Monday, 08 July 2024 04:54

Businesses in the informal market contribute over half of Nigeria’s GDP - Report

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The Informal Economy Report 2024 has shown that only 1.3 per cent of Nigerian informal businesses reach over N2.5 million profit on a monthly basis.

The report, which was compiled by financial technology provider, Moniepoint, revealed that the network of unregistered businesses, which contributed over half of the country’s GDP with teeming street vendors, artisans and service providers, appeared prosperous based on revenue figures.

The report, which was launched over the weekend in Abuja, also showed that businesses in the informal market contributed over half of Nigeria’s GDP as 72.3 per cent of informal businesses surpassed the N1m mark in monthly revenue.

“Put together, businesses in the informal market contribute over half of Nigeria’s GDP. This is evident in their revenues with the bulk of them (72.3 per cent) hitting monthly revenues of over N1,000,000 monthly. But their actual profit deviates from these high figures. Individually, most of them make less than N250,000 monthly. On the higher end of the spectrum, only about 1.3 per cent of businesses in Nigeria’s informal economy earn above N2.5m monthly,” it said.

The report also revealed that a significant portion (68.2 per cent) of their income went towards feeding and family expenses. This was followed by reinvestment in the business (29.7 per cent), with only a small percentage (3 out of 10) prioritising reinvestment.

Doris Anita, Minister of Industry, Trade and Investment, expressed confidence that the report would help the government to better understand the informal sector to know their needs and enhance growth and inclusion in the country.

She said, “We will see how we can take every recommendation and move the report forward. We will support you to do much better. We will rely on this report to better understand the informal sector and know their needs.”

On his part, Charles Odili, Director General of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), said, “The numbers support this reality as reaffirmed by this report. The vast majority 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 worked her magic to the fruit store that grew from a wheelbarrow. Born of both necessity and entrepreneurial zeal, they exemplify the famous ‘hustling’.”

In his remarks, Babatunde Olofin, Managing Director of Moniepoint MFB, noted that the report was focused on the significance of Nigeria’s informal economy, the challenges faced by informal businesses in accessing credit, the impact of credit access on business growth and the challenges in formalising businesses.

 

Daily Trust

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