Determinants of Private Investment in the Informal Sector of Urban Areas in Nigeria

Abstract

The increasing importance of informal economy in entrepreneurship development, job creation and improvement in the overall social welfare of the people has been widely acknowledged in literature. This article presents various enterprise compositions and private investment in the informal economy in an urban center of a developing country. Ilorin metropolis in Nigeria was chosen as the study area due to the high concentration, high growth rate and economic significance of these activities. The level of business capitals, which form part of the private investment volume, play vital roles in the survival and growth rate of any business venture, hence the output and income earnings from business. The cross sectional data were collected from a field survey through a structured questionnaire administered to 500 informal entrepreneurs. Out of these, 482 questionnaires were retrieved and analyzed. The data was presented and explained using tables, percentages, mean scores, and median and standard deviations using the EViews 9 statistical package. The coding structure of the questionnaire and spreadsheet of the raw data collected have been made accessible in order to ensure more comprehensive investigation for further studies. Contribution/Originality: The informal sector plays a critical role in the economic landscape of most developing countries, especially in Nigeria. Previous studies on private investment determination focused more on the formal sector. This study contributes to the existing literature by empirically identifying the various determinants of private investment within the purview of informal economy.

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