MSMEs contribute half of Nigeria’s GDP, 84% of jobs

Micro, small and medium enterprises (MSMEs) are responsible for about half of Nigeria’s GDP and employ more than 84 per cent of its workforce, Jumoke Oduwole, the minister of industry, trade and investment, disclosed in Abuja on Friday.

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Ms Oduwole, who stood in for Vice President Kashim Shettima at the launch of Moniepoint’s 2025 Edition of the Nigerian Informal Economy Report, said the figures reflect the strength and dynamism of Nigerian entrepreneurs, who continue to sustain the economy in the face of structural challenges.

“Nigeria is home to over 39 million micro, small and medium sized enterprises, and they account for about 96 per cent of all businesses,” she said.

“From market traders and artisans to small service providers and young digital entrepreneurs, millions of Nigerians power commerce daily, often in ways that remain unseen yet indispensable to our economy.”

She described the informal sector as “the heart of Nigeria’s story of resilience, creativity and enterprise,” crediting small business owners, artisans and digital entrepreneurs for keeping trade and services alive in the country.

Ms Oduwole lauded Moniepoint for spotlighting evolving trends in the informal economy through its new report, saying such insights are crucial for evidence-based policymaking.

The minister remarked that the Nigerian government is determined to create an enabling environment for MSMEs to thrive by improving access to finance, simplifying registration and compliance processes, and equipping entrepreneurs with necessary tools to scale.

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She also highlighted a couple of trade-related incentives under the African Continental Free Trade Area, designed to boost market access for Nigerian businesses.

Among these are gazetted tax concessions for trading goods to enable duty-free access across Africa, and the launch of the Adegboye Export Corridor with Uganda Air, which is targeting 13 Southern and Eastern African countries.

The export corridor, she said, offers discounted cargo rates, which reduce air freight costs by as much as 75 per cent, affording Nigerian exporters a faster means of connecting with regional markets.

“The African Continental Free Trade Area is no longer a concept. It’s the real and unfolding marketplace of 1.4 billion people, and this is the time to ask how you can serve that regional market,” she said.

Key findings

The report highlights the resilience and fragility of Nigeria’s informal sector, revealing that while 65 per cent of informal businesses recorded revenue growth in the past year, rising costs meant that only 47 per cent reported higher profit.

While cash remains the dominant mode of payment by customers in the sector, about half of business owners prefer to pay suppliers through bank transfers.

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Moniepoint identified limited access to finance, weak business structures, low digital adoption and poor infrastructure as the key challenges retarding growth.

It noted that an improved financial literacy and a wider access to affordable digital tools can help improve productivity.

The report found that despite the harsh economic climate, many informal businesses have managed to survive, relying on mobile transactions and community-based savings networks to stay afloat. Moniepoint urged policymakers and financial institutions to support these entrepreneurs with targeted interventions that can guarantee their long-term stability and contributions to the Nigerian economy.