Abstract:
The main purpose of this study was to examine the development of the informal sector
1908-2009 in Kenya, the case study of Eldoret town. The objectives of the study were; to
examine what led to the emergence and development of informal sector in Eldoret during
the colonial period; to examine the policies formulated by the government of Kenya since
independence with regard to the informal sector and the relationship between the formal
and informal sectors; to examine the challenges facing the informal sector in Eldoret
since the introduction of multipartism in Kenya. Random stratified sampling was
employed to obtain a reasonable sample size for administering questionnaires. The
researcher sampled 50 people actively involved in the informal sector. The researcher
sampled an average of 3 people from each of the 15 wards of Eldoret by then apart from
the densely populated wards where 4 people were sampled. These wards were; Langas,
Market, Kapsoya, Huruma and Kamukunji to make a total of 50. The questionnaires had
both open-ended and closed ended questions. The data was collected from the field using
one on one interviews and subsequent filling of the questionnaires. The data was
analyzed using descriptive tools. The study findings indicated that the motivation behind
the development of the informal sector in Eldoret and Kenya at large was due to the
reluctance on the side of the government in having clear-cut policies on the informal
sector. The dynamism and creativity of the people in the informal sector provides the
basis for self-reliance and alleviation of poverty among the urban poor in Eldoret. The
government has formulated several policies in support of the informal sector though not
enough. The post elections violence affected the informal sector negatively as many
people had to relocate or abandon the whole idea all together. Informal sector is very key
in expanding the economy as well as creating job opportunities. The small and micro
enterprises are the backbone of Kenya’s economy and Eldoret in particular. The following
recommendations were made based on the research findings; there is need for the
government to come up with clear-cut policies on the informal sector through proper
legislations and other government initiatives aimed at improving and/or assisting the
informal sector; people especially those seeking for employment opportunities should
embrace the informal sector instead of tarmacking for years looking for formal
employment; the county government of Eldoret should come up with legislations within
the county assembly aimed at supporting the informal sector in the county; there is need
for structured funding of the small enterprises in Eldoret and its environs.