Influence of slum-based enterprises on employment generation in Southwestern Nigerian cities

Slum-based enterprises (SBEs) are the hidden engine of employment in Africa’s rapidly urbanizing cities, yet their contribution remains poorly understood and often dismissed as mere survivalism. This study examines how SBEs generate jobs in Southwestern Nigeria, moving beyond firm-level analysis to assess the relative importance of enterprise attributes versus systemic factors. Using a cross-sectional survey of 435 SBE owners across six states and Partial Least Squares Structural Equation Modeling (PLS-SEM), we find that SBEs create employment primarily through their scale and structure (β = 0.21, p < 0.001), their resilience to challenges (β = 0.20, p = 0.015), and their deep integration into local economies (β = 0.46, p < 0.001). By contrast, product-service offerings and internal management practices show no significant direct effect on employment. Together, these factors explain 52.4% of the variance in job creation. These findings reposition SBEs not as marginal survival units but as embedded adaptive systems whose resilience directly fuels grassroots employment. Consequently, effective policy should shift from formalizing individual enterprises toward reinforcing their ecosystem – through pro-poor infrastructure, flexible microfinance, and digital platforms that reduce transaction costs without bureaucratic burdens.