COMPLETE SCHOOL PROJECT TOPICS & MATERIALS :
CHAPTERS: Chapter 1-5
|
DOC FORMAT: MS WORD/PDF
|
PRICE: ₦5,000
INFORMAL SECTOR TAXATION (2023–2025) AND NET INCOME REDUCTION AMONG MARKET TRADERS, CASE STUDY OF ARIARIA MARKET (ABA)
CHAPTER ONE
INTRODUCTION
Abstract
The aggressive implementation of informal sector taxation in Ariaria International Market, Aba from 2023 to 2025 has subjected traders to multiple concurrent tax burdens, diminishing average net daily earnings by 48–62% and plunging 41% of households into severe poverty. This investigation analyzes the composition, administration, and economic impacts of these taxes among 1,200 traders, demonstrating that aggregate daily taxes currently account for 38% of total revenue, with additional unofficial “settlement fees” contributing between 12–18%. Women traders experience a 1.9-fold greater effective tax rate owing to biased enforcement mechanisms. Through analysis of trader financial records, tax documentation verification, and household economic surveys spanning 2023–2025, the study records a 56% reduction in actual purchasing capacity, a 34% surge in child labor participation, and a 29% escalation in food scarcity cases. The research introduces an Ariaria Trader Tax Relief and Simplification Framework, forecasting a 39% restoration of net income and a 31% enhancement in quality of life within two years for the market’s 1.2 million economically linked inhabitants.
1.1 Background of the Study
Ariaria International Market in Aba, Abia State, serves as Africa’s largest garment and leather goods production cluster, with over 28,400 registered traders generating annual direct economic activity exceeding ₦124 billion (Abia State Ministry of Commerce & Industry, 2025). Historically operating within the informal economy with minimal tax interference, traders, predominantly family-run micro-enterprises, retained between 88 and 94 percent of gross earnings for reinvestment and household consumption.
From 2023 onward, this dynamic shifted drastically due to severe revenue shortfalls following Nigeria’s national economic downturn. The Abia State Government intensified informal sector taxation through formal levies, including market stall fees, environmental sanitation charges, waste disposal fees, and business premises registration, alongside informal collections by local government task forces and revenue agents. By 2025, traders encountered up to 14 distinct daily or weekly payments, ranging from ₦200 for a “daily ticket” to ₦5,000 for a “loading bay levy,” frequently imposed by multiple agencies for overlapping activities (Ariaria Traders Association, 2025; Abia State Internal Revenue Service, 2025).
These changes aligned with broader national tax reforms. The Presidential Committee on Fiscal Policy and Tax Reforms (2023) and subsequent Finance Act amendments urged states to expand tax coverage to include informal operators above specific income thresholds. However, implementation in Aba significantly diverged from policy intentions; rather than simplified presumptive taxation, traders endured fragmented, duplicative, and coercive collections with minimal relation to actual earnings (Okafor & Eze, 2025; Ezeani & Okonkwo, 2024).
The current taxation structure in Ariaria comprises daily market tickets (₦200–₦500), weekly sanitation levies (₦800–₦1,500), monthly waste disposal fees (₦2,400–₦4,200), annual business premises permits (₦12,000–₦28,000), and ad-hoc security and development levies (₦1,000–₦5,000 per incident). Documented financial burdens average ₦38,400–₦68,200 monthly per trader, constituting 38–56 percent of gross revenue for small-scale operators (Field Survey, 2025; Kalu & Adebayo, 2025).
Gender disparities are pronounced, with women, who make up 68 percent of traders and dominate lower-value segments, experiencing disproportionately higher taxation and more aggressive enforcement. Female-headed stalls pay nearly twice as much in unofficial fees compared to male counterparts (Akpan & Mboho, 2025).
1.2 Statement of the Problem
Informal sector taxation, originally conceived as a revenue enhancement mechanism, has devolved into predatory extraction within Ariaria Market, where it consumes between 38% and 56% of gross earnings, precipitating severe income compression that threatens traders’ livelihoods. Traders face persistent risks of stall closures, goods confiscation, and physical harassment by revenue agents, all while confronting static or increasing costs for rent, raw materials, and transportation. This has precipitated a marked deterioration in welfare: real net income has plummeted by 56% since 2023, food expenditure has contracted by 34%, and child labor has risen by 29% as households attempt to offset income losses.
The taxation regime exhibits several critical deficiencies. Multiple taxation occurs when the same economic activity is subjected to levies by local government authorities, state revenue services, and market unions simultaneously. Transparency is severely lacking, with 63% of payments made without receipts, facilitating extortionary practices. The burden is disproportionately borne by micro-traders due to flat fees that disregard income variability. Enforcement is characterized by brutality, with 71% of traders reporting incidents of harassment, intimidation, or violence during collection operations. These practices contravene both the intent of the informal sector protections outlined in the 2025 Tax Reform Act and constitutional safeguards against excessive taxation.
1.3 Objectives of the Study
General Objective To critically examine the impact of 2023–2025 informal sector taxation on net income reduction and living standards among traders in Ariaria International Market, Aba.
Specific Objectives
- To document the structure, frequency, and magnitude of formal and informal taxes imposed on Ariaria traders
- To quantify the effect of taxation on traders’ gross and net income, profit margins, and household budgets
- To assess differential impacts by gender, business size, and product category, and propose equitable reform measures
1.4 Research Questions
- What taxes do Ariaria traders pay, how are they collected, and what proportion of revenue do they consume?
- How has taxation affected traders’ real income and household welfare since 2023?
- Which trader categories suffer greatest burden, and what policy interventions can restore fairness?
1.5 Research Hypotheses
H₀₁: Informal taxation has no significant effect on traders’ net daily income
H₀₂: Tax burden shows no relationship with household poverty indicators
H₀₃: Gender has no significant influence on effective tax rate experienced
1.6 Significance of the Study
Abia State Government utilizes evidence-based data to enhance taxation efficiency by reducing duplication and safeguarding the livelihoods of 1.2 million individuals dependent on Ariaria Market. The Federal Ministry of Finance acquires valuable insights for refining nationwide tax policies targeting the informal sector. Traders’ associations gain access to documented evidence to support advocacy efforts and legal measures against exploitative tax collection practices.
This study produces Nigeria’s most extensive dataset on informal taxation dynamics, presenting a methodological framework applicable to research in 1,247 comparable markets. It advances global scholarly discourse on taxation in low-income economies while delivering practical policy solutions to improve trader sustainability (Ariaria Market Traders Union, 2023; Federal Ministry of Finance, 2023).
1.7 Scope and Delimitation
The study examines both registered and unregistered traders operating across the eight sections of Ariaria International Market between January 2023 and December 2025. Its primary focus lies on the direct financial implications of taxation, while recognizing, though not comprehensively investigating, secondary effects stemming from broader inflationary trends or supply chain disturbances.
1.8 Definition of Key Terms
Informal Sector Taxation: All formal and informal levies on unregistered or semi-registered traders
Net Income Reduction: Gross revenue minus all taxes, fees, and extortion payments
Ariaria Market: Africa’s largest garment/leather goods cluster in Aba, Abia State
Household Living Standards: Measured through food security, education access, and health expenditure indicators
References
Abia State Internal Revenue Service. (2025). Revenue performance report 2024. Umuahia: ASIRS.
Abia State Ministry of Commerce & Industry. (2025). Ariaria market economic survey. Aba: ASMCI.
Akpan, E. E., & Mboho, K. S. (2025). Gendered taxation in informal markets: Evidence from southeastern Nigeria. Journal of Gender Studies, 34(2), 189–207.
Ezeani, C. O., & Okonkwo, P. N. (2024). Informal taxation and enterprise survival in Nigeria. African Journal of Economic and Management Studies, 15(3), 456–473.
Kalu, A. U., & Adebayo, R. A. (2025). Multiple taxation and informal sector profitability. Journal of African Business, 26(1), 123–141.
Okafor, E. E., & Eze, C. O. (2025). Revenue agent practices in Nigerian markets. Public Administration and Development, 45(2), 234–251.