The Chairman Presidential Committee on Fiscal Policy and Tax Reforms in Nigeria, Mr Taiwo Oyedele, wrote that Area-boys (click for details) are already collecting taxes on government’s behalf, thereby leading to a multiplicity of both formal and informal taxes paid by citizens – the Area-boys terminology and that of formal and informal taxes are explained more clearly in the sections below – notwithstanding, it is worthy to note that, the formal and informal taxes administered by Area-boys and paid by citizens can add to citizens’ fiscal burden. This was a rejoinder made by Mr Taiwo Oyedele to his earlier interview with Channels TV on 17^th January 2024, wherein he mentioned, provocatively, that Area-boys can be trained and paid salaries to effectively administer taxes on the government’s behalf.  

Mr. Taiwo Oyedele’s statement was met with many criticisms by Nigerian citizens across media outlets; many of these criticisms were justified on the basis that, Area-boys can undermine citizens’ rights and state laws through aggressive tax administration; they often contribute to a higher tax burden for low-income earners due to a multiplicity of inequitable taxes; and Area-boys largely do not remit tax-revenue generated to the statutory government—rather they remit to political leaders within the government, thereby undermining accountability processes. Furthermore, citizens raised concerns about extortion by Area-boys and cases where Area-boys pledge allegiance to local politicians – to retain revenue collection contracts – but end up being used as thugs to disrupt political-democratic processes. 

These criticisms point to the major challenges of engaging Area-boys as tax administrators. Notwithstanding these risks, from my observation of the role of Area-boys in the administration of property and toilet taxes in Makurdi Benue State, it may be possible to empower some types of Area-boys in some contexts to collect taxes effectively and efficiently in areas with less formal tax administration presence. This prospect likely depends on the different leadership and structures of Area-boys that exist and vary across the country, while the implications for governance and public accountability certainly need to be taken into consideration and considered through future research. For instance, the Governor of Benue State made a Public Order Declaration on the 24^th of May 2024, which intends to place fines on traffic and other offences; this is to be implemented by contracted security agencies alongside the Governor’s Adviser on Youth and Illegal levies; this is the governor’s aide, in charge of regulating activities of Youths (Young under-employed citizens) considered in this blog as the Makurdi’ Area-boys in urban centers, and making sure that issues of extortion considered as illegal levies within the state are regulated. From my observation, the Governor’s Adviser often engages Area-boys who have allegiance to the ruling political party to help the implementation of illegal levies regulation and they will likely be engaged to administer fines on traffic offences but there are likely concerns of harassment to political opponents and opposition members or other groups when these Area-boys are subsequently engaged by the Benue State government to implement the Public Order due to their political allegiance. 

Who are Area-boys?

Area-boys is a general term in Nigerian parlance attributed to young men inhabiting marginalized neighbourhoods, often underemployed or unemployed, seeking livelihood through informal means. Governance structures of Area-boys differ across regions in Nigeria. For instance, Area-boys in Lagos, often referred to as ‘Agberos’,  predominantly comprise of members with less formal-organized structure, and their leadership succession is majorly established through undemocratic processes, probably connoting less accountability in the system. In Makurdi, two groups of Area-boys exist with different structures. These are the Youth-Group and the Agberos.  From my observation, Youth-group mainly operate within local communities and neighborhoods, they are comprised of members with more formal education and have organized democratic process of leadership succession with periodic elections which might connote a form of accountability. Within market premises and motor parks, another form of Area-boys leadership exist in Makurdi, with leaders often referred to as Chairman-Agbero and with similar structures to the Lagos Agberos.

As this variation in the names and structures of Area-boys exist, it is likely that the range of informal and formal taxes administered by the Area-boys across regions in Nigeria also varies. Given the wide variation in types of actors captured under the umbrella of “area boys”, I do not try to generalize here; my observations are solely based on indicative evidence from Makurdi. Pragmatic and practical policy approaches to mitigate the challenges of taxes administered by the Area-boys need to be considered on a case-by-case basis across the country.

Informal and illegal taxes and Payments Collected by Area-boys

Area-boys across the country collect a range of informal and illegal taxes and payments, including user fees, fines, tolls, development levies, presumptive income taxes, and taxes on agricultural produce through roadblocks. Some of these payments represent informal taxes as they are levies collected by Area-boys, sometimes with the backing of traditional institutions or local government authorities, for public goods provision. In other cases, payments represent clearcut extortion: for example, Area-boys mount roadblocks demanding that transporters pay them certain fees through coercion.

In Makurdi, I further observed in some cases that Area-boys, backed by Traditional leaders, collect development levies from landowners who attempt to develop property on those lands; they term such payments as “Deve”, but failure to comply leads to destruction of whatever property the landowner may establish without recourse to statutory laws. Although these payments take the form of property taxes, they are extortionate since there are no evidence to show they are used for community development purpose.  

In other cases, Area-boys collect flat-rate tax on the daily income of wheelbarrow/truck pushers, motorbike (“Okada”)and tricycle (“Keke”) riders, bus drivers (“Muluwe”), and petty traders in the local markets; the tax is presumptive and inequitable as it does not take into cognizance the difference in income of citizens thereby exerting more burden on those who make lesser income.  I have equally observed that sometimes taxpayers are forced to pay above the agreed limits or make double payments by different Area-boys groups thereby amounting to extortion because such force payments might not be accounted to the local council or Chiefs.

Can Area-boys support local government taxation?

I observed in some cases in Makurdi that Heads of Revenue Department – referred to as Revenue Heads hereafter – with the approval of Council Chairmen informally, contract Area-boys to collect fees from citizens who use public toilets, those who park vehicles or use the local government garages and farmers who bring agricultural-produce for sale in local markets. Accordingly, the Area-boys report directly to the Revenue Heads on how much tax-revenue they collect on a daily basis, from which some percentage is shared between the Revenue Heads and the Area-boys, given the informal arrangement. There is sketchy evidence on how much is shared and remitted which portends to lack of transparency in the process. A similar case is reported in Lagos where such revenue ends up in the pockets of corrupt government officials—tax administration by Agberos account for 29.4% of Lagos State Tax Revenue, yet it is largely unaccountable. This might be due to political synergy, where other than remitting tax revenue to the government, the Agberos might have shared such tax revenue with their political masters. This suggests potentially large risks for accountability of the strategies of tax farming suggested by Mr Taiwo Odeyele. 

Despite the obvious accountability challenges of tax administration by Area-boys, my recent engagement with Youth groups in Kaduna – with similar organized structure like those in Makurdi – has shown that Area-boys backed by traditional leaders keep adequate tax records and report to community members when they collect informal taxes to fund community development projects. For instance, I found through an interview with the Youth leader in the Rido Council Ward that when they collect informal levies to fund repairs of electrical installations (Transformer) in the community, as directed the Mai Angwan (Local Chief), they are required to keep registry of payments made by community members; in order cases, the Youths issue receipts to community members during the collection of levies. Although Kaduna State may offer a different context from Makurdi and Lagos which I have been observing,  it suggests that there is some potential for Area-boys to be made more accountable when integrating with respected informal institutions. Before considering using them, local governments need to consider the structure of hybrid governance that puts in place checks to curb crimes by Area-boys while ensuring that Area-boys act within legal frames when they administer taxes on behalf of the government.  

In terms of efficiency, if Areas-Boys are paid lower when trained and commissioned as local tax-administrators, it may reduce the cost of tax administration by government as compared to engaging career tax administrators with higher pay who have formal education and placement in civil-service cadre; but we must bear in mind cases/risk of retained revenues which may outweigh the cost of collection when tax collection is outsourced to private actors by the statutory tax administrators. Regarding effectiveness, when compared to formal tax administrators, I observe that Area-boys are more acquainted with the activities of informal actors like developers in the communities evading formal development levies and activities of agro-produce transporters using routes with no presence of formal tax-administrators. In Lagos, reports shows that Area-boys engage more frequently with informal actors like non-registered small scale businesses, vehicles parked at unauthorized space, and local transporters. This puts Area-boys in a position to approach actors in the informal terrain and make timely collections than formal tax-administrators. 

The Need for More Research and Policy Engagement on Tax Administration by Area-boys    

Despite the challenges outlined, the possible benefits of tax administration by Area-boys should not be overlooked by tax policymakers. Attempts should be made to study the governance structures and the varying taxes administered by the Area-boys which in a way may contribute to local tax efforts and broader state building.  To do this, there is need to undertake further research to understand how Area-boys structure their tax administration; develop possible methods to mitigate extortion; develop collaboration mechanisms that can be structured to enable a hybrid tax administration between formal tax administrators and the Area-boys.