Lagos micro businesses in the grip of ‘area boys’

AT the heart of Bolade in Oshodi market on May 26, an area boy in a yellow apron with thick black stripes stopped to harass a micro business owner en route to another part of the market in Lagos.

The micro business owner had bought clothes and singlets in retail to resell in a nearby mini-market. And he had packed them in two nylon sack bags and put them in a wheelbarrow.

Like a bee to the honey, the area boy rushed to the wheelbarrow, standing in front of it to ensure that he was in charge.

Owo mi da,” he demanded. In Yoruba, one of the three major languages in Nigeria, the expression loosely means “where is my money?”

“I paid someone not too long ago,” the business owner protested.

“That one no concern me, make you give me my money,”  the now agitated area boy barked in pidgin English.

After eight minutes of haggling, the reporter observed that the micro-business owner parted with N100 before the area boy could allow him to go.

The area boy demanding money from a business owner at Bolade, Oshodi

His co-area boys were around, watching closely at the scene.

Should the business owner refuse to pay, fight could ensue – and blood would flow.

By definition, micro businesses are enterprises with one to nine employees. The businesses are often started with a small amount of money.

They are big sources of employment and economic growth in Lagos, Nigeria’s richest state, but they are constantly harassed and exploited by non-state actors known as area boys,

Lagos boasts of 3.329 million micro business and is the state with the highest number of this class of business,  according to the 2019 survey conducted by the National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) covering 2013 to 2017.

The small and medium businesses in the state are only 8,395 in number, representing just 0.25 per cent of the total.

Micro business owners range from ice cream sellers moving in bicycles to food vendors in make-shift stalls.

Their start-up capital is usually N50,000, according to a the NBS/SMEDAN report.

“These kinds of business create a lot of jobs. One of them can create one, two, three jobs and the multiplier effect on the economy can be very strong,” former Acting Managing Director of the Bank of Industry Waheed Olagunju (now retired), who also headed the small business segment of the bank, once said at an event attended by the reporter.

By Olagunju’s estimates, these businesses could have created 6.66 million jobs or more in Lagos State with a record unemployment rate of 37.14 per cent –higher than the national average of 33.3 per cent in the fourth quarter of 2020 – according to the NBS.

They are the smallest among the acronym, MSMEs, others being small and medium enterprises, but they create 95 per cent of jobs, according to the 2019 NBS/ SMEDAN survey.

Because they cannot afford to rent standard shops, they operate in make-shift shops, open spaces, kiosks and sometimes move around with their products.

However, areas boys are on the streets, major markets, open places in Lagos lying in wait for these micro businesses which operate in the informal sector of the economy.

In simple terms, area boys, also known as agberos or touts, are non-state actors who harrass businesses and collect mostly illegal taxes from them.


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Shops are expensive

According to The ICIR findings, rents for shops in Oshodi and its environment go as high as  N2 million (nearly $4900) for a year. Cheapest shops are rented at N800,000 (nearly $2,000) per annum, findings show.

Many micro businesses in Lagos cannot afford them  as the majority operate with capital  base of N50,000.

In Isolo LCDA, half a shop goes as high as N300,000 while full shops are rented out at N600,000 per year.

“That is if you will even find one in places like Ajao Estate or Aswani. I cannot afford to pay N300,000 or N400,000,” Angela, who sells confectionery in retail, said.

She told The ICIR that her capital base was N80,000 and she could not even afford quarter of a standard shop in Isolo.

Otigba Cluster/Computer Village where micro business pay over N1500 each day to area boys


The situation is same in other parts of Lagos, where high cost of rents has driven micro businesses into the streets and open places.

In Ikeja, particularly at Otigba Cluster, shops go as high as N1.2 million-N3 million, depending on their sizes. according to findings.

“This is why you see a lot of people outside the shops, because they can’t afford to rent them here,” Stella Onyeagwu, who sells phone accessories at Oguniyi Community Development Association in Computer Village, said.

“Getting a space in open places here is not even easy. You have to pay three groups of area boys, local government, and market leaders to give you a portion. If you do not have  more than N100,000, don’t even start.

“However, as you can see, there is even no more space for any new person,” she further said.

She noted that many micro traders were now being allocated shops on the edges of the roads and around Medical Road in Ikeja, contrary to the Computer Village master plan.

Similarly, shops at Lagos Island areas are also expensive for micro traders. At CMS, Lagos Island East, shops go as high as N500,000 to N700,000, forcing many micro businesses into displaying their wares indiscriminately, The ICIR found.

“There used to be a pro-poor arrangement in the past where people had access to low-cost shops. During the time of Lateef Jakande (Second Republic Lagos governor), shops in Ipaja, Amuwo-Odofin, Oke-Afa, Badagry and Ikorodu were cheap for the poor. He increased taxes and tenement rates in high-brow areas such as Victoria  Island to subsidise those in Lagos Mainland, where the poor were mostly based. This is what I expect successive leaders to do,” 72-year-old Bamidele Ogunkoya told The ICIR.

How micro businesses are exploited

In Nigeria, 105 million citizens are extremely poor, according to the World Poverty Clock. The majority of them are the unemployed and people in micro businesses, experts say.

But this has not stopped non-state actors from exploiting micro business owners.

The ICIR toured 23 local government areas and local council development authorities (LCDA) to investigate how much each of the micro businesses pays to the area boys.

Findings show that apart from N100 that goes into the coffers of local government councils, all other collections by area boys move into private pockets.

As usual, they issue only N50 face value local government tickets on few occasions while collecting upwards of N500 from micro businesses each day..

The ICIR interviewed at least four micro business owners in each of the 23 local councils in Lagos and found that there were differences in what micro businesses paid from one council to another.

For instance, in Oshodi Local Government Area, oral testimonies were taken from hawkers and micro traders in Oshodi market and Bolade.

In Isolo LCDA, The ICIR spoke with traders in Aswani market, Mafouluku and Ajao Estate.

In Ikeja, oral testimonies were taken from micro businesses operating in Otigba Cluster/ Computer Village and Ikeja Under Bridge axis.

In Kosofe, The ICIR interviewed sellers in Ketu and Mile 12.

In Mushin, testimonies were taken from micro businesses operating around Illasa and Ilupeju.

In Surulere, The ICIR interacted with micro businesses operating in Ojuelegba axis.

In Obalande/Ikoyi, the reporter had interviews with micro traders in Obalende.

In Yaba, the reporter spoke with business owners in Sabo and those around Ojuelegba Road.

In Ikorodu Local Government Area, the reporter focused on Ikorodu Garage and Agric areas.

The ICIR found that the average amount paid by these businesses to area boys every day was N513.04.


Daily payment of micro businesses to area boys in 23 Local Councils


It was also found that Otigba Cluster, Ikeja, records the highest area boys’ extortion, with micro businesses paying an average of N900 each day, which rises to N324,000 ($790) each year.

A micro businesswoman dealing in phones, chargers and batteries, Jane Ogunkoya, told The ICIR that she paid up to N1000 each day.

“At least four groups of people come here every day, asking us for money. Because we do not have shops, they collect N1,200 from some people and N1,000 from others. I am lucky to pay N1,000 most of the times,” she said.

When asked whether she made enough sales to cover for the indiscriminate payments, she replied, “Yes, it is no problem when we make enough sales, but some days are bad. However, the area boys do not care whether you make sales or not. If you refuse to give them, they carry your products and go.”

Chairman of Ikeja Local Government Area Mojeed Alabi Balogun said he was not in a position to speak for area boys.

In Oshodi Local Government Area, micro traders pay N550 each day from Monday to Wednesday, N850 on Thursday, N950 on Friday and N1, 050 on Saturday.

Only a N50 ticket from Oshodi Local Government Area is given to the micro business owners. Based on The ICIR estimates, micro businesses in Oshodi pay an average of N750, rising to N270,000 ($659) annually.

The ICIR found that apart from area boys operating in Oshodi,  the Kick Against Indiscipline (KAI) would also visit from time to time.

“Any day KAI comes is a bad day ,” said Nnenna, who sells women’s wear in Oshodi.

“They seize your products and you need to raise N1,500 to N2,000 before you can take them back,” she said.

Nnenna said area boys took half of her profit each day.

“After a day’s hard work, someone who didn’t put in any effort takes half of my profit, leaving me with little with which to purchase new products,” she said.

“Imagine that I could have doubled the products I have now without these touts,” she said.

The businesses in Oshodi do not bear the cost alone.

James Idowu, who sells jean clothes in Oshodi, explained that it was the consumers who suffered the impact of area boys.

“What I do is to transfer the cost to the buyers. I always increase the price of my jeans in order to make a profit at the end of the day,” he said.

“The higher the collections by area boys, the higher my price. I do it in such a way that buyers will not find out,” he said.

He also explained that the extortion by area boys had made it difficult for him to plough back profits into his business.

A text message was sent to the official phone number of immediate past Chairman of Oshodi Local Government Bolaji Ariyo, informing him about how area boys extorted money from micro businesses during his time and asking him to explain how much these businesses in his local government paid every day.

The user of the phone replied that he was not the chairman of Oshodi Local Government Area. However,  the phone number was recorded by the Lagos State government as Bolaji Ariyo’s number.

“Am sorry about this but am not the chairman of the LG maybe you should direct all your questions to the chairman,” the phone’s text message read.

When informed that his phone number was recorded as chairman of the local government, he did not reply.

Lagos Market

Aswani Market in Isolo


The same situation was found in Isolo LCDA, where micro-businesses pay at least N500 each day. At Aswani Market, Isolo, which is busiest on Tuesdays, micro traders pay N500. This means they pay an average of N180,000  ($439) each year.

A Babaloja (male market head) collects N100, an  Iyaloja (female market head) takes N200 while the local government council takes N100.

Text and WhatApp messages to Chairman of Isolo Local Government Olayele Shamsudeen Abiodun were not replied. Phone calls to him were neither picked nor returned.

The ICIR found that area boys in Lagos do not just collect money, they also collect products.

An ice cream seller in Yaba axis told The ICIR that he often gave area boys a N100 or N200 worth of ice cream so that they would not disturb him.

The ice cream seller, who did not give his name, said the area boys preferred it to money at times.

“When they go out in the sun and return, I often give them ice cream. It is more important to them at that time than money. That is my own style and they like it that way,” he said.

Based on findings, area boys collect an average of N400 per day (N146,000 each year) from micro business owners in Yaba LCDA.

Micro businesses at CMS, LAGOS iSLAND East LCDA
Micro businesses at CMS, LAGOS Island East LCDA


An onion seller at Mile 12, Kosofe LCDA, said he would sometimes offer his product to them.

“But I do not give it to them every day. I do it mostly on weekends, especially Saturdays. On other days, I give them money, N300, N400, N500 or N600,” he said.

In Kosofe, some micro business owners said they paid at least N500 each day, amounting to N180,000 annually.

At CMS, Lagos Island East LCDA, micro businesses said they were at the mercy of informal tax collectors posing as local government officials.

The ICIR sent text and WhatApp messages to the Lagos Island East Local Government Chairman Kaml O. Salau regarding these taxes, but he did not respond. Phone calls to his number were neither picked nor returned.

Impact on their families

James Idowu, earlier quoted, explained that these collections by touts had eroded his profits, making it hard for him to send all his children to school.

“I have six children but not all of them are in school. If I have the money collected by these touts in Oshodi, they will be enough money to take care of them,” he said.

By The ICIR calculations, N750 collected from micro businesses in Oshodi amounts to N273,750 each year.

Idowu said he paid about N50,000 each year as school fees for each of his children.

By The ICIR‘s calculations, the amount taken by touts in Oshodi could pay the school fees of Idowu’s five children.

For Miracle Essien, who plies her trade in Ejigbo, her major challenge was that she could not fend for her family.

Essien, a widow, said, “The money they collect from me is big enough to take care of my rent and feeding for her family. Multiply N500 to N600 by one year and you will understand why this extortion must stop.”

By The ICIR’s calculations, she pays at least N182,500 annually, which, according to her, could pay her house rent (N120,000) in Ejigbo and take care of part of the feeding problems facing her family.

Official taxes in Lagos

The Lagos State Internal Revenue Service (LIRS) says on its website that the state government collects  business premises registration fee, market taxes and levies (where state finance is involved), land use charge (where applicable), produce sales tax (where applicable), and signage and mobile advertisement fees, (jointly collected by the State and Local Government), among others.

On the other hand , local governments collect shops and kiosks rates, tenement rates, liquor license fees, markets taxes and levies (excluding any market where state finance is involved), motor park levies, radio and television license fees, vehicle radio license, wrong parking charges, and wharf landing charge (where applicable), among others.

Business analysts wonder why Lagos local government still charge radio and television taxes.  In an interview with this reporter in 2020, President of Lagos Chamber of Commerce and Industry Toki Mabogunje described radio and television charges as relics of the colonial past.

Chief Executive Officer of SME 100 Charles Odii explained that micro businesses paid taxes recognised by the government and many more ones unrecognised  by the state..

“You pay for water, gutter, TV and radio, parking and many others. It is a nightmare,” Odii, whose platform promotes small businesses, said.

Other challenges of micro businesses

According to the NBS/SMEDAN report, micro business owners have relatively illiterate workforce and most of them report lack of readily-available artisans.

They are equally poorly trained to attract investor funds due to lack of bankable business plans and book-keeping.

Also, most of them source their capital from personal income as they are financially excluded by deposit money banks due to interest rate charges.

Benchmark interest rate

The NBS-SMEDAN report said 85 per cent of this class of business  in Nigeria could not have access to external financing between 2013 and 2017.

Only 5.3 per cent of MSMEs had access to credit, even with 40 per cent of them having relationships with banks.

Nigeria’s Monetary Policy Rate (MPR), which is the benchmark interest rate in the economy, is 11.5 per cent, according to the Central Bank of Nigeria (CBN). The MPR determines interest rate in any economy and is an indication of whether micro businesses can have access to funds or not.

Nigeria’s MPR is higher when compared with South Africa‘s 3.5 per cent; Kenya’s 7.5 per cent; and Zambia’s 8 per cent, according to their central banks.

In Ethiopia, another SSA nation, the benchmark interest rate stands at 9 per cent, according to the National Bank of Ethiopia. Botswana’s rate is estimated at 3.75 per cent while  Uganda’s is 7 per cent. Similarly, Namibia’s benchmark rate is 7.75 per cent.

The Manufacturers Association of Nigeria (MAN) said in 2020 that its members, including MSMEs, were charged over 21 per cent interest rate by banks.

Nigeria not receiving enough taxes

Nigeria is not receiving enough taxes because they are sometimes stolen or collected by illegal agents. The ICIR found in the first of the Lagos Series that touts in Lagos pocket N123 billion in transport taxes. It was also found that the money is not recorded in Lagos State financial statements.

Speaking at an interactive session organised by the Professional Practice Group of the Lagos Chamber of Commerce and Industry (LCCI) in Lagos in 2020, Partner for Tax, Regulatory and People Services at KPMG Ajibola Olomola said Nigeria needed a bullet-proof tax system to boost its gross domestic product and cut the unemployment rate.

He said Nigeria’s tax to GDP of six percent (in 2018) was one of the lowest globally, as the ratio across African countries hovered between 12 and 17 percent.

“Tax and non-tax revenue of N2.18 trillion are insufficient to close the projected 2020 budget deficit,” he said.

IMF Mission Chief to Nigeria Jesmin Rahman, on a virtual call in 2020, said that Nigeria had one of the lowest revenue levels globally and much lower than peers in sub-Saharan Africa and other oil exporters.

Some experts, including Chief Economist for PwC Nigeria Andrew S. Nevin, have explained that the Nigerian government need to provide social services for the people to encourage them to pay taxes.

However, The ICIR found that many Nigerian businesses and transporters pay taxes, but what they pay are mostly illegal taxes which go into private pockets.

Even some of the legal taxes paid by these entities end up in private pockets or are not accounted for.

This reporter found that most shop taxes paid by businesses in Lagos go into private pockets.

The ICIR also found that bus drivers, tricyclists and motorcyclists pay N123.078 billion annually to touts in Lagos.

But the Lagos State government cannot account for the money as it is not in its financial statements or is it recorded on any document by the LIRS or Ministry of Finance.

“The problem is not that Nigeria does not collect enough taxes, but the issue is that many taxes are being pocketed by individuals. Think of park rates, road taxes, abattoir taxes and others. After elections, you have state governors allocating certain places to individuals to collect taxes for themselves because of their support. This must stop,” said an Abuja-based former banker and financial consultant Samuel Otore.


Automate the process now

Small business experts and owners say the government should ensure that the ones being collected do not end up in private pockets.

Odii, earlier quoted, said there was a need to stop the activities of the touts collecting government funds.

He noted that government should embark on education to enlighten businesses on the need to pay legal taxes in appropriate quarters and avoid illegal ones.

Founder of Dukka, a digital book-keeping application helping micro and small businesses to manage sales, Keturah Ovio-Onoweya, urged the government to digitise the process.



    “To check these informal multiple taxes, we need to think about how we can digitse the process of tax payments and reminders,” she said.
    “Creating a digital way for business owners to pay, receive receipts, be reminded of payments before they are due, will create an efficient system for all stakeholders. Making this work even to the local council level will ultimately bring transparency to taxation in Nigeria,” she further said.
    She explained that one of the benefits of this was that the government would amass a lot of revenue from taxes as every payment would be made in designated government accounts.
    “Another benefit is that small businesses can then hold the government accountable for infrastructure promised and yet to be done. This should increase quality of service rendered by the government to its people, and quality of life overall to citizens.”


    Chief executive of AgroEknor, a small export firm, Attah Anzaku, explained that governments at all levels should desist from collecting formal or informal taxes from micro businesses, reminding them that the 2019 Finance Bill said only businesses with N25 million or more turnover should pay taxes.

    “That is why we need harmonisation between federal and state tax laws,” he said.

    On access to funding, analysts want micro businesses  to change their strategy.

    “Banks are looking at your cash flow, audited accounts, and they are looking at whether you have the technology to drive your business and if you have a good credit history,” said Managing Director/ CEO of CRC Credit Bureau Tunde Popoola, while offering his advice recently in a Zoom meeting.

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