The Informal Economy — Understanding the Unsung Drivers of Lagos’s Hustle

Lagos is a city that never sleeps, but more importantly, it is a city that never stops trading. Beyond the gleaming glass towers of Victoria Island and the tech hubs of Yaba lies the true engine of the Lagosian economy: the informal sector. Often dismissed as "unorganized" or "marginal," this sector is, in reality, a sophisticated, resilient, and indispensable network that powers West Africa's largest economy. In 2025, recent data from the Moniepoint Informal Economy Report reveals that Lagos alone accounts for 16% of all informal businesses in Nigeria a share equal to the entire Northeast and Southeast regions combined.

The informal economy in Lagos is not a monolith. It is a spectrum ranging from the "Mama Put" selling Jollof rice under a flyover to the specialized spare parts dealers in Ladipo Market. It encompasses street hawkers, "Okada" and "Marwa" riders, freelance hair braiders, and digital "hustlers" who trade gift cards or manage social media pages from cyber cafes.

​Statistics show that while this sector is vast, it is also deeply personal. Approximately 65% of these businesses are male-owned, yet women remain the backbone of the retail and food sub-sectors. These are largely micro-enterprises; 40% of them employ at least one additional person, meaning the informal sector is the largest employer of labor in the state. For most, entering this space isn't just an entrepreneurial choice it's a survival mechanism driven by a lack of formal job opportunities.

​One of the most striking paradoxes of the Lagos hustle is the gap between activity and profit. According to 2025 reports, 65% of informal operators saw their revenue increase over the past year. However, only 47% saw a corresponding rise in profit. The culprits are familiar to any Lagosian: skyrocketing inflation, the removal of fuel subsidies, and the fluctuating exchange rate.

​Financial fragility is the norm. Nearly 42% of these businesses have only enough cash reserves to survive for one month if their operations were to cease. Despite this, they contribute billions to the state's GDP. The median daily revenue for these businesses sits between ₦20,000 and ₦50,000, yet 70% of operators take home less than ₦50,000 in profit per month.

​Lagos is witnessing a digital revolution within its informal markets. While 50% of transactions are still cash-based, the "transfer" culture has taken over. Almost 48% of business owners now use digital transfers as their primary method of payment for goods. This shift is crucial; it creates a "digital footprint" that allows micro-merchants to finally access credit from fintechs something traditional banks have denied them for decades.

​The informal economy is not something to be "fixed" or eliminated; it is something to be integrated and supported. As Lagos aims for a population of 30 million by 2030, the resilience of these "unsung drivers" will determine the city's stability. Recognizing their contribution through better infrastructure, simplified tax regimes, and expanded financial inclusion is the only way to ensure the Lagos hustle continues to thrive.