Nearly half of Nigeria’s informal businesses generate less than N20,000 daily in revenue, according to the Moniepoint Informal Economy Report 2025, shedding light on the thin margins and persistent struggles of small enterprises that power the nation’s economy.

The report revealed that “44 percent of businesses in Nigeria’s informal economy make less than N20,000 ($12) daily,” placing most operators at the lower end of the income spectrum despite their significant contribution to national growth.

It further revealed that “the median daily revenue range is between N20,000 and N50,000, while the median profit range is between N10,000 and N20,000, with 70 percent of them earning less than N50,000 per day.”

The data highlights a recurring challenge in Nigeria’s informal sector: thin profit margins that persist despite strong commercial activity. The report noted that high revenue values do not necessarily translate to significant profit, reflecting the rising cost of doing business across the country.

Inflationary pressures, supply chain disruptions, and a weakened naira have worsened the situation for small enterprises that form the backbone of Nigeria’s economy. “79% of businesses in the informal economy saw an increase in their cost of doing business in the past year,” the report stated, citing increased prices from suppliers, an increase in transportation costs, and the depreciation of the naira as the primary factors.

This financial strain has contributed to what the report describes as a fragile ecosystem of survivalist businesses. While many entrepreneurs have seen an increase in revenue, their profits have failed to keep pace.

“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 percent of them reporting a corresponding increase in their profit,” the report said.

Despite these challenges, the informal sector remains a key pillar of Nigeria’s economic landscape. According to the report, micro, small, and medium-sized enterprises (MSMEs), most of which operate informally, contribute around 65 percent of GDP and provide more than 80 percent of all jobs. The sector includes millions of small traders, artisans, and service providers who sustain daily economic activity across cities and rural communities.

The gender dimension of informal trade also reveals persistent inequalities. The report found that “41 percent of women-owned businesses in the informal economy earn less than N10,000 per day in profit, compared to 34 percent of businesses owned by men. Furthermore, 10 percent of women-owned businesses earn above N50,000 daily, compared to 16 percent of men-owned businesses.”

This gap reflects the uneven access to resources and credit facilities between men and women entrepreneurs. The report also noted that women tend to operate smaller businesses and are more likely to depend on family support or informal savings systems to finance their operations.

Beyond income disparities, the Moniepoint Informal Economy Report 2025 sheds light on structural challenges such as limited formal employment, low access to credit, and a reliance on cash-based systems. “Informal businesses are becoming more averse to credit,” it noted, with 51 percent of respondents reporting that they have never taken a loan and do not intend to.

The few who do access loans mostly use them to expand business operations, such as buying equipment, renovating, or opening new locations. However, only 6 percent of informal businesses have secured loans exceeding N1 million.

Record keeping remains another major constraint. “One in four informal business owners do not keep business records,” the report found, adding that “of the share that do keep some sort of record (structured or unstructured), 38% say they keep track of their business mentally, without any written records.”

The structure of Nigeria’s informal economy also remains dominated by tiny, individually owned ventures. The report stated that 85 percent of businesses in the informal economy are sole proprietorships, while only 40 percent employ labour. Of those that do, 75 percent have between one and three employees.

While the majority of these businesses struggle to scale, some have demonstrated resilience and potential for growth when provided with the right support. The report observed that informal businesses that have been around for longer are more likely to hire employees, suggesting that access to financial tools, capacity-building, and formalisation opportunities could help improve their sustainability.

The Moniepoint Informal Economy Report 2025 also underscored the need for sustained policy attention. It noted that “Under the radar, the cost of doing business has increased for 80 percent of informal businesses, a trend that threatens livelihoods and limits the sector’s contribution to inclusive growth.”

Moniepoint, which developed the report in partnership with the International Finance Corporation (IFC) and other stakeholders, said the findings are aimed at helping policymakers, regulators, and the private sector better understand the informal economy’s realities.

While the report underscores the challenges, it also presents opportunities for reform. It added that “Nigeria’s informal economy remains central to the country’s story of resilience and enterprise, with growth potential when supported and given access to the tools they need to grow.” (BusinessDay)