NBS says 84% of working-class Nigerians are self-employed 

The National Bureau of Statistics (NBS) has disclosed that 84% of Nigeria’s working-class population is self-employed in the first quarter of 2024, reflecting a decrease from the 87.3% recorded in Q3 2023.

This is according to the Nigeria Labour Force Survey (NLFS) Q1 2024 report by the NBS.

The report indicates a decline of 3.3%-points in the self-employment rate, highlighting a shift within the labor market.

Also, the report noted a slight increase of 3.3%-points in wage employment in Q1 2024 to 16.0%, from 12.7% in Q3 2023, which means that more Nigerians got traditional salary paying jobs by early 2024. It reflects a modest but positive change in the employment landscape, indicating a slow but steady workforce absorption into more formal employment sectors.

The report notes that the self-employment rate has also decreased in both rural and urban areas. In rural regions, the self-employment rate fell from 93.7% in Q3 2023 to 91.9% in Q1 2024, marking a 1.8%-point decline.

In urban areas, the rate dropped from 80.7% to 78.2%, indicating a 2.5 percentage point decrease.

These figures reflect a gradual reduction in self-employment across the country, potentially due to improvements in wage employment options or challenges faced by small business owners in sustaining operations.

The report also highlights a gender-based decline in self-employment rates. The percentage of self-employed women decreased by 2.3%-points, from 90.2% in Q3 2023 to 87.9% in Q1 2024. Among men, self-employment dropped by 3%-points, from 82.9% to 79.9% during the same period.

These figures suggest that while both men and women experienced a decline in self-employment, men saw a slightly larger reduction, possibly due to greater access to wage employment opportunities in certain sectors.

According to the report, “The proportion of persons in self-employment declined from 86% in Q1 2023 to 84% in Q1 2024. Survey findings reveal an increase in the share of employed persons primarily engaged as employees between Q1 2024 (16.0%) and Q3 2023(12.7%). The self-employment rate among females was 87.9% while males was 79.9%. Disaggregation by place of residence, the rate of self-employed persons in rural areas was 91.9% and 78.2% in urban areas.” 

Nigeria continues to grapple with a high rate of informal employment. According to the NBS report, 92.7% of the country’s employed population is engaged in informal work.

This represents a marginal increase from the 92.3% recorded in Q3 2023, showing a rise of 0.4-points. Informal employment, which includes jobs that are not regulated by formal labor laws and lack social protections, remains a dominant feature of Nigeria’s labor market.

The report further indicates that rural areas exhibit a higher rate of informal employment (97.6%) compared to urban regions (89.0%). This gap can be attributed to the structure of rural economies, where agricultural and small-scale enterprises dominate, offering little access to formal employment opportunities.

Urban areas, while more diversified, still see a significant proportion of informal workers, reflecting the challenges of securing formal jobs in Nigeria’s urban centers.

Educational attainment also plays a critical role in determining the likelihood of informal employment. Individuals with little to no education are much more likely to be employed informally, with 98.8% of those without formal education working in the informal sector. This rate drops significantly for those with post-secondary education, at 67.6%.

This trend suggests that improving access to education could be key in reducing the prevalence of informal employment in Nigeria, where job security and protections are limited for the vast majority of the workforce .

Overall, the report highlights a slight shift away from self-employment as a critical aspect of Nigeria’s economy.

With the country’s unemployment rate rising from 5.0% in Q3 2023 to 5.3% in Q1 2024, the decline in self-employment rates may indicate a growing preference for wage employment or challenges in the informal sector.

However, self-employment continues to serve as a vital alternative for millions of Nigerians seeking economic opportunities, particularly in rural areas.