This paper critically examines Home Based Enterprises (HBE's) in residential areas of the Lagos Metropolis in order to determine their major characteristics as well as the effects their activities have on Urban Planning. Data was obtained by the administration of structured questionnaires on HBE owners in buildings with more than one informal economic activity. 929 questionnaires were administered in 5, 18 and 31 low, medium ann high density residential neighbourhoods respectively. 712(76%) were fully completed and thus fit for analysis. Analysis was by simple descriptive statistics as well as chi square among others. The research revealed the importance of informal activities, particularly home based enterprises, as a major source of employment, income and services in urban areas. It was discovered that about 45 % of the respondents rely solely on their home enterprises and would otherwise have been destitiute. 29.7 % of respondents earn between N7,500 and N15,000 monthly from their home enterprise. Across the income groups, multiple income earners are prevalent in the family. Also respondents are involved in multiple streams of income with 18.76 % being also employed in the formal sector of the economy. The paper concludes by suggesting recommendations for harnessing HBEs at minimal cost to the environment. These recommendations include enabling the informal economy, encouragement of collective action and implementing planning reforms as well as embracing pro-poor planning and restructuring the National Poverty Eradication Programme.
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