According to the 2025 Informal Economy Report by Moniepoint, nearly 8 out of 10 informal enterprises in Nigeria have faced rising operational expenses over the last year. Additionally, the report reveals that 38% of these businesses generate daily profits below ₦10,000.
This amount, approximately $7, reflects the financial reality for many small-scale traders, craftsmen, and service providers nationwide. Such earnings often barely cover their business costs, leaving little room for household needs or growth investments.
Most informal entrepreneurs operate day-to-day without any financial cushion or savings to fall back on.
The informal sector remains the backbone of Nigeria’s employment landscape and daily commerce, contributing over half of the country’s GDP and employing the majority of the workforce. Despite its significance, the latest data highlights the precarious situation of those sustaining this vital economic segment.
Financial vulnerability is evident: 42% of informal businesses have savings or cash flow sufficient to sustain operations for only one month if their income stream halts.
Put simply, nearly half of Nigeria’s informal sector could face collapse within weeks of any disruption.
While 65% of informal businesses reported revenue growth over the past year, only 47% saw an increase in actual profits. This discrepancy underscores the challenge of rising costs offsetting income gains, mirroring Nigeria’s broader inflationary pressures.
This delicate balance between expansion and survival also influences payment methods within the sector. Despite the rise of digital payments, half of all transactions still occur in cash. Meanwhile, 48% of business owners primarily rely on bank transfers for purchasing goods and services.
Unemployment remains the primary driver pushing many Nigerians into informal trade. With limited formal job prospects and a fragile labor market, millions resort to informal businesses as their main source of livelihood.
Importantly, the report highlights that 40% of informal enterprises employ workers, emphasizing their critical role in grassroots job creation.
Everyday challenges compound these difficulties. Rising transportation expenses hinder the movement of goods, while soaring fuel prices impact food vendors and small manufacturers alike. Volatile exchange rates further inflate the cost of imported raw materials.
On top of these pressures, informal levies and multiple unofficial taxes erode already slim profit margins. Although some traders have adopted digital tools to streamline transactions, most still lack access to safety nets or affordable credit facilities.
The data paints a picture of a vast, dynamic yet fragile system. Informal businesses are the engine of Nigeria’s economy but operate with minimal institutional support and scant protection against economic shocks. Many remain unregistered, limiting their access to financing, insurance, or government assistance. Consequently, when expenses rise, these entrepreneurs often absorb the costs personally, sacrificing their own income.
The report also breaks down the sector’s composition: retail and trade constitute 44% of informal businesses, followed by other services at 33%, agriculture at 7%, and arts, entertainment, and recreation at 4%.
These sectors underpin countless daily transactions across urban and rural areas but are highly vulnerable to inflation and supply chain disruptions, explaining the widespread impact of cost increases.
Read also: What is the cost of going cashless? How transaction charges affect Nigeria’s informal sector
The statistics reveal a sector at a pivotal moment. On the surface, the informal economy appears robust-providing employment, sustaining households, and circulating money nationwide. Yet beneath this facade lies a fragile foundation marked by unstable incomes, escalating expenses, and minimal formal protections.
With 79% of businesses reporting increased costs and over a third earning less than ₦10,000 daily, these figures serve as urgent signals rather than mere data points.