79% of informal Nigerian businesses are bleeding margins, says report

Nigeria’s vast informal economy, often lauded for its resilience, is grappling with a severe margin crisis, according to a new report by Moniepoint.

The Informal Economy Report 2025 says while the majority of businesses are bringing in more money, the actual profit they keep is dwindling.

The core finding reveals that despite 65% of informal businesses reporting an increase in revenue over the past year, only 47% saw a corresponding growth in their net profits. This significant lag points to massive profit erosion driven by the country’s turbulent operating environment.

The primary culprit is soaring operational expenses. An overwhelming 79% of informal business operators stated that their cost of doing business has increased. Factors cited include Naira depreciation, heightened transportation costs, and high input prices from suppliers —all of which are being absorbed by the businesses rather than being fully passed on to the consumer.

Lean Margin

The profit squeeze translates into financial fragility across the sector. The report shows that daily profits are thin for a substantial portion of the economy:

• 38% of informal businesses make a daily profit of less than ₦10,000 (approximately $7).
• The median daily profit range is barely enough to absorb shocks, especially when nearly half of businesses are unable to grow their bottom line.

This financial instability leaves businesses vulnerable. In a grim measure of resilience, 42% of the businesses surveyed admitted they have enough savings to survive for only one month if their operations were suddenly halted.

The Gender Disparity in Profitability

The report also shone a light on the disproportionate impact on female entrepreneurs. Women-owned businesses are more likely to be trapped in the lowest profitability bracket: 41% of them earn less than ₦10,000 per day in profit, compared to 34% of businesses owned by men.

The Moniepoint study, which surveyed 3,400 informal business owners across all six geopolitical zones, confirms that while the informal sector remains a crucial engine of employment—with 4 out of 10 businesses acting as employers—the economic pressures of 2024 and 2025 are systematically undermining its financial health, fostering “profitless prosperity” where activity is high but gains are minimal.