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Informal Sector as a Source of Employment in Intermediate Town. A Case Study of
Eldoret Town.
By
Peris C. Korir
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.