Sociology Program,
Department of Sociology/Psychology/Criminology & Security Studies,
Faculty of Management and Social Sciences,
Alex Ekwueme Federal University Ndufu Alike Ikwo.

Urban areas are strategic sites for the management of the Nigerian economy and the
production of the most advanced services and financial operations that have become key
inputs for the country’s economic operations. On peripheral capitalism the foundation of the
Nigerian urban economy stand, this mode of production consists of two interrelated parts: a
capitalist sector integrated into the world economy, and a range of petty capitalist forms of
production oriented more towards the domestic economy (i.e formal and informal). Nigerian
urban economy has been greatly influenced by the forces of state creation (state capitals) and
industrialization. Therefore, discuss on the urban mode of production or economy is a
reflection of the Nigerian Economy.
Keywords: urban, urban economy, mode of production, Nigeria, etc.
The World today might safely be described as an ‘urban planet’ and her citizens as homo

urbanis (Whitehouse, 2005). More than half of the world population (54%) is already
living in urban settlements (UN, 2014). Urban areas are centers of economic production and
consumption, arenas of social networks and cultural activities, and the seat of government
and administration (M. Pacione, 2009). Cities all over the world have remained the creators

of economic wealth, generating over 70 per cent of the world’s Gross Domestic Product (UN
Habitat for a better urban future, 2017). The economies of cities in Nigeria are reflections of
the country’s economy. Most industries and businesses are located in or within the urban
areas, providing its residents with job opportunities and high standard of living. Because most
employment opportunities are within urban areas, cities attract large parts of the country’s
development projects, industries, job seeking population and investors.
With a growth rate of 20-30%, many Nigerian cities now have populations of more
than 500,000, with some such as Ibadan, Kano, Port Harcourt, Kaduna, Benin and
Maiduguri being up to 1 million and above. Ibadan and Kano in particular are near to 5
million (UNDP, 2003). Much of this growth is found in the 36 state capitals where
there are huge government presences. The spatial growth of Lagos actually rose from
3.97km2 in 1866 to about 1000km2 in 2006, yielding a density of 10,000 to 15,000
persons/km2. This large population has been sustained by the informal sector that accounts for
more than 70% of the urban economy (UNDP, 2000). The UN Habitat programme manager
in Nigeria, Prof. Johnson Falade in 2010 stated that 56 million (70%) of the country’s urban

dwellers live in slums, with 54% of the population bellow poverty level. While Lagos and
many of these cities grow naturally out of small settlements, Abuja was deliberately
designed and built to correct the ills found in these other urban centres (Ajah E. O,
Urban economy in Nigeria has a long history, ranging from the pre-colonial, colonial and post
colonial periods. In the 19th and 20th centuries, there existed a concentration of economic and
administrative decision-making in Lagos, Ibadan, Kaduna, Jos, and Enugu, and high degree
of specialization, larger population associated with greater specialization of goods and
services (Bloch R. et al, 2015).


There is growing official acknowledgement that cities are the engines of growth in most
economies in both industrialized and developing countries, therefore is a subject of national
and macro-economic importance as it generate over 80 percent of global GDP and over 60
percent of GDP in most countries. The 17th century German saying that “city air makes men
free” was not just a statement about politics, but also about economic and cultural
As Nigeria economy become more urban, generating both value and opportunities, urban
economies are creating wider and wider ranges of choice. This process is the essence of

social transformation. The urban economy, therefore, is the site not just of economic
transformation but also political and cultural change as well.
The performance of the Nigerian urban economy does not depend solely on economic factors.
The availability and condition of infrastructure at the city level, for example in Lagos, affects
the costs of production and the profitability of many manufacturing enterprises and service
sectors. Similarly, the economic costs of different spatial forms of the city, including density,
scale, centralities, and absolute spatial area, affect both the costs of land and different
economic activities. These spatial forms also generate specific forms of congestion and
pollution, also these patterns of spatial and social exclusion may encourage crime.
Urban Area
What constitutes an ‘urban’ area is conceptually and practically ambiguous as there is no
universal standard. Indicative considerations include population size, density, administrative
status and employment composition, amongst others. In Nigeria, urban area refers to a
heterogeneous settlement with population of 20,000 or more inhabitants and characterized by


predominantly non-agricultural activities and the presence of sizeable modern social
infrastructure (Ezeani, 2001).

Anugwom (2000) defined an urban area as a geographical area with a conglomerate of
different people from diverse backgrounds with different and often conflicting cultures. It is a
place distinguished most fundamentally by its functions (Ukwu, 1984). Urban areas in
Nigeria includes, Lagos, Abuja, Benin City, Ibadan, Kano, Port Harcourt, Aba, Enugu,
Ikorodu, Ilorin, Jos, Kaduna, Maiduguri, Nnewi, Onitsha, Oshogbo, Owerri, Uyo, Warri,
Zaria, Abakaliki, Abeokuta, Ado-Ekiti, Akure, Bauchi, Calabar, Gboko, Gombe, Igbidu,
Katsina, Lokoja, Minna, Ogbomosho, Okene, Ondo, Oyo, Sokoto, Umuahia (United Nations,
Urban Economy
Urban economy refers to the mode of production, distribution, or trade, and consumption of
goods and services in cities. In its broadest sense, urban economy emphasizes the practices,
discourses, and material expressions associated with the production, use, and management of
resources in urban areas.
Urban economy also include the economic study (analysis) of cities with special emphasis on
housing, transportation, land use, cost and benefit of cities and urbanization, or the provision
of local public goods like education.
Prior to the penetration of European powers in the second half of the 19 th and the early 20th
centuries, the urban economy in Nigeria had been developing since the early mediaeval
period (circa 7th Century) and was particularly evident in the north of the country
(Mabogunje 1965). This system was oriented around trans-Saharan trade. The Hausa States


and the Kanem Empire, centred on Borno, were part of a trade network stretching across the
Sudan region northwards to the ports of North Africa and on to Europe.
Urban economy also developed in the south-western Yoruba part of the country at around the
same time. These towns developed originally as a result of Yoruba colonisation, rather as a
consequence of long distance trade, but soon became trading centres themselves (Mabogunje,
1965). The colonial period transformed the urban economy by changing the pattern of
distribution of towns in the country (Fourchard, 2003). New towns emerged as administrative
headquarters (such as Kaduna and Nsukka), while others were fostered as industrial centres
(Jos and Enugu for instance). This was particularly visible in the southeast of the country.
Previous to British rule, urbanisation tended to concentrate in the north and southwest, and
the southeast had a predominant rural character (Abumere, 1994). The colonial powers
encouraged the urbanisation of southeastern Nigeria, through the creation of four major cities
for the processing and export of raw materials: Port Harcourt, Aba, Enugu and Owerri.
The economy of cities in Nigeria is based on peripheral capitalism. This mode of production
consists of two interrelated parts: a capitalist sector integrated into the world economy, and a
range of petty capitalist forms of production oriented more towards the domestic economy

(Michael Pacione, 2009). Chant (1999) divided the urban economy into formal and informal
sectors. The informal sector includes that part of urban economy beyond official recognition
and record which performs productive, useful and necessary labour without formal systems
of control and remuneration. Informal sectors activities in Nigeria constitute a major part of
the urban economy and in some quarters the sector is known as black economy (Michael
Pacione, 2009). The formal sector is the opposite of informal sector, it encompasses all jobs
with normal hours and regular wages, and are recognized as income sources on which income

taxes must be paid. According to National Bureau of Statistics (NBS) in 2015 Nigeria’s Gross
Domestic Product (GDP) received a 58.82% boost from the formal sector, making it a larger
contributor to the economy compared to inputs from the informal sector, which gave 41.43%.
According to the sector-by-sector breakdown of GDP figures, the oil refining industry topped
the formal sector contribution to the GDP with 100% value, while the informal sector gave
00.0 % contribution to the GDP under the period in review.
On the manufacturing side, the formal sector again accounted for 100% contribution to the
GDP, while the informal sector gave 00.0% in the same period under review.
The textile industry under the formal sector contributed 72.1% to the GDP, while the informal
sector contributed 27.9% to the GDP under the same period.
Also in the electricity, gas and water supply sectors, the formal sector led by contributing

100% each to the nation’s economy, while the informal sector gave 0.0%. On the nonmetallic product range, the informal sector contributed 0.0% under same period in review.
On rail transportation contribution to the GDP, the informal sector made 0.0% contribution to
the GDP in 2015, while the formal sector accounted for 100% of the GDP in the rail transport
Below is the full analysis of the formal and informal sectors and their contribution to the
Nigerian urban economy.


Source: National Bureau of Statistics (NBS)

Nigeria has the largest urban informal sector in Africa, a predominance that stems from its
massive population of 153,9 million, and decades of poor economic performance denoted by

a high unemployment rate of 12.9% and soaring poverty incidence of up to 54% (CBN,
2009). An estimate in the year 2000 by Schneider (2002) put the size of Nigeria’s informal
sector at 57.9% of its gross national product (GNP) or an equivalent of US$212,6 billion. The
‘informal sector’ nomenclature first entered the Nigerian urban labour market discourse in
1975 with the publication of the ILO Working Paper titled Urban development, income

distribution, and employment in Lagos undertaken by Olanrewaju J. Fapohunda, Mein Pieter
van Dijk, and Jap Reijmerink (Onyebueke V. & Geyer M, 2011).
Again, the capacity to generate employments in the urban formal sector has continuously



by several policies and programmes such as Structural Adjustment





Scale Enterprises







like Vocational






Programmes (FSP) among

of informal enterprises. This was equally

acknowledged by ILO JASPA (1991) in a remark that workers, in informal enterprises
are concentrated in the urban areas because the cut in government expenditure posit a
great deal of repercussion in the urban employment situation. Sequel to this, majority of
the retrenched urban work force switched over to informal enterprises in order to



The informal sector consists of very small scale economic

activities. This accounts for substantial and increasing





Nigeria where a large majority of the urban poor depend on such activities for their

livelihood. The sector







in urban economic

development of Nigeria (Abolade, 2012).
The wellbeing of individuals and household in urban areas in Nigeria is dependent on their
position within this dual sector urban economy.


From the fore-going, good urban economy is required for the modernizing or developing
economies. Therefore, the ruling class, modernizing elites and the entire populace of the
country should strive for the actualization of the human development index, economic
progress and a sustainable development in the Nigerian cities.
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