The news
- Only 1.3% of informal businesses in Nigeria make above ₦2.5 million in monthly profit according to Moniepoint's 2024 Informal Economy Report.
- Most informal businesses in the country can only boast a monthly profit of ₦250,000.
- However, considering revenue, many informal businesses rake in ₦1 million monthly.
These businesses, although informal, contribute a large amount to Nigeria's GDP — 34% — which makes them very important to the economy.
The report also shared that the total number of informal businesses in Nigeria is 40 million.
Out of this 40 million, Moniepoint's report is made up of a survey of two million businesses that revealed how they raise capital, accept payment, and which line of businesses are the most popular in Nigeria.
Overall, retail and general trade are the most popular line of informal businesses in Nigeria accounting for 24% of the total amount of businesses surveyed.
The food and drinks business follows closely accounting for 13.4% of the total informal businesses surveyed. Fashion, beauty, IT/electronics, agriculture, and education are also some of the informal businesses people start.
Although informal, these businesses are important to Nigeria's economy as they account for more than 80% of all businesses in the country.
It can be deduced from this that the country's economy is essentially powered by small and medium-scale enterprises (MSMEs) that are only able to make ₦250,000 in monthly profit.
The level of profit these entities can generate indicates that something needs to be done for these businesses to earn more.
The Minister for Industry, Trade and Investment, Doris Uzoka-Anite said in the report that the government is taking actions to help these businesses through interventions like the ₦200 million intervention programme for MSMEs to raise capital and the Grow Nigeria" initiative that is supposed to accelerate economic growth for SMEs in key sectors.
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However, these initiatives do not seem to be working as Nigeria falls to Africa's fourth largest economy behind South Africa, Egypt, and Algeria.Interestingly, more data points, such as the 2024 Informal Economy Report, could help the Nigerian government decide which problems informal businesses to prioritise.
