The Informal Economy, Hidden Capital, and Nigeria’s Next Growth Frontier
A few days ago, I came across a short interview with Adesuwa Rhodes.
It was brief, almost casual.
But hidden inside it was a sentence that should arrest every serious thinker, investor, policymaker, pastor, entrepreneur, development professional and nation-builder in Nigeria.
She was asked what industry people should be looking at now.
Her answer was simple:
The informal economy.
Then she explained what she meant.
The women on the street selling milk, bread, Coke, water and everyday items.
The people we pass daily.
The people we buy from casually.
The people who keep neighbourhood life functioning.
The people whose businesses are visible to our eyes but often invisible to our systems.
Many of them do not have formal bank accounts.
Many do not have proper records.
Many do not have access to health services, insurance, structured capital, digital tools, training, bulk purchasing, logistics support or legal protection.
Yet they are not outside the economy.
They are the economy.
Or at least, they are one of the largest parts of it.
And this is where Nigeria may be missing one of its greatest opportunities.
We keep looking for the next big thing in the wrong direction.
We look up at boardrooms, big banks, formal employment, political power, oil, tech startups and foreign investment.
But perhaps one of the largest markets in Nigeria is hidden in plain sight.
On the roadside.
At junctions.
In kiosks.
In markets.
In small shops.
At school gates.
Around motor parks.
Beside churches.
Inside neighbourhoods.
In the hands of women and men who sell what people need every day.
We call it informal.
But informal does not mean unimportant.
Informal does not mean unintelligent.
Informal does not mean unproductive.
Informal does not mean unserious.
Informal often means undocumented.
Unprotected.
Underserved.
Under-financed.
Under-insured.
Under-measured.
Under-organised.
And because it is under-organised, we underestimate it.
That may be one of Nigeria’s most expensive mistakes.
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THE NUMBERS ARE TRYING TO TELL US SOMETHING
This is not a small matter.
Nigeria’s National Bureau of Statistics reported that informal employment remained high at 93% in Q2 2024.
The same report showed that self-employment accounted for 85.6% of employed people in Q2 2024.
Informality is even more pronounced among women and rural workers. In the NBS Q2 2024 report, informal employment was 96% among females, 90% among males, 90% in urban areas and 97.5% in rural areas.
The International Labour Organization paints the same picture from another angle. Its Nigeria policy brief reports that informal employment encompasses 92.3% of total employment, rising to 96% among women and 98% among young people.
This means that when we speak about Nigeria’s labour market, we are mostly speaking about informal work.
When we speak about women’s economic life, we are mostly speaking about informal work.
When we speak about young people trying to survive, trade, earn, learn and build, we are mostly speaking about informal work.
When we speak about the economy people actually experience daily, we are speaking about something far larger than formal offices, salaries and corporate employment.
So why do we keep treating the informal economy as a side issue?
Why do we design policy as if the formal economy is the whole economy?
Why do we preach prosperity as if the people selling bread, pepper, water, recharge cards, cooked food, cosmetics, clothes, spare parts, small provisions and household essentials are merely surviving, rather than participating in one of the largest economic systems in the country?
The data is not whispering.
It is shouting.
Nigeria is informal.
The question is whether we will keep ignoring the structure of the economy we actually have.
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THE INFORMAL ECONOMY IS NOT THE ABSENCE OF ECONOMY
The informal economy is not the absence of economy.
It is economy without enough structure.
It is economy without enough recognition.
It is economy without enough protection.
It is economy without enough data.
It is economy without enough design.
It is economy without enough respect.
A woman selling bread on the street is not merely a small trader.
She is a distribution point.
She is a demand signal.
She is a community connector.
She is a household finance manager.
She is part of the daily food system.
She is a potential insurance customer.
She is a potential health access point.
She is a potential savings participant.
She is a potential borrower.
She is a potential micro-franchisee.
She is a potential digital agent.
She is a potential employer.
She is a potential data point in a national productivity map.
But because we do not see her properly, we do not design properly.
We either pity her, ignore her, tax her, harass her, romanticise her, or use her as a campaign image.
But we rarely build around her.
We rarely ask:
What would help her sell better?
What would help her save better?
What would help her access health care?
What would help her insure her family?
What would help her buy stock cheaper?
What would help her keep records?
What would help her build credit?
What would help her protect her children?
What would help her move from survival to stability?
What would help her move from stability to growth?
What would help her become part of a larger system of value?
That is the market we refuse to see.
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THE PROSPERITY PARADOX
Clayton Christensen, Efosa Ojomo and Karen Dillon, in The Prosperity Paradox, make an argument that Africa desperately needs to revisit.
They argue that prosperity does not come merely from trying to fix the visible signs of poverty.
It comes when innovators create new markets.
Not just new products for people who already consume.
But markets that make products and services affordable, accessible and useful to people who were previously nonconsumers.
This is a critical distinction.
A nonconsumer is not someone who has no need.
A nonconsumer is someone who has a struggle, but no accessible solution.
They need something.
They want something.
They may even be willing to pay for something.
But the available solution is too expensive, too complex, too far away, too formal, too inconvenient, too intimidating, or simply not designed for their reality.
That is where market-creating innovation begins.
It does not begin by asking:
What can we sell to the rich?
It begins by asking:
Who is struggling to make progress because the current system does not serve them?
That question changes everything.
Mo Ibrahim saw this with mobile phones in Africa.
Many people saw poverty.
He saw the struggle of communication.
Many saw risk.
He saw nonconsumption.
Many saw people who could not afford phones.
He saw people who desperately needed connection.
And when the right model was created, mobile phones did not remain a luxury.
They became infrastructure.
They created jobs.
They created payment systems.
They created new forms of identity.
They created business opportunities.
They created fintech.
They created mobile health possibilities.
They changed behaviour.
They pulled in infrastructure.
They helped formalize parts of life that had previously been disconnected.
That is what market-creating innovation does.
It does not merely serve a market.
It creates one.
Nigeria must now ask:
Where are the next nonconsumption markets?
One answer may be right in front of us:
The informal economy.
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STOP TELLING POOR PEOPLE WHAT THEY NEED
There is another lesson we must learn from development economics.
Abhijit Banerjee, Esther Duflo and Michael Kremer won the Nobel Prize in Economic Sciences for their experimental approach to alleviating global poverty.
One of the broader lessons from this body of work is that poor people are not simplistic creatures who only need experts to tell them what to want.
They are human beings.
They make choices.
They pursue dignity.
They seek pleasure.
They want status.
They desire beauty.
They need belonging.
They want phones.
They want televisions.
They want good food.
They want celebrations.
They want their children to look respectable.
They want to enjoy life.
They want more than survival.
This matters deeply.
Because development thinking often treats poor people as though their only legitimate needs are the needs outsiders approve.
Food.
Water.
Mosquito nets.
Vaccines.
School fees.
Sanitation.
All of these are important.
But human beings do not live by lists prepared by experts alone.
People also live by aspiration.
By hope.
By dignity.
By identity.
By social belonging.
By the desire to feel that life is moving forward.
This does not mean health, nutrition or safety are unimportant.
It means we must stop treating the poor as if they are incapable of choosing.
We must stop designing solutions that assume, “We know what you need.”
We must listen.
We must observe.
We must ask better questions.
Why does a person buy a phone before buying something an expert thinks is more urgent?
Maybe because the phone is not a luxury to them.
Maybe it is a business tool.
A social identity.
A connection to family.
A security device.
A payment channel.
A learning platform.
A status signal.
A way to belong to the modern world.
Why does a poor family want a television?
Maybe because entertainment is not foolishness.
Maybe because information matters.
Maybe because children gather around it.
Maybe because dignity includes beauty, colour and joy.
If we do not understand what people value, we will design solutions they do not use.
If we do not listen to people, we will keep building broken wells.
If we only push what we think they need, we may miss what they are already trying to become.
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THE PHONE IS ALREADY A DOORWAY
One reason this moment is different is technology.
EFInA’s 2023 Access to Financial Services in Nigeria survey shows that mobile phone usage among adults has risen to 93%, or about 103 million adults.
That matters.
Because the phone is no longer merely a communication device.
It is becoming a doorway.
A doorway to payments.
A doorway to savings.
A doorway to credit.
A doorway to insurance.
A doorway to health reminders.
A doorway to identity.
A doorway to records.
A doorway to learning.
A doorway to business visibility.
A doorway to markets.
A doorway to emergency response.
A doorway to community trust.
GSMA reports that mobile connectivity has become a cornerstone for inclusive digital economies in Africa, and that the mobile sector contributed about $220 billion to Africa’s economy in 2024.
Globally, mobile money processed more than $2 trillion in transactions in 2025.
This is not a small signal.
The mobile phone is one of the most important tools for organizing the informal economy without forcing people to become formal overnight.
The question is not whether informal traders can use technology.
Many already do.
The question is whether we can design technology that respects how they live, trade, save, borrow, trust, sell, buy and survive.
That technology must be simple.
Local.
Affordable.
Trustworthy.
Voice-friendly.
Agent-assisted.
Low-data.
Low-literacy.
Useful immediately.
And connected to real value.
Technology that only impresses investors will fail.
Technology that solves daily struggles may create markets.
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FINANCIAL INCLUSION MUST MOVE FROM ACCESS TO USEFULNESS
EFInA’s 2023 survey also reminds us that financial inclusion is not just about opening accounts.
It is about whether people use financial services in ways that help them live, trade, save, borrow, insure and withstand shocks.
One of the striking barriers in the EFInA 2023 highlights is that “little or irregular income” became a more prominent reason for not having a bank account, rising from 31% in 2020 to 49% in 2023.
This is important.
People are not simply unbanked because they are ignorant.
Many are unbanked or underbanked because formal products do not fit irregular lives.
Informal income is uneven.
Daily sales fluctuate.
Emergencies interrupt savings.
Health shocks destroy capital.
Transport costs affect profit.
School fees disrupt cash flow.
Market disruptions reduce income.
Inflation changes everything.
If finance is designed around predictable salaries, it will not serve people whose lives run on daily, weekly and seasonal uncertainty.
So the question is not merely:
How do we bring informal people into formal finance?
The better question is:
How do we design finance around the real rhythms of informal life?
That is the opportunity.
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WE ARE LOOKING IN THE WRONG DIRECTION
Years ago, in a presentation titled We Are Looking in The Wrong Direction, I reflected on a phrase attributed to Landa Cope:
“The future was that the poor are the solutions for themselves. We are looking in the wrong direction.”
That line has stayed with me.
Because it challenges the saviour complex.
It challenges charity that does not listen.
It challenges policy that sees people as problems.
It challenges development work that sees only deficiency.
It challenges churches that only give to the poor but do not see the poor as agents of transformation.
It challenges business leaders who think the only serious market is the already organised market.
What if the poor are not merely the problem?
What if they are part of the solution?
What if the market women, street sellers, artisans, apprentices, food vendors, drivers, dispatch riders, cleaners, repairers, small shop owners and daily traders are not signs of backwardness?
What if they are the beginning of a new prosperity architecture?
What if Nigeria’s next economic leap will not come only from creating more formal institutions at the top, but from enabling millions of informal participants at the base?
What if the people we call “ordinary” are actually the operating system of the nation?
Then the question changes.
It is no longer:
How do we help poor people?
It becomes:
How do we build systems that allow overlooked people to create, capture, protect and multiply value?
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THE PRACTICAL OPPORTUNITY MAP
If we take the informal economy seriously, then we must stop speaking only in general terms.
We must map the opportunity.
1. Micro-health
Informal workers often lose income when they fall sick.
Many delay treatment because clinics feel expensive, distant or intimidating.
What if street traders, market women and artisans could access subscription-based basic health checks?
Blood pressure checks.
Diabetes screening.
Maternal health support.
Telemedicine access.
Mobile clinic days.
Medicine discounts.
Health education through trusted community agents.
A trader does not only need capital.
She needs health.
A sick trader cannot trade.
Health is economic infrastructure.
2. Micro-insurance
Many informal workers live one shock away from collapse.
Fire.
Flood.
Theft.
Illness.
Accident.
Death of a breadwinner.
Sudden hospitalization.
A small shock can destroy years of effort.
What if insurance was redesigned for the informal economy?
Tiny premiums.
Simple language.
Fast claims.
Trusted agents.
Group cover.
Market association plans.
Family protection.
Business interruption support.
Micro-insurance is not a luxury.
It is resilience infrastructure.
3. Micro-credit and responsible capital
Access to capital is one of the greatest constraints of informal business.
But capital without structure can also destroy.
Many people borrow from exploitative sources because formal finance does not see them.
What if lending was based on daily sales records, group trust, digital behaviour, stock movement and verified trading history?
What if capital came with coaching?
What if repayment matched cash flow?
What if women traders could borrow to buy inventory in bulk?
What if capital rewarded reliability?
The issue is not simply giving money.
It is building trustworthy pathways to capital.
4. Digital bookkeeping
Many informal businesses do not lack business activity.
They lack records.
Without records, there is no proof.
Without proof, there is no credit.
Without credit, there is no scale.
Without scale, there is no transition.
Simple digital bookkeeping could change lives.
Daily sales.
Stock bought.
Stock sold.
Profit estimate.
Debt record.
Supplier record.
Customer record.
Savings record.
Tax readiness.
Business history.
If capital follows order, then records are the doorway.
5. Cooperative procurement
A single trader buys small and pays more.
A group can buy better.
What if informal sellers were organized into trusted buying clusters?
Bread sellers.
Water sellers.
Food vendors.
Retail kiosks.
Women-led neighbourhood traders.
They could buy stock together.
Negotiate better prices.
Reduce transport costs.
Improve margins.
Share logistics.
Access verified suppliers.
This is not charity.
It is market design.
6. Agent networks
Nigeria already understands agent networks through POS operators, mobile money agents and distribution agents.
But this can go further.
The informal trader can become an access point for:
Payments.
Savings.
Health enrollment.
Insurance.
Identity verification.
School fee savings.
Government communication.
Emergency alerts.
Community reporting.
Local delivery.
A street seller is not only a seller.
She can become a node in a trust network.
7. Training and business formation
Training must be practical, short, local and repeated.
Not long seminars people cannot attend.
Not abstract language.
Not imported business vocabulary.
Informal workers need training in:
Pricing.
Stock control.
Customer service.
Savings.
Debt management.
Recordkeeping.
Digital payments.
Health and hygiene.
Negotiation.
Safety.
Family finance.
Succession.
Training must meet people where they are.
The goal is not to make them feel small.
The goal is to help them see the business inside what they already do.
8. Women-led distribution
Women are already central to many informal distribution systems.
They sell.
They manage households.
They extend trust.
They understand neighbourhood demand.
They notice changes early.
They know who is sick, who is hungry, who is struggling and who is reliable.
A women-led distribution model could become one of Nigeria’s most powerful inclusion strategies.
Not by tokenism.
But by recognizing existing networks of trust and trade.
Women who sell bread and water may become distributors of health products, insurance products, savings products, information, education and household goods.
9. Emergency funds
Many poor households do not only need income.
They need shock absorbers.
An emergency fund tied to trusted groups could help families survive:
Illness.
Burial costs.
School emergencies.
Fire incidents.
Market destruction.
Transport accidents.
Sudden displacement.
This could be built through rotating savings, church-community partnerships, digital wallets, cooperative funds and insurance-linked support.
10. Community trust systems
The informal economy runs on trust.
But trust is often undocumented.
Who is reliable?
Who repays?
Who supplies well?
Who cheats?
Who delivers?
Who shows up?
Who is respected in the market?
Who is central in the community?
Technology can help record trust without destroying the human relationships that already sustain it.
A community trust system could combine digital records with local reputation.
This may become the bridge between informal credibility and formal opportunity.
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FROM CHARITY TO MARKET-CREATING CARE
The church must pay attention here.
Because this is not only an economic issue.
It is a Kingdom issue.
Jesus did not ignore ordinary people.
He saw fishermen.
He saw widows.
He saw tax collectors.
He saw women at wells.
He saw children.
He saw labourers.
He saw servants.
He saw the sick.
He saw the hungry.
He saw people outside the formal centres of power.
The Kingdom does not only see the top of society.
The Kingdom reveals value in people others overlook.
But the church must move beyond occasional charity.
Charity has its place.
Giving food matters.
Helping people in crisis matters.
Supporting the vulnerable matters.
But charity alone does not create prosperity.
We must also ask:
How do we build systems that help people stand?
How do we help people work better?
How do we help people document value?
How do we help people access care?
How do we help people build trust?
How do we help people move from survival to stewardship?
How do we connect compassion to structure?
This is what I would call market-creating care.
Care that does not only give relief.
Care that creates pathways.
Care that sees people as participants.
Care that builds dignity.
Care that honours agency.
Care that listens before it designs.
Care that uses technology without losing humanity.
Care that creates jobs, services, trust and opportunity.
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THE MARKET IS ALREADY SPEAKING
The informal economy is already speaking.
It speaks through what people buy.
It speaks through what people sell.
It speaks through the risks they take.
It speaks through the debts they carry.
It speaks through their daily movement.
It speaks through the goods that sell fastest.
It speaks through the phones they use.
It speaks through the groups they join.
It speaks through the things they sacrifice for.
It speaks through what they desire for their children.
The question is whether we are listening.
Too often, we enter poor communities with answers before questions.
We design interventions before listening.
We assume needs before observing desires.
We mistake lack of formal structure for lack of intelligence.
We mistake poverty for passivity.
We mistake informality for absence.
But markets speak.
People speak.
Desire speaks.
Pain speaks.
Struggle speaks.
Survival patterns speak.
The wise innovator listens.
The wise policymaker listens.
The wise pastor listens.
The wise investor listens.
The wise nation listens.
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BUILT BY ORDER
There is a direct connection between this and our 2027 direction:
Built by Order.
The informal economy does not need to be crushed by formality.
It needs appropriate order.
Lightweight order.
Useful order.
Trust-building order.
Order that helps people access opportunity.
Order that does not punish them for being small.
Order that does not drown them in bureaucracy.
Order that turns activity into evidence.
Order that turns evidence into trust.
Order that turns trust into capital.
Order that turns capital into growth.
Order that turns growth into prosperity.
If capital follows order, then one of Nigeria’s great tasks is to build order around hidden value.
Not order as control.
Order as empowerment.
Not order as harassment.
Order as trust.
Not order as paperwork for its own sake.
Order as a bridge to opportunity.
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THE REAL QUESTION
The question is not whether Nigeria has markets.
The question is whether we can see them.
The question is not whether people are working.
They are working.
The question is whether their work is protected, measured, financed, insured, connected and multiplied.
The question is not whether the poor have value.
They do.
The question is whether our systems recognize that value.
The question is not whether the informal economy is real.
It is.
The question is whether we will keep walking past it.
Because the woman selling bread may not only be selling bread.
She may be showing us the next frontier of health access.
The next frontier of micro-insurance.
The next frontier of women-led distribution.
The next frontier of digital bookkeeping.
The next frontier of agent networks.
The next frontier of community trust.
The next frontier of inclusive capital.
The next frontier of national productivity.
The next frontier of Kingdom stewardship.
We must stop looking only where the lights are bright.
Some of the future is standing by the roadside.
And if we learn to see it, listen to it, organize it and serve it, Nigeria may discover that one of its largest markets was never absent.
It was simply ignored.
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CLOSING THOUGHT
The informal economy is not a problem to be erased.
It is a market to be understood.
A people to be dignified.
A system to be enabled.
A struggle to be converted into innovation.
A hidden capital base waiting for trust, technology, care and order.
The market we refuse to see may become the market that helps us build the future.
But only if we look in the right direction.
Francis Madojemu
