Developing a Framework for Measuring the Informal Economy in Nigerian States

Accurate measurement of the informal economy is essential for understanding national economic output, designing tax policy, and targeting regulatory reform, and developing a professional measurement framework adapted to Nigerian state data environments addresses a critical statistical gap. This study developed an informal economy measurement framework for application across Nigerian states, drawing on comparative review of informal economy measurement methodologies (MIMIC, currency demand, enterprise survey, and light-of-night satellite approaches), consultations with 20 NBS officials and 10 informal economy research specialists, and pilot application in Oyo and Kaduna States. Assessment confirmed that official GDP estimates undercount the informal economy by an estimated 35 to 45 percent in the two pilot states based on preliminary triangulation. The framework developed specifies a hybrid measurement approach combining enterprise surveys, household expenditure surveys, and satellite nighttime light calibration. State-level data collection instruments, estimation procedures, and uncertainty quantification methods are provided. Expert review by eight statistical and economic measurement specialists confirmed the framework's methodological rigour. Recommendations include NBS incorporating the framework into its national accounts methodology review, establishing state statistical agencies in states lacking them, funding biennial informal economy measurement exercises, and publishing informal economy estimates as part of official national accounts.

Keywords: informal economy measurement, Nigerian states, MIMIC model, national accounts, statistical methodology