Abstract/Summary

The persistence of widespread informality among agro-food smallholders in developing countries like Nigeria presents a significant barrier to economic upgrading and effective integration into Global Value Chains (GVCs). This study investigates the complex linkages between strategic informality, institutional quality, GVC participation, and value capture in Nigeria's agricultural sector, using Kaduna State as an in-depth case study. Employing an explanatory sequential mixed-methods (QUAN → qual) design, the research integrates quantitative survey data from 206 smallholders with rich qualitative insights from focus group discussions and key informant interviews. A central contribution of this thesis is the development and empirical validation of a multi-dimensional “Formality-Informality Continuum.” This framework challenges binary classifications by demonstrating that smallholders strategically position themselves along this spectrum based on a rational, albeit bounded, assessment of institutional incentives, regulatory costs, and the efficacy of the Informal Support Ecosystem (ISE). The analysis empirically identifies four distinct actor profiles—Highly Informal, Moderately Informal, Moderately Formal, and Highly Formal— and introduces two key conceptual dynamics. The “Informality Trap” is a self-reinforcing cycle where high perceived costs of formalization and deep reliance on the ISE deter formal engagement, limiting upgrading potential. Conversely, the “Experience Effect” describes how positive, repeated engagement with reliable formal institutions fosters trust and incentivizes sustained participation. Key findings reveal that Formal Exchange Arrangements (FEA), such as contractual farming, are significantly stronger drivers of formal market participation than regulatory compliance alone. The ISE is shown to play a crucial dual role: acting as a vital “lifeline” by providing accessible informal credit and risk mitigation, yet also functioning as an “anchor” that can constrain transitions to higher-value markets. Furthermore, while GVC participation offers upgrading potential, the study demonstrates that its translation into tangible value capture for smallholders is significantly mediated by their access to formal credit. This study challenges conventional top-down formalization policies, advocating instead for an incentive-based approach. It calls for differentiated strategies tailored to actors' positions on the continuum, prioritizing the strengthening of market-based enablers, developing hybrid financial models, and strategically leveraging the strengths of the ISE. Such an approach is crucial for creating viable pathways towards sustainable economic upgrading for Nigeria's agro-food smallholders within domestic and global value chains.