthodox Western views of poverty, reflected in the ―Vicious Circle Hypothesis‖ stated that a poor person is poor because he is

poor, and may remain poor, unless the person‘s income level increases significantly enough to pull the person in question out of the poverty trap. This thought sees poverty from the point of absoluteness, i.e. when poverty is seen as the level of income below what is required to have a decent standard of living, which in other words is a situation where the total earnings of individuals/families are insufficient to obtain the minimum necessaries for the maintenance of merely physical efficiency. In contrast to this is relative poverty which explicitly relates poverty to a reference group. Rather than refer to a supposedly objective standard, it links poverty to a particular point in the distribution curve of a particular variable such as income. People are judged to be poor if they are poor in comparison to those around them. This notion of poverty is therefore particularly relevant when debates on social justice do not merely focus on the needs of bare survival, but also on the question of inequality in society (Booth, (1887; 1888; 1903); Walker, (1897), Naoniji, (1901); Rowntree, (1901); Townsand, (1962); Harrington, (1962); Anderson, (1964) cited in Denevert, (1973); Mead, (1996); Ajakanye and Adeyeye, (2001); Laderchi, et. al (2003); Bradshaw, (2006) and Nunes, (2008)].
In recent time, a number of studies on poverty have come to see poverty beyond the lack of income and its skewed distribution, but relate it to hunger, lack of basic capabilities to live in dignity, lack of shelter, being sick and not being able to go to school, not knowing how to read, not being able to speak properly, not having a job, fear for the future, losing a child to illness brought about by unclean water, powerlessness, lack of representation and freedom (Sen, 1985; World Bank, 1999; World Bank, 2001; Sengupta, 2003; Hunt, et .al 2004). In the light of the International Bill of Rights, poverty is seen as a human condition characterized by sustained or chronic deprivation of the resources, capabilities, choices, security and power necessary for the enjoyment of an adequate standard of living and other civil, cultural, economic, political and social rights (UN, 2001; UN, 2002).
Closely related to these definitions of poverty is the measurement of poverty. Over time, different methods were identified and used in the measurement of poverty. Key among them is the use of a poverty line that separates the ―poor‖ from the ―non-poor‖. There are two types of poverty lines which are generally used: first, is that which represents the value of a selection of goods or services that are identified as necessary, and second, is that which relates to the distribution of income/expenditure within a society. Poverty line which represents the value of a selection of goods or services that are identified as ‗needs‘ is generally calculated by giving a monetary value to a basket of goods or services that are identified according to the standard of living or well-being that policy makers decide should reflect a state of impoverishment. This type of poverty line can be used to depict what is known as a ―head-count‖ of the total number of people living in poverty. Second is the poverty line that relates to the distribution of income/expenditure within a society which is often relative and set at the level that includes people living below a particular threshold/bench mark. An example is when the poverty line is set at the level that indicates that people living below 20 percent of national income of a nation as being very poor like in the case of South Africa or a poverty line set at $275 and $370 per person a year for the extreme poor and for the moderate poor respectively or a poverty line set at $1 and $2 dollars a day for the extreme poor and for the moderate poor respectively as provided by the World Bank. One advantage of this measure of poverty is that it allow for comparisons of poverty levels between countries to be drawn with relative ease (World Bank, 1990; 2001).
Related to the above measure of poverty is that provided by Foster, et.al (1984), which includes the following: (i) the head count poverty index given by the percentage of the

population that live in the household with a consumption per capita less than the poverty line; (ii) poverty gap index which reflects the depth of poverty by taking into account, how far the average poor persons income is from the poverty line; and (iii) the distributional sensitive measure of squared poverty gap defined as the means of the squared proportionate poverty gap which reflects the severity of poverty. Put together, they are referred to as P-alpha Class measure of poverty1.
Recently too, the use of income and consumption-expenditure as basis for determining the poverty line are beginning to lose much of their relevance since the method of calculation was not adapted to the new economic trends resulting from high rate of inflation and the prevailing high increase in interest rate and exchange rate devaluation. Thus the Minimum Wage and Minimum Pension2, Food Insecurity Measures of Poverty (FIMP)3, Human Development Index (HDI)4 and Capability Poverty Measure (CPM)5 and Indices of Multiple Deprivation (IMP)6 are now advocated.
1 The index for poverty measures as give by Foster, et.al (1984) is:
q
P = 1/ n  ( z-yi / z)
i=1
Where:
n = number of heads of households in the zones.
q = number of heads of households that are poor in the zones.
z = poverty line.
yi = total consumption–expenditure of individual i in the zones.
 = poverty aversion parameter.
The poverty aversion parameter () can take any positive value or zero. The higher the value the more the index weights the situation of the poor in the zones, i.e. the people farthest below the poverty line. Of specific interest are the cases where:  = 0,1 and 2.
2 Cited in Grootaert (1995:9)
3 FIMP sought to cost a nutritionally balanced minima list diet for a household (SPII, 2007)
4 The Human Development Index (HDI) combines three components: longevity (life expectancy at birth) educational attainment and standard of living (UNDP, 2009).
5 Capability Poverty Measure (CPM) focuses on human capabilities just as the Human Development Index does. Instead of examining the average state of people‘s capabilities it reflects the percentage of people who lack basic or minimally essential (UNDP, 2009)
6 The index is made up of the following: Health deprivation, Employment deprivation, Income and material deprivation, Education deprivation and Living environment deprivation(SPII, 2007)

2.2.2 Causes of Poverty
Theoretically, a number of studies have over time provided and discussed some of the factors that are the root causes of poverty. For instance, as observed by Bradshaw (2006) key among the causes are those that focus on the individuals as responsible for their poverty situation; those linked to the culture of the people; those linked to economic, political and social distortions/discrimination; those linked to geographical disparities; and those caused by cumulative and cyclical interdependencies. The theory that focused on individuals typically blame individuals in poverty for creating their own problems, and argued that with hard work and better choices the poor could have avoided their problems or remedy them. Other variations of the individual theory of poverty ascribe poverty to lack of genetic qualities such as intelligence that are not so easily reversed. The belief that poverty stems from individual deficiencies is old. For instance, religious doctrine that equated wealth with the favour of God was central to the Protestant reformation. Ironically, neo-classical economics reinforces individualistic sources of poverty. The core premise of this dominant paradigm for the study of the conditions leading to poverty is that individuals seek to maximize their own well-being by making choices and investments, and that (assuming that they have perfect information) they seek to maximize their well-being. When some people choose short term and low-payoff returns, economic theory holds the individual largely responsible for their individual choices, for example, to forego college education or other training that will lead to better paying jobs in the future.
The theory that focused on the culture of the people suggests that poverty is created by the transmission over generations of a set of beliefs, values, and skills that are socially generated but individually held. Individuals are not necessarily to blame because they are victims of their dysfunctional sub-culture or culture. Culture is socially generated and perpetuated, reflecting the interaction of individual and community. This makes the ―culture of poverty‖ theory different from the ―individual‖ theories that link poverty explicitly to individual abilities and motivation. Technically, the culture of poverty is a sub-culture of poor people in ghettos, poor regions, or social contexts where they develop a shared set of beliefs, values and norms for behaviour that are separated from but embedded in the culture of the main society. Oscar Lewis was one of the main writers that define the culture of poverty as a set of beliefs and values passed from generation to generation. He writes:
Once the culture of poverty has come into existence it tends to perpetuate itself. By the time slum children are six or seven they have usually absorbed the basic attitudes and values of their subculture. Thereafter they are psychologically unready to take full advantage of changing conditions or improving opportunities that may develop in their lifetime.
With regard to the theory of poverty that is caused by economic, political and social distortions/discrimination, theorists in this tradition look not to the individual as a source of poverty, but to the economic, political, and social system which causes people to have limited opportunities and resources with which to achieve income and well-being. For example, Marx showed how the economic system of capitalism created the ―reserve army of the unemployed‖ as a conscientious strategy to keep wages low. Marx‘s theoretical formulation was largely based on the principle of exploitation of labour. The theoretical formulations presents the economy as ultimately polarized into a few rich capitalists and the masses made up of the poor miserable workers. Technological progress, he argued, was labour saving, but resulted in displacement of workers that joined the reserved army of the unemployed, and where labour

was not displaced wage level was depressed. The consequence at the end was increase in the number of people that are poor. Cases of parallel barrier against the poor also exist with the political system in which the interests and participation of the poor is either impossible or is deceptive. A number of studies have confirmed the linkage between wealth and power, and how poor people are less involved in political discussions. Coupled with racial discrimination, poor people lack influence in the political system that they might use to mobilize economic benefits and justice.
At the global level, is the process of marginalization arising out of work relations in the capitalist global economy and the composition of the neoliberal global economic order. A look at the structural composition of the global economy seems to rest on three main components. First, institutional arrangements for free trade under the World Trade Organization (WTO) and supported by a worldwide program of deregulation and privatization of economic activity engineered by the World Bank (WB) and the International Monetary Fund (IMF). Secondly, the massive drive for capital accumulation by transnational capital under the leadership of transnational corporations (TNCs). And thirdly, the unequal participation of southern elites in the global capitalist order, which breeds structural imbalances between the industrial north and the undeveloped south. This structural set-up serves the interests of dominant capitalist class of a handful Western developed countries who underwrite the rules for global economic, business, technological and financial interactions but also work in collaboration with the dominant social forces in the developing countries as junior partners. The pattern of collaboration, although unequal and based on a dominant versus dominated relationship, produces a structure that tends to be biased in favour of the rich and wealthy people to the detriment of the poor everywhere. Poverty is a necessary by-product of this structural composition and functional mechanism of the global economy (Nuruzzaman, undated; Mbeki, 2009). A critical look at the Structural Adjustment Programs (SAPs) carried out by the WB and the IMF will be seen to have further weakened and damaged the interests of the developing countries. The policy package SAPs advocate rests on three important elements: dismantling the role of the state in economic development; liberalization of trade and investment regimes; and privatization of economic activities. Of course, the two Bretton Woods institutions did not spontaneously formulate the SAPs and then imposed these on the developing countries across the South; indeed, the debt crisis of the 1980s created the prelude to devise the SAPs and Mexico‘s second collapse in 1995 led to further tightening of the SAPs. It is more than two decades the IMF and the WB are experimenting with SAPs but no major progress has still been achieved. Rather, the experiences of developing countries, particularly those in South Asia and Sub-Saharan Africa, confirm that the SAPs have very little to do with achieving the much-expected economic growth but structural subordination of the South to the North and its impoverishment (Nuruzzaman, undated).
Another theory of the root cause of poverty that is built on the above is the poverty caused by geographical disparities such as rural poverty, ghetto poverty, urban disinvestment and third world poverty. The existence of this type of poverty is the fact that people, institutions, and cultures in certain areas lack the objective resources needed to generate well-being and income, and that they lack the power to claim redistribution (Bradshaw, 2006). This position was in line with that of Bigman and Fofack (2000) who gave the following reasons why some geographic areas become pockets of poverty, while others have become islands of prosperity: differences in agro-climatic condition; endowment of natural resources, or geographic conditions (particularly the distance to a sea outlet and to centers of commerce); and biases in government policies. On a general note, they said the causes of poverty include; the low quality of public services particularly in education and health in some areas (which further

impedes the accumulation of human capital and thus earnings capacity of the people); the poor condition of rural infrastructure which limits trade and retards local investment and growth; the low level of social capital which slows the diffusion and adoption of new farm technologies, and thus reduces farmers earning capacity; and the distance from urban centers which inhibits trade, specialization in production and access to credit.
A more interesting and complex theory of the root causes of poverty is the poverty caused by cumulative and cyclical interdependencies. This theory of the cause of poverty is, to some degree, built on the components of each of the other theories discussed above, in that it looks at the individual and their community as caught in a spiral of opportunity and problems, and that once problems dominate they close other opportunities and create a cumulative set of problems that make any effective response nearly impossible. This theory has its origins in economics in the work of Myrdal published in 1957. In the book, Myrdal developed a theory of ―interlocking circular interdependence within a process of cumulative causation‖. The theory helps explain economic underdevelopment and development. Myrdal notes that personal and community well- being are closely linked in a cascade of negative consequences, and that closure of a factory or other crisis can lead to a cascade of personal and community problems including migration of people from a community. Thus the interdependence of factors creating poverty actually accelerates once a cycle of decline is started.
In furtherance to the above position, Bradshaw (2006) also cited the work of Jonathan Sher (published in 1977) on the interaction between education and employment at the country and individual level. For instance, at the community level, a lack of employment opportunities leads to out-migration, closing retail stores, and declining local tax revenues, which leads to deterioration of the schools, which leads to poorly trained workers, leading firms not to be able to utilize cutting edge technology and to the inability to recruit new firms to the area, which leads back to a greater lack of employment. At the individual level, the lack of employment leads to lack of consumption and spending due to inadequate incomes, and to inadequate savings, which means that individuals can not invest in training, and individuals also lack the ability to invest in businesses or to start their own businesses, which leads to lack of expansion, erosion of markets, and disinvestment, all of which contribute back to more inadequate community opportunities.
In order to better understand and be able to distinguish between levels of causes of poverty, McCaston and Rewald (2005) developed a causal hierarchy that is useful in understanding the underlying causes of poverty. This causal hierarchy is broken down into three categories: immediate causes; intermediate causes; and underlying causes as shown in Table 2.1 below.
Table 2.1: A Causal Hierarchy of Causes of Poverty
Some Examples
Immediate Causes
These are causes that are directly related to life and survival and include:
• Disease
• Famine
• Environmental disasters
• Conflict
Intermediate Causes
These causes affect people‘s well-being and opportunities for development and livelihood security, and include:
• Low livelihood (agric or income) productivity;
• Limited livelihood opportunities;
• Lack of skills; inadequate access to food;
• Inadequate care for women and children;

• Lack of basic services, e.g., health, education, water and sanitation, education
Underlying Causes
These causes are related to the structural underpinnings of underdevelopment, specifically social systems and political and economic structures, and environmental issues. They involve:
• Economic: Inequitable resource distribution (distributive justice); globalization; terms of trade; structural adjustment
• Political: Poor governance and institutional capacity; corruption; violent conflict; lack of political will; domination by regional/global superpowers
• Social: Marginalization, inequality, social exclusion (based on gender, class, ethnicity); harmful societal norms, customs and cultural practices, over-population
• Environmental: Carrying capacity; resource-based conflict; environmental disasters; propensity for human disease; propensity for crop & livestock disease
Source: McCaston and Rewald, 2005.
2.2.3 Consequences of Poverty
According to Von Hauff and Kruse (1994), the consequences of poverty include among other things: (i) the consequences arising from physical and psychological misery, which understandably are caused by inadequate nourishment, lack of medical care, a lack of basic and job related education and marginalization in the labour markets; (ii) the consequences arising through the formation of slums in cities, a worsening of ecological problems particularly, as a result of predatory exploitation in the agricultural sector and through the failure to use the available human resources; and (iii) the consequences that tend to preserve or reinforce the existing power structures and thus also the privileges of a minority of the population. In some cases this involves corrupt elites. These privileged minorities in the population are not generally interested in structural changes for the benefit of the poor population.
As observed by Narayan, et. al (2000a) when people are poor, they tend to lack protection against violence, extortion and intimidation and also lack civility and predictability in interactions with public officials. The poor is also prevented from taking advantage of new economic opportunities and engaging in activities outside their immediate zone. Threat of physical force or arbitrary bureaucratic power makes it difficult for them to engage in public affairs, to make their interests known and to have them taken into account.
Narayan, et al. (2000b) also indicates that with poverty, a lot of people are also confronted with agonizing choices became they are powerless and voiceless. Powerless as they are in many respects, poor people face options that are often exceptionally constrained. In making choices the best they can do may be to look for the least negative and the damaging. They have little cushion against mistakes. They have to choose with care, for example, among different sources of cash or credit for daily needs or for an emergency. They are forced again and again to trade-off one bad thing against another just like trading off a good candidate for a bad one during an election because of money.

2.3. Poverty in Nigeria and in Kwara State
Available data on the poverty situation in Nigeria has shown that over time, there has been an increase in the total poverty head count. As indicated in Table 2.2, the total poverty head count has had a steady increase from 28.1 percent in 1980 to 65.6 percent in 1996, with a slight drop to 54.4 percent in 2004. A comparison of the rate of urban and rural poverty indicates that urban poverty rose from 17.2 per cent in 1980 to 58.2 percent in 1996, but declined to 43.2 per cent in 2004 while that of the rural area increase from 28.3 percent in 1980 to 69.3 percent in 1996, with a slight decline to 63.3 percent in 2004. Of the six geo- political zones in Nigeria, the North West witnessed an increase in the rate of poverty head count from 37.7 percent in 1980 to 77.2 percent in 1996. However, in 2004 the poverty head count in the zone dropped to 71.2 percent in 2004. In Kwara State, the Core Welfare Indicators Questionnaire (CWIQ) Survey conducted in 2006 by the National Bureau of Statistics indicated that total poverty head count was 83.3 per cent for the whole State, while poverty head count for both the rural and urban areas were 95.9 percent and 97.3 percent respectively (NBS, 2006).
Table 2.2: Incidence of poverty in Nigeria, 2004
1980
1985
1992
1996
2004
National
28.1
46.3
42.7
65.6
54.4
Urban
17.2
37.8
37.5
58.2
43.2
Rural
28.3
51.4
66.0
69.3
63.3
South-South
13.2
45.7
40.8
58.2
35.1
South-East
12.9
30.4
41.0
53.5
26.7
South-West
13.4
38.6
43.1
60.9
43.0
North-Central
32.2
50.8
46.0
64.7
67.0
North East
35.6
54.9
54.0
70.1
71.2
North West
37.7
52.1
36.5
77.2
71.2
Sources: NBS 2004; UNDP 2009
Some of the theoretical causes of poverty discussed in section 2.2 above were not far different from the causes of poverty in Nigeria. For instance, as observed by Obadan (1997) the main factors that are causes of poverty in Nigeria include: inadequate access to employment opportunities; inadequate physical assets, such as land and capital and minimal access by the poor to credit even on a small scale; inadequate access to the means of supporting rural development in poor regions; inadequate access to markets where the poor can sell goods and services; low endowment of human capital, destruction of natural resources leading to environmental degradation especially in the Niger Delta and reduced productivity; and inadequate access to assistance for those living at the margin and those victimized by transitory poverty and lack of participation. That is, failure to draw the poor into the design of development programmes. Ijaiya (2000) also confirmed these causes in a study of Ilorin, Kwara State. They include the lack of or limited supply of some basic needs of life such as food, shelter, portable water basic health care services, sanitation facilities, transportation and electricity are some of the causes of poverty in the city. For instance, the non-accessibility of health care services has aggravated the health situation of most of the households in the city. Sickness is usually devastating and drains the affected people‘s meager resources because it disrupts the economic activities of the entire household. The urban cities in the State also have a long history of acute water shortage. This shortage has caused a lot of hardship for most of the households who have to spend time daily looking for water which in effect cuts down their productive time and adversely affects their income generating efforts and welfare.

2.4. Urban Poverty Incidence
Urban poverty situations are usually linked to the problems associated with urbanization, which in turn is linked to the massive movement of people from the rural areas to the cities. As observed by Dale (2009) and Sabry (2010), given the massive movement of people from the rural areas to the cities, the scale of urban poverty has been on the rise worldwide, thus creating urban slums, often referred to as informal settlements, which are areas without enough resources, with degraded environmental conditions, without or with limited access to proper sanitation, clean water, electricity and health care facilities. These worsening environmental conditions in turn damage residents‘ health and entrench the stigma and isolation of living in informal settlements, making it all the more difficult to escape from poverty (see Montgomery and Hewett, 2004) .
Some of the recent studies on urban poverty are those of Ijaiya (2000), Sabry (2010). The study by Sabry (2009, 2010) indicates that the poverty estimates in the Egyptian urban areas in 2009 was 11 percent. In Cairo, especially the Greater Cairo made up of Giza, Qalyoubia, Helwan and 6th October areas the poverty rate is high because they form parts of the slums/informal settlements in the city. The study also revealed that these areas have the highest rate of malnutrition, where about 16 percent of children were underweight which is much higher than the recorded income poverty rate in urban areas. The study also revealed that the costs of basic non-food needs—such as for housing, transportation, basic education and health, and access to water, sanitation and electricity—are much higher than commonly recognized. In the poor environmental conditions of these slums/informal settlements, the chances of getting ill are high because the public health system in Egypt is severely deteriorated. Poor people rarely find the free medicine that is supposed to be available. Thus, their health expenses are extremely high. Thus, it is not surprising to find that the scale of untreated illnesses in these areas was colossal. Health conditions in the informal settlements are often deplorable because of the lack of access to essential services. For example, connections to the public sanitation networks are missing from entire areas. This means that residents have to pay once or twice a month (at 50-80 LE) just to have their trenches emptied of sewerage. Even when there are water connections in the slums, low pressure makes its supply scarce. Just to be connected to the water network costs an average of 15 LE per month.

CHAPTER 3
METHODOLOGY
3.1. Study Area
The study area is Kwara State, Nigeria. The State was created on the 27th of May 1967. The population of the state is about 3.3million people, based on the 2006 National Population Census. The distribution of this figure by local government and by gender is shown Table 3.1.
Kwara State occupies geographically vantage position on the map of Nigeria. It is situated between Latitudes 110 2‘ and 110 45‘N and between Longitude 20 45‘ and 60 4‘E. It also lies midway between the Northern and Southern parts of Nigeria bounded in the North by Niger State and shares international boundary with the Republic of Benin in the West. To its eastern border is Kogi State; while in the south it shares boundary with the four states of Ekiti, Osun and Oyo. The State is covered by the Sudan and Woody Savanna vegetation with a mean annual rainfall and temperature of 1,338mm/year and 26.50C respectively.
Table 3.1. Population Distribution of Kwara State, 2006 Census
S/No
LGA
Headquarters
Gender
Total
Male
Female
1.
Asa
Afon
64,982
61,453
126,435
2.
Baruteen
Kosubosu
108,153
101,306
209,459
3.
Edu
Lafiagi
104,944
96,525
201,469
4.
Ekiti
Araromi-Opin
28,402
26,448
54,850
5.
Ifelodun
Share
106,056
99,986
206,042
6.
Ilorin East
Oke-Oyi
104,402
99,908
204,691
7.
Ilorin South
Fufu
104,504
104,187
208,691
8.
Ilorin West
Ilorin
181,875
182,791
364,666
9.
Irepodun
Omu-Aran
75,539
73,071
148,610
10.
Isin
Owu Isin
30,833
28,905
59,738
11.
Kaiama
Kaiama
68,240
55,924
124,164
12.
Moro
Bode-Saadu
55,630
53,162
108,792
13.
Offa
Offa
46,266
43,408
89,674
14.
Oke Ero
Ilofa
29,515
28,104
57,619
15.
Oyun
Ilemona
48,601
45,652
94,253
16.
Patigi
Patigi
62,639
49,678
112,317
Total
1,220,581
1,150,508
3,271,089
Source: national Population Commission, Abuja.
3.2. Model for Poverty Analysis
Both qualitative and quantitative methods were used in analyzing the data collected for the study. The qualitative analysis based on content analysis and the perception of the people operating in the urban informal sector was used in determining the causes and consequences of poverty in the urban informal sector of Kwara State. The quantitative method comprised the use of descriptive statistics such as percentile, in describing the socio-demographic characteristics of the respondents and in describing the nature of the urban informal sector of Kwara State. Other quantitative methods used were the household consumption-expenditure

per adult equivalent adopted by Organization for Economic Co-operation and Development (OECD) and the P-alpha class measures of poverty adopted by Foster and others in 1984 in determining the extent of poverty (i.e. the incidence, the depth and the severity of poverty). These methods were in line with most recent works on poverty.
In this study thus, the poverty analysis was based on money–metric measure of utility and welfare. For measure of utility and welfare, total consumption-expenditure of the heads of household operating in the urban informal sector was used as a measure of their welfare and for determining the poverty line. The analysis also took into consideration differences in needs due to the difference in the respondents‘ household size and composition, and therefore used the household consumption- expenditure per adult equivalent as the welfare measure. There are wide choices of adult equivalent scales and different scales used in different countries. The most commonly used is that of the Organization for Economic Co-operation and Development (OECD) because of its simplicity of use and wide familiarity. This scale is expressed as follow:
EXPeq = EXP / n( 0.7) (3.1)
Where:
EXP = total consumption-expenditure of the operators in the urban informal sector
n = household size of the operators in the urban informal sector
0.7 = exponential formation representing other adults in the household of the operators (Glewwe, 1990; Grootaert and Braithwaite, 1998).
A cut–off point was selected to serve as poverty line across the distribution of real household expenditure per adult equivalent. An absolute line such as $1 a day [Purchasing Power Parity (PPP$)] was used in identifying the poor (World Bank 2001).
The next stage in the analysis of poverty in the urban informal sector of Kwara State was the use of the popular P–alpha class of poverty measures introduced by Foster, Greer and Thorbecke in 1984.The index is defined as:
q
P = 1/ n  (z-yi / z)  (3.2)
i=1
Where:
n = number of households in the urban informal sector
q = number of poor households in the urban informal sector
z = poverty line
yi = total consumption – expenditure of individual head of household in the urban informal sector
 = poverty aversion parameter.
The poverty aversion parameter () can take any positive value or zero. The higher the value the more the index weights the situation of the poor households in the urban informal sector i.e. households that are farthest below the poverty line. Of specific interest are the cases where  = 0,1 and 2.

If  = 0 the index becomes:
P0 = q/n (3.3)
which is the simple head count poverty rate, i.e. the number of poor households in the urban informal sector of Kwara State as a percentage of the total population. Although, as a useful first indicator, it fails to pay attention to the depth (or gap) and severity of poverty in the urban informal sector.
To arrive at the depth of poverty and severity of poverty we looked at the extent to which the expenditure of the poor households in the urban informal sector falls below the poverty line. This is customarily expressed as the ―income gap ratio‖ or ―expenditure gap ratio‖ which expresses the average shortfalls as a fraction of the poverty line itself, i.e.:
z – yi/z (3.4)
Where:
yi is the average income or expenditure of the poor households in the sector.
A useful index was obtained when the head count poverty ratio was multiplied by the income or expenditure gap ratio. Thus corresponding to:
P1 = q/n( z-yi/z ) (3.5)
which reflects both the incidence and depth of poverty in the sector. These measures have particularly useful interpretation because they indicate what fraction of the poverty line would have to be contributed by every individual household in the sector to eradicate poverty through transfer under the assumption of perfect targeting.
The severity of poverty index is the mean of the squared proportion of the poverty gap expressed as:
P2 = q/n ( z – yi/z) 2 (3.6)
This index allows for concern about the poverty of the poor households in the sector by attaching greater weight to the poverty of the poorest ones among them than to those just below the line.
3.3. Data Requirements and Sources
In addition to the use of secondary data, a survey aimed at generating primary household data on the measurement of poverty in the urban informal sector of Kwara State was conducted using a structured questionnaire, a Participatory Poverty Assessment method and the P-alpha class measures of poverty. The questionnaire was based on the World Bank Living Standards Measurement Study (LSMS); International Labour Organization‘s Rapid Assessment Surveys of Poverty (RASP); World Bank Household Priority Surveys ( HPSs) and the National Bureau of Statistics‘ National Integrated Surveys on Households (NISHs) methods, which, among other things, provide a comprehensive monetary measure of welfare and its distribution and the description of the patterns of access to and use of social services e.g. education and health care services. The Participatory Poverty Assessment (PPA) method was

used to obtain information from key informants in the urban informal sector on their perception of the causes and consequences of poverty in the sector (Grootaert, 1986; Robb, 2000; NBS, 2008).
3.4. Sample Selection Method
A multi-stage stratified random sampling method was used in the selection of the respondents. To have an unbiased selection of samples the study area was divided into the 16 local government areas in the State. In accordance with these sample units, a structured questionnaire was distributed to about 1000 respondents based on a normal distribution model in the urban informal sector of the State (an average of 60 respondents per local government area). Only 86 per cent of the administered questionnaires were retrieved for analysis.
The issues raised in the questionnaire include the background of the respondents (i.e. age, marital status, educational status, employment status, household size and composition); income; total consumption-expenditure; and access to social services (e.g. health care services and medical attention in case of illness, safe drinking water, healthy and safe environment and education, etc).

CHAPTER 4
DATA ANALYSIS, INTERPRETATION AND DISCUSSION OF RESULT
4.1. Characteristics of the Operators
The socio-demographic characteristics of 856 respondents in the Urban Informal Sector of Kwara State included in the analysis are presented in Table 4.1.
Table 4.1. Socio-demographic Characteristics of the Respondents
Characteristics
Percentage (%)
a..
Gender of the Respondents
Male
36.9
Female
63.1
b.
Age of the Respondents
Below 31
23.1
31- 40
46.5
Above 40
30.4
c.
Marital Status of the Respondents
Single
35.4
Ever Married
64.6
d.
Household Size of the Respondents
1-5
56.5
6-10
13.7
More than 10
29.8
e.
Educational Status of the Respondents
No formal schooling
11.5
Primary Education
14.1
Junior Secondary
12.4
Senior Secondary/Technical School
32.0
Post Secondary 1 (OND/NCE)
15.7
Post Secondary 2 (HND, B.Sc)
13.2
Post Secondary (Master and above)
1.1
Source: Authors‘ computation
The survey conducted on urban informal sector of Kwara State showed that 63.1 per cent of the operators are female while 36.9 per cent are male. It further shows that 23.1 per cent are below 31 years; 46.5 percent is within the 31- 40 years age bracket; and about 30.4 percent were found to be above 40 years. The study shows that 64.6 per cent are married. Operators with 6 household members constitute 56.5 per cent while those with 6-10 household members were found to constitute 13.7 per cent. Operators with more than 10 household members stood at 29.8 per cent.
The minimum year of schooling in Nigeria is nine years, which is equivalent to completed Junior Secondary School. The survey revealed that about 74.4 per cent of the operators had the required minimum years of schooling.

4.2. Nature of the Informal Sector in Kwara State
The salient features of the informal sector in the Kwara State, Nigeria are shown in Table 4.2.
Table 4.2. The Nature of the Informal Sector of Kwara State, Nigeria
Variable
Percentage (%)
a.
Type of informal sector activity
Trading (buying and selling)
24.9
Tailoring/Sewing/Knitting
13.3
Hairdressing
9.4
Manufacturing
8.2
Food Vendor/Catering
6.8
Food processing
3.9
Repair services
12.5
Transportation
8.2
Others
12.8
b.
Ownership Structure of the Business
Self/Sole Proprietorship
81.2
Family Owned
10.9
Partnership
6.3
Others
1.7
c.
Other Type of Work engaged in
Farming
45.9
Government Work
22.2
Other Informal Activities
19.2
Organized Private Sector
6.5
Others
6.3
d.
Nature of Employment
Part time
31.7
Full time
68.3
e.
Reasons for establishing the Business
Lack of employment in formal sector
35.0
To help family members earn more income
35.7
Personal interest
27.2
Others
2.1
f.
Major source of financing Start-up Capital
Inheritance
11.7
Personal savings
49.2
Fund from spouse/relation/friends
26.3
Cooperative Society
6.8
Bank loan
1.8
Government loan (NDE, NAPEP, PAP, etc.)
0.5
Others
3.7
g.
Range of hour of operation per day
1- 8 hours
37.7
Above 8 hours
62.3
h.
Number of Employees
Nil
32.9
1-5
60.4
Above 5
6.7
i.
Number of Apprentice
Nil
12.8
1-5
62.2
6-10
20.9
Above 10
4.1

j.
Number of Apprentice trained since establishing the business
Nil
14.0
1-5
65.6
6-10
12.9
Above 10
7.5
Source: Field Survey.
In terms of single activity, 24.9 percent of the informal sector operators are engaged in trading (buying and selling); followed by tailoring and repair services which accounted for 13.3 and 12.5 per cent respectively. Other activities accounted for 12.8 per cent. The ownership of business as usual in this type of sector is dominated by sole proprietorship, which accounted for 81.2 per cent of the businesses surveyed. The reasons for the dominance of sole proprietorship are; ease of entry and exit; low start-up capital requirement; and no accountability to business regulators.
This study also revealed that in establishing some of the informal sector businesses factors such as lack of employment in formal sector, the desire to help family members earn more income and personal interest determined the establishment of some of the enterprises. Of these factors, 35.7 percent of the operators established their businesses due to the desire to assist family members earn more income, while 35 per cent established the outfits due to lack of employment in the formal sector. Personal interest was responsible for the establishment of 27.2 per cent of the businesses.
The source of finance for start-up capital revealed that 49 per cent of the operators sourced their capital from personal savings. In terms of formality of sources of finance 97.7 per cent of the operators got their start-up capital from the informal financial sector while formal financial sector accounted for only 2.3 per cent. The informal sector of Kwara State was found to provide avenue for training of prospective informal sector operators through the apprenticeship system. It also employs urban semi skilled and unskilled labour as shown in Table 4.2.
The study reveals that 62.3 per cent of the enterprises operate above 8 hours per day. The reason for this may partly be because most of the people operate within their homes. To their clients it is an avenue to reach them any time the need arises and to the operators it allows them to continue to attend to their clients with the long run effect of increasing the supply of goods and services at cheaper rates and increasing their own income and standards of living.
4.3. Result of the Poverty situation in the Urban Informal Sector of Kwara State
This section provides an overview of the poverty situation in the urban informal sector of Kwara State. The analysis of poverty in the sector was first done by estimating the incidence, the depth and the severity of poverty in the urban areas, by gender and by economic activities in the sector. In estimating the poverty indices, this study measures the well-being of individual heads of households (who incidentally are also the operators in the informal sector) by their total consumption-expenditure on non-durable goods and by household size, using the adult equivalent scale formula.
Having established the individual households consumption-expenditure, a cut-off point, which served as the poverty line (using the 2/3 of the mean per capita consumption- expenditure of the whole population which was converted to the World Bank $1 per day) was set at N9,837.66 per month per adult equivalent. From this, the popular P-alpha class of

poverty measures was used in determining the incidence, the depth and the severity of poverty in the urban informal sector of Kwara State. Table 4.1 below provides the estimates of the rate of poverty in the urban informal sector of the State, by gender and by economic activities based on the three (3) measures of poverty: the head count poverty index, the poverty gap (depth) and the severity of poverty index as at November 2010. In the urban areas, the head count poverty index was 0.63, which represent 63 percent of the people in the urban informal sector of Kwara State whose consumption-expenditure level falls below the poverty line (N9,837.66 per month).
Table 4.3: Foster-Greer-Thornbecke (FGT) Poverty Measures for Kwara State.
Source: Authors‘ Computation.
Within the same period, the poverty gap index was 0.42 which represent 42 percent of the extent of shortfall of the average income of the poor from the poverty line. That is, how poor a person is from the poverty line. This gap is referred to as the poor‘s degree of misery. Thus representing the percentage of the expenditure required to bring each individual person that is poor below the poverty line up to the poverty line. The severity of poverty index was 0.28, which represent 28 percent of the poorest of the poor households in the urban informal sector of Kwara State whom policy makers must pay attention to in the State in the distribution of the standards of living indicators such as health care services, clean water, sanitation, food and income generating activities.
No. of Poor Households based on N9,837.00 Poverty Line
Poverty Head Count Index Po
Poverty Gap Index P1
FGT Index P2
Whole State
663
0.63
0.42
0.28
Male
184
0.68
0.44
0.28
Female
235
0.59
0.41
0.28
Informal Sector Activity:
Trading
55
0.36
0.24
0.15
Tailoring/Sowing/Knitting
58
0.67
0.40
0.24
Hair Dressing
43
0.64
0.36
0.20
Manufacturing
27
0.51
0.40
0.32
Food Vendor Services/Catering
34
0.66
0.47
0.34
Food Processing
15
0.71
0.46
0.29
Repair Services
60
0.72
0.49
0.33
Transportation
26
0.52
0.40
0.32
Others
36
0.54
0.37
0.25

By gender, the study revealed that 68 percent of those that are poor in the sector are male. Of all the economic activities in the sector 72 percent of the poor are mostly found in the repair services activities of the sector.
Generally thus, the use of these three (3) measures of poverty clearly indicates that the rate of poverty in the urban informal sector of Kwara State is relatively high when compared with the total percentage of the people that are poor in Nigeria [(64 percent as provided by the African Development Bank in 2004 (see ADB, 2010)].

CHAPTER FIVE
CONCLUSION AND RECOMMENDATIONS
An empirical analysis of the rate of poverty in the urban informal sector of Kwara State was carried out using a set of household data and the P-alpha class poverty measure. The result of the analysis indicates that the rate of poverty in the urban informal sector of Kwara State is high with 63 percent of the operators‘ consumption-expenditure per adult equivalent falling below the poverty line of N9, 837.66 per month. The poverty gap index was 0.42 and the severity of poverty index stood at 0.28.
Drawn from the result, to address the poverty situation in the sector, there is the need to look at the challenges raised by the poor operating in the sector. First is that the government especially the local government authorities should recognize the contribution of the operators in the sector to the economic development of Kwara State and to also see them as partners in development than nuisance. The incessant displacement, demolition, arrest and harassment of the operators by the police and the local law enforcement agencies; and the incessant increase in trading fees that are inimical to entrepreneurial development, as well as to the improvement of their wellbeing should also be addressed. A situation where operators are displaced and their shops are demolished without compensation and alternative locations is detrimental to entrepreneurial development and improvement in the wellbeing of the operators.
The operators in the urban informal sector of Kwara State should resort to self help/communal assistance and the tenets of social capital since the governments over time have failed to recognize the operators as partners in development and in providing social services to the people. With self help the efforts of the operators would be frequently geared toward changing the critical situations they found themselves in and in influencing their political and social conditions, such as securing freedom for themselves. With self help there is also the conviction that their efforts or the efforts resulting from the solidarity of the group would be a decisive factor in the formation of a feeling of self-esteem. With self help the operator‘s own resources in the form of labour, capital, land and skills would also be used for the upliftment of their standard of living. On the other hand, social capital often referred to as norms and social relations, when embedded in the social structures of the operators in the urban informal sector would enable them coordinate actions or act collectively in order to achieve their desired goals, key among them is the upliftment of their standard of living.
The government should also address some of the critical infrastructure challenges the operators are facing. First, there should be regular supply of electricity and safe water which are important to the operation of businesses in the sector and to the live of the people operating within the sector. Second, government should also assist in the provision of credit facilities at the micro level and the provision of micro insurance facilities to serve as coping measure in case of unforeseen situations. For the purpose of efficient disbursement of the credit facilities the government can make use of trade associations and cooperative societies the operators belong to.
Finally and critical too is the involvement of the operators in the urban informal sector in activities that affect their lives and the fight against corruption. Their involvement for instance, would allow for proper representation, adequate information flow, consultation,

negotiation, mediation and commitment on the part of the people. The fight against corruption would guide against the diversion of funds and material resources that are meant for the development of the sector and the communities where they operate.

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