Economy
THE Informal Economy Report 2024, says businesses in the informal market contribute over half of Nigeria’s Gross Domestic Product (GDP).
The Minister of Industry, Trade and Investment, Dr Doris Anite said this when she inaugurated the report on Friday in Abuja.
The News Agency of Nigeria (NAN) reports that the unregistered businesses includes street vendors, artisans, and service providers.
“Put together, businesses in the informal market contribute over half of Nigeria’s GDP.
“This is evident in their revenues, with the bulk of them (72.3 per cent) hitting monthly revenues of more than N1,000,000 monthly. But their actual profit deviates from these high figures.
“Individually, most of them make less than N250,000 monthly. On the higher end of the spectrum, only about 1.3 per cent of businesses in Nigeria’s informal economy earn above N2.5 million monthly.”
According to the report, Retail and General Trade is the leading industry within the informal economy, making up 24 per cent of all informal businesses.
It said this category, along with Food and Drinks, Fashion and Beauty, and Agriculture, collectively account for more than (58.6 per cent) of all informal businesses in Nigeria.
“While the bulk of informal businesses (72.3 per cent) generate more than one million naira in monthly revenue, individual profits paint a different picture.
“Most informal businesses make less than N250,000 monthly, with only 1.3 per cent exceeding N2.5 million monthly earnings.
“In spite of this, a staggering 90 per cent contribute to the national GDP, reinforcing their significance to the Nigerian economy,” it said.
The report also revealed that a significant portion (68.2 per cent) of their income goes towards feeding and family expenses.
It said this was followed by reinvestment in the business (29.7 per cent), with only a small percentage (3 out of 10) prioritising reinvestment.
According to the report, access to credit is a major challenge for informal businesses.
“In spite of 70.1 per cent having accessed credit, friends and family remain the primary source (70.7 per cent), followed by loan apps/platforms (15.1 per cent) and traditional banks (12.2 per cent).”
The report said that informal businesses neglected tax contributions, saying about 90 per cent of them paid some form of tax primarily in the form of market levies.
The minister of trade, during the inauguration, commended Moniepoint for the report.
Anite expressed the Federal Government’s commitment to supporting small businesses in the informal sector as they contributed largely to the nation’s GDP.
The minister hoped that the report would help the government better understand the informal sector’s needs and propose solutions that would enhance growth and inclusion in the country.
“we will see how we can take every recommendation and move the reports forward. We will support you in doing much better.
“We will rely on this report to better understand the informal sector and know their needs as it aligns with the renewed hope agenda of financial inclusion in the country,” Anite said.
Earlier, Mr Charles Odili, the Director-General Small and Medium Enterprise Development Agency of Nigeria (SMEDAN), said that small businesses are the engine of the Nigerian economy.
According to Odii, the informal sector is the piston that provides momentum.
“The numbers support this reality, as reaffirmed by this report. Most of Nigeria’s approximately 40 million small businesses reside in the informal sector.
“They are all around us, from the unregistered beauty shop that began with a simple stool under a tree for customers to sit while the stylist works her magic to the fruit store that grew from a wheelbarrow.
“Born of both necessity and entrepreneurial zeal, they exemplify the famous ‘hustling’,” he said
According to him, the agency is working to formalise these businesses and bring them into the formal sector to increase access to important resources such as finance.
He said this was because formalisation aids the development of brand value and financial history, which indicates creditworthiness and attracts investment.
Odii said that a major obstacle to the formalisation was the fear of taxes.
He, however, said that the government was ensuring the enforcement of existing tax exemptions designed to give small businesses room to grow.
“We are also working with the Association of Local Governments of Nigeria (ALGON) to address the rampant illegal taxation and harassment of small businesses.
“Which discourage formalisation and negatively impact the ease of doing business,” he said.
Representing Vice President Kashim Shettima, his Special Assistant on Financial Inclusion, Nurudeen Zauro, said the Federal Government was committed to economic and financial inclusion in the country.
He expressed the government’s commitment to supporting efforts to realise President Bola Tinubu’s renewed hope agenda.
Also speaking, the Chairman,House Committee on Small and Medium Enterprises (SMEs), Mansur Soro, said the house was taking deliberate steps to prioritise women operating in the informal sector.
He expressed the National Assembly’s commitment to give the report its full attention, subjecting it to the necessary review and internalising it.
NAN reports that top government officials and stakeholders in the sector attended the inauguration. (NAN)
A.I
July o6, 2024 @ 06:54 GMT|
Tags: Dr Doris Anite Mr Charles Odili Vice president Kashim Shettima
