SPECIAL REPORT: How Illegal Levies Exploit Traders, Drivers in Abuja By Oyeyemi Abolade
In Nigeria’s bustling informal economy, payments rarely come with clarity, receipts, or even definitions. Across markets and transport hubs, traders and workers navigate a complex web of compulsory levies that are collected routinely but scarcely explained.
These payments are not always formally classified as taxes, yet they function with the same coercive force—recurring, unavoidable, and enforced through institutional pressure.
From Abuja’s crowded Jabi market to similar commercial clusters in Lagos, Ibadan, and other urban centres, a pattern has emerged: multiple layers of charges imposed on informal operators who often have little understanding of what they are paying for, who ultimately benefits, or how the funds are managed. The result is a fragmented system of revenue collection that operates parallel to formal taxation structures but without equivalent transparency or accountability.
This investigative feature by Economic Confidential examines how these levies are imposed, who collects them, and what if anything returns to those who pay.
Multiple Levies, Little Clarity
Obi Jonathan, an electronics trader at Jabi market in Abuja, pays multiple levies to market authorities where he trades. Not one. Not two. But daily, weekly, monthly and yearly levies, each attached to different, often undefined purposes.
“They don’t tell us what the levies are called,” he said.
“They just tell us it is for keeping the market in place. We pay daily levies, ₦1,000 every Monday, about ₦5,000 at the end of the month although the amount varies from shop to shop—and ₦500 per shop every last Saturday of the month. At the end of the year, we also pay another levy. We just know it must be paid to market authorities as we were told.”
Findings by Economic Confidential revealed that regardless of sales performance, the obligations remain fixed. The system is rigid rather than responsive.
“If you don’t pay, they can lock your shop or seize your goods,” he added.
Formally, these payments are not classified as statutory taxes. In practice, however, they are compulsory. Traders comply not because of legal clarity, but due to enforcement pressure embedded in market administration structures.
Obi Jonathan’s central concern reflects a broader uncertainty: accountability.
“How are we being helped by the money we pay?” he asked.
Across Nigeria’s informal economy, which global institutions estimate to represent about 50-65% of total economic activity, this concern is becoming increasingly widespread.
Payments Without Proportionate Returns
The pattern is not unique to Abuja. In Karimo District Market, also in the capital, levies are similarly structured but vary according to business scale and market classification.
“There are differences. Those selling big pay above ₦10,000 sometimes. For me, I pay about ₦400 once a week,” said Nkechi Mberekpe, a trader in the market.
On paper, the structure appears differentiated and organised. In reality, it raises a fundamental question: correspondence between payment and service delivery.
Market authorities reportedly use the funds for basic services.
“They clean and secure the market for us. That’s the only benefit for now,” she added.
However, the linkage between contributions and outcomes remains weak. Infrastructure gaps, inconsistent sanitation, and limited security presence continue to define many market environments, despite the steady inflow of levies.
Structure Without Full Transparency
Unlike markets, the transport sector presents a more formalised collection system, yet it is not free from opacity as well.
In Abuja, the National Union of Road Transport Workers (NURTW) operates a structured ticketing mechanism tied to trips and routes.
“Once we carry passengers, we collect money from drivers depending on where they are going. For us in Abuja, it is within the city, and the amount is charged based on the route,” said Bamiji Ogunyemi, Chairman of the NURTW Taxi Cab Branch 4, Jabi.
The union is formally registered under the Nigeria Labour Congress framework and maintains defined internal structures. According to its leadership, a portion of the revenue supports union administration and member welfare, particularly in cases of distress or operational challenges.
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There is also claimed coordination with government authorities, including tax remittances and regulatory compliance. Yet even within this structured arrangement, concerns persist.
“Since the introduction of CNG, those higher up have not been totally transparent about cash inflow,” Ogunyemi noted.
The implication is clear: formal structure does not automatically guarantee financial transparency.
Public Trust and Fragmented Collection
Beyond revenue administration, the broader consequence of this system is erosion of public trust.
According to Oludamilola Onemano, Senior Program Officer at BudgIT, multiple layers of compulsory payments are reshaping how citizens interpret taxation itself.
“In Nigeria, beyond statutory taxes like personal income tax and VAT, many people especially in the informal sector are required to pay market dues, transport union charges and community levies,” she said.
While not always legally defined as taxes, they function as mandatory financial obligations.
“The increase of these payments creates a fragmented system where citizens face multiple collection points with little transparency,” she added.
The outcome is predictable: taxpayers perceive duplication without visible returns.
“When citizens do not see a clear link between what they pay and what they receive, trust in government declines and compliance drops.”
A further complication lies in collection mechanisms. Many levies are not directly administered by state institutions but by intermediaries, reducing traceability and weakening accountability structures.
“Many of these payments are handled by intermediaries rather than directly by the state, which makes accountability difficult.”
What the Law Does Not Address
Nigeria’s recent tax reforms, including the Nigeria Tax Act (2025), aim to strengthen formal tax administration. However, they do not explicitly regulate the informal levy ecosystem dominated by associations, unions, and local market authorities.
According to Timothy Onechojon Usman, a taxation researcher, the issue is less about absence of laws and more about enforcement capacity and institutional design.
“Nothing significant has changed in the tax laws about informal tax collection,” he said.
He argues that informal levies persist because institutional oversight is weak rather than because they are legally unrecognised.
“Their prevalence is tied to how much our institutions can curb excesses by informal sector participants,” he explained.
Although mechanisms such as the Joint Revenue Board and Tax Ombudsman exist to address disputes and improve accountability, their effectiveness remains uneven.
Coordination, he added, is inconsistent across jurisdictions.
“In my opinion, no defined coordination exists, except in some sparse dimensions across some states and local governments.”
In some instances, informal collectors operate alongside government systems in loosely defined arrangements, especially where official business data is incomplete or outdated.
The result is a hybrid system: partially formal, partially informal, and largely fragmented.
An Unresolved System
Across markets and transport corridors, the pattern persists: compulsory payments, limited transparency, and inconsistent service delivery.
Traders continue to report infrastructural deficits, weak security presence, and losses without compensation, even in environments where regular levies are collected.
Yet the system remains operational and self-sustaining.
Experts argue that without stronger institutional coordination, clearer regulatory frameworks, and enforceable accountability mechanisms, informal levies will continue to function as a parallel fiscal system.
For now, the questions remain unresolved and largely unanswered. Who collects? Who pays? And who ultimately benefits?
Last Line
Nevertheless, across markets and transport hubs, informal levies remain a routine but opaque feature of Nigeria’s economic landscape. While they ensure the day-to-day functioning of these spaces, the lack of clarity, coordination, and accountability continues to raise concerns about fairness and value for money.
Until clearer structures and stronger oversight are established, many citizens will keep paying into a system whose benefits remain difficult to trace.
Oyeyemi Abolade is a PRNigeria Fellow, she writes from Abuja.
