• Poor infrastructure support undermines entrepreneurship boom

• New businesses take 24% of small savings, says report

• Poor Nigerian savers prioritise Detty December over health, education

Nigeria’s deepening unemployment crisis may have triggered a dramatic shift in how millions of individuals seek to earn a living, with the majority turning to nano businesses and accidental enterprises, market insights have suggested.

On their face value, the data suggest a radical switch to entrepreneurship. But beneath are operational models that prioritise survival as opposed to serious sustainable wealth creation.

While the trend exposes the dire situation facing millions of citizens, it also points to the huge prospect in entrepreneurship and how investment in support infrastructure and fiscal incentives could power the next phase of economic growth.

The business community is replete with case studies of how survival crises pushed hundreds of Nigerians into macro-business (largely informal at takeoff) that grew into multi-billion-dollar empires.

The country may be on the cusp of an entrepreneurship breakthrough, with 24 per cent of micro savings, as suggested by a new report by MoniePoint Inc, being mobilised for investment in businesses, underpinning the rising popularity of entrepreneurship among the citizens.

At the micro level, the report suggests that N24 in every N100 saved targets a new business or the desire to expand an existing one.

Rents, which have spiked above employees’ yearly salaries as reported by The Guardian, take 16.5 per cent of savings.

Detty December, unrestricted indulgence in parties and other frivolous spending during yuletide seasons, interestingly, commands more savings than education, a key driver of productivity and wealth creation. The report puts savings for Detty December at 11 per cent and that of school fees at 10 per cent.

The data point to a silent but significant crisis that many Nigerians and even policymakers may have ignored. Considering that the report focuses more on transactions by low-income earners, with savings targets ranging from N200,000 to N500,000, it suggests that poor Nigerians are still important investments in areas such as education, rather than frivolities.

Health and education, according to economic literature, are among the strongest levellers for reducing income inequality. Sadly, health is not among the top five items Nigerians save for. However, the third item and possibly another header in part for health, takes nine per cent.

Poor savings for health and education among the least income earners in a country where spending in the two critical items is largely done out-of-pocket is a recipe for widening income inequality.

Whereas the poor are trapped in rent and other survivalist expenditures, an increasing number of the wealthiest Nigerians continue to send their wards to Ivy League universities. Foreign education demand, which spiked and extended to the struggling middle-class a few years ago in the height of government-lecturer face-off, was being subsidised by the Central Bank of Nigeria (CBN) through concessional foreign exchange (FX) until 2023 when the market was liberalised.

Even with the high cost of foreign education, owing to the sharp depreciation of the naira from 2023, the mania for foreign education among the rich has not eased. In the first half of 2025, data by the CBN suggested that Nigerians spent $1.4 billion on foreign education.

The figure was a 20 per cent uptick on the amount spent in the same period in 2024. From 2020 till June last year, the CBN statistics revealed that a total of $11.1 billion was spent on foreign education.

As increasingly number of children of rich families go overseas to acquire perceived more quality education and return home to take the juiciest opportunities, the system continues to malign children from poor homes, who barely complete basic schools not because they are mentally incapable but they are either financially disadvantaged or that their parents inadvertently made wrong choices – a possibility to breeds wider income inequality and worsen the poverty trade.

For the umpteenth time, Nigerians are leveraging smart saving products created by banks and fintech to save for business ventures. But their intentions could be undermined by an increasingly tough operating environment. With power shifting radically from a social service to an economic good, those in the bottom income quintile are largely priced out of the market.

For one, the band ‘A’ and ‘B’ categories are elitist in catchments and charges, a problem that is on its own fueling energy poverty and inequality. The fast-growing off-grid options are not within the reach of the poor.

Naira depreciation, for one, has triggered a localised spike in the cost of panels, batteries and inverters in the past three years. In some cases, prices have shot up by as much as 200 per cent, making an ambition to join the trail by struggling Nigerians a mere aspiration.

The government is offering a generous tax waiver for small businesses to help grow entrepreneurship. But for a sector that is overwhelmed with regulatory and market risks, stakeholders said the need to de-risk is more urgent than any other fiscal incentive.

In the face of a rising number of businesses, most business owners are barely getting along. For instance, the Informal Economy Report 2025 said half of informal businesses, which consist of 44 per cent of the businesses in the country, generate less than N20,000 daily in revenue, pointing to extremely thin margins.

The report puts the median daily revenue range between N20,000 and N50,000, while the median profit range is between N10,000 and N20,000. It added that 70 per cent of the businesses earn less than N50,000 daily.

An increasing number of young Nigerians may continue to flood the informal sector, not to build enduring businesses but to scavenge for survival income as artificial intelligence (AI) takes root across the board, a possibility that would worsen underemployment and deepen poverty.

A recent EY report claimed that 72 per cent of businesses in the country are exploring artificial intelligence (AI) to overhaul their workforce strategies, exposing the depth of disruption the technology will cause in the near future.

Recently, the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, warned that the AI adoption wave could disrupt the job market and wipe out many entry-level positions. AI impacts on jobs are higher in developed economies, but emerging markets, including Nigeria, are not left out.

According to multiple reports, informal sector employment, especially in developing countries, offers low and unstable income, making it extremely difficult for the employees to live above the survival level and prioritise their health and education.

In Nigeria, from 2022, the informal sector contributes between 92 and 94 per cent to the total number of employed people. According to the National Bureau of Statistics (NBS), self-employment, which is largely defined by informality, contributed a range of 84 and 88 per cent from 2022 to 2024.

Even at the medium scale level, as small profits are masked by high turnover and strong commercial activities, the perennially rising cost of doing business.

Content creation and influence marketing, projected to reach $5.3 billion last year, is reaping sufficient benefits from the shrinking formal job market. The expanding fan base of social media influencers – with 54 per cent of young Nigerians joining the digital community of at least one influencer – is a defining moment for the fast-growing market.

The number of Nigerians making businesses out of the microblogging sites is difficult to ascertain, as many do it as a ‘side hustle’. Reports estimate the number of Nigerian users on TikTok, the face of social media monetisation, at 37 million.