Country42 researched factors
Starting a small business in Nigeria (2026): costs, wages, rent, licences
Nigeria at a glance
Running a small business in Nigeria is dominated by two costs that the India model barely has: self-generated power and inflation. Most shops sit in tariff Bands B–E with 4–16 hours of daily outage, so a petrol generator costing ₦1,400–2,100 an hour (petrol near ₦1,400/L in Oct 2026 after the Hormuz oil shock) can exceed rent. Food inflation was still about 19.6% in Sep 2026 and the naira trades near ₦1,333/$, so menu prices are reset every few months. Payments run on bank transfers, OPay/Moniepoint/PalmPay wallets and POS agents rather than UPI-style QR. The 2026 tax reform is generous to micro firms (0% CIT and no VAT under ₦50m turnover, first ₦800k of personal income tax-free), but state and LGA levies, task-force raids and informal collections are a real cost. Lagos is far dearer than Ibadan or northern cities; the North has distinct Ramadan and Sharia-related trading rules.
MetroLagos
Mid-size cityIbadan
Small townOgbomoso
Nigeria at a glance
Cities used for the three sizes: Lagos · Ibadan · Ogbomoso
| Nigeria | |
|---|---|
| Minimum wage, monthly | ₦70,000 |
| Unskilled day wage | ₦6,000 |
| Shop rent, metro (per sq ft/month) | ₦900Estimate |
| Shop rent, mid-size city | ₦350Estimate |
| Shop rent, small town | ₦150Estimate |
| Commercial power, per kWh | ₦210 |
| Commercial LPG cylinder | ₦16,000Estimate |
| Petrol, per litre | ₦1,400Estimate |
| Cup of tea / coffee | ₦400Estimate |
| Simple meal | ₦2,000 |
| Men's haircut | ₦1,500Estimate |
| Milk, 1 litre | ₦3,200Estimate |
| Bread loaf | ₦1,600Estimate |
Taxes
| Sales Tax | VAT 7.5% (Nigerian Tax Act 2025, in force 1 Jan 2026) |
| Small Biz Threshold | Small company = turnover ≤ ₦50 million and fixed assets ≤ ₦250 million: 0% CIT, no development levy, exempt from VAT registration/charging. Individuals: first ₦800,000/yr of income tax-free |
| Local Levies | State and LGA levies (trade permit, signage, waste, market/park levies); Lagos Consumption tax on food outlets; informal 'agbero' collections |
Licences and registrations
Rules vary by state and city: confirm with your municipal office.
| Licences and registrations | Fee | Authority | Source |
|---|---|---|---|
| CAC Business Name registration (sole trader) | ≈ ₦21,400 (₦20,000 filing + ₦1,000 name reservation + charges); free under SMEDAN/CAC quota schemes | Corporate Affairs Commission | selar.com |
| Private company (Ltd) incorporation | ≈ ₦35,000–60,000 incl. stamp duty for ₦1m share capital (estimate) | Corporate Affairs Commission | kolonell.com |
| Tax ID (TIN) via JTB / Nigeria Revenue Service | Free | Joint Tax Board / NRS | businessday.ng |
| LGA trade/shop permit and signage permit | ≈ ₦5,000–30,000/yr, varies by LGA (estimate) | Local Government Area revenue office | Est.: LGA levies are set by state revenue laws; no national schedule |
| NAFDAC registration (packaged food/drink only) | ₦100,000+ per product; small-scale relief scheme available (estimate) | NAFDAC | Est.: NAFDAC tariff not re-checked for 2026 |
| Food handlers' medical certificate / environmental health permit | ≈ ₦5,000–15,000 per staff/yr (estimate) | State environmental health / LGA | Est.: state practice, no 2026 schedule found |
Festivals and demand
| Festivals and demand | Dates (2026–27) | Effect on trade |
|---|---|---|
| Christmas and 'Detty December' | Dec 2026 (public holidays 25–26 Dec, 1 Jan 2027) | Biggest spending month: food, drinks, clothing, salons and tailors at peak; mass travel from Lagos to the East empties some markets late Dec |
| Eid al-Fitr (Sallah) | about 9–10 Mar 2027 (moon-dependent) | North: Ramadan daytime food sales collapse then spike for Sallah; tailoring and ram demand up |
| Easter | Good Friday 26 Mar – Easter Monday 29 Mar 2027 | Four-day break; food and drinks demand up, offices shut |
| Eid al-Adha (Ileya / Babban Sallah) | about 16–17 May 2027 | Ram/cattle prices spike; tailoring and food demand up |
| School resumption (Sep, Jan, Apr) | Jan 2027, Apr/May 2027, Sep 2027 | Household cash goes to fees; discretionary spend dips for 2–3 weeks |
Seasons and weather
- Apr–Oct · Rainy season in the south: flooding in Lagos and riverine states disrupts street trade and supply
- Nov–Feb · Harmattan: dry dusty winds, lower humidity; good trading weather, more respiratory illness
- Mar–Apr · Hottest months, especially north; power demand peaks and outages worsen
How people pay
- DigitalShare · Bank transfers and POS cards dominate urban trade; cash still large in markets and rural areas (estimate 50–70% of small-shop value via transfer/POS in cities)
- Credit · Customer credit ('I go pay you later') common in neighbourhood shops; supplier credit and 'ajo/esusu' savings groups widespread
Where costs and rules differ most
- Lagos · Highest rents (1–2 yrs upfront), street-trading ban, LIRS consumption tax, Band A feeders; biggest market
- FCT Abuja · Planned city with strict AEPB enforcement on kiosks and hawkers; high rents, better power in central districts
- Kano · Sharia state (no alcohol, Hisbah), Ramadan trading pattern, cheaper labour and rent, large wholesale markets
- Rivers (Port Harcourt) · Oil economy: higher prices and rents, soot pollution, flooding
- Oyo (Ibadan) · Large lower-cost city, Yoruba market culture, rents ~40% of Lagos
- Anambra (Onitsha) · Trader hub with apprenticeship system and market-union levies
- Kaduna · Mixed Sharia/non-Sharia areas, insecurity and curfews
42 researched factors
JSON · Source · Estimate
| Factor | Typical value in India | Source |
|---|---|---|
| National minimum wage | ₦70,000/month (Act of July 2024); review due 1 Jun 2027 | thisdaylive.com |
| State minimum wages above federal floor | Some states pay more (Imo ₦104,000, Ebonyi ₦90,000 for civil servants); private micro shops rarely comply | nairametrics.com |
| Shop helper / apprentice pay (Ibadan) | ₦40,000–70,000/month; apprentices often unpaid or a stipend plus 'freedom' payment at endEstimate | Est.: below the ₦70,000 floor is commo… |
| Casual day labour (Ibadan) | ₦5,000–7,000/dayEstimate | Est.: ₦70,000 ÷ 26 days ≈ ₦2,700 is th… |
| Shop rent T1 Lagos (mainland, 100–200 sq ft) | ≈ ₦900/sq ft/month; usually 1–2 years paid upfront plus agency and legal fees (10% + 10%)Estimate | Est.: Lagos mainland lock-up shops adv… |
| Shop rent T2 Ibadan / T3 Ogbomoso | ≈ ₦350 / ₦150 per sq ft/monthEstimate | Est.: Ibadan rents roughly 35–40% of L… |
| Upfront rent convention | 1–2 years' rent in advance + agency 10% + legal 10% + caution; Lagos Tenancy Law caps advance for sitting tenants but rarely enforcedEstimate | Est.: standard market practice; Lagos … |
| Grid tariff Band A (20+ hrs supply) | ₦209.5–225/kWh (NERC; Band A cost-reflective since Apr 2024) | voltflow.net |
| Grid tariff Bands B–E | ₦63 (B, 16–20 h) / ₦50 (C) / ₦45 (D) / ₦40 (E, <8 h) per kWh; most small shops are B–D | voltflow.net |
| Generator running cost | 2.5 kVA petrol gen burns 1–1.5 L/h ≈ ₦1,400–2,100/h at Oct 2026 petrol; ≈ ₦500–900/kWh effectiveEstimate | voltflow.net |
| Buy inverter/solar vs generator | Owner choice: small solar+battery kit ≈ ₦1.5–4m capex cuts generator fuel 50–90%Estimate | Est.: market prices for 1–3 kVA hybrid… |
| Petrol (PMS) pump price | ≈ ₦1,400/L (Lagos depot ₦1,348 on 15 Oct 2026; NNPC retail reported ₦1,405); was ₦839 in Feb 2026Estimate | legit.ng |
| Cooking gas (LPG 12.5 kg) | ≈ ₦16,000 refill (₦13,438 in Feb 2026, raised for the 2026 oil shock)Estimate | zikoko.com |
| Diesel (AGO) | ≈ ₦1,300–1,500/L Oct 2026 (₦909 in Feb 2026)Estimate | zikoko.com |
| Headline / food inflation | Headline ≈ 15–16% (mid-2026); food inflation 19.6% y/y in Sep 2026 | allafrica.com |
| Exchange rate | ≈ ₦1,333/$ official NFEM (mid-Oct 2026); parallel ≈ ₦1,375 | nairametrics.com |
| Staples: rice 50 kg, oil, gari | Rice 50 kg ₦68,000; vegetable oil 1 L ₦4,745; gari ₦810/kg; beans ₦3,000/kg (Feb 2026) | zikoko.com |
| Sliced bread loaf | ≈ ₦1,500–1,800 (₦1,460 in Aug 2024 NBS)Estimate | millingmea.com |
| Buka plate (rice/swallow + stew + meat) | ≈ ₦2,000 Ibadan, ₦2,500–3,500 LagosEstimate | Est.: built from rice/oil/beef input p… |
| Men's haircut (barbing salon) | ≈ ₦1,500 Ibadan; ₦2,000–5,000 Lagos (generator surcharge common)Estimate | Est.: market rates; clipper use makes … |
| Tea/'mai shayi' cup and milk | Tea cup ₦300–500 at a mai shayi stall; milk ≈ ₦3,200/L (UHT/powdered equivalent)Estimate | Est.: tinned/powdered milk dominates; … |
| CAC Business Name fee | ≈ ₦21,400 total government charge; 1–3 days online | selar.com |
| Free registration schemes | SMEDAN/CAC free business-name quotas (limited to 250,000 businesses) | msmeafricaonline.com |
| Small company exemption | Turnover ≤ ₦50m and fixed assets ≤ ₦250m: 0% CIT, exempt from 4% development levy; professionals excluded | businessday.ng |
| VAT | 7.5%; small businesses exempt from registering/charging unless they elect | businessday.ng |
| Tax reform in force | Nigerian Tax Act and Tax Administration Act effective 1 Jan 2026 | nannews.ng |
| State/LGA levies and informal collection | Trade permit, signage, waste, park/market tickets; 'agbero' touts collect daily ₦200–1,000 from street traders (estimate)Estimate | Est.: multiple taxation of MSMEs widel… |
| Transfers, wallets and POS agents | Customers pay by bank transfer, OPay/Moniepoint/PalmPay; POS agents provide cash-out at ≈ ₦100–200 per ₦5,000–10,000Estimate | Est.: POS agent fee norms in 2025–26; … |
| Customer credit | Neighbourhood shops extend informal credit; ajo/esusu groups fund stockEstimate | Est.: standard practice in informal re… |
| Common small businesses | Provision shops, POS agent kiosks, buka/food canteens, suya and roadside food, barbing and hair salons, tailoring, phone repair and accessories, recharge-card/data sellersEstimate | Est.: SMEDAN MSME survey categories (2… |
| Rainy season | Apr–Oct south; flooding stalls street tradeEstimate | Est.: NiMet seasonal pattern |
| December peak | Dec spending 1.5–2× normal for food, drink, fashion, salonsEstimate | Est.: seasonal pattern; no official sa… |
| Sharia states (12 northern states) | Alcohol sales banned; Hisbah enforcement; Ramadan daytime eating restricted for MuslimsEstimate | Est.: Sharia penal codes in Kano, Zamf… |
| Lagos street-trading ban and KAI | Street trading/hawking prohibited under Lagos Street Trading Law 2003; goods seized, finesEstimate | Est.: Lagos State Street Trading and I… |
| Languages of trade | English official; Pidgin everywhere; Yoruba (SW), Hausa (N), Igbo (SE)Estimate | Est.: general reference |
| Income and urbanisation | GDP/capita ≈ $800–1,000 after 2023–24 devaluation; ≈ 55% urbanEstimate | Est.: World Bank WDI 2024–25 order of … |
| Fuel scarcity / price spike | Queues and 20–50% price jumps; generator cost and transport surge | legit.ng |
| National grid collapse | Several total collapses per year; days of no grid powerEstimate | Est.: repeated national grid collapses… |
| Urban flood | Lagos/riverine floods destroy stock; markets shut daysEstimate | Est.: annual flooding pattern (e.g. Ma… |
| Task-force raid / shop demolition | Stalls seized or demolished for 'illegal structures'Estimate | Est.: recurrent Lagos and Abuja enforc… |
| Cash scarcity / FX shock | Naira redesign 2023 cash crunch; POS cash-out fees tripleEstimate | Est.: 2023 naira redesign episode |
| Insecurity / curfew (North, Middle Belt) | Banditry and curfews close marketsEstimate | Est.: recurring state curfews |
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Our 30 researched guides use Indian numbers. Nigeria-specific guides are being researched; the simulator can already use Nigeria wages and prices.
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