In Lagos, Nigeria's Biggest City, Only 3 Percent of Population is Paying Tax: Governor

Nigeria's port city of Lagos is one of the world's biggest by population. With some 21 million people, the West African metropolis is bigger than Los Angeles and Russia's capital Moscow.

With such a large and fast-growing population—Nigeria is expected to overtake the United States as the world's third most populous country by 2050—Lagos should have a huge tax base to claim from. But according to the state governor, only 3 percent of the city's residents are paying their dues.

"The number of people paying taxes in Lagos is less than 600,000 people and we are 22 million and then 67 percent of the people living in Lagos are below the age of 35 and even the retirees, how much are they paying?" said state governor Akinwunmi Ambode, citing a higher total population figure, earlier this week, according to Nigeria's Premium Times.

Ambode said that unpaid taxes were preventing the state government from improving infrastructure in Lagos and from dealing with challenges such as flooding. Lagos was hit by major floods over the July 8-9 weekend that were exacerbated by poor drainage; locals even had to use kayaks to navigate the city's business district.

Ambode said that there had been no increase in tax revenues over the past decade in Lagos and that low-level avoidance was harming the city. "Nobody takes it as their business that the new road I am using, I need to pay something," he said.

"What I am saying is that there must be a convergence between civic obligations and the ability of government to build trust and be able to tell people that you know what, the little that you are giving me, I will use it judiciously," Ambode added.

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Nigeria has one of the lowest rates of tax contribution in the world, relative to the size of the economy. Finance Minister Kemi Adeosun wrote in a Financial Times article that just 6 percent of the population—which equates to around 11 million out of 180 million people—were meeting their tax obligations. "Such underpayment of tax is unacceptable and hits the poor hardest. It must stop," Adeosun wrote.

With some of the largest oil reserves in Africa, Nigeria is home to great wealth, but this is largely concentrated in the hands of a small segment of the population. Africa's richest man—cement magnate Aliko Dangote, who has a personal fortune of over $14 billion—is a Nigerian. A recent report by Oxfam International found that the combined wealth of Nigeria's top five billionaires could cover the $24 billion cost of wiping out extreme poverty in the country.

The country is currently in economic recession and has struggled to battle corruption. Nigeria is ranked 136 out of 176 countries by watchdog Transparency International, and was described as "fantastically corrupt" by former British Prime Minister David Cameron in 2016.

President Muhammadu Buhari, elected in 2015, pledged to root out graft and money laundering, but he has had limited success. While the Nigerian government has saved billions by eliminating ghost workers in the civil service and initiated the return of funds secreted abroad by former leaders, there have been no high-profile convictions for corruption under Buhari's administration, though several trials are ongoing.