Business Management

LITERATURE REVIEW

2.0 Introduction

The Informal sector is increasingly viewed as an important engine for employment creation and economic growth. This has been necessitated by the increasing awareness within the government that large projects in the industrial sector are less likely to generate the requisite employment opportunities, given the high capital-intensity of output in the sector.

While informal sector activities grew faster with the attainment of Kenya’s political independence, the economy continued to be dominated by foreign interests through multinational corporations (Ndege 1990:14). It was not until 1972 that informal sector activities were brought into the open by the International Labour Organization’s (ILO’s) Employment Strategy Mission research report, which identified a sizeable potential for the sector and large numbers of people who were working outside formal sector jobs in this unregulated and highly competitive sector. This marked the beginning of the recognition of the informal sector (Alila and Pedersen 2001).

Both the private and public domains have credited the informal sector as a provider of jobs to Kenyans and as a prime mover in the country’s efforts towards industrialization (Republic of Kenya 1997). Many school leavers, retrenchees as well as those dissatisfied with formal wage employment resorted to entrepreneurial activities within this sector as a means of earning a living. However, by recognizing their potential, it is assumed that informal sector entrepreneurs possess sufficient cognitive abilities in business practice to spur their countries to greater heights of economic and social development. On the contrary, some research literature has reported that informal sector entrepreneurs suffer various deficiencies in business management. These deficiencies are attributable to their low education levels, which in turn adversely affects their ability to access credit, overcome bureaucratic controls, market their goods and...