Abstract:
Informal sector has been found to be a critical instrument for reducing the poverty in urban
people. It is prominently used to improve the livelihood of urban households where it is believed
to be underexploited in research and hence is dispensable to examine its real effectiveness. To
this end, this study aims to assess the effect of informal sector on urban poverty reduction. A
cross-sectional survey data collected from 190 urban households (81 participant and 109 non participating) using multi-stage sampling techniques from Liban Jawi Town. Both Descriptive
like frequency, percent, graph and inferential analysis (Binary logistic regression) were applied
for analyzing the impact of informal business on urban poverty at the study area. The result of
chi-square indicate the association between urban poverty and Education level of household,
Family size, House of ownership household, Rent, Spend average of per month, Average monthly
spend for food, Average monthly spend for health, Types of business, License for your business,
Income tax, Experience year on the current work activities, Operate business activity and
Participation in business at 0.05 significance level which confirm that, those variables are
statistically significant for the urban poverty at the study area. Based on the result this study
recommended that it is better off the government make some policy and regulation for this sector
in order to prevent the formal sector from unwanted competition and Government should
constrict strategies for informal sector to enhance to transform to formal sector.
