By Nchetachi Chukwuajah
Moniepoint’s Informal Economy Report 2025 reveals that more business owners in Nigeria refuse to take loans to support their businesses due to tighter lending conditions and high interest rates, which stood at 27 per cent as of September 2025.
The report, which examines trends among millions of unregistered micro and small enterprises (MSEs), was produced in partnership with the International Finance Corporation (IFC).
According to Moniepoint, the decline in credit appetite among informal businesses in Nigeria was largely due to fear of being unable to repay loans, opting instead to fund their businesses from their savings.
The report stated: “While 30 per cent of respondents reported not borrowing for their business in our previous report, that figure increased to 51 per cent in this report.
“This shows a decline in credit appetite across the informal and small business landscape. A major reason for this could be tighter lending conditions and a higher interest environment.
“The most common reason they don’t take loans is that they’re afraid of being unable to repay them. 26 per cent of them also believe that their businesses do not need a loan, while 11 per cent would prefer to use their savings or funds for business needs.
“Women are more likely to avoid getting a loan because they’re afraid of being unable to repay, or because of high/unfavourable interest rates.”
The report added that very few informal businesses get access to large loans, adding that though women were more likely to get loans from informal sources than men, businesses owned by men were twice as likely to get loans above N1 million compared to those owned by women.
It said: “Only 6 per cent of informal businesses have secured loans exceeding N1 million. Informal businesses owned by men are twice as likely to get loans above N1 million as women-owned businesses.”
The report also found that 69 per cent of informal businesses save less than N50,000 monthly, adding that 42 per cent of them also report that their current savings can last them less than one month if they stopped getting income from their business.
Commenting on the report, the Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Chinyere Almona, called for simpler tax systems and incentives for small and informal businesses that will make formalisation attractive rather than punitive.
Almona said: “Compliance should be rewarding, not burdensome. Gender-sensitive credit, simplified registration, and targeted tax relief will go a long way in empowering micro-entrepreneurs.”
Minister of Industry, Trade and Investment, Jumoke Oduwole, noted that unlocking the potential of the informal economy, especially for women and youth, remains critical to building a more prosperous future.
For the CEO of Enhancing Financial Innovation and Access (EFInA), Foyinsolami Akinjayeju, coordinated policies are needed to close gender gaps and improve financial inclusion.
In her comments, Akinjayeju recommended regulatory incentives for financial institutions that provide tailored credit and insurance products for women-owned microbusinesses.
She said: “Policies must shift from fragmented interventions to coordinated measures that guarantee access, digital inclusion, and gender equity.”
