The role of the informal sector in poverty alleviation : An empirical investigation with reference to greater Wad Medani locality of the Gezira State, Sudan

Hysum I . M. Muhmode, Adam E. Mohamed

Abstract


This study investigated the role of the informal sector in poverty alleviation in Sudan with reference to Wad Medani Locality of the Gezira State in January 2008. The data for the study was collected by means of a questionnaire, which was distributed to a random cluster sample of 80 households working in the informal sector in the study area. To examine the impact of the informal sector in poverty alleviation, the "before and after" approach was adopted where data on the relevant variables were analyzed for two periods, before and after joining the informal sector. Income and expenditure were used separately as indicators of welfare. The Lorenz curve and Gini coefficient were used as measures of income and expenditure inequality. The three standard poverty indices were also calculated, namely incidence, depth, and severity of poverty. The results suggested that the income and expenditure distribution after working in the informal sector was more equitable than before joining the sector. With regard to poverty measures, the results suggested that 92% of the households in the sample fell below the income poverty line before working in the sector compared to 70% after working in the sector, while 94% and 60% of households fell below the expenditure poverty line before and after joining the sector, respectively. Thus, income and expenditure poverty was found to be more prevalent among the sample of households before working in the sector. Similar results were also obtained for the depth and severity of poverty, where income and expenditure poverty were deeper and more severe before joining the sector. These results indicated the important role of the informal sector in reducing inequality and alleviating poverty.


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