In Nigeria today, the informal economy is a giant that cannot be ignored. Though often overlooked, these informal businesses are quietly pulling billions of naira, shaping the country’s economy in ways many don’t fully appreciate.
From bustling open markets in Lagos to small roadside shops in rural towns, informal businesses are the lifeblood of millions of Nigerians. These ventures range from local food sellers and artisans to tech repairers and transport operators. Despite their ‘informal’ tag, the scale of some is astonishing. Some informal businesses are estimated to generate revenues worth billions of naira annually.
Why do so many Nigerians choose the informal route? The answer lies in the challenges within the formal economy—high taxes, bureaucracy, and lack of access to finance often push entrepreneurs into informal sectors. Here, they trade freely, avoid heavy regulation, and keep their businesses nimble. But this freedom comes with its own risks, including lack of legal protections and limited growth opportunities.
Interestingly, the informal sector isn’t just a refuge for survival; it is a thriving hub of innovation and resilience. For example, informal transport businesses like danfo buses or okada motorbikes keep millions moving daily, despite poor public infrastructure. Similarly, markets selling second-hand goods, fashion items, and household products sustain entire communities while generating huge turnovers.
The government has long struggled with how to integrate these businesses into the formal economy without crushing them. Formalising informal businesses can increase tax revenue and provide better social protections for workers, but heavy-handed policies risk driving them underground.
To truly unlock Nigeria’s economic potential, policymakers must rethink their approach. Supporting informal businesses with affordable credit, simplified registration processes, and basic infrastructure can encourage growth and stability. Successful examples from other countries show that when informal sectors receive the right support, they become powerful engines of job creation and wealth.
Nigeria’s informal billion naira businesses are a reminder that the country’s economy is far more than what official statistics show. Behind every street corner, market stall, and roadside shop lies a story of hard work, ingenuity, and survival. Rather than sidelining these enterprises, it’s time to recognise their power and work with them to build a stronger, more inclusive economy for all Nigerians.
