According to Moniepoint’s 2025 Informal Economy Report, a significant 38% of Nigeria’s small and medium-sized enterprises (SMEs) earn less than ₦10,000 (approximately $6.78) in daily profit. This highlights that many of these vital contributors to Nigeria’s economy are still operating in survival mode rather than expanding their businesses.
The comprehensive research, which analyzed data from 5 million businesses and included direct surveys of small business owners nationwide, revealed that the majority of informal enterprises generate daily revenues ranging from ₦20,000 ($13.56) to ₦50,000 ($33.89). Notably, 38% of these businesses report profits under ₦10,000 daily, and 70% earn less than ₦50,000.
On average, daily profits fall between ₦10,000 ($6.78) and ₦20,000 ($13.56).
Micro, Small, and Medium-sized Enterprises (MSMEs) are the cornerstone of Nigeria’s economy, accounting for roughly 65% of the nation’s GDP and providing over 80% of employment opportunities. However, escalating operational expenses continue to erode their profitability.
Assess Your Business Resilience
Understanding your business’s ability to withstand financial shocks depends largely on your savings and cost pressures. Reflect on the following to gauge how your business compares within the informal sector.
Context: 42% of businesses survive for one month or less without income.
Source: Moniepoint Informal Economy Report 2025.
The report further indicates that 44% of informal sector businesses earn less than ₦20,000 ($13.56) daily.
Women-led SMEs in Nigeria face even greater challenges. About 41% of female entrepreneurs report daily profits below ₦10,000 ($6.78), compared to 34% of their male counterparts. Conversely, 16% of male-owned businesses earn above ₦50,000 ($33.89), while only 10% of women-owned businesses reach this threshold.
Escalating Expenses Burden Informal Enterprises
Despite 65% of informal businesses experiencing revenue growth over the past year, only 47% reported increased profits. A striking 79% acknowledged rising operational costs, driven by surging supplier prices, transportation expenses, and the depreciation of the naira.
Profit Pressure: Why Higher Revenue Doesn’t Translate to Greater Earnings
Key Insight: The disparity between revenue and profit growth underscores a systemic challenge. Rising operational costs are the main obstacle preventing nearly half of these businesses from converting increased sales into actual profit.
Source: Moniepoint Informal Economy Report 2025 (Pages 12, 23, 24).
In 2024, the naira depreciated by nearly 70% following the Central Bank of Nigeria’s easing of foreign exchange controls. This sharp decline inflated costs in an economy heavily reliant on imports, pushing inflation to a 28-year peak in November 2024.
Nurudeen Abubakar Zauro, Secretary and Head of the PreCEFI Secretariat and Technical Advisor to the President on Economic and Financial Inclusion, Office of the Vice President, explained, “Between June 2023 and June 2025, the naira’s exchange rate plummeted from 460 NGN/USD to approximately 1600 NGN/USD.”
He added, “This currency depreciation triggered price surges for imported goods, diminished purchasing power, and increased costs across supply chains, logistics, and transportation. Consequently, many SMEs faced bankruptcy, reducing the informal economy’s contribution to Nigeria’s GDP.”
Rising expenses have also impacted savings behavior, with only 74% of informal businesses saving money, down from 92.4% the previous year.
Most entrepreneurs prefer cooperatives and digital banks for saving, allocating funds primarily toward business growth (41%) and inventory purchases (24%). Meanwhile, borrowing has declined due to higher interest rates and stricter lending criteria.
Moniepoint notes, “With borrowing becoming less attractive, savings remain the main source of capital for these businesses to expand or manage emergencies.”
Urgent Need for Policy Reform
Experts emphasize that government interventions must evolve from isolated efforts to comprehensive, coordinated strategies to foster growth and inclusion within the informal sector.
Foyinsolami Akinjayeju, CEO of Enhancing Financial Inclusion & Advancement, stresses the importance of systemic policy shifts.
Chinyere Almona, Director General of the Lagos Chamber of Commerce and Industry, adds, “To transform informal businesses into scalable enterprises, policies should focus on facilitating this transition. A critical step involves implementing structured training programs through local chambers and trade groups to enhance skills in bookkeeping, inventory control, and digital technology adoption.”