Onome Amuge
44 per cent of Nigeria’s informal businesses earn less than N20,000 in daily revenue, according to the Moniepoint Informal Economy Report 2025, highlighting how rising costs and shrinking profit margins are squeezing millions of small enterprises that drive the country’s economy.
The report, produced in partnership with the International Finance Corporation (IFC), offers one of the most detailed snapshots yet of Nigeria’s informal economy, which contributes about 65 per cent of GDP and accounts for more than 80 per cent of employment.
The Moniepoint data show that 44 per cent of informal enterprises make less than N20,000 a day, while 70 per cent earn below N50,000. Yet higher sales volumes have not translated into higher earnings.
“The majority of businesses in the informal economy (65 percent) have experienced some increase in their business revenue over the past year. However, the impact on profit is lower, with only about 47 per cent of them reporting a corresponding increase in profit,” the report noted.
The report found that 79 per cent of informal businesses have seen their cost of operations rise in the past year, a direct result of Nigeria’s inflation crisis and exchange rate instability.
Since the naira’s depreciation following exchange rate reforms in mid-2023, imported inputs have become significantly more expensive. Energy costs have soared after the fuel subsidy removal, while logistics expenses, driven by diesel-powered transport, have risen across the board.
Such pressures have created what Moniepoint describes as a fragile ecosystem of survivalist businesses, where enterprises remain active but barely sustainable.
According to the report, at the core of the informal sector’s struggle is a “missing middle” consisting of enterprises too big to remain micro but too small to attract formal financing or scale effectively. The Moniepoint Informal Economy Report 2025 shows that only 6 per cent of informal businesses have obtained loans exceeding N1 million, while more than half (51 percent) say they have never borrowed and do not plan to.
The report noted further that access to finance remains the sector’s most persistent obstacle. This is as traditional banks are seen to often view informal operators as high-risk borrowers due to a lack of collateral, inconsistent records, and cash-based operations.
“One in four business owners do not keep any business records,” Moniepoint found, while 38 per cent of those who do rely solely on memory rather than written documentation.
This opacity, experts say, keeps millions of businesses locked out of formal credit systems.
Beyond income gaps, the report exposes a sharp gender divide in Nigeria’s informal economy. 41 per cent of women-owned businesses earn less than N10,000 per day in profit, compared to 34 per cent for men. Only 10 per cent of women-run enterprises make over N50,000 daily, against 16 per cent for men.
Women entrepreneurs, Moniepoint observed, tend to operate smaller, household-based ventures and are more reliant on informal financing mechanisms such as thrift savings groups and family support. The result is an economy where women power daily consumption but remain largely excluded from scalable enterprise.
According to the report, the informal sector’s continued reliance on cash remains a major brake on productivity and transparency. Although mobile money usage has grown, cash still dominates day-to-day trade in markets and transport.
Digital adoption has been slower among smaller traders, particularly outside urban centres. Many cite trust issues, network instability, and transaction fees as deterrents.
Yet Moniepoint’s report argues that greater digitisation could unlock growth. It asserted that by moving transactions online, businesses can build data trails, access credit, and reduce losses from theft or record-keeping lapses.
The report also pointed out that despite structural weaknesses, the informal economy remains Nigeria’s most dynamic source of employment and entrepreneurship. From roadside mechanics and market vendors to tech-savvy artisans, millions of Nigerians generate income daily outside formal systems.
However, the Moniepoint report warns that under the radar, the cost of doing business has increased for 80 per cent of informal businesses, threatening livelihoods and shrinking the sector’s contribution to inclusive growth.
The Moniepoint report concludes on a cautiously optimistic note. It observed that informal businesses that have operated for longer periods tend to employ more staff and reinvest in growth, indicating that longevity and experience can translate into scale—if supported.
The report calls for targeted reforms including:
- Micro-credit expansion through digital channels;
- Capacity-building and record-keeping training;
- Incentives for digitisation and business registration; and
- Gender-focused financing programmes to bridge access gaps.
Moniepoint’s CEO, Tosin Eniolorunda, described the report as “a blueprint for understanding how Nigerians actually do business—and how to empower them where they are.”
The challenge, he said, is not just about formalising the informal, but about making the invisible visible through data, technology, and inclusive finance.
