In recent times, the world economy has developed tremendously and this is partly linked with activities of petty traders who are part of the informal sector, especially in developing countries. Sadly, increasing taxation by the government at all levels in Nigeria, has continued to affect these traders, often leading to their decline. CHIJIOKE ARINZE visited one of such market in Enugu State and presents this report.
It is 11 am, exactly three hours after the bustling Ogbete market in the heart of Enugu city opened for the day. The ear-piercing sounds of whirring commercial vehicles and Pedicabs (Keke Napep) to the crescendo of voices from dealers in second-hand clothing. Owners of shops haggle with customers. Shoppers are exchanging pleasantries. The market is full of life.
Grace Alozie had just wheeled a pack of African Star into the market. She is carrying an umbrella she uses to shield herself anytime the sun blazes, with her money bag firmly tied around her waist. Her face looks crumpled, signs of ageing. She begins her normal routine of calling out to prospective buyers.
“Come and buy from me. It is the best apple you can get,” she sings as she tries to call out for customers
As playful as that sounds, it has helped Alozie lure buyers for the past six months. The story is, however, not the same on this particular day. She has been standing for several minutes, just as she has sang, but no customer seemed to be coming her way.
Soon, two men, carrying purses containing money, approach Alozie to collect her “tax for the day. “Madam, please give us your money for today. We have a lot of people to collect from. We don’t have time” one of them said fiercely, his cap almost covering his entire face.
Despite several attempts to explain her challenge to them- the fact that she has not made any sales and that she just got to the market- the men refuse to listen and insist that she pay her tax or leave them with the option of carrying whatever they find. Soon drama ensues. One of the men gets a firm grip of her umbrella.
After several minutes of dragging, the man goes away with it. She chases after him and hurls insults, the best she can do given her age. The man, looking unconcerned, continues his job. After some minutes, she walks up to him and pays her N50 and gets back her umbrella. That is the amount this particular group collects.
Visibly irked, Alozie whose fruits go for N100 by four, says she has thought of trying out a different business. But she has not been successful, since there is no money and no one to provide support to her.
“Left for me, I would have abandoned this and gone into something else. Apart from the fact that the money I make is too small, there is the challenge of multiple tax payments,” she said in her traditional Igbo tone. “Every now and then, we are forced to pay tax by some boys who claim to work for the local government” “they cannot ask us to come and collect money for our businesses.”
The informal sector a boost to the Nigerian economy
The Nigerian Informal Sector has been a major contributor to the Nigerian economy, accounting for a significant portion of employment and national GDP. According to the IMF, this sector accounted for 65% of Nigeria’s 2017 GDP.
The Informal Sector which comprises any economic activity or source of income that is not fully regulated by the government and other public authorities, including street traders, subsistence farmers, service providers (e.g. hairdressers, private taxi drivers, and carpenters), currently accounts for over half of global employment.
It accounts for as much as 90% of employment in some of the poorer developing countries.
A fast growing view is that the informal economy offers significant job creation and income generation potential, as well as the capacity to meet the needs of poor consumers by providing cheaper and more accessible goods and services.
But petty traders are struggling
Despite its huge importance, the informal sector has often been overlooked and misunderstood, with some viewing it as transient, and expected to eventually be absorbed into the formal economy.
Today there is no unanimous perspective with regard to the informal economy. Some take the view that the informal sector encourages fraudulent activities that results in the loss of revenue from taxes, weakens unions, creates unfair competition, leads to a loss of regulatory control, reduces observance of health and safety standards, amongst others.
But sustainable and inclusive economic development and job creation are unlikely to be achieved unless the potential and needs of the informal sector are adequately considered.
Due to its flexible nature, the informal sector in some ways is better able to adapt to difficulties such as the current global recession, providing some measure of support to those most in need.
Now back at her wheelbarrow, she tells this reporter, teary-eyed, that she pays six times to six different groups of tax collectors each day she comes to the market.
“I pay N50 to two different groups, N30 to two different groups and N20 to two different groups. That makes it 200 in all,” she recounted. “There are times when I even pay up to 250 as tax here. And they are never willing to listen to your complaints even when you are moving around the main road, you are still made to pay.”
Dark and lanky, Alozie completely depends on her business to survive. After paying several taxes daily, she is left with almost nothing to return home. It has become a source of worry to her. But with no alternative, she can’t stop selling.
There are several owners of small businesses who complain seriously about how multiple taxation is affecting growth. These taxes range from such levies as sanitation, packing late levy and special security levy to permits like wheelbarrow permit, hawkers’ permit and eating permit.
Hopes of education dashed
It has been five years since Anabel Aguoh finished her secondary education. But she could not go to the University due to lack of finance. She and her family have been struggling to feed themselves.
The narrative took a turn for the worse when her dad passed away, with a large part of the responsibility of taking care of her family now resting on her since her mother only sells sachet water and her little sister is in a secondary school.
Aguoh juggles selling oranges, eggplant fruit and watermelon, depending on how much they are sold anytime she goes to buy from her suppliers. But her business is not thriving, not exactly the way she wants it and given the amount of responsibility on her shoulders.
Every day, she spends 250 naira on tax, regardless of what fruit she is carrying.
“There is a certain open space around the market where we also sell. But if you decide to go there you will be made to pay 50 naira to three different groups. If you decide to go to the main road, you pay 40, 50 and 20 in addition to the 250 already spent,” she explains.
Most times when they come to collect tax from her and she tells them there is no money, they seize the wheelbarrow she uses to sell. She would have to pay as much as 500 naira to collect it.
She says the taxes are just too much for her to bear, even though it has not been long since she started the business. Aguoh is tired and frustrated. She wants to stop but there is nothing else she can be doing even if she decides to quit the business she started in 2019.
“I don’t have money anywhere. I just have to keep managing. There are times when I come out and I don’t sell everything I have. They still come to collect these taxes and at the end of the day, there is no gain for me” a visibly angry Aguoh said.
She does not own a wheelbarrow and so, she is forced to hire one for N150. For some time now, she has been selling oranges. She buys three painters. Sometimes, she buys four, with the money available.
“My gain on a very good day is roughly 600 naira. But I go home with as little as 200 naira at the end of the day after paying for the wheelbarrow I use to sell and the many taxes I am forced to pay” she explained.
Aguoh’s mum also pays these taxes. She spends as much as 100 naira. Each bag of sachet water goes for 100 naira. At the end of the day, she makes 200 naira. After paying her taxes, she is left with just 100 naira, the same amount she used to buy the bag.
On days when she sells three or more bags of water, it is fair. But on days when she hardly finishes a bag, it is hell for her.
Aguoh has her sights set on returning to school. “It is part of the reason why I decided to begin this business; but it has not been easy,” she said.” I wonder how I want to go to school in this kind of situation.”
Taxes not intended to stifle small businesses
The Enugu state government has a different view. The commissioner for environment, Chijioke Edeoga says the administration does not intend to use taxes to stifle small enterprises.
“He told this reporter that the taxes businessmen and women are made to pay go to different departments and they are used for different purposes.
“It is not just one part of the government that is collecting these taxes and keeping them. We are not forcing them to pay because we want to discourage them.” he explained.
Paying bribes to sell
Amaka Uche has so far spent N180 on this particular day, after settling four different groups of tax collectors. Each of these groups threatened to carry her wheelbarrow of watermelon if she did not comply. She still has two more groups to settle before the day runs out.
“This is what we see every day, even though we are out here on the road,” Uche said “All the tax collectors want is, give them their money and we don’t even know what they use the money to do”.
Uche began the business in August 2019 and, like other women who do their business on the road, their first instinct is to flee whenever these prying tax collectors surface. They do that as soon as they get a tip-off from passerby’s or fellow business partners.
She explains that apart from the many taxes they are made to pay, they also pay N100 three times weekly to “bribe” another group to allow them to sell by the roadside. All of these payments deduct from her profit.
“I can’t stop selling here because there is nothing else I can do,” she said, while attending to a customer. “If I had something else, I would have long abandoned this one. They need to reduce the amount of taxes they collect from us.”
A slightly different view
Onyebuchi Ugwu has a different view.
He spends 80 naira every day on tax. But he says it is normal to pay taxes and that he does not have any problem with that.
“Whoever is complaining to you does not even want to pay at all because you don’t expect to just come to the market and sell your products and go. The government needs money to maintain the markets. They need it to maintain the road and keep everywhere clean. They also need it to provide security,” he explains.
He, however, adds that there is a need for the government to reduce the amount for some people so they can always afford to pay, depending on whatever business everyone is doing.
“Those that own shops pay more every month. But we pay daily. It has not really been easy for us though, more so given that we run a small business.
Alleged extortion by ECTDA
Emma Onoh is a roadside dealer in phone accessories. He alleges that operatives of the Enugu Capital Territory Development Authority (ECTDA) always come to collect money from them for selling on the streets.
“After asking us to pay some amount of money, they still come and ask us to leave the streets. They carry our products when we refuse to pay. We do not have anywhere else to go apart from selling here on the street” he says.
When contacted, the Executive Director of the ECTDA, Dr. Josef Onoh stated that he had no idea about officers who go around to extort owners of small businesses.
“I am not aware of such development and I strongly doubt such,” he said.
Onoh, who has also suffered in the hands of multiple tax collectors says it is annoying for the government to exploit small business owners who are only trying to survive.
“I just hope that the government will provide some of us with a place where we can stay and do our businesses comfortably and avoid being extorted in the name of taxation”.
This story was done with support from RCDIJ Africa Fund
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