Despite a slight increase in formal business registration, a significant portion of Nigerian enterprises remain unregistered, highlighting persistent structural challenges in the country's entrepreneurial ecosystem. According to a recent survey, 54% of businesses in Nigeria were still unregistered in 2025, indicating a modest rebound in business formalization after years of decline. The report, titled '2025 State of Entrepreneurship Survey', conducted by FATE Foundation, reveals that 46% of Nigerian entrepreneurs operated formally registered businesses in 2025, up from 42% in 2024. However, a larger proportion – 54% – still run unregistered enterprises, underscoring the deep roots of informality across the country’s entrepreneurial ecosystem. The survey also shows a five-year trend of persistent volatility in formalization. The share of unregistered businesses stood at 44% in 2021, rising to 51% in 2022 and 53% in 2023, before peaking at 58% 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 formalization, 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% in 2024 to 24.7% in 2025. Similarly, the proportion of businesses registered with formal trade groups and associations increased to 7.5% in 2025, up from 6% 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% of new businesses were unregistered – a notable decline from 82% in 2024. For firms under 5 years old, 63% operated informally in 2025, which is a marginal improvement from 64% 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."
