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By Yinka Kolawole
A recent survey has revealed that 54 percent of businesses in Nigeria remained unregistered in 2025 indicating a modest rebound in business formalization after years of decline.
The report on the 2025 State of Entrepreneurship Survey conducted by FATE Foundation shows that 46 per cent of Nigerian entrepreneurs operated formally registered businesses in 2025, up from 42 per cent in 2024.
Despite the improvement, the report noted that a larger proportion – 54 per cent – still run unregistered enterprises, underscoring the deep roots of informality across the country’s entrepreneurial ecosystem.
“In 2025, 46% of Nigerian entrepreneurs reported their businesses being formally registered, up from 42% in 2024. Despite this slight improvement, the data reveal that more than half (54%) of enterprises still operate informally,” report stated.
Analysis of the survey shows a five-year trend of persistent volatility in formalisation. The share of unregistered businesses stood at 44 per cent in 2021, rising to 51 per cent in 2022 and 53 per cent in 2023, before peaking at 58 per cent in 2024 and easing slightly in 2025.
Analysts say the marginal recovery suggests a gradual return of confidence in regulatory processes, aided partly by digital registration platforms introduced by the Corporate Affairs Commission (CAC).
However, structural challenges continue to discourage formalisation, particularly among nano and micro enterprises that dominate Nigeria’s business landscape. Key constraints include limited access to information, mistrust of public institutions and an unfavourable cost-benefit perception surrounding registration.
Among formally registered businesses, the survey revealed that CAC remains the primary registration body. More than two-thirds of registered enterprises reported affiliation with the commission, maintaining a pattern consistent with previous years.
The survey, however, points to gradual diversification. Registrations with the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) rose from 19.1 per cent in 2024 to 24.7 per cent in 2025.
Similarly, the proportion of businesses registered with formal trade groups and associations increased to 7.5 per cent in 2025, up from 6 per cent a year earlier. Cooperative societies and local trade associations are also gaining traction, reflecting a preference among small firms for semi-formal recognition built on trust networks and community validation.
The report further showed that business age remains a strong determinant of registration status.
Enterprises less than one year old recorded the highest informality rates, though conditions improved year-on-year.
In 2025, 68.2 percent of new businesses were unregistered – a notable decline from 82 per cent in 2024. For firms under 5 years old, 63 percent operated informally in 2025, which is a marginal improvement from 64 percent the previous year. The trend suggests rising awareness and gradual adoption of registration processes among early-stage entrepreneurs.
Adenike Adeyemi, Executive Director at FATE Foundation, said: “Overall, the survey shows incremental gains in formalisation across both new and established businesses. Yet, persistently high informality among younger firms highlights enduring structural barriers – including procedural costs, weak incentives and the limited perceived value of formal registration.”