Making Sense of Nigeria’s Informal Sector

I enjoyed reading the Informal Economy Report released by Moniepoint last week (June 2024). It contains a lot of information that entrepreneurs, businesses, investors, public sector agencies, researchers, and especially policymakers can benefit from. For far too long, we have ignored data in our decision making, and seeing that businesses in the informal market contribute over half of Nigeria’s GDP, it is no surprise that our decision in not being at breast with the latest figures in this important economy has impacted negatively on the quality of life of NIgerians.

This attitude needs to be corrected considering Nigeria, the most populous black nation on earth, is home to approximately 40 million Micro, Small, and Medium Enterprises (MSMEs), and an overwhelming 89.4% of these businesses operate within the informal economy. The informal economy, characterized by untaxed and unregistered businesses, forms the backbone of the Nigerian economy. Despite its significance, the report shows that the challenges and dynamics within this sector are vast and multifaceted.

The Demographics and Motivations

The informal economy in Nigeria is primarily driven by young entrepreneurs. Data reveals that the largest group of informal business owners, accounting for 43%, are between the ages of 25 and 34. Following…