Rising prices hit 79% of informal businesses as profits remain flat: report

From Adanna Nnamani, Abuja

Despite their resilience and growing revenues, most informal businesses in Nigeria are struggling to stay profitable, according to the 2025 Informal Economy Report released by Moniepoint.

The report, produced in partnership with the International Finance Corporation (IFC) and released recently in Abuja, revealed that 79 percent of informal businesses experienced increased costs of doing business in the past year, while 38 percent make profits of less than N10,000 ($7) daily.

It also showed that while 65 percent of informal businesses recorded revenue growth, only 47 percent saw corresponding profit increases, reflecting how inflation and operational costs continue to erode margins.

Furthermore, 50 percent of payments in the informal economy are still made in cash, even though 48 percent of business owners now primarily use transfers to pay for goods and services, a sign of slow but steady digital adoption.

The report highlighted that unemployment remains the most common reason Nigerians venture into informal businesses, and that four in ten informal businesses now employ others.

It also revealed that 44 percent of informal businesses make less than N20,000 daily in revenue, with the median profit range between N10,000 and N20,000, a continuation of last year’s trend of high turnover but slim margins.

Moniepoint’s findings further exposed a gender gap as 41 percent of women-owned informal businesses earn less than N10,000 in daily profit, compared to 34 percent of men-owned businesses, while men are more likely to earn above N50,000.

In her remarks, the Minister of Industry, Trade and Investment, Dr. Jumoke Oduwole, described the informal economy as central to Nigeria’s story of resilience and enterprise, noting that millions of Nigerians sustain livelihoods in ways that often go undocumented.

“This report provides an important window into their realities, the opportunities they create, the challenges they navigate, and the scale of their contribution to national development,” she said.

The Minister added that the Federal Government is committed to easing business formalisation, expanding access to finance, and empowering entrepreneurs with the skills they need to grow.

Also speaking, the Director-General of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Charles Odii, said the informal sector remains the backbone of Nigeria’s economy, adding that formalisation is key to unlocking its full potential.

“Informality restricts access to finance, markets, and structured interventions. This is why SMEDAN is intentional about promoting formalisation,” Odii said.

He disclosed that SMEDAN, in partnership with the Corporate Affairs Commission (CAC), is registering 250,000 business names at no cost, as part of efforts to help small enterprises transition into the formal economy.

The DG said the initiative will open access to credit, partnerships, and investment opportunities for small entrepreneurs, particularly women and youth.

Delivering his goodwill message at the launch, the Minister for Youth Development, Ayodele Olawande, commended Moniepoint for its commitment to illuminating the dynamics of a sector that, though often overlooked, remains the backbone of the national economy.

Olawande said the report reveals a sector marked by resilience and fragility, powered by the creativity, perseverance, and hard work of millions of Nigerians, most of whom are young people.

According to him, while unemployment remains a key driver for participation in informal ventures, these enterprises have become a lifeline for economic survival and a source of dignity and purpose for many.

He called for stronger synergy among government, private sector players, financial institutions, and development partners to move from insight to action, designing and implementing strategies that will enable informal enterprises to access finance, build capacity, formalise, and transition to sustainable growth.

Olawande reaffirmed that the Federal Government, through the Ministry for Youth Development and related agencies, remains committed to creating an enabling environment where youth-led enterprises can thrive.

According to him, the government is pursuing partnerships to expand access to credit, promote financial literacy, encourage innovation, and strengthen linkages between the formal and informal sectors.