The 2024 Informal Economy Report released by Moniepoint has revealed that 42.7 percent of small businesses in the informal sector have operated for less than five years.

The report titled, “Perception Study: Efficiency and Impact of Regulatory Activities of Standard Organisation of Nigeria on SMEs” stated that these small businesses have been stifled and has little to no opportunity for growth, although they have contributed immensely to Nigeria's Gross Domestic Product (GDP) growth.

According to the report, the businesses collapse before the fifth year after operating due to challenges like poor access to loans and multiple taxation.

Parts of the report read: “Eight in every ten small businesses are relatively new, running for less than five years. Less than 20 per cent of businesses were over five years old, indicating the challenge of keeping businesses running for over five years.

“Programmes designed to enhance business resilience, like improved access to financing and support and development programs, could be valuable.

“80 per cent of SMEs fail before their fifth anniversary due to harsh economic environments, lack of access to capital, and poor business practices, which have stunted the growth and transition of micro-businesses, according to the Small and Medium Scale Enterprises Development Agency of Nigeria in Nigeria.

“Without a bank account, for example, they are limited to doing transactions with only people they can physically interact with.

“This lack of access to banking also impacts them in other ways. Many programs and initiatives from development institutions, including the Nigerian government, exist to support businesses of all sizes in the country.

"However, with most of the businesses in. the informal economy invisible, access to them remains constrained. They also do not have the requisite documentation to apply for these grants. This means that although opportunities for them do exist, they are often unable to access them in ways that can help them grow meaningfully.”

BEB