New data from Stanbic Bank Kenya’s Purchasing Managers’ Index (PMI) showed companies reduced staffing levels during the month, ending a stretch of continuous job creation that had lasted since the start of 2025. 

Many businesses said the reductions mainly affected temporary workers as lower demand eased pressure on capacity.

The PMI fell to 46.6 in May from 49.4 in April, the steepest deterioration in business conditions since July 2024. A reading below 50 signals a contraction in activity.

The downturn reveals a strong slowdown across the private sector. New orders declined for a third consecutive month and at their fastest pace since mid-2025 as customers cut spending and tightened household budgets. 

Business activity also weakened further, with firms linking the decline to lower sales and softer demand.

Construction and services companies reported falls in both output and new orders during the month. Manufacturing was the only sector to record growth in production, while declines were recorded elsewhere. Agriculture and retail businesses were among those that reduced staff numbers.

Private sector employment fell after firms reported they had enough capacity to handle current workloads. Backlogs of work also declined for a third straight month, reducing the need for additional hiring.

Christopher Legilisho, economist at Standard Bank, said: “The Stanbic Bank PMI data for May reflects a deterioration of business activity by private sector firms. Inventory purchases slowed, from being expansive, because of weakening sales, cash flow concerns, and rising costs. 

“Consumer resistance to spend, alongside rising costs, contributed to contractions in new orders and output. These declines may stem from the week-long disruption to business activity because of nationwide protests by transportation sector players that constrained movement.”

High costs added to the challenges facing businesses and, ultimately, jobs in Kenya. The survey showed overall input price inflation accelerated to its strongest level since November 2023, driven largely by higher purchase costs, fuel expenses and transportation charges.

Although wage costs continually increase, businesses kept salary growth moderate. Many firms also slowed inventory purchases and held back spending as they sought to preserve cash due to weaker sales and tighter margins.

At the same time, companies passed part of the higher costs on to customers. Selling prices rose at the fastest pace in two and a half years, with all five monitored sectors reporting increases.

The weaker business conditions will likely lead to concerns about employment prospects, particularly as thousands of young Kenyans enter the labour market every month. Consumer-facing businesses, including startups and technology firms that depend on household spending, could also face softer demand if spending remains subdued.

Despite the difficult operating environment, firms were optimistic about the year ahead. Business confidence climbed to its highest level since February 2023, supported by plans to increase advertising, introduce new products and expand digital sales channels.

Legilisho added: “Inflationary pressures have intensified, constraining demand conditions, with input prices, purchase costs and output prices driven up by higher fuel and transportation costs. Still, despite subdued business momentum, firms remain optimistic about future conditions.”

This was revealed in the new figures released by the National Bureau of Statistics (NBS). The increase adds more stress on households and businesses already enduring high transport, food and energy expenses across the country.

NBS said petrol prices increased by 18.97% compared to March 2026. Every year, prices rose by 23.69% from N1,239.33 recorded in April 2025.

In March, the national average stood at N1,288.54 per litre before moving higher in April.

The figures show the continuous impact of fuel deregulation, foreign exchange instability, high global crude prices and increasing distribution prices within Nigeria’s downstream oil sector.

Across the states, Yobe recorded the highest average petrol price at N1,599.05 per litre. Edo followed at N1,595.74, while Bauchi posted N1,589.07.

On the other hand, Niger recorded the lowest average retail price at N1,403.89 per litre. Sokoto sold at N1,404.16, while Katsina recorded N1,406.28.

The report also showed regional differences in fuel prices.

The South-South recorded the highest zonal average at N1,566.76 per litre. The North-West had the lowest average at N1,508.81.

Analysts link the high price gap between states to transport costs, supply challenges, infrastructure problems and varying access to fuel depots.

Northern states in particular still face higher delivery costs because many marketers transport products over long distances.

Nigeria’s headline inflation rate climbed to 15.69% in April 2026, up from 15.38% in March. Food inflation reached 16.06% year-on-year, driven by rising prices of staple foods including yam, maize, millet and sorghum.

Core inflation, which excludes volatile agricultural produce and energy, also rose to 15.86%, showing that price pressure now cuts across several sectors of the economy.

At the state level, Sokoto recorded the highest inflation rate at 25.74%. Bauchi followed at 22.52%, while Zamfara posted 22.03%. Edo recorded the lowest inflation rate at 5.91%.

Global oil prices also contributed to the rise in local petrol prices.

Brent crude climbed to $120.4 per barrel in April 2026 from $103.7 in March following renewed tensions in the Middle East. At the same time, the naira averaged N1,361 against the dollar during the month despite market volatility.

The removal of petrol subsidies in 2025 also left local fuel prices fully exposed to market forces.

Meanwhile, a recent survey showed that both petrol and cooking gas prices were high between April and May 2026.

The survey, conducted on May 23, found that cooking gas prices in Lagos increased from around N1,300 to N1,400 per kilogram in April to between N1,350 and N1,500 in May.

Petrol prices during the same period ranged between N1,200 and N1,350 per litre.

In the Federal Capital Territory and Nasarawa State, cooking gas prices rose to as high as N1,500 per kilogram, while petrol sold for between N1,350 and N1,444 per litre at major filling stations.

Kaduna and Rivers recorded some of the widest price differences for both petrol and cooking gas because of supply shortages and logistics costs.

In Kaduna, a 5kg cooking gas refill averaged N9,212 in April, while a 12.5kg refill cost around N23,030. Retail cooking gas prices in the state ranged between N1,300 and N1,500 per kilogram.

New figures released on Monday by the National Bureau of Statistics showed the economy grew faster than the 3.13% recorded in the same period of 2025. 

Still, growth slowed slightly from the 3.99% posted in the fourth quarter of 2025.

The report points to resilience in the non-oil sector, even as crude oil production weakened during the quarter.

Agriculture recorded one of the strongest improvements. The sector grew by 3.15% in real terms, compared with just 0.07% in the first quarter of last year. Crop production was the biggest driver within the sector.

Services were the largest part of the economy, contributing 57.73% to total GDP. The sector expanded by 4.31% during the quarter, although that was slightly below the 4.33% growth recorded a year earlier.

Industry also improved moderately, growing by 3.50% from 3.42% in the corresponding period of 2025.

Nigeria’s non-oil sector continued to carry most of the economy. According to the NBS, the sector grew by 3.94% in real terms and accounted for 96.08% of total GDP in the quarter.

Telecommunications, crop production, trade, cement manufacturing, financial institutions, real estate, construction and road transport were among the sectors that supported growth.

Telecommunications was one of the strongest performers. Information and communication activities grew by 10.98% year-on-year and contributed 11.31% to real GDP, higher than the 10.59% recorded in the same quarter of 2025.

Trade contributed 17.89% to real GDP, while real estate accounted for 13.10%. The finance and insurance sector grew by 8.54%, and construction expanded by 6.38%.

In nominal terms, the country’s GDP stood at N110.79 trillion in the first quarter of 2026. That represents a 17.79% increase from the N94.05 trillion recorded in the same period last year.

Oil production, however, was under stress. Average daily crude oil output fell to 1.55 million barrels per day, lower than the 1.62 million barrels per day recorded in the first quarter of 2025. Production also dropped slightly from the 1.58 million barrels per day posted in the previous quarter.

Even with weaker output, the oil sector still recorded real growth of 2.57%, up from 1.87% a year earlier. Its contribution to total real GDP stood at 3.92%, slightly below the 3.97% recorded in the corresponding quarter of 2025.

The report also showed mixed performances across other sectors. Arts, entertainment and recreation recorded strong growth of 11.25%. On the other hand, electricity, gas, steam and air conditioning supply contracted by 15.30% in real terms.

Education growth slowed to 1.22%, down from 2.47% in the same period last year.

Nigeria is currently dealing with high inflation, expensive living costs and pressure on household spending. Inflation has remained above 15% despite ongoing reforms aimed at stabilising the economy.

Since 2025, the federal government has pushed ahead with policies including fuel subsidy removal, exchange rate unification and fiscal reforms as it tries to strengthen public finances and attract investment.

Compared with some African economies, Nigeria’s latest GDP growth figure placed it ahead of South Africa, where growth slowed to 1.9% in the same period. Ghana recorded 3.5% growth in the first quarter of 2026.

The latest figure, released by the National Bureau of Statistics (NBS), represents an increase from the 15.38 percent recorded in March, signaling renewed inflationary pressure after months of gradual easing.

Economic analysts attribute the latest increase largely to higher transportation costs, rising food prices, energy-related expenses, and the lingering impact of fuel price adjustments across the economy.

The development comes at a time when businesses and consumers are already grappling with elevated operational costs, weaker purchasing power, and continued pressure on disposable incomes.

Analysts say food inflation remains one of the biggest contributors to the rising headline figure, particularly as logistics costs and supply chain disruptions continue to affect the movement of agricultural produce nationwide.

The renewed inflationary trend could also complicate monetary policy decisions for the Central Bank of Nigeria, which had recently begun easing its aggressive tightening cycle after inflation showed signs of moderation earlier in the year.

The latest inflation increase comes despite ongoing government reforms and efforts to stabilise the naira, improve domestic refining capacity, and strengthen macroeconomic conditions.

Economists warn that sustained increases in food and energy prices could further weaken consumer confidence and increase pressure on businesses already battling high operating costs.

Global liquidity still runs through the dollar, and Nigeria cannot ignore this. Higher U.S. yields make it difficult for emerging markets to attract short-term capital. They also strengthen the dollar, which feeds directly into imported inflation and complicates exchange rate management.

For an economy that depends heavily on oil exports priced in dollars, the relationship is more complex. Stronger oil prices help Nigeria’s external reserves, however, if global dollar liquidity gets tougher at the same time, those improvements can be offset by capital outflows or currency instability.

At the same time, global oil markets are pricing in supply risk. Brent crude has climbed to around $72–$73 per barrel, its highest in about seven months, as geopolitical stresses escalate in the Middle East. 

Meanwhile, equity indices have shown intermittent volatility but are still resilient. The S&P 500 hovered close to the 6,900 area in late February. 

Taken together, these developments show how markets are balancing monetary conditions, spending patterns, and energy risk in early 2026.

Liquidity: Tougher Than in the Past, But Not Restrictive

A balance sheet of roughly $6.61 trillion confirms that policy is no longer in emergency mode, but still large by longer‑term historical standards. 

Interest rates are higher than a few years ago, and the Federal Reserve has been gradually reducing the amount of securities it holds. But that reduction has slowed, and the level of reserves in the system has not fallen far enough to scrape out market liquidity entirely.

Investors are still willing to take risks. Credit spreads have not blown out, and volatility measures like VIX have stayed below crisis levels. Even assets that trade with higher risk premia, such as cryptocurrencies, have seen renewed institutional interest recently.

This dynamic points to a market that seems comfortable with current monetary conditions, even if official policy rates are still restrictive. Expectations of future rate cuts are part of the reason, with markets usually pricing in expected easing well before central banks act.

A huge risk is if inflation proves stickier than expected, the monetary easing investors currently price in may be delayed or even reversed. That would raise yields further and tighten financial conditions more than most anticipate.

Technology Investment: Strong Now, But Not Broad‑Based

Corporate investment in technology infrastructure, especially for advanced computing and data processing, is still a major driver of market and sector performance.

A small group of large technology companies are at the centre of this trend. Their capital expenditure plans, particularly in areas tied to machine learning and cloud infrastructure, have supported earnings growth and aggregate market valuation.

The concentration of earnings in a handful of large firms has lifted headline equity indices. This creates a situation where market performance depends heavily on a narrow segment of the economy.

Outside those core technology firms, earnings growth has been more muted. That is of concern because when valuations are concentrated at the top, any disappointment from those leading firms can ripple quickly across markets.

There is also a link between technology investments and energy consumption. Large data centres require significant power. With tech capex increasing, so is demand for reliable energy supply, connecting the narrative directly to trends in energy markets.

Oil Prices: The Risk That Could Shift the Macro Balance

Globally, prices of oil have increased to levels not seen for months. Brent crude climbing into the low $70s per barrel shows supply risk priced into markets due to geopolitical tensions in the Gulf region. 

Recent military action involving the United States and Israel has boosted concerns about supply disruption through the Strait of Hormuz, a critical artery for global oil flows. Markets responded, pushing prices higher on the expectation of risk rather than actual physical cuts to supply. 

Reports have even suggested that if firm disruptions occur, Brent could rise towards $80 per barrel, although this is far from certain. 

Higher oil prices feed into consumer and producer cost structures. Transport is expensive, fertiliser and agricultural input prices are high and that can keep inflation elevated even when core goods are subdued. Central banks, monitoring inflation closely, will respond to these challenges.

For oil‑exporting nations, stronger prices support foreign exchange revenues and fiscal positions. For oil importers, the opposite is true, energy costs can squeeze budgets and slow growth.

How These Forces Interact

These three forces, liquidity situations, concentrated technology investment, and expensive energy prices, are not independent.

• If prices of oil continue to increase and push inflation expectations higher, bond yields could increase too. Higher yields tighten monetary requirements even without changes in central bank policy.
• If tech investment slows or earnings disappoint, markets that rely on a narrow base of corporate profits could see more weakness.
• If financial situations get tougher unexpectedly, credit spreads could widen, reducing risk appetite.

Market stability today depends on these forces staying in relative balance. A shift in one can ensure movements in the others.

What to Watch This Week

As we begin March, these indicators are essential:

• Official inflation data from major economies
• Treasury auction results and changes in bond yields
• Weekly oil inventory reports and OPEC+ announcements
• Corporate earnings guidance on capex spending
• Credit market stress indicators such as high‑yield spreads

Small changes in these indicators can influence market expectations.

Liquidity is tougher than in the years following the pandemic, but it has not withdrawn. Technology investment is supporting markets, albeit in a concentrated manner. Oil prices are growing as geopolitical risk premiums increase.

None of these forces alone ends a bull market or derails growth projections. But together, they influence the conditions that markets are currently pricing.

The important focus this Monday is not whether markets will rise or fall, but how these three forces, liquidity, AI and Oil, interact going forward.

The Central Bank of Nigeria (CBN), in its latest macroeconomic outlook, expects the trend to continue, with average inflation projected at 12.94% in 2026.

This slowdown comes against the backdrop of ongoing structural reforms, including foreign exchange unification and changes in the energy sector under President Bola Tinubu’s administration.

Still, economists and policymakers say the outlook is finely balanced. Several key factors could either support further cooling or bring back price pressures in the new year.

1. Food Prices and Agricultural Supply

Food inflation is the largest component of Nigeria’s consumer price index and a primary driver of headline figures. It declined sharply to 11.08% in November 2025, aided by better farm output and slight improvements in security across some farming communities, even as security challenges continue.

In 2026, keeping food prices stable will depend largely on continued growth in agricultural production, government support, and further reductions in insecurity.

Analysts warn that flooding, drought, or persistent banditry in major food-producing areas could quickly disrupt supply.

Staples such as bread, cereals, rice, and vegetables have historically been among the biggest contributors to inflation spikes.

2. Energy and Fuel Costs

Energy prices, especially Premium Motor Spirit (PMS or petrol), represent another critical watchpoint. The removal of fuel subsidy in 2023 by the Federal Government initially increased the nation’s inflation rate.

Better output from local refineries, including the Dangote Refinery, has improved supply, while the CBN expects lower fuel prices in 2026 due to stronger competition in the midstream oil segment and higher local production.

Nigeria’s oil output is estimated at 1.5 million barrels per day, benchmarked at $55 per barrel. Any production shortfalls could still feed into higher energy costs across Africa’s most populous nation.

3. Naira Exchange Rate Stability

Foreign exchange stability has been a major factor following the naira’s unification and floating in recent years.

The currency has shown relative calm, with the CBN forecasting an official rate near N1,400/$ in 2026.

Core inflation, excluding volatile food and energy, dropped to 18% in November 2025. This was due to the reduced pass-through effect from currency weakness.

Potential depreciation pressures could arise from fiscal deficits projected at around 3-4% of GDP or lower oil revenues.

4. Monetary Policy and Interest Rates

The CBN’s Monetary Policy Rate (MPR) stood at 27% toward the end of 2025, helping to rein in inflation by strengthening financial conditions and anchoring expectations.

As price pressures ease, gradual policy loosening is anticipated, potentially lowering lending costs. This will help to achieve the GDP growth forecast projected at 4.49%.

5. Fiscal Spending and External Shocks

Expanded fiscal outlays, including on infrastructure and social programs, could stoke demand if not offset by revenue gains from tax reforms. Global factors, such as trade tensions or commodity price swings, add external risks.

Here are the key consumer spending trends to watch in 2026:

1. Digital Payments and eCommerce Boom

Young Nigerians are driving the move away from cash. Digital payments and online shopping are now part of daily lives, powered by fintech platforms such as Opay, Moniepoint, PalmPay and eCommerce companies like Jumia.

Transactions are faster, more convenient and better trusted.

This transition is most obvious in urban centres, where mobile wallets, agent banking and QR payments are replacing cash for everything from groceries to transport fares.

The informal economy in Nigeria, which accounts for more than half of economic activity, has also taken up digital finance, enhanced by factors such as improved mobile access and the 2023 cash shortage.

Financial inclusion has expanded steadily, growing from about 54% in 2020 to 64% by 2023, mainly due to digital channels. With payments becoming seamless, spending behaviour changes with it.

Consumers are more likely to shop online, pay bills instantly, and make impulse purchases, especially in categories such as fashion, gadgets and food delivery.

Regulators, particularly the Central Bank of Nigeria (CBN), continually focus on system security and fraud reduction, while consumers push demand through convenience.

Nigeria’s population size gives this trend more scale, setting it apart from similar digital adoption seen in markets like South Africa.

2. Health and Wellness Take Priority

Health and wellness spending is growing as Nigerians adopt a more preventive mindset. Families and individuals are paying closer attention to what they eat, how they exercise, and the products they consume.

Demand for organic foods, gym memberships, supplements and healthier snacks is growing, particularly in cities.

Consumers check food labels more closely, opting for reduced-sugar drinks, plant-based options and healthier ingredient lists.

Social media has been top-notch here, with fitness creators, nutrition advocates and lifestyle influencers impacting preferences and awareness.

On the policy side, government spending on healthcare has increased. The 2025 health budget rose significantly, and allocations to the Basic Health Care Provision Fund are projected to grow further in 2026.

However, healthcare workers still complain about infrastructure gaps and unpaid salaries, as well as implementation which lags behind policy announcements.

Even so, easing inflation could free up household budgets for preventive healthcare, supporting steady growth in wellness-related spending through the year.

3. Value-Driven and Price-Sensitive Buying

Consumers in Nigeria are becoming more deliberate about what they buy. Rather than volume or advertisement, many now prioritise quality, durability and brand trust, even when it comes at a higher price.

With supermarkets, convenience stores and organised retail expanding, shoppers are comparing products more carefully. Young professionals and families, in particular, are weighing long-term value against upfront cost when choosing electronics, clothing and household items.

Social media is important here. Most Nigerians now discover brands online, and influencers on platforms such as Instagram and TikTok impact perceptions through reviews, demonstrations and personal endorsements. This has pushed brands to focus more on product quality and credibility.

The result is a more sustainable spending pattern, with fewer disposable purchases and greater emphasis on products that last.

The Bigger Market Context

In 2026, the consumer market reveals a different African trend, where digital innovation fills gaps left by traditional systems. With over 70% of the population under 35, the country’s youth keeps driving adoption across mobile banking, online retail and digital services.

Recent economic reforms, including initiatives to stabilise the naira and manage inflation, are beginning to ease pressure on households. Inflation is projected to trend downward, while growth in non-oil sectors such as services, agriculture and trade is supporting gradual recovery in consumer confidence.

Fintech is indispensable to this transformation, extending financial services beyond urban centres and bringing more Nigerians into the formal economy.

This pattern shows the impact of platforms like M-Pesa in East Africa, adapted to Nigeria’s larger and more complex market.

While the cost of living is still high due to fiscal adjustments and import pressures, the overall outlook points to a more structured, tech-enabled consumer economy.

What to Watch Through 2026

Several indicators will impact how these trends evolve:

• Inflation and cost of living: Always track monthly headline inflation via CBN reports; if it goes below 13%, expect freer spending on non-essentials like health or wellness products.
• Digital adoption: Growth in mobile wallets and fintech users will show stronger e-commerce activity.
• Sector performance: Pay attention to health and retail figures from industry reports; increase in organic food sales or quality brand revenues highlight consumer changes.
• FX stability and remittances: A steadier naira could reduce import expenses and support consumption.
• Youth engagement online: Higher influencer engagement usually results in quality-focused purchases.
• Regulatory signals: CBN policies will continue to affect fintech growth and consumer trust.

Conclusion

The year 2026 will be a year of smart, tech-focused spending for Nigerians, where digital tools and quality choices will help manage economic realities.

With economic growth on the rise and inflation rates reducing, these trends come with opportunities for consumers to be more flexible in spending and for businesses to innovate.

Embracing them means building a more inclusive economy.

In an exclusive interview on the MicOn Podcast with Seun Okinbaloye, Oyedele explained how the reforms aim to widen the tax net, capture non-compliant taxpayers, and exempt low-income earners from paying taxes.

On the current state of compliance, Oyedele stated:

“Nigeria has over 200 million people. Based on employment data, about 86 million Nigerians are actively employed. You can argue how many of them can even afford to pay any tax in the tax nets across all 36 states and the FCT.

“The active number of taxpayers is less than 10 million. That math doesn’t add up. In any country in the world, developing, developed, or underdeveloped, you’d expect at least half of the employed population to be in the tax net. This means Nigeria has a long way to go to move from 10 million to around 40 million. When you go to businesses, the number is not much different.”

He further noted that most companies registered with the Corporate Affairs Commission (CAC) are not paying taxes, thereby distorting the economy.

“You will see with the corporate affairs commission, over a million companies are registered, actively paying taxes, barely 100,000. If you don’t fix that problem, we continue to distort the economy where honest people struggle to survive.”

Explaining how the government plans to expand the tax net, Oyedele said:

“This is the whole essence of the intelligence we are trying to piece together. What happens in your bank account when you travel abroad, how you use your payment card, electricity for your phone, all that information. We’ve also introduced what we call fiscalization, which is when you issue an invoice for goods or services, the government gets a copy automatically.

“What we’re trying to do with that is instead of relying on people to be honest and patriotic to tell us their income. We want to use the system to find out. Your primary role is to declare your income yourself. Then the government, on the other hand, does a system ecosystem validation.”

Oyedele also cautioned against false declarations, noting that the reforms include measures to ensure compliance.

“If you claim you earned N1 million last year and bought a new car, travelled abroad twice in Business class and spent lavishly, the system will flag discrepancies. While minor mismatches are not pursued, undeclared amounts can result in automatic debit from your bank account after due notice.”

He stressed that the reforms aim to modernise tax collection:

“Taxes can now be collected professionally through technology. There’s no need to go on the street with wood and nails to start beating people up to collect taxes. There are very decent ways of doing that in modern society, and Nigeria should not be the exception.”

Addressing claims about high prices of goods and services in January 2026, Oyedele clarified that the reforms are designed to reduce costs:

“I don’t see any reason for prices to increase under this new tax law. If anything, prices should fall, or at worst, remain stable.  These reforms are intended to stabilise the economy and tackle inflation. In reducing personal income tax, people will have more disposable income, lower costs of goods and services and increased affordability. Combined, this makes life more manageable for Nigerians.”

The country’s headline inflation rate declined Month-on-Month from 18.02% in September 2025 to 16.05% in October 2025, a 1.97%.

On a Year-on-Year basis, the inflation rate fell to 16.05% in October 2025 from 33.88% recorded in October 2024, revealing a significant reduction compared to the same period last year.  

The Consumer Price Index (CPI), which measures changes in the average prices of goods and services, rose to 128.9 basis points in October 2025, up from 127.7 basis points in September 2025, indicating a 1.2 point increase.

Nigeria’s CPI growth rate, however, decreased from 32.26% in October 2024 to 10.24% in October 2025.

Urban Inflation closed at 15.65% Year-on-Year and 1.14% Month-on-Month, while rural inflation closed at 15.86% Year-on-Year and 0.45% Month-on-Month.

For the Combined rural and urban State CPI on a Year-on-Year basis, Ekiti, Nasarawa and Zamfara recorded the highest increases in all-items inflation rate at 20.14%, 18.97%, and 18.81% respectively. Bauchi, Anambra, and Gombe recorded the lowest increases at 9.99%, 11.72%, and 11.73%.

On a Month-on-Month basis, Niger and Anambra recorded the highest rise in all-items inflation rate at 4.90%, each, followed by Enugu at 4.72%.

Edo, Kastina, and Adamawa recorded the lowest Month-on-Month changes with -4%, -3.26%, and -3.10% respectively.

For Nigeria’s food inflation in October 2025, Ogun, Nasarawa, and Ekiti recorded the highest Year-on-Year increases at 20.85%, 19.96%, and 19.70%. Akwa Ibom, Kastina, and Yobe posted 3.98%, 4.15%, and 4.29%.

Month-on-Month food inflation was highest in Bauchi (6.77%), the FCT (5.11%), and Niger (4.84%), while Kastina (-7.72%), Oyo (-5.89%), and Taraba (-4.89%) recorded the biggest decline. 

Moniepoint’s 2025 Informal Economy Report reveals what most Nigerians already live, small businesses are earning more but gaining less.

Sixty-five percent of Nigeria’s informal businesses across the country reported an increase in revenue over the past year, but only 47% saw a growth in profit. At the same time, 79% said the cost of doing business had increased, driven mainly by higher supplier prices, transport expenses, and the relentless depreciation of the naira.

This contradiction, of higher earnings but shrinking returns, captures the state of the Nigerian economy today.

Growth Without Profits

The country’s informal economy looks alive. The markets are filled with activities, goods are moving daily, artisans are finding work, and service providers are busy, but look deeper, they are all exhausted. 

The report stresses how traders, among others, watch their margins evaporate, unable to keep pace with inflation. “The cost of doing business has increased for 80% of informal businesses in that same period. A goal for us in this report was to establish context like this: helping key stakeholders see and understand the effects of every decision made on informal businesses, and giving them a voice where they’ve previously gone largely unheard,” said Tosin Eniolorunda, founder and group CEO, Moniepoint Inc.

Unsurprisingly, 44% of Nigeria’s informal businesses make less than ₦20,000 daily in revenue, and most make profit of only ₦10,000 to ₦20,000 a day. Business owners skip meals to restock, workers forgo pay to keep their jobs.

And for women-owned businesses, 41% of women earn below ₦10,000 daily, compared to 34% of men. It tells us that Nigeria’s informal economy, while inclusive in appearance, still aligns with the inequalities of the formal one.

Survival Mode Economics

We see an economy built on individuals, isolated, unstructured and overstretched, highly fragmented. Eighty-five percent of informal businesses are sole proprietorships, usually run by one person who handles everything from supply to sales to bookkeeping. Only 40% employ labour, and when they do, it’s typically one to three workers. It’s not that they don’t want to expand, it’s just that they can’t afford to.

Record keeping is also informal. Seventy-five percent of business owners say they track their income and expenses, but 38% disclose they do so mentally, without written or digital records. Most lack a clear view of their cash flow, making them invisible to lenders and policymakers.

That lack of structure limits access to credit, planning, and long-term growth.

Credit access is also deteriorating as 51% of informal business owners have never taken a loan and have no intention to do so, compared to 30% in the last report.

Fear of debt, high interest rates, and lack of collateral keep them shut out of the financial system. Among those who borrow, only 6% have ever secured loans above ₦1 million, with digital lenders and microfinance banks emerging as their most common sources.

The result is a self-sustaining cycle of informality; low records, low credit, low growth.

Inflation and the Cost of Resilience

Inflation has become the most punishing cost of doing business in Nigeria. It’s the invisible tax that eats into every sale, every restock and every saving. 

Dr Nurudeen Abubakar Zauro, technical adviser to the President on Economic and Financial Inclusion, explained:

“With the removal of fuel subsidies and devaluation of the Naira by the monetary authorities, inflation rate increased from 22.41% in May 2023 to a climax of 34.8% by December 2024 according to the data from the National Bureau of Statistics (NBS). In July 2025, inflation rate declined drastically to 21.88%.”

For informal businesses, that drop brings a little comfort. Inflation may have eased statistically, but prices are still suffocating. The report found that while 74% of business owners save money, 69% save less than ₦50,000 monthly, and 42% say their savings cannot last a month if their business income stops.

Even the much-celebrated digital transition has not fully arrived. While many businesses use transfers to restock, most still prefer to receive payments in cash, and only 16% say digital transactions account for more than half of their total revenue. The infrastructure may be modern, but consumer behaviour is still very traditional and survival rarely leaves room for experimentation.

Policy and Structural Limitations

For an economy that contributes around 65% of the nation’s GDP and supports over 80% of jobs, the informal sector is strangely underserved by policy. It sustains Nigeria, but without protection. 

Dr Chinyere Almona, director-general of the Lagos Chamber of Commerce and Industry, noted:

“The most pressing challenge, therefore, is misaligned policy frameworks that inadequately balance revenue generation with sectoral resilience, inadvertently driving many players further into informality. What is needed is not merely regulation, but coherent regulatory empathy, a framework that recognises informality as a springboard for innovation, employment, and resilience, rather than a nuisance to be managed.”

Despite recent policy initiatives such as the Nigeria Consumer Credit Corporation (CrediCorp), the Nigeria Tax Administration Act (NTAA), and small business registration campaigns, the report disclosed that formalisation is still out of reach for most small business owners, expensive, bureaucratic and unrewarding. 

“Although many informal businesses are unfamiliar with the process of registering their business, the assumption is that it is costly and complex. These assumptions make them unlikely to attempt the process,” said Zauro.

It’s not a lack of will, but a lack of trust. 

From Resilience to Reform

If there’s one thread that ties Moniepoint’s findings together, it’s that resilience is not enough. The informal sector needs access, not a round of applause.

In her commentary, Dr. Almona called for a shift in thinking. “Policies must pivot from punitive compliance models to incentive-driven, inclusion-focused strategies to effectively support growth and formalisation.”

That means simplifying registration, improving access to finance, expanding digital infrastructure, and providing targeted support for women entrepreneurs; all areas where private sector players like Moniepoint, SMEDAN, and IFC are already collaborating and this must continue in order to bridge the trust gap between the street and the system. 

Moniepoint’s report measures Nigeria’s informal economy, exposing its weaknesses and the fatigue of millions of businesses. Nigerians are counting coins under candlelight, calculating what can wait till tomorrow. Informal businesses are the backbone of the economy, but they’re carrying too much weight without support.

Until policymakers, financiers, and regulators begin to design for their reality, not their assumptions, Nigeria’s growth will stay uneven. The country’s entrepreneurs are doing their part. It’s time the system met them halfway.