Only 1.3 per cent of Nigerian informal businesses reach over N2.5 million profit on a monthly basis, the Informal Economy Report 2024, has shown.
The report, compiled by financial technology provider, Moniepoint, revealed that the network of unregistered businesses, contributing over half of the country’s GDP with teeming street vendors, artisans and service providers, appeared prosperous based on revenue figures.
Launched over the weekend in Abuja, the report also showed that businesses in the informal market contributed over half of Nigeria’s GDP as 72.3 per cent of informal businesses surpassed the N1m mark in monthly revenue.
It explained, “Put together, businesses in the informal market contribute over half of Nigeria’s GDP. This is evident in their revenues with the bulk of them (72.3 per cent) hitting monthly revenues of over N1,000,000 monthly.”
The report noted that their actual profit deviated from the high figures, saying that individually, most of them make less than N250,000 monthly, on the higher end of the spectrum, only about 1.3 per cent of businesses in Nigeria’s informal economy earn above N2.5m monthly.
According to the report, a significant portion (68.2 per cent) of their income went towards feeding and family expenses, stressing that it is followed by reinvestment in the business (29.7 per cent), with only a small percentage (3 out of 10) prioritising reinvestment.
The Minister of Industry, Trade and Investment, Doris Anita, expressed optimism that the report would help the government to better understand the informal sector to know their needs and enhance growth and inclusion in the country.
She stressed, “We will see how we can take every recommendation and move the report forward. We will support you to do much better. We will rely on this report to better understand the informal sector and know their needs as it aligns with the Renewed Hope agenda of financial inclusion in the country.”
The Director General of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), Charles Odili, on his part said that the numbers support the reality as reaffirmed by this report, pointing out that the vast majority of Nigeria’s approximately 40 million small businesses reside in the informal sector.
He added that they are all around them from the unregistered beauty shop that began with a simple stool under a tree for customers to sit while the stylist worked her magic to the fruit store that grew from a wheelbarrow that is born of both necessity and entrepreneurial zeal, they exemplify the famous ‘hustling.
The Managing Director of Moniepoint MFB, Babatunde Olofin, believed that the report was focused on the significance of Nigeria’s informal economy, the challenges faced by informal businesses in accessing credit, the impact of credit access on business growth and the challenges in formalising businesses.
