54% of Nigerian businesses still unregistered despite uptick —SURVEY
54% of Nigerian Businesses Remain Unregistered, Despite Modest Rebound
By Yinka Kolawole
A recent survey has found that 54 percent of businesses in Nigeria remained unregistered as of 2025, indicating a modest recovery in the landscape of business formalization following years of decline.
The 2025 State of Entrepreneurship Survey, conducted by FATE Foundation, reveals that the percentage of Nigerian entrepreneurs operating formal businesses increased to 46 percent, up from 42 percent in 2024. While this improvement is notable, it also highlights the persistence of informality within the nation’s entrepreneurial ecosystem.
The survey reported, “In 2025, 46% of Nigerian entrepreneurs reported their businesses as formally registered, an increase from 42% in 2024. Despite this slight improvement, more than half (54%) of enterprises still operate informally.”
Analysis of the data shows a five-year pattern of fluctuating business formalization rates. The share of unregistered businesses was 44 percent in 2021, rose to 51 percent in 2022, and continued to increase to 53 percent in 2023, before peaking at 58 percent in 2024 and easing slightly in 2025.
Experts attribute the marginal recovery to a gradual resurgence of confidence in registration processes, aided in part by digital platforms launched by the Corporate Affairs Commission (CAC). Nevertheless, various structural challenges continue to inhibit formalization, particularly among nano and micro enterprises, which dominate Nigeria’s business landscape. Significant barriers include limited access to information, mistrust of public institutions, and a perceived lack of benefits related to formal registration.
Among businesses with formal registration, the CAC remains the predominant regulatory body, with more than two-thirds of registered firms affiliated with it, maintaining a trend consistent with previous years. However, the survey indicates a gradual diversification in registration bodies, with the percentage of businesses registered with the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) increasing from 19.1 percent in 2024 to 24.7 percent in 2025. Additionally, the proportion of businesses registered with formal trade groups rose to 7.5 percent, up from 6 percent in the previous year.
The data also reveals that the age of a business significantly influences its registration status. New enterprises recorded the highest rates of informality, though conditions have improved year-on-year. In 2025, 68.2 percent of businesses less than one year old were unregistered, a decline from 82 percent in 2024. For firms under five years old, the informal operation rate decreased from 64 percent to 63 percent.
Adenike Adeyemi, Executive Director at FATE Foundation, noted, “Overall, the survey shows incremental gains in formalization across both new and established businesses. Yet, persistently high levels of informality among younger firms highlight ongoing structural barriers, including procedural costs, weak incentives, and limited perceived value of formal registration.”
