July 10, 2024

FG pledges support for informal sector with over 50% contribution to Nigeria’s GDP

FG pledges support for informal sector with over 50% contribution to Nigeria’s GDP

By Victoria Ojeme

The Federal Government has announced its commitment to bolstering Nigeria’s informal sector following the release of a new report revealing the sector’s contribution of over 50% to the country’s Gross Domestic Product (GDP).

This pledge comes in response to the findings of the Informal Economy Report 2024, launched in collaboration with the Small and Medium Enterprises Development Agency (SMEDAN).

The Minister of Industry, Trade and Investment, Doris Nkiruka Uzoka-Anite, said the government is committed to supporting small businesses in the informal sector, recognizing their substantial impact on the nation’s economy.

She stated that the report’s insights would guide policy formulation to enhance growth and inclusion in this critical economic segment.

The report indicates that 72.3% of informal businesses generate over ₦1 million in monthly revenue. However, it also highlights the financial challenges faced by these enterprises, with most individual operators earning less than ₦250,000 monthly.

Key findings from the report include that retail and general trade lead the informal economy, accounting for 24% of all informal businesses; 68.2% of income from informal businesses is spent on feeding and family expenses; despite their economic impact, only 3 out of 10 businesses prioritize reinvestment.

The report also revealed that access to credit remains a significant challenge, with 70.7% relying on friends and family for financial support. Contrary to popular belief, about 90% of informal businesses pay some form of tax, primarily through market levies.

Charles Odii, Director-General of SMEDAN, said there was a need to formalize these businesses to increase their access to crucial resources like finance.

Meanwhile, representatives from the Vice President’s office reaffirmed the government’s commitment to economic and financial inclusion as part of President Bola Tinubu’s renewed hope agenda.

The House Committee on Small and Medium Enterprises also announced plans to prioritize support for women operating in the informal sector, signaling a potential shift in legislative focus.