Nigeria's Micro, Small, and Medium-sized Enterprises (MSMEs), which are crucial to the country's economy, are predominantly operating in survival mode rather than achieving significant growth, according to Moniepoint’s 2025 Informal Economy Report. The study, based on data from 5 million businesses and surveys across Nigeria, reveals a challenging landscape where 38% of SMEs generate daily profits below ₦10,000 ($6.78), and 70% make less than ₦50,000 ($33.89). While most informal businesses report daily revenues between ₦20,000 ($13.56) and ₦50,000 ($33.89), the median profit typically falls within the ₦10,000 to ₦20,000 ($6.78-$13.56) range. This situation is particularly concerning given that MSMEs contribute approximately 65% of Nigeria’s GDP and provide over 80% of all jobs.

A significant factor contributing to this stagnation is the continuous rise in operational costs, which erodes profitability. The report highlights that business resilience is severely tested by cost pressures and limited savings buffers; 42% of businesses indicated their savings would last for one month or less if income ceased. Furthermore, 79% of businesses reported a significant or slight increase in their cost of doing business over the last 12 months.

A notable disparity exists in the performance of women-owned businesses. The Moniepoint report found that 41% of women entrepreneurs earn less than ₦10,000 ($6.78) daily, compared to 34% of men. Conversely, a higher percentage of men-owned businesses (16%) earn above ₦50,000 ($33.89) daily, compared to just 10% of women-owned businesses.

Despite 65% of informal businesses experiencing revenue growth in the past year, only 47% saw an increase in profit. This 'profit squeeze' is primarily driven by escalating operational costs, including higher supplier prices, increased transport expenses, and a significantly weaker naira. The Nigerian naira depreciated by approximately 70% in 2024 following the Central Bank of Nigeria's relaxation of foreign exchange restrictions, dropping from NGN 460/USD to around NGN 1600/USD between June 2023 and June 2025. This devaluation has led to forced price hikes on imported goods, reduced purchasing power, increased supply chain bottlenecks, and elevated logistics and transport costs, ultimately causing many SMEs to face bankruptcy and diminishing the informal economy's contribution to the nation's GDP.

The impact of higher operating costs is also reflected in saving habits. Only 74% of informal businesses are currently saving, a notable decrease from 92.4% in the previous year. Cooperatives and digital banks remain the preferred saving channels, with most funds directed towards business expansion (41%) or purchasing goods (24%). Given a rising aversion to borrowing due to higher interest rates and stricter lending conditions, savings have become the primary means for these businesses to access necessary funding for expansion or emergencies.

Experts like Foyinsolami Akinjayeju, CEO of Enhancing Financial Inclusion & Advancement, and Chinyere Almona, DG of the Lagos Chamber of Commerce and Industry, stress the urgent need for a policy rethink. They advocate for a shift from fragmented interventions to coordinated, systemic measures to foster growth and inclusion for informal businesses. This includes deliberately targeting their transition from survivalist enterprises to scalable ventures through structured capacity-building programs, embedded within local chambers of commerce and trade associations, focusing on essential skills like bookkeeping, inventory management, and digital tools.