Nigeria's informal economy, which constitutes over 85% of the nation's labor force, is currently grappling with the complexities of digital transformation. While smartphones have become central to the operations of market vendors, roadside traders, food sellers, and artisans in hubs like Oshodi and Balogun, a significant gap is emerging between those who use digital platforms and those who truly benefit from the accelerating digital economy. This issue is exacerbated by poor network connections, unpredictable algorithms, hidden data practices, and mobile apps that many traders barely understand, raising questions about the fairness and inclusivity of this digital shift.

A survey of 42 traders revealed that over 80% (34) use smartphones for business, primarily leveraging platforms like WhatsApp, Facebook, and Instagram. However, platform access does not translate to digital fluency. Only 33.3% of traders understand what Artificial Intelligence (AI) is, with another 28.6% having heard of it but not understanding, and nearly 39% having no idea at all. This lack of comprehension is critical, as AI is increasingly embedded in how apps filter visibility, process customer data, and personalize experiences, leaving the majority of traders in the dark.

The economic impact is evident: 45.2% (19) of respondents reported a drop in customer sales over the past 6 to 12 months, primarily citing a bad economy, high costs, low purchasing power, and payment scams. While only six traders directly attributed losses to digital competition or AI-powered automation, 16.7% acknowledged that those using digital tools had an advantage. Ifeanyi, a sneaker seller, observed that 'people buying online' contributed to a sales drop and that platforms use algorithms to prioritize certain sellers. Similarly, Ayo, an Ankara fabric vendor, noted how Instagram expanded her business beyond Lagos, highlighting the subtle but significant shift where platforms reward those who understand the system, often based on engagement, responsiveness, or user ratings.

Algorithmic opacity and hidden visibility bias are significant concerns. Data privacy expert Oladipupo Ige from the Data Privacy Lawyers Association of Nigeria (DPLAN) explains that platforms often use algorithms favoring high-performing sellers but rarely explain these mechanisms. Over 26% of traders believe platforms show some sellers more than others, and a staggering 41.5% admitted they do not understand how these ranking systems work. This is corroborated by former Jumia Nigeria CCO Ms. Omolola Oladunjoye, who advises sellers to optimize listings with competitive pricing, high-quality images, and sufficient stock. Chinecherem Amaka, a thrift seller, experienced drops in page engagement despite consistent posting, suspecting preferential treatment for others.

Barriers to full participation in the digital economy remain stubbornly high. Traders cited challenges such as the high cost of data and smartphones (27%), poor internet connection (30%), lack of support or training (10%), trust issues (12.5%), and language barriers, with some requesting Yoruba-language guidance. These concerns underscore a fundamental demand for inclusion: cheaper tools, better internet, localized training, and transparency, rather than just innovation. Market leaders like Iya Shola, Alhaja, and Joy Okoye have opted to either bypass advanced digital tools entirely or limit their use to WhatsApp, citing trust issues and past experiences of financial losses due to unreliable online transactions.

The National Information Technology Development Agency (NITDA), through its Director of Corporate Communications, Hadiza Umar, acknowledges the profound impact of AI and digital platforms on Nigeria’s informal workers. NITDA’s Strategic Roadmap and Action Plan (SRAP 2.0) focuses on leveraging opportunities like increased productivity and market access while addressing challenges such as potential job displacement, precariousness, and deepening inequalities. Initiatives like the Digital Literacy for All (DL4ALL) program aim to empower millions of Nigerians with essential digital skills, including specific programs for the informal sector through collaborations with various organizations and government bodies. NITDA is also working on curriculum integration and workforce readiness programs to embed digital skills at foundational levels.

On regulation, Umar emphasizes the government's crucial role in developing clear AI governance frameworks and ethical guidelines to ensure a fair, safe, and inclusive digital economy. This includes addressing algorithmic bias, transparency, accountability, and fairness in decision-making, as well as ensuring data protection and privacy in compliance with the Nigeria Data Protection Act. NITDA advocates for transparency, requiring platforms to explain their AI algorithms, especially concerning worker livelihoods, and supports research into the socio-economic impacts of AI.

Data privacy is another critical area of concern, with over 78% of traders not understanding what data is or how it is used. Oladipupo Ige highlights that many platforms illegally retain user data after transactions, referencing Section 36(2) of the Nigeria Data Protection Act 2023, which mandates data erasure once its purpose is complete, unless explicitly justified. The precedent set by Araka v. Ecart (Domino’s case) underscores the violation of storage limitation principles when data is used for unsolicited promotions. While users often overlook terms and conditions, platforms remain legally bound to process data fairly, legally, and with clear consent.

Despite AI being an integral part of informal trade – from chatbots to algorithmic visibility boosts – most traders remain unaware; only three out of 42 reported using AI-powered tools directly. Many, however, suspect underlying biases, noting that platforms favor