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Digital lenders and microfinance banks are the top sources of loans for Nigerian informal businesses, according to the Moniepoint 2025 Informal Economy Report. Women were also more likely to get loans from informal sources than men.
When informal businesses obtain loans, one in three of them report that the highest amount they’ve ever received is ₦100,000 or less. Only 6% of informal businesses have secured loans exceeding ₦1 million. Informal businesses owned by men are twice as likely to get loans above ₦1 million as women owned businesses.
About 51% of respondents reported not borrowing for their business in the report. This shows a decline in credit appetite across the informal and small business landscape. A major reason for this could be tighter lending conditions, and a higher interest environment.
The most common reason why they don’t take loans is that they’re afraid of being unable to repay them. 26% of them also believe that their businesses do not need a loan, while 11% would prefer to use their savings or funds for business needs.
Women are more likely to avoid getting a loan because they’re afraid of being unable to repay, or because of high/unfavorable interest rates.
Most informal businesses that take loans use them to expand their business operations, such as buying equipment, renovating, or opening new business locations.
Purchasing goods for their inventory and managing operational expenses are other top reasons why informal businesses access loans.
Other key points about Nigeria’s informal economy from the report:
44% of informal businesses make less than N20,000 daily in revenue
44% of businesses in Nigeria’s informal economy make less than N20,000 ($12 ) daily. The median daily revenue range is between N20,000 and N50,000.
By comparison, the median profit range is between N10,000 and N20,000, with 70% of them earning less than N50,000 per day. This is a trend that has continued from last year, where high revenue values do not necessarily translate to significant profit.
Most women-owned businesses earn less than their men-owned counterparts
Men are likely to earn significantly more than women owned businesses over time.
Similar to last year’s report, a higher proportion of women were in the low revenue and profit range, while men were more likely to be higher earners.
41% of women-owned businesses in the informal economy earn less than ₦10,000 per day in profit, compared to 34% of businesses owned by men. On the other hand, 16% of men-owned businesses earn above ₦50,000 compared to 10% of women-owned businesses.
Informal business revenues are growing, but their profits don’t match the pace
The report showed that the majority of businesses in the informal economy (65%) have experienced some sort of increase in their business revenue over the past year. However, the impact on profit is lower, with only about 47% of them reporting a corresponding increase in their profit.
It’s getting more expensive to run an informal business in Nigeria
79% of businesses in the informal economy report that their cost of doing business has increased over the past year.
According to them, this increase resulted from multiple things, with the top reasons being increased prices from suppliers, an increase in transportation costs, and the depreciation of the Naira.
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