Despite a slight improvement, the majority of Nigerian businesses remain unregistered, highlighting persistent structural challenges in the entrepreneurial ecosystem. A recent survey reveals that 54% of businesses in Nigeria were still unregistered in 2025, indicating a modest rebound in business formalization after years of decline. This data highlights a five-year trend of persistent volatility in formalization, with unregistered businesses peaking at 58% in 2024 and easing slightly in 2025. Despite the introduction of digital registration platforms by the Corporate Affairs Commission (CAC), analysts say the marginal recovery suggests a gradual return of confidence in regulatory processes. However, structural challenges persist, 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, with over two-thirds of registered enterprises reporting affiliation with the commission. However, there is a gradual diversification, with registrations with the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) rising 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, 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 formalization 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.'
