Moniepoint, a leading fintech giant known for operating one of Nigeria's largest agent networks, has unveiled its inaugural informal economy report. This comprehensive report provides valuable insights into the financial habits and digital payment trends within Nigeria's informal economy. By analyzing data from over 2 million Nigerian businesses that registered on its platform between 2019 and 2024, Moniepoint offers a unique perspective on the evolving financial landscape.
One of the standout findings is the growing preference among businesses for saving with fintech platforms over traditional banks. This shift highlights the trust and convenience that fintech solutions offer to small and medium-sized enterprises (SMEs) operating in the informal sector. The report's detailed examination of digital payment trends further underscores the increasing adoption of fintech services, reflecting a broader movement towards more efficient and accessible financial solutions.
Moniepoint's report goes beyond raw data, shedding light on the practical realities of Nigeria's informal economy. It explores how businesses are leveraging digital tools to enhance their financial management and streamline transactions. These insights not only underscore the pivotal role of fintech in driving economic inclusion but also provide a roadmap for other fintech companies looking to make a meaningful impact in similar markets. Here are five interesting things we learned from the report.
Cards, Most Especially Verve, Dominate Offline Payments in Nigeria
Moniepoint's report reveals that among the 2 million businesses surveyed, approximately 80% favor card payments over transfers for in-person transactions. This preference contrasts with online payments, where online transfers predominate according to figures from the central bank.
The surge in digital payments saw its peak in 2023, driven by a cashless policy that inadvertently made cash scarce, compelling many Nigerians to adopt digital payment methods. Despite the eventual reversal of this policy, the shift to digital payments persisted, underscoring a lasting change in financial habits.
 |
| Moniepoint Verve Card Picture |
In this transformed landscape, companies like OPay and Moniepoint have become integral to daily life. Moniepoint alone processed an impressive 5.2 billion transactions, highlighting the significant role fintechs play in facilitating digital payments. This trend not only reflects the adaptability of Nigerian businesses and consumers but also emphasizes the growing reliance on fintech solutions for efficient and accessible financial transactions.
Lagos: The Unquestionable Commercial Capital of Nigeria
Lagos has consistently been Nigeria’s economic powerhouse, despite being the smallest state by land area. Since the country's independence, Lagos's strategic location and historical significance as the first capital have cemented its status as a commercial hub. The city is a vibrant epicenter of economic activity, housing 15% of Nigeria’s informal economy. This makes Lagos a crucial player in the nation's financial landscape, highlighting its enduring economic importance.
Remarkably, Lagos is only surpassed by the North Central region, known as Nigeria's food basket and the location of the current capital, Abuja, and the broader South West region, where Lagos itself is situated. These regions together drive much of Nigeria's economic output, with Lagos at the forefront. Its bustling markets, thriving businesses, and dynamic economic environment make it an indispensable component of Nigeria's economic framework.
Nigerian Businesses would Rather Save Money on Digital Platforms than Banks
The Moniepoint’s report also reveals that an overwhelming 92.4% of informal businesses prefer saving on digital platforms rather than traditional banks, highlighting the growing influence of fintechs in Nigeria. Cooperatives and contributions, managed by members of the informal sector, account for nearly half of the savings choices within this economy. This shift towards digital savings reflects a broader trend of trust and convenience associated with fintech solutions over conventional banking methods.
For fintech companies, this preference for digital platforms represents a significant boost to their bottom line. The deposits from these informal businesses become the loans that fintechs can offer to other customers, thereby enhancing their financial services ecosystem. Despite the widespread adoption of fintech platforms, the report also notes that only 1.3% of informal businesses earn above ₦2.5 million in monthly profits, underscoring the challenges and modest earnings within Nigeria’s informal economy.
Nigerian Businesses Prefer Loan Apps Over Banks for Borrowing
When loan apps emerged, they filled a crucial gap by offering credit to Nigerians that commercial banks typically ignored—small businesses and individuals. This shift is significant in a country where, according to a 2023 report, only 6% of the population utilizes credit. The introduction of online loan apps/platforms provided much-needed financial support to those underserved by traditional banking institutions, addressing a longstanding need for accessible credit.
Despite the informal economy's preference for borrowing from friends and family, loan apps have become the second most popular option, surpassing traditional banks. This trend underscores the transformative impact of fintech solutions in Nigeria's lending landscape. Loan apps offer a more accessible, user-friendly alternative for borrowing, making them an increasingly attractive option for many Nigerians seeking financial assistance.
Nigerian Businesses are Relatively Young
Lastly, a concerning trend highlighted by the data is that over 80% of respondents indicated their businesses were less than five years old, suggesting a high attrition rate among young enterprises. This demographic underscores the challenge of sustaining businesses beyond their initial years in Nigeria's competitive market environment.
The majority of businesses surveyed reported being operational for less than five years but more than two years, with a significant portion falling within the six-month to one-year range. This indicates a dynamic entrepreneurial landscape where new ventures continually emerge, albeit facing considerable hurdles to long-term viability and growth.