With more funding and deliberate financial inclusion policies by the federal and state governments as well as the private sector, there is a tendency for the informal sector to thrive in the post-COVID era.
This was part of a discussion by key finance sector players and the media recently, as they urged governments to improve on the structures for financial inclusion, financial education, grants and loans to artisans and Micro, Small and Medium-scale Enterprises (MSMEs).
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During the webinar with the theme, ‘Securing our Informal Economy amidst a Post-COVID Reality’, the participants held that there was the need for urgent action at a time when the informal sector accounts for about 65 per cent of the entire economy, indicating that it bore a huge part of the effects of the COVID-19 since 2020.
These include lockdowns, border closures, which culminated in an economic recession that widened poverty gaps, increased inflation and unemployment rate.
As of the fourth quarter of 2020, data from the National Bureau of Statistics (NBS) showed that 23.2 million Nigerians were unemployed, representing a 6.2% increase from the 27.1% recorded in the second quarter of 2020.
According to the February 2021 statistics from NBS, the inflation rate jumped to 21.79%, being the highest recorded in over 15 years.
The Executive Director, Micro Enterprises at the Bank of Industry (BOI), Ms Toyin Adeniji, highlighted some BOI interventions, like reducing interest rates by two per cent among others.
She said existing initiatives like the Government’s Economic Empowerment Programme (GEEP) served as a channel for effective targeting of some of these interventions.
A private-sector operator and CEO of Bankly, Ms Tomi Adejana, said digitization, collaboration and data are key in securing the informal sector. She said Bankly, a digital solution, helped users to fall back to their savings during the pandemic peak in 2020 while shielding them from fraud, giving them insurance coverage and access to the formal sector.
Dr Godwin Ehigiamusoe, a former CEO, LAPO Microfinance Bank, said learning from the COVID-19 effects, there should be an institutionalised platform for government’s interventions focusing on both MSMEs access to credit and areas like micro-insurance for healthcare, educational support, both of which require huge expenditure from lean financial resources by households.
The Chief Impact Officer, Rendra Foundation, Ms Onyeka Akpaida, said the pandemic affected more women in the informal sector.
The event moderator and Policy Lead, Sustainable and Inclusive Digital Financial Services initiative (SIDFS), Prof. Olawale Ajai, said interventions for the informal sector should focus both on financial inclusion and economic inclusion as they present an opportunity to fast track development with good policies.
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