What the informal economy covers
Nigeria's informal economy comprises the wide range of economic activity that takes place largely outside formal business registration, tax collection and labour regulation: open-air and covered markets, street hawking and roadside kiosks, commercial motorcycle and tricycle transport ("okada" and "keke"), artisans such as tailors, mechanics, carpenters and hairdressers, small-scale food processing and catering, and the great majority of Nigeria's micro, small and medium enterprises S1S5. A 2024 industry report on the sector, based on interviews with business owners and transaction data from over two million small businesses processed by the Nigerian payments company Moniepoint, estimated that roughly 40 million such enterprises operate across the country, concentrated heavily in retail and general trade, which the same data put at around 44% of informal economic activity, followed by food and beverage services, fashion, personal care and small-scale agriculture S1S5. Lagos alone was estimated to host about 16% of these informal businesses nationally, with Ogun State, the Federal Capital Territory and Delta State each accounting for a further 6% S5
The people running these enterprises skew young: the 2024 Moniepoint-based survey found 58% of informal business owners were under 34, with 43% falling in the 25–34 age bracket specifically, and just over half of respondents cited unemployment as their reason for starting an informal business rather than seeking wage work S1S5. Ownership is not evenly split by gender — men own roughly 63–65% of the informal enterprises surveyed and women the remainder — and most of the businesses involved are young themselves, with 80% reported to have been operating for under five years, consistent with a sector characterised by low barriers to entry and high turnover S5
Why the size estimates diverge
Measuring an economy that by definition keeps poor records is inherently difficult, and the published estimates of its scale vary widely depending on the method and year used, so any single figure should be read as one estimate among several rather than a settled number. Nigeria's National Bureau of Statistics (NBS), using its 2019-base rebasing of national accounts covering the 2019–2023 period, put the informal sector's value at ₦86.85 trillion in 2019, equivalent to 42.5% of GDP under the new base year, more than double the roughly 20% share implied by the 2015-base GDP series it replaced S2. By contrast, an International Monetary Fund blog post examining informality across Sub-Saharan Africa placed Nigeria's informal economy as high as 65% of GDP, at the upper end of a regional range the IMF put at 20–25% of GDP for economies such as Mauritius and South Africa and 50–65% for economies such as Nigeria and Tanzania, based on the Fund's own cross-country informality modelling rather than NBS national accounts S3. Separately, private-sector analyses drawing on payments and business-registration data, including the Moniepoint-based 2024 report, have put Nigeria's informal economy at 55–58% of GDP, again using yet another estimation approach S1S5. The gap between the NBS's 42.5% and the IMF's 65% reflects genuinely different definitions of "informal" — the NBS rebasing captures unregistered production activity within the national accounts framework, while cross-country informality models such as the IMF's attempt to estimate total unrecorded economic activity, including tax evasion by otherwise-registered firms — and readers should treat both as attributed estimates from named sources rather than as interchangeable facts S2S3
Informal employment
A related but distinct measure is the share of Nigeria's workforce employed informally, which the NBS tracks separately from the sector's contribution to GDP. The NBS's Labour Force Statistics report found that 92.3% of employed Nigerians were in informal employment in the third quarter of 2023, a slight decline from 92.7% the previous quarter, with the same report showing informal employment far more prevalent in rural areas (97.2%) than in urban areas (87.5%) S4. The same period's data showed 87.3% of employed Nigerians as self-employed rather than wage employees, underscoring how much of Nigerian work — whether counted as part of a formally measured industry or not — takes the form of individually run enterprises rather than salaried jobs inside registered firms S4. The IMF's Sub-Saharan Africa research separately estimated that as much as 85% of employment outside agriculture across the region occurs informally, a regional figure broadly consistent with, though not identical to, the NBS's Nigeria-specific numbers S5
Taxation, credit and formalisation
Despite operating outside most formal regulatory structures, the 2024 Moniepoint-based survey found that 89% of informal business owners reported paying some form of tax, overwhelmingly in the form of local market levies and similar charges rather than the income or company taxes formal businesses remit to the Federal Inland Revenue Service, with typical annual payments in the ₦3,500–₦15,000 range S1S5. The same survey found that most informal operators still rely on informal credit sources — about 71% on loans from friends and family — rather than banks or licensed lending platforms, and that just over half still prefer cash to digital payment methods for everyday transactions, even as card and transfer-based payments have grown S5. These patterns matter for Nigeria's wider financial and fiscal system: informal workers and businesses sit largely outside the tax net that applies to nigerian exchange-listed formal companies, draw on credit channels distinct from those the central bank of nigeria regulates, and interact closely with adjacent parts of the economy such as agriculture in nigeria, remittances to nigeria sent home by the diaspora, and retail responses to shifts in nigeria fuel pricing S5