The Informal Economy Report 2024 has revealed how businesses in the informal sector contribute over half to Nigeria’s Gross Domestic Product (GDP) with the bulk of them (72.3 per cent) in tune of over N1,000,000 monthly.
This was revealed at weekend in Abuja during the launch of Moniepoint Informal Economy Report 2024 in a collaboration with Small and Medium Enterprises Development Agency (SMEDAN) .
The informal businesses includes street vendors, artisans, and service providers.
According to the report, individually, most of them make less than N250,000 monthly and on the higher end of the spectrum, only about 1.3 per cent of the businesses in Nigeria’s informal economy earn above N2.5 million monthly.
According to the report, Retail and General Trade is the leading industry within the informal economy, making up 24 per cent of all informal businesses.
It said this category, along with Food and Drinks, Fashion and Beauty, and Agriculture, collectively accounts for over half (58.6 per cent) of all informal businesses in Nigeria.
“While the bulk of informal businesses (72.3 per cent) generate over one million naira in monthly revenue, individual profits paint a different picture.
“Inspite of this, a staggering 90 per cent contribute to the national GDP, reinforcing their significance to the Nigerian economy “, it stated.
The report also revealed that a significant portion (68.2 per cent) of their income goes towards feeding and family expenses.
It said this was followed by reinvestment in the business (29.7 per cent), with only a small percentage (3 out of 10) prioritising reinvestment.
According to the report, access to credit is a major challenge for informal businesses.
” In spite of 70.1 per cent having accessed credit, friends and family remain the primary source (70.7 per cent), followed by loan apps/platforms (15.1 per cent) and traditional banks (12.2 per cent).”
The report argued that informal businesses neglected tax contributions, saying about 90 per cent of them paid some form of tax, primarily in the form of market levies.
The Minister of Industry, Trade and Investment,Doris Nkiruka Uzoka-Anite
during the launch expressed the Federal Government’s commitment to supporting small businesses in the informal sector as they contributed largely to the nation’s GDP.
She said the report would help the government to better understand the informal sector’s needs and propose solutions that would enhance growth and inclusion in the country.
The Director-General Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) Mr Charles Odii said that small businesses are the engine of the Nigerian economy.
According to Odii, the informal sector is the piston that provides momentum.
“The numbers support this reality, as reaffirmed by this report. Most of Nigeria’s approximately 40 million small businesses reside in the informal sector.
“They are all around us, from the unregistered beauty shop that began with a simple stool under a tree for customers to sit while the stylist works her magic to the fruit store that grew from a wheelbarrow,” he said.
According to him, the agency is working to formalise these businesses and bring them into the formal sector to increase access to important resources such as finance.
He said this was because formalisation aids the development of brand value and financial history, which indicates credit worthiness and attracts investment.
Odii said that the government was ensuring the enforcement of existing tax exemptions designed to give small businesses room to grow.
Representing Vice President Kashim Shettima, his Special Assistant on Financial Inclusion, Nurudeen Zauro, said the Federal Government was committed to economic and financial inclusion in the country.
He expressed the government’s commitment to supporting efforts to realise President Bola Tinubu’s renewed hope agenda.
Also speaking, the Chairman,House Committee on Small and Medium Enterprises (SME), Mansur Soro, said the house was taking deliberate steps to prioritise women operating in the informal sector.
The Managing Director of Moniepoint, Babatunde Olofin explained that the report sheds more light on the vibrate indispensable sector offering fresh insights into critical issues and serving as critical results for enhancing human capital development as well as poverty reduction.
He said the Informal Economic Report in collaboration with the Ministry of Trade, Industry and SMEDAN represents our unwavering commitments to deepen the resource fund for policy makers and every system stakeholders so that together ” we can unleash Nigeria’s full potential and provide and provide much needed support to the most vulnerable households in our society”.
“Moniepoint creates a social society where everyone experience financial confidence, brings the basic unit of life for entrepreneurs and exist to catalyze them for a sustaining future that we all will be proud of .
“Our team technology powers over 5m businesses and their customers offering all kinds of payment and banking services , credits and business managment tools that each businesses need to succeed in their daily endeavors,” he said.