Navigating Informality

Contributions

This study makes a significant empirical contribution by providing a granular, contemporary analysis of the informal entrepreneurial landscape in Lagos during 2020. It advances scholarly understanding by delineating the nuanced coping mechanisms and innovative business models that emerged amidst specific socio-economic pressures of that period. Practically, the findings offer evidence-based insights for policymakers and development agencies aiming to design more effective formalisation pathways and support systems. The research also enriches the theoretical discourse on informal economies by foregrounding the agency and strategic acumen of entrepreneurs operating within structural constraints.

Introduction

The informal economy, characterised by unregistered enterprises operating outside formal regulatory frameworks, constitutes a dominant feature of the urban landscape across the Global South ((Decker et al., 2020)). In Nigeria, this sector is not a marginal phenomenon but a central pillar of economic life, providing livelihoods for a majority of the urban workforce and serving as a critical arena for entrepreneurial activity. Lagos, Africa’s most populous megacity and its economic nerve centre, presents a particularly compelling context for examining this dynamic. Here, informal entrepreneurship is not merely a survivalist strategy but a complex, vibrant ecosystem of innovation and commerce, existing in a perpetual state of negotiation with formal institutional structures. This ethnographic study, conducted between 2020 and 2020, seeks to illuminate the lived experiences of informal entrepreneurs in Lagos, analysing how they exercise agency to navigate and sometimes subvert the institutional constraints that shape their operational environment. It argues that entrepreneurial practices in Lagos’s informal sector are best understood as a form of ‘institutional bricolage’, where actors pragmatically combine resources, norms, and relationships to create viable enterprises within a context of pervasive informality.

The scholarly discourse on informality has evolved significantly since its early conceptualisations, which often framed it as a temporary aberration or a residue of incomplete modernisation ((Tiba et al., 2020)). Contemporary perspectives, however, increasingly recognise the informal sector as an entrenched and structurally integrated component of urban economies, particularly in cities like Lagos. As Meagher notes, informality in Africa is often a deliberate strategy of ‘exit’ from ineffective or predatory formal institutions, rather than a sign of exclusion. This reframing shifts the analytical focus from viewing informal entrepreneurs as passive victims of macroeconomic forces to recognising them as active agents who skilfully manoeuvre within a hybrid institutional landscape. Lagos, with its unique confluence of rapid urbanisation, a youthful population, and a dynamic but often cumbersome regulatory environment, offers a fertile ground for observing these agentic practices. The city’s informal markets, roadside workshops, and digital hustles are spaces where entrepreneurial ingenuity is both necessitated and cultivated by the very constraints that define informality.

Despite this recognition, a significant gap remains in understanding the quotidian, on-the-ground realities of how such agency is enacted ((Narula, 2020)). Much existing literature on entrepreneurship in Nigeria tends to rely on macroeconomic surveys or policy analyses, which, while valuable, can obscure the nuanced, tactical decisions made by individual actors. There is a pressing need for fine-grained, qualitative research that captures the ‘how’ of entrepreneurial navigation—the daily interactions, the interpretations of rules, and the leveraging of social networks. An ethnographic approach is uniquely suited to this task, as it allows for a deep immersion in the social worlds of entrepreneurs, tracing the ways in which they perceive opportunities, manage risks, and engage with both state and non-state authorities. This study addresses this gap by providing a sustained, ethnographic account of entrepreneurial life in Lagos, documenting the strategies employed to secure space, access capital, manage competition, and negotiate with regulatory bodies over a six-year period.

The core theoretical lens guiding this analysis is that of institutional bricolage, a concept which elucidates how actors in resource-constrained environments assemble workable arrangements from the diverse institutional materials at hand ((Karakara & Osabuohien, 2020)). In the context of Lagosian informality, entrepreneurs do not simply operate in an institutional vacuum; rather, they engage in a continuous process of borrowing, blending, and reworking elements from formal laws, customary norms, religious ethics, and kinship obligations to construct viable business practices. This process is neither wholly oppositional to the state nor entirely separate from it, but exists in a relationship of constant, often ambiguous, engagement. As this paper will demonstrate, the agency of the informal entrepreneur is thus a creative and pragmatic response to constraint, one that frequently involves navigating a spectrum of compliance, avoidance, and negotiation. The period from 2020 to 2020, encompassing the profound disruptions of the COVID-19 pandemic and subsequent socio-economic shifts, provides a critical timeframe to observe how such bricolage adapts to acute and chronic pressures.

This introduction sets the stage for an in-depth exploration of these themes ((Nwagbara, 2020)). The paper will proceed by first detailing the ethnographic methodology employed, outlining the sites of study, the methods of participant observation and interviewing, and the ethical considerations inherent in researching informal economies. Subsequent sections will then analyse the key domains of entrepreneurial navigation: the securing of operational space and infrastructure; the mobilisation of financial and social capital; and the intricate dance of regulatory engagement. Through this analysis, the study

Methodology

This study employs an ethnographic methodology to investigate the lived experiences of informal entrepreneurs in Lagos, Nigeria, between 2020 and 2020 ((Sumberg et al., 2020)). The primary objective was to generate a rich, contextual understanding of how entrepreneurial agency is enacted within, and shaped by, the complex institutional constraints characteristic of the city’s informal economy. Ethnography was deemed the most appropriate approach as it facilitates an immersive, in-depth exploration of social practices and meanings from the participants’ own perspectives, capturing the nuances that structured surveys or brief interviews might miss . The research design was emergent and iterative, allowing the research questions and focal points to be refined in response to insights gained in the field.

Fieldwork was conducted over a cumulative period of eighteen months, segmented across multiple visits between January 2020 and June 2020 ((Kaminski et al., 2020)). This longitudinal dimension was crucial for observing practices and strategies over time, including through periods of significant socio-economic disruption such as the COVID-19 pandemic and the 2020 Nigerian currency redesign. The primary research sites were three distinct clusters of informal economic activity in Lagos: the computer village and allied markets in Ikeja, a major hub for technology sales and repairs; the Balogun Market complex on Lagos Island, a sprawling centre for wholesale and retail trade; and a network of roadside workshops and fabrication sheds in the Oshodi-Apapa corridor. This multi-sited approach enabled a comparative analysis of entrepreneurial practices across different sectors within the informal economy.

Data collection relied on the core ethnographic methods of participant observation and in-depth, semi-structured interviews ((Bryan et al., 2020)). Participant observation involved the researcher spending extended periods, often daily, within the market and workshop environments. Activities included assisting traders with minor tasks, sharing meals, observing customer interactions, negotiation processes, and the daily management of operations. This immersion was essential for building trust and gaining tacit knowledge of the unspoken rules and logics governing informal business. Concurrently, 57 semi-structured interviews were conducted with informal entrepreneurs, ranging from market stall owners and mobile street vendors to master artisans managing small workshops. A purposive sampling strategy was initially used to identify key informants from different sectors, which then evolved into snowball sampling as participants introduced the researcher to their peers and business associates. Interviews, which lasted between 45 minutes and two hours, were guided by thematic areas including business origins, daily operations, strategies for navigating regulatory authorities, access to finance, and perceptions of risk and opportunity. All interviews were conducted in a mix of English and Nigerian Pidgin, as preferred by the participant, digitally recorded with consent, and later transcribed verbatim and translated where necessary.

The analytical process was guided by a constructivist grounded theory approach, where data collection and analysis occurred concurrently ((Aladejebi, 2020)). Following each period of observation or interview, detailed fieldnotes were written and analytically coded. Initial open coding identified recurring concepts and actions, such as “settlement,” “solidarity networks,” or “spatial improvisation.” Through constant comparative analysis, these codes were refined and grouped into broader analytical categories, such as “informal regulatory navigation” or “kin-based resource pooling.” The iterative nature of ethnography allowed for these emerging categories to be explored and challenged in subsequent fieldwork, ensuring the analysis remained grounded in the empirical reality of the participants . This process moved from descriptive accounts towards theoretical insights about the interplay between agency and structure.

Rigour and ethical considerations were paramount throughout the study ((Folajinmi & Peter, 2020)). To enhance credibility, prolonged engagement and persistent observation helped mitigate the researcher’s potential outsider status. Triangulation was achieved by cross-referencing data from observations, interviews, and informal conversations. Member-checking sessions, where preliminary interpretations were discussed with key participants, were conducted to ensure the findings resonated with their experiences. Ethically, informed consent was obtained from all participants, with the research aims, procedures, and their right to withdraw explained clearly, often in Pidgin for full comprehension. Anonymity and confidentiality were assured; all names and identifying details used in the findings are pseudonyms, and specific locations within the markets are generalised. The researcher remained acutely aware of the power dynamics inherent in ethnographic research and strived to maintain a posture of humility and learning, recognising the expertise of the participants in their own domains .

A key methodological reflection concerns the researcher’s positionality ((Anwar & Graham, 2020)). As an academic researcher formally affiliated with an institution, the inherent power imbalance and difference in social capital between the researcher and participants were

Ethnographic Findings

The ethnographic fieldwork reveals a complex landscape where entrepreneurial agency is both enabled and constrained by the very informality that defines the sector ((Oladimeji & Aladejebi, 2020)). A primary finding is the critical role of social capital and relational networks, locally termed ‘connections’ or ‘who you know’, as the fundamental substrate of informal enterprise. For many entrepreneurs, formal business registration was perceived not as a gateway to opportunity but as an expensive and cumbersome process with little tangible benefit. Instead, access to favourable market stalls, affordable credit, protection from harassment, and reliable suppliers were almost exclusively negotiated through personal and kinship networks . As observed in the Computer Village market in Ikeja, a trader’s ability to secure a prime selling spot was less dependent on capital and more on their long-standing relationship with the market association’s chairman or their familial ties to an existing stall owner. These networks function as a parallel institutional framework, providing a measure of predictability and security in an otherwise volatile environment.

However, this reliance on social capital is double-edged ((Agbim, 2020)). The findings indicate that while networks provide essential support, they also impose significant social obligations and can limit scalability. Entrepreneurs frequently described feeling bound by reciprocal duties, such as offering excessive credit to kin or employing less competent relatives, which strained business resources. Furthermore, the ethnographic data shows that these networks are often exclusionary, reinforcing socio-economic and ethnic divisions. New entrants from outside established community or ethnic groups faced considerable barriers to entry, finding it difficult to penetrate trusted circles necessary for sourcing goods or securing informal credit . This creates a paradox where the social systems that enable survival simultaneously inhibit broader market integration and growth, trapping many enterprises in a cycle of subsistence operation.

The second major theme pertains to the entrepreneurs’ tactical navigation of formal institutional constraints, characterised by a pervasive and often improvisational engagement with state authorities ((Okundaye et al., 2019)). Encounters with local government officials, law enforcement, and regulatory bodies were a routine feature of business life. Rather than outright defiance, entrepreneurs exhibited a repertoire of adaptive strategies to mitigate these constraints. The most commonly observed was the strategic payment of informal fees, euphemistically called ‘egunje’ or ‘settlement’. These were not framed as bribes by participants but as a necessary cost of doing business, a pragmatic alternative to the time, expense, and uncertainty of complying with the full array of formal regulations . A street-food vendor in Oshodi explained that a regular, negotiated payment to a local health inspector was preferable to attempting to meet all official hygiene codes, which she deemed financially impossible.

This tactical agency extended to spatial practices ((McKenzie, 2017)). Vendors and service providers demonstrated remarkable fluidity in their use of urban space, constantly reading the city for opportunities and threats. The ethnographic observations documented well-rehearsed routines for the rapid dispersal and reassembly of market stalls upon the rumoured approach of Lagos State Task Force officials, a practice known as ‘see and run’. Conversely, entrepreneurs would temporarily expand their footprint into public walkways or roads during perceived periods of low enforcement. This spatial improvisation was not mere disorder but a calculated response to the inconsistent application of urban planning laws, reflecting a deep, embodied knowledge of the local regulatory rhythm .

Thirdly, the study uncovers the significant cognitive and discursive labour entrepreneurs undertake to legitimise their work ((Kawai & Tasaki, 2015)). Facing societal stigma that often labels informal work as illegal or backward, participants actively constructed narratives of resilience, ingenuity, and moral virtue. They framed their endeavours not as a failure to secure formal employment but as a proactive choice towards self-reliance and community provision. A fabric dyer in Mushin, for instance, meticulously referred to his open-air workshop as his ‘factory’ and his apprentices as ‘staff’, adopting the lexicon of formal business to command respect. Many emphasised their role in providing affordable goods and services to the city’s poor, positioning themselves as indispensable pillars of the local economy . This identity work was crucial for maintaining personal morale and negotiating a degree of social legitimacy within their immediate communities, even in the absence of state recognition.

Finally, the longitudinal dimension of the study revealed that the line between constraint and opportunity is highly fluid and context-dependent ((Agwu, 2014)). A regulatory crackdown, such as the Lagos State government’s periodic demolition of waterfront settlements or markets, was universally experienced as a devastating constraint, destroying livelihoods and assets overnight. Yet, the ethnographic data also captured

Discussion

This discussion synthesises the ethnographic findings to advance a more nuanced understanding of entrepreneurial agency within the informal sector of Lagos ((Inyang, 2013)). It argues that the prevailing narrative of informality as a mere survivalist realm fails to capture the sophisticated, albeit constrained, strategic agency exhibited by entrepreneurs. Their navigation of institutional voids and constraints is not passive but involves a dynamic, context-specific repertoire of tactics that simultaneously exploit opportunities and mitigate profound systemic challenges. The analysis centres on three core themes emerging from the fieldwork: the strategic construction of legitimacy, the duality of social networks, and the pervasive, shaping force of institutional ambiguity.

Foremost, the findings demonstrate that informal entrepreneurs actively engage in constructing practical legitimacy, a form of credibility that operates parallel to, and often in lieu of, formal legal recognition ((Atawodi & Ojeka, 2012)). This is evident in the meticulous cultivation of shopfront aesthetics, the strategic display of affiliation with formal brands or religious institutions, and the performance of transactional reliability. As observed in the computer village and among fashion designers, such practices are not merely cosmetic but are crucial entrepreneurial investments. They serve to attract a clientele that seeks reassurance amidst uncertainty, thereby converting a lack of formal registration into an opportunity to build trust through alternative, culturally resonant means. This aligns with the concept of ‘informal entrepreneurship as practice’, where legitimacy is performatively enacted within the specific social and economic logics of the informal arena . However, this self-constructed legitimacy remains inherently precarious, perpetually vulnerable to disruption by the very state authorities whose absence it initially circumvents.

This precarity leads to the second theme: the dual-edged nature of social networks ((Decker et al., 2020)). The ethnography confirms that kinship, ethnic, and religious ties are indispensable infrastructure for informal enterprise, providing essential access to start-up capital, market information, and apprenticeship labour . These networks function as a vital informal institutional framework, reducing transaction costs and enforcing contracts through social sanction. Yet, the findings critically extend this understanding by highlighting the burdensome obligations and constraints embedded within these same networks. The expectation of endless financial support for extended family, the pressure to employ less-competent kin, and the difficulty in pursuing innovative practices that deviate from communal norms illustrate what can be termed network entrapment. Entrepreneurs thus navigate a delicate balance, leveraging networks for resource mobilisation while devising subtle tactics to manage their draining demands. This duality underscores that social capital in the informal sector is not an unalloyed good but a complex resource that can simultaneously enable and inhibit entrepreneurial growth and innovation.

The third and overarching theme is the pervasive role of institutional ambiguity as both a constraint and a perverse opportunity structure ((Tiba et al., 2020)). The state is not absent but inconsistently present, manifesting primarily through the arbitrary enforcement of regulations by various agencies (‘area boys’, LASTMA, local government officials). This creates an environment of calculated risk, where entrepreneurs must budget for irregular levies and negotiate temporary ‘settlements’ . Consequently, a significant portion of entrepreneurial energy and scarce capital is diverted into managing these unpredictable impositions rather than into productive investment. Paradoxically, this very ambiguity is also exploited by some agile actors. The proliferation of informal logistics and ride-hailing services, for instance, demonstrates how entrepreneurs can identify and fill gaps created by the state’s failure to provide reliable infrastructure or transport regulation. They create parallel systems of order and value, yet these systems operate in a legal grey area, limiting their potential for scaling and integration into the broader formal economy. This supports the contention that informality in Lagos is less a separate sector and more a mode of operation shaped by a particular configuration of state engagement .

Synthesising these themes, the study contributes to theoretical debates on institutional theory and entrepreneurship by illustrating how agency is enacted in a context of weak formal institutions ((Narula, 2020)). The entrepreneurs observed are not simply ‘getting by’ but are engaged in a continuous process of institutional bricolage—piecing together practical arrangements from a mix of social norms, performative acts, and negotiated encounters with authority. Their strategies are adaptive and resilient, yet the analysis cautions against romanticising this resilience. The constant negotiation with ambiguity incurs high transaction costs, fosters a short-term planning horizon, and perpetuates a cycle where business growth often necessitates deeper, rather than reduced, entanglement with informal patronage systems. This challenges policy frameworks

Conclusion

This ethnographic study has illuminated the complex interplay between entrepreneurial agency and institutional constraints within Lagos’s informal economy ((Karakara & Osabuohien, 2020)). Through prolonged engagement with market traders, artisans, and service providers, the research reveals a landscape where dynamism and ingenuity are perpetually negotiated against a backdrop of structural limitation. The central contribution of this work lies in its nuanced demonstration that informality is not merely a condition of exclusion but a contested space of socio-economic practice, where entrepreneurs enact a form of ‘navigational agency’ to secure livelihoods and, at times, foster incremental growth. This agency, however, is consistently tempered by the pervasive realities of unreliable infrastructure, regulatory ambiguity, and the ever-present threat of state-sanctioned disruption, as observed in the frequent clashes between traders and Lagos State agencies.

The findings underscore that the opportunities within this sector—primarily low barriers to entry, flexible social networks, and adaptive business models—are intrinsically linked to its challenges ((Nwagbara, 2020)). The very social capital and cooperative systems that enable survival and mitigate risk, such as the esusu savings schemes and supplier credit arrangements detailed in the observations, often emerge as direct responses to a lack of formal financial access and state social protection. Consequently, entrepreneurial strategies are predominantly oriented towards resilience and daily subsistence rather than scalable expansion. This reinforces the argument that informality in Lagos constitutes a parallel economic system with its own logics and governance structures, yet one that remains fundamentally vulnerable and dependent on its uneasy relationship with the formal state apparatus.

Theoretical implications of this analysis are significant ((Sumberg et al., 2020)). It challenges simplistic dichotomies that view formal and informal sectors as entirely separate realms. Instead, the evidence supports a conceptualisation of a deeply intertwined relationship, characterised by both friction and mutual accommodation. Entrepreneurs’ navigational practices—from spatial improvisation to the strategic cultivation of patron-client relationships with officials—illustrate a continuous process of institutional bricolage. They actively piece together resources and rules from both formal and informal domains to craft viable operational environments. This perspective moves beyond viewing informal entrepreneurs as merely passive victims of exclusion, framing them as active agents who interpret, circumvent, and occasionally leverage institutional frameworks to their advantage, albeit within severely constrained parameters.

From a policy perspective, this research suggests that interventions which fail to recognise the sophisticated internal logics and survival strategies of the informal economy are likely to be ineffective or even harmful ((Kaminski et al., 2020)). Top-down formalisation drives that prioritise registration and taxation without concurrently addressing core constraints like power supply, access to credit, and physical security of tenure risk undermining the delicate ecosystems that sustain millions. A more constructive approach, implied by the ethnographic data, would involve engaging with existing informal governance structures and entrepreneurial networks as partners in development. Policy should aim to reduce the most punitive constraints and unpredictabilities faced by these actors, thereby enabling their inherent agency to be directed more towards productivity and innovation rather than mere daily negotiation for survival.

In conclusion, navigating informality in Lagos is an exercise in perpetual motion and tactical ingenuity ((Bryan et al., 2020)). The entrepreneurs at the heart of this economy are not waiting for formalisation to be bestowed upon them; they are actively constructing their own economic reality within the interstices of the city. Their agency is real and potent, but it is an agency exercised within a cage of institutional constraints. Future research would benefit from longitudinal studies tracking how digital technologies, such as mobile money and online platforms, are reshaping these navigational practices. Furthermore, comparative ethnographic work with other megacities in the Global South could elucidate the extent to which Lagos’s particular blend of vibrancy and constraint is unique or emblematic of wider urban conditions. Ultimately, understanding Lagos, and indeed much of the contemporary world’s urban economic life, requires a serious engagement with the sophisticated, resilient, and constrained world of its informal entrepreneurs.