The 2025 State of Entrepreneurship Survey by the FATE Foundation, released in late 2025, reveals a modest but significant shift in the Nigerian business landscape. After years of rising informality, 46% of entrepreneurs now operate formally registered businesses—a 4% increase from 2024.
While this signals a “gradual return of confidence” in the regulatory environment, the report highlights that 54% of enterprises remain unregistered, primarily due to perceived costs and a lack of clear incentives for nano-enterprises.
1. The Five-Year Formalization Rollercoaster
Nigeria’s path to business formalization has been volatile, heavily influenced by the 2022–2024 economic shocks (fuel subsidy removal and Naira devaluation).
2. Diversification of Registration Bodies
The Corporate Affairs Commission (CAC) remains the dominant authority, but the survey notes a “gradual diversification” as entrepreneurs seek semi-formal recognition through trade-specific and developmental bodies.
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CAC Dominance: Over two-thirds of registered firms are affiliated with the CAC.
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SMEDAN Growth: Registrations with the Small and Medium Enterprises Development Agency of Nigeria jumped from 19.1% (2024) to 24.7% (2025), driven by the lure of government grants and single-digit interest loans.
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Community Validation: Trade groups and local cooperatives saw an uptick to 7.5%, reflecting a preference for “trust networks” over cold bureaucracy.
3. The Age Factor: New Businesses Are Catching On
One of the most encouraging findings is the rapid formalization rate among newly birthed businesses (less than 1 year old).
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2024 Informality: 82% of new businesses were unregistered.
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2025 Informality: 68.2% of new businesses are unregistered.
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The Insight: This 13.8% improvement suggests that the “digital-first” registration platforms introduced by the CAC are finally reaching younger entrepreneurs at the point of business inception.
4. Structural Barriers to Full Formalization
Despite the uptick, Adenike Adeyemi, Executive Director of FATE Foundation, identified three persistent “walls” preventing the remaining 54% from registering:
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Cost-Benefit Mismatch: Small owners often feel the cost of annual filings exceeds the benefits of having a certificate.
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Mistrust of Institutions: Fear that registration is simply a “trigger” for multiple taxation.
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Access to Information: Many nano-entrepreneurs are still unaware of the simplified, lower-cost registration tiers for small names.
“Informality remains the default for over half of Nigeria’s entrepreneurs. While we see green shoots, we need a regulatory environment where the ‘value’ of being formal is as obvious as the cost of being informal.” — FATE Foundation 2025 Report.
