Nigeria aims to formalise small businesses operating outside the tax net

This, the government insists, is a structural reform intended to broaden the tax base without raising tax payments. 

According to Minister of Finance and Coordinating Minister of the Economy, Wale Edun, the aim is also to eliminate discretionary assessments, improve predictability and protect small enterprises while ensuring every economically active segment contributes fairly. 

“Our goal is consistency, clarity, equity and structured entry into the formal economy,” the Minister said. 

He highlighted that the regulations exempt nano and small businesses with an annual turnover of ₦12-million and below from tax, ensuring protection for struggling entrepreneurs. 

Economic growth 

The Minister also disclosed that Nigeria’s economy recorded growth above 4% in the last quarter of 2025, describing it as positive momentum. 

 He emphasised that the government is targeting 7% GDP growth in the immediate term, as part of a broader strategy to achieve President Tinubu’s vision of a US$1-trillion economy by 2030. 

Informal economy report 

According to the 2024 Informal Economy Report, powered by Nigerian payment startup Moniepoint, businesses in Nigeria’s informal market, encompassing around 40-million small enterprises, contribute over half of the country’s Gross Domestic Product. 

In a 2024 article published in Forbes Africa business magazine, Nigerian analyst, Kolawole Oyebola, commented: “The informal economy is both a lifeline and a bottleneck for Nigeria’s economic development. While it undeniably contributes significantly to the GDP and offers critical opportunities for youth and women, the high rate of business turnover and low-profit margins highlight structural inefficiencies. 

“To harness its full potential, there needs to be a concerted effort to integrate these businesses into the formal economy through supportive policies, financial inclusion initiatives and infrastructure development.”