Despite efforts to empower Micro and Medium Enterprises in the country, most businesses in the informal sector still earn low amidst high cost of doing business, a report by financial technology company, Monieppint has shown.
According to Moniepoint, the informal economy is still largely youth-driven, with 73 per cent of business owners aged between 18 and 44.
"Businesses owned by people aged 35-44 increased to 35 per cent, compared to 29 per cent in 2024," it noted.
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However, the report noted that women-owned enterprises declined slightly to 35 per cent, while men controlled 65 per cent.
It also added that "44 per cent of informal businesses make less than N20,000 daily in revenue," while "70 per cent earn below N50,000 in profit" it stated.
A breakdown of the report by Daily Trust further showed that cash remains the dominant payment method for most informal enterprises in Nigeria.
The report launched to mark the fintech's decade of operation over the weekend noted that one in four informal businesses report that digital payments account for less than 10 per cent of their total business revenue.
"For most informal businesses, digital payments are an option, and typically not the full story. 1 in 4 of them say that digital payments account for less than 10 per cent of their total business revenue.
"Only 16 per cent of them say that digital transactions account for over 50 per cent of their business revenue."
The finding sits alongside other constraints, low profits, multiple levies, and limited access to large loans, which keep most operators reliant on offline transactions despite rising use of transfers for supplier payments.
"The number of businesses in retail and trade increased to 44 per cent, followed by other services (33 per cent), agriculture (7 per cent), arts, entertainment, and recreation (4 per cent)," according to the study.
Despite this dominance, "profit margins are low and often eroded by inflation, multiple taxation, and lack of access to credit," Moniepoint reveals.
Gender inequality persists, as "41 per cent of women-owned businesses earn less than N10,000 per day in profit, compared to 34 per cent of men-owned."
The gap underscores structural financial and cultural barriers to female entrepreneurship.
The report details the demographic, operational, financial, and digital trends shaping the sector amid rising inflation and evolving policy efforts.
The South-West, led by Lagos, continues to dominate, hosting one-third of all informal businesses. Lagos alone accounts for "16 per cent of businesses in the informal sector -- about the same as the North-East and South-East combined."
In terms of structure, 85 per cent of operators are sole proprietors, and only 40 per cent employ labour -- mostly one to three workers.
Moniepoint revealed that longer-established businesses are twice as likely to hire staff, indicating that survival and growth are critical to job creation potential.
The report also highlights that many informal operators "pay some form of taxes or market levies (89 per cent)."
However, poor understanding of business registration and its benefits continue to deter formalisation.
Under "Credit, Taxation, and Financial Behaviour," the report indicates that 70 per cent of informal businesses depend on informal credit sources like family and friends, while digital payments are gradually replacing cash transactions, signalling improved financial inclusion.
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On the policy front, experts emphasised the need for simplified registration systems, gender-sensitive financial products, and digital literacy support.
Dr. Nurudeen Abubakar Zauro noted that inflation rose from "22.41 per cent in May 2023 to 34.8 per cent by December 2024," before easing to 21.88 per cent in mid-2025, urging targeted interventions such as conditional cash transfers and accessible credit.
Similarly, the Lagos Chamber of Commerce and Industry's Director-General, Dr. Chinyere Almona, called for "coherent regulatory empathy" and tiered compliance structures to prevent excessive taxation from driving small businesses deeper into informality.
According to Moniepoint, while Nigeria's informal economy remains resilient and adaptive, structural barriers in finance, regulation, and digital infrastructure hinder its potential to contribute sustainably to GDP and formal employment.
