Informal Sector as a Source of Employment in Intermediate Town. A Case Study of Eldoret Town.

Problems of unemployment have become rampant in the world today.  The worst hit, however, are the Third World countries.  Kenya, like the rest of these countries, faces a lot of unemployment problems so that the need to create or encourage alternative sources of employment is urgent.

Basing its argument on this fact, this study focuses on the role of the informal sector, (a sector that has suffered a number of setbacks), in creating additional employment.  This study was justified on the grounds that modern (formal) sector can no longer provide sufficient employment opportunities to the growing labor force and the need therefore to examine the potentiality of the informal sector in providing additional employment opportunities.  The focus is on intermediate towns where limited studies on informal sector have been carried out.

Using Eldoret Town as the study area, the study aimed first, at, determining the employment opportunities that exist in the informal sector, more so on which sub-sector offers greater employment opportunities. To do this, it was necessary to determine first the type of informal sector activities together with the characteristics associated with them.  It was also necessary to examine the prevailing physical, social and economic conditions of the study area because they do affect the development of the sector. The study also aimed at establishing the incomes accruing from the informal sector employment with a view to establishing whether these incomes allow the entrepreneurs to meet their basic needs save and invest.  These factors are important in as far as generation of more employment is concerned.

The last objective of the study was that of establishing the constraining factors faced by the sector and in the light of this suggest solutions and recommendations.  Using both primary and secondary data, and employing descriptive analytical methods, the following findings were arrived at:  that a variety of informal sector activities exist in the study area with prevailing characteristics comparing well with those of larger urban centers:  that employment opportunities exist in the informal sector with manufacturing sub-sector showing greater potential:  that though informal sector operators  earn reasonable incomes (on the basis that on average their incomes are well above the minimum) their savings are relatively low:  that a high percentage of informal sector incomes are devoted to meeting basic needs and the profits reinvested back into business is thus low.  This, it was concluded, lowers the potential of generating more employment.  This is compounded by the constraining factors especially lack of and lack of demand.

The solutions proposed therefore include the need to assist this sector through provision of an enabling legal environment, provision of credit facilities, creation of more markets, provision of infrastructural facilities and the overall need for a coordinated process of planning for these activities.  In so doing, the productivity of the sector would be enhanced leading to higher incomes and therefore more employment opportunities.

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