Algorithm and Hustle: How AI-powered digital platforms affect informal trade

In Lagos, the future is creeping in, not through flying cars or light speed trains, but through phone screens and payment links. But in Nigeria’s largest informal economy, the so-called future comes wrapped in poor network connections, unpredictable algorithms, hidden data practices, and mobile apps traders barely understand.

Nigeria’s informal workforce comprises of over 85% of the nation’s labour force. Many of these individuals are market vendors, roadside traders, food sellers, and artisans operating in big trading hubs like Oshodi and Balogun. Smartphones have increasingly become centric to these businesses, but how these traders engage, or fail to engage, with the digital platforms behind these devices reveal a burgeoning gap in who truly benefits from Nigeria’s accelerating digital economy.

This story draws from 42 field responses, interviews with market leaders, and legal insight from Oladipupo Ige, Director at the Data Privacy Lawyers Association of Nigeria, to explore what happens when AI and algorithms begin to replace hustle.

AI in informal trade

Out of 42 traders surveyed, over 80% (34) use smartphones for their business operations. The most common platforms mentioned include WhatsApp, Facebook, and Instagram. A handful of these traders referenced Tiktok, Jumia, or Bolt, but these were outliers.  

However, platform access doesn’t equate to digital fluency. Only 33.3% (14) say they understand what Artificial Intelligence (AI) is. 28.6% have heard of AI but don’t understand it, and the rest, nearly 39%, had no idea at all.

This creates a troubling dynamic especially because AI is quietly becoming embedded in how apps filter visibility, process customer data, and personalise experience. Yet, the majority of traders are simply left in the dark. 

45.2% (19) of respondents reported a drop in customer sales over the past 6 to 12 months. When asked why, the most common reasons were:

• Bad economy, (all 19)
• High costs and low purchasing power (7.2%)
• Fake alerts and payment scams (2) 

The National Information Technology Development Agency (NITDA), through the Director of Corporate Communications, Hadiza Umar, acknowledged this reality. She said:

“Yes, NITDA is highly aware of the profound impact of AI and digital platforms on Nigeria’s informal workers, including traders, food vendors, transporters, and artisans. This is a central focus of our Strategic Roadmap and Action Plan (SRAP 2.0). 

“We recognise that while these technologies offer immense opportunities for increased productivity, market access, and financial inclusion, they also present challenges. These challenges include potential job displacement for routine tasks, increased precariousness for workers due to new employment models, and deepening inequalities for those without digital access or literacy.

“For instance, we’ve observed how digital ride-hailing platforms such as UBER, BOLT, In Drive etc have transformed transportation, offering new income streams but also raising questions about worker classification, social protection, and algorithmic management. 

“Similarly, e-commerce platforms open new markets for traders and artisans but also demand digital skills for online presence, inventory management, and payment processing. Our DL4ALL Informal sector program attempts to address the challenges identified.”

Meanwhile, only 6 traders directly attributed losses to digital competition or AI-powered automation. Yet, when asked if people using digital tools had an advantage, 7 (16.7%) traders said yes. 

Ifeanyi, 32, a sneaker seller, started his business in 2019 and uses a smartphone for his business, including selling through AI-powered platforms like Jumia. He agrees that ‘people buying online’ has caused a drop in sales and that platforms use algorithms to push certain sellers over others. 

“I got an order through Jumia and that was my best order yet and the customer said he had been looking everywhere for that type of sneaker,” said Ifeanyi.

“Instagram helped expand my business beyond Lagos,” noted Ayo, an Ankara fabric vendor who has been in the business over two years. 

The shift is subtle but significant. Platforms are not overtly replacing informal workers, but they’re rewarding those who understand the system, basically how digital platforms promote sellers, often based on engagement, responsiveness, or user ratings, rather than product quality or tenure. 

For example, traders like Ifeanyi who understand how to optimise listings or respond quickly are more likely to appear in search results. 

According to data privacy expert Oladipupo Ige, platforms use algorithms that favour high-performing sellers, but rarely explain these mechanisms to users. 

Over 26% of traders surveyed believe these systems promote some sellers over others, and 41.5% admitted they don’t understand how that works.

Trust and barriers to entry

Barriers to full participation in the digital economy remain stubbornly high. Traders cited challenges such as:

• Too expensive (data, smartphones): 27%
• Poor internet connection: 30%
• Lack of support or training: 10%
• Trust issues: 12.5%
• Language barriers: 2 respondents requested Yoruba-language guidance

Poor internet connection and expensive payment plans remain prevalent . What traders ask for is not innovation. It’s inclusion: cheaper tools, better internet, localised training, and transparency.

These concerns were echoed through the responses where 30% mentioned poor internet, and over 27% cited cost of data or smartphones. 

Traders like Chinecherem, mentioned later, complained about low visibility despite consistency, or Sarah, who just wants to learn “how to reach customers”, reflect a deeper desire for support. Supporting these, Iya Segun adds, “We need language-friendly app tutorials.”

To support this, Umar reaffirmed the NITDA’s commitment to digital inclusion at all levels.

“Absolutely, this is a core component of NITDA’s strategy. Integrating digital literacy into vocational and market-based training schemes is crucial for bridging the digital divide and ensuring informal workers can leverage digital tools for their benefit.

“Our Digital Literacy for All (DL4ALL) initiative is a flagship program designed to empower millions of Nigerians with essential digital skills. It includes specific programs for the informal sector through collaborations with organizations like the NYSC, State Governments, and private partners to reach citizens across all 774 Local Government Areas.”

NITDA lists items it is working on such as curriculum integration; collaborating with the Federal Ministry of Education and other relevant parastatals under its supervision to embed digital skills into school curricula as compulsory general studies, and Workforce readiness programs; establishing partnership with the Office of the Head of Civil Service of the Federation (OHCSF) to equip the workforce with skills needed for Nigeria’s digital transformation, leading to professional digital literacy certification.

While curricula integration primarily targets formal education, the foundational skills learned will play a significant role for future entrants into the informal sector.

Umar says, “The goal is to ensure that digital literacy is not just about access but about meaningful adoption, where people see themselves reflected in the future that technology promises.”

Meanwhile, market leaders in Balogun market, especially older women like Iya Shola and Alhaja, have chosen to bypass the digital age entirely. “I don’t do all those online things. I’ve never done it and I never will,” said Iya Shola, a line market leader in Balogun. She insisted on not responding to further questions. 

“People send me pictures on WhatsApp, I tell them if I have the item. They send someone to pick it. That’s it,” said Alhaja, another market leader, who has traded children’s wear since the 1990s and once sourced goods from Thailand and India. “But, I do not like doing it online.” She recalled an experience, in her local language, where a delivery man disappeared with goods from a nearby shop. “Materials worth over ₦350,000 were lost, you now say I should do online?”

Joy Okoye, 42, has been in the market for over 15 years and sells high-grade owanbé and lace materials in Oshodi Market and is a line leader overseeing over a dozen fabric traders. Like Alhaja, she isn’t interested in digital innovation beyond WhatsApp. “WhatsApp is what I use,” she said. “They send pictures, I check if I have it, I tell them the price.”

Joy doesn’t engage with Instagram, Jumia, or any AI-powered tools. “I’ve heard of [AI], maybe from the news,” she laughed. “But me, I don’t need it. My business is doing fine.”

When asked if she feels left out, she shrugged. “I’m not competing with anybody. My customers know me. They come to me because they trust me, not because I use any special app.”

For them, digital trust is the barrier, not digital tools.

Opaque algorithms and hidden visibility bias

Over 26% of market traders believe platforms show some sellers more than others. Many suspect there’s a ranking system they don’t understand. They’re not wrong.

Many e-commerce platforms use engagement-driven algorithms that favour vendors with faster response times, high customer ratings.  For example, on Jumia, sellers with better performance scores, based on delivery times, customer feedback, and listing quality, are ranked higher in search results. Similarly, on Instagram, posts with higher engagement (likes, saves, comments) are boosted by the platform’s algorithm, giving more visibility to active users.

In a report, a former Chief Commercial Officer for Jumia Nigeria, Ms Omolola Oladunjoye, corroborates this, saying: 

“We advise you to list your best and fastest selling products that fit into current trend and season, make your pricing very competitive, upload as many assortments as possible including high-quality images and detailed descriptions and also stock up enough so as not to miss out on the sale uplift.”

Chinecherem Amaka, a 29-year-old thrift seller, noticed her page engagement dropping during peak seasons, despite consistent posting. “Maybe they show others more,” she said. “I don’t know how it works.”

A staggering 41.5% of traders responded, “I don’t know how it works,” when asked if they know that platforms rank highly rated vendors. 

“Platforms are allowed to process user data for service delivery, but they must do it transparently,” said Oladipupo Ige, a Director at the Data Privacy Lawyers Association of Nigeria (DPLAN). 

“Some of them use omnibus privacy clauses to justify excessive data collection, and others even sell personal data to third parties or use it for targeted marketing. Even platforms that promote fairness may prioritise high-engagement sellers, sidelining those who can’t keep up.”

Platforms like ride-hailing apps require geolocation to match drivers. E-commerce apps use algorithms to promote top-selling or highly rated vendors. But many platforms go further, quietly tracking users’ behaviours, locations, even interactions with other apps, all often buried in privacy policies.

On the role of government in regulating AI platforms that manage informal workers, Umar stated:

“The government has a crucial role to play in regulating platforms that utilise AI to serve or manage informal workers to ensure a fair, safe, and inclusive digital economy. This role should encompass:

• Developing clear AI governance frameworks and ethical guidelines: This includes setting principles for responsible AI use, addressing issues like algorithmic bias, transparency, accountability, and fairness in decision-making processes (e.g., job allocation, pricing, performance evaluation).
• Ensuring data protection and privacy: Ensuring compliance with the Nigeria Data Protection Act
• Encouraging transparency and explainability: Requiring platforms to be transparent about how their AI algorithms work, especially concerning issues that affect workers’ livelihoods. Workers should have the right to understand why certain decisions are made.
• Investing in research and development: Supporting research into the socio-economic impacts of AI on informal workers to inform policy decisions.
• Facilitating dialogue and collaboration: Creating platforms for ongoing dialogue between government, platform operators, informal worker representatives, civil society, and academia to co-create adaptive regulations.

“NITDA’s shift towards “non-rule-based regulation” and co-creating policies aligns with this.”

Who draws the map? Data, AI, and the future of trade

Over 78% do not understand what data is or how it is used on e-commerce platforms or ride-hailing apps. “Most platforms don’t delete your data after the transaction ends. This is illegal unless explicitly justified,” said Ige.

For instance, Rasheedah Ayeni, 55, doesn’t use a smartphone. Her niece takes orders for her. Yet, after using a dispatch rider once, Rasheedah’s niece began receiving unsolicited promotional messages. She never gave her number to anyone else.

Against this, Ige referenced Section 36(2) of the Nigeria Data Protection Act 2023 which states:

“A data controller shall discontinue the processing of personal data, unless the data controller demonstrates a public interest or other legitimate grounds, which overrides the fundamental rights and freedoms, and the interests of the data subject.”

In other words, the law mandates that personal data must be erased once its purpose is complete unless otherwise justified.

A key precedent is Araka v. Ecart (Domino’s case) where the company was sued for sending promotions long after fulfilling a food order. The court noted that the continued data use violated storage limitation principles.”Users often skip terms and conditions, unknowingly giving away extensive rights. But platforms are still bound by law to process data fairly, legally, and with clear consent,” Ige mentioned.

No doubt, AI is already a part of informal trade. Whether it’s chatbots suggesting prices, algorithms boosting visibility, or ride apps rewarding drivers with faster phones, Yet, most traders are unaware.

Out of 42, only 3 reported using AI-powered tools like auto-replies or smart suggestions. But many suspected something was off: “They favour drivers with high rating and fast phone,” said Ibrahim, a former taxi driver in pidgin english. “I don’t know how they decide who to show to buyers,” said Adebimpe, who sells jewellery.

In digital systems, hustle doesn’t scale, data does. Digital platforms have become a new terrain where the rules are written in code and buried in privacy policies. Informal traders, the very backbone of urban Nigerian commerce, are either climbing uphill or standing still. The winners in this new marketplace are not necessarily those who hustle hardest, but those who know how to work with the algorithm, or at least understand it exists.

Building a digitally inclusive future

Building an inclusive AI future in Nigeria requires a multi-faceted approach that prioritises human capital development, infrastructure, and an enabling policy environment. 

Umar says “Nigeria can indeed build a more inclusive AI future where digital tools and offline workers grow together, creating a robust and equitable digital economy for all.”

The requests from traders are not futuristic, they are foundational. From cheaper smartphones and reliable internet to support systems in local languages, many traders are simply asking for a fighting chance. 

“Let people have money,” said Funmi, a food vendor. “Train us in Yoruba,” added Aanuoluwa, who sells custom jewellery. For most, success online begins with access and continues with understanding.

“The world is changing,” said one trader, “but we don’t know who is changing it.”

That may be the most important clue of all.

This report was produced with support from the Centre for Journalism Innovation and Development (CJID) and Luminate.