The NBS reports that 84% of the Nigerian working class is self-employed.

The National Bureau of Statistics (NBS) has revealed that 84% of the Nigerian working class were self-employed in the first quarter of 2024, down from 87.3% recorded in the third quarter of 2023.

This is according to the NBS’s first quarter 2024 report on the Nigeria Labour Force Survey (NLFS).

The report shows a 3.3 percentage point drop in the self-employment rate, reflecting changes in the labour market.

The report also noted a modest 3.3 percentage point increase in employment in Q1 2024 to 16.0% from 12.7% in Q3 2023, meaning more Nigerians were in traditional, salaried positions by early 2024. This reflects a modest but positive change in the employment landscape, indicating a slow but steady absorption of the workforce into more formal employment sectors.

More self-employed Nigerians in rural areas

The report notes that the self-employment rate has declined in both rural and urban areas. In rural areas, the self-employment rate fell from 93.7% in Q3 2023 to 91.9% in Q1 2024, a decline of 1.8 percentage points.

In urban areas, the rate fell from 80.7% to 78.2%, a decrease of 2.5 percentage points.

The figures reflect a gradual decline in the number of self-employed people across the country, potentially due to improved employment options or the challenges small business owners face in keeping their businesses afloat.

Self-employment is dominant among women

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

These figures indicate that while both men and women have seen a decline in self-employment, the decline has been slightly greater for men, possibly due to greater access to full-time employment opportunities in some sectors.

According to the report, “The percentage of self-employed people decreased from 86% in Q1 2023 to 84% in Q1 2024. The survey results reveal an increase in the percentage of people employed, engaged primarily as employees, between Q1 2024 (16.0%) and Q3 2023 (12.7%). The self-employment rate among women was 87.9%, and among men 79.9%. Breaking down by place of residence, the self-employment rate in rural areas was 91.9%, and in urban areas 78.2%.

High level of informal employment in Nigeria

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

This represents a slight increase from the 92.3% recorded in the third quarter of 2023, an increase of 0.4 points. Informal employment, which includes work that is not regulated by formal labor laws and lacks social protection, remains a dominant feature of the Nigerian labor market.

The report also shows that rural areas have a higher rate of informal employment (97.6%) compared to urban regions (89.0%). This difference can be attributed to the structure of rural economies, which are dominated by agricultural and small businesses, offering little access to formal employment opportunities.

Urban areas, although more diverse, still record significant proportions of informal workers, reflecting the challenges of finding formal employment in Nigeria’s urban centres.

Education level also plays a key role in determining the likelihood of informal employment. Those with little or no education are much more likely to be in informal employment, with 98.8% of those with no formal education working in the informal sector. This figure drops significantly for those with postgraduate education, to 67.6%.

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

More observations

Overall, the report highlights a slight trend away from self-employment as a key aspect of the Nigerian economy.

With the country’s unemployment rate rising from 5.0% in the third quarter of 2023 to 5.3% in the first quarter of 2024, the decline in self-employment rates could indicate a growing preference for salaried employment or challenges in the informal sector.

However, self-employment continues to be a vital alternative for millions of Nigerians seeking income-generating opportunities, especially in rural areas.