Nigeria Business Formalisation rises to 46% in 2025, reflecting slow but steady adoption of registration among entrepreneurs

Nigeria Business Formalisation recorded a modest rebound in 2025, with 46 percent of entrepreneurs reporting formally registered enterprises, up from 42 percent in 2024, according to the 2025 State of Entrepreneurship Survey by FATE Foundation.

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Despite the improvement, 54 percent of businesses remain unregistered, highlighting persistent informality in the country’s entrepreneurial ecosystem.

Analysis of survey data shows a five-year pattern of fluctuation, with unregistered businesses accounting for 44 percent in 2021, rising to 58 percent in 2024 before easing slightly in 2025.

Analysts attribute the incremental recovery to growing confidence in regulatory processes, aided in part by digital registration platforms introduced by the Corporate Affairs Commission (CAC).

However, structural challenges continue to impede formalisation, particularly for nano and micro enterprises.

Constraints include limited access to information, mistrust of public institutions, and perceptions that registration costs outweigh benefits.

Among registered businesses, CAC remains the dominant body, with more than two-thirds of enterprises reporting affiliation.

The survey indicates gradual diversification, with registrations under the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) rising from 19.1 percent in 2024 to 24.7 percent in 2025.

Registration with formal trade associations also increased to 7.5 percent from 6 percent, while cooperative societies and local trade associations are gaining traction among smaller businesses seeking semi-formal recognition.

Business age remains a key factor in formalisation.

Firms less than one year old continue to show the highest informality, although the share of unregistered new businesses declined from 82 percent in 2024 to 68.2 percent in 2025.

Enterprises under five years old operated 63 percent informally, a marginal improvement from 64 percent the previous year, suggesting growing awareness among early-stage entrepreneurs.

Adenike Adeyemi, Executive Director at FATE Foundation, noted: “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.”

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The survey highlights ongoing challenges for policymakers seeking to strengthen business registration, with implications for taxation, regulatory oversight, and access to finance for small and growing enterprises.