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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


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


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


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 19th 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


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


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

non-metallic 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


Source: National Bureau of Statistics (NBS)


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

been weakened by several policies and programmes such as Structural Adjustment

Programmes (SAP), while others like Vocational Skills Development (VSD),

Small Scale Enterprises (SSE), and Family Support Programmes (FSP) among

others have promoted the proliferation 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

sustain their livelihood. The informal sector consists of very small scale economic

activities. This accounts for substantial and increasing share of urban employment

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

livelihood. The sector has been playing a vital role in urban economic

development of Nigeria (Abolade, 2012).

The wellbeing of individuals and household in urban areas in Nigeria is dependent on their



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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and Regional Planning Ladoke Akintola University of Technology Ogbomosho,

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Ajah E. O (2016), Emerging Nigerian Megacities and Sustainable Development: Case Study

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1913-9063 E-ISSN 1913-9071

Bloch R., Fox S., Monroy J., and Ojo A. (2015) Urbanisation and Urban Expansion in

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Draft Final Report Abuja

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almost four decades of research. Centre for Regional & Urban Innovation and

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Ikporukpo (eds) Rex Charles Publication Ibadan

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