Abstract

The concept of Economic growth can be accompanied by an increase in informal employment. Informality may support growth by reducing labor cost and improving competitiveness. However, a well-functioning and regulated informal economy will be a critical prerequisite to achieve sustainable growth. And also, a widespread informality with regard to employment, enterprise and productive activities is frequently perceived as a barrier to full participation in the economy and as a hindrance to long-run economic development and poverty alleviation. This is because the link between, informality, poverty alleviation and growth is not fully understood. This paper seeks to investigate the Relationship between informal financial sector activities and poverty alleviation in Nigeria. A multivariate panel data approach was used with data from 150 informal sector operators in Gwagwalada area council-FCT. Data was collected using structured questionnaire and analyzed with appropriate technique in order to identify the perception of socio-economic impact of Informal sectors on poverty alleviation in Nigeria. The findings revealed that informal financial sector operators has a positive and significant impact on poverty alleviation in Nigeria; while poverty-mentality, illiteracy, high inflation, low infrastructure, access to credit, social safety nets and information dissemination are the major problems encountered by these institutions. The paper recommends among other things the education of the rural poor to embark on viable projects, infrastructural development and favorable government policies so as to make the sector becomes relevant.