As the Nigeria Tax Act (NTA) takes effect in January 2026, its exemption of VAT on agricultural equipment and zero-rating of key inputs such as seeds, fertilisers, animal feeds, and veterinary products is expected to reduce production costs and lower food prices. But the persistence of unofficial levies and market charges could erode much of this intended relief.
The NTA is poised to take care of multiple taxation ravaging corporate businesses and Micro, Small and Medium Enterprises (MSMEs), but may not impact Nano and Micro businesses, which form 96.9 percent of the entire MSMEs. These are the businesses that interact directly with the masses in the markets, especially in the sale of raw foods.
Femi Egbesola, PhD, President of the Association of Small Business Owners of Nigeria (ASBON), cautioned that while tax exemptions may be granted at higher levels, the reality for grassroots operators is quite different. “Many of these nano-paid levies and taxes are beyond what MSMEs are paying. They pay to the local governments, they pay to the Babalojas and Iyalojas, they pay to the touts in the market on a daily basis. We need to find a way to also regulate that, such that as MSMEs are free from tax, exempted in the upper level, those at the grassroots must also be supported, so that they will not use the funds they need to grow and scale to be paying multiple taxes,” he said.
When speaking with BusinessDay, Musa, an experienced driver who delivers foodstuffs to Lagos, described how these unofficial charges pile up long before the produce reaches the market.
“From Oluru, they collect N1,000,” he began. “By the time you get to Ilorin, it’s another N4,000. When you reach Ogbomoso, they take N5,000. If you carry food, you must pay. If you don’t, they can seize your vehicle, break something in it, or delay you for hours.”
The situation worsens at the Lagos entry points. Musa explained that at the 7Up bus stop, Federal Road Safety (FRSC) officials often demand between N70,000 and N150,000. To avoid such penalties, drivers are forced to hire escorts, such as police or soldiers, who collect approximately N10,000 to accompany the truck.
Inside Mile 12 market, where he offloads goods, the costs multiply further. “There’s a N4,000 ticket fee once you enter. After offloading, you pay market taxes that can total around N13,500. And when you want to drive out of the garage, it’s another N7,500,” he said.
By the end of one trip, I may have spent tens of thousands of naira on levies. These costs are added to food prices,” Musa said.
As for the seller, here is another case study. A yam seller explained through an interpreter that if he buys yam worth N100,000 from the market, he must pay N6,000 in charges, bringing the total to N106,000. When selling, he divides the yams into portions, calculating his cost and expected gain from the N106,000 spent. For higher purchases, the charges rise proportionally, N12,000 if he buys yam worth N200,000.
Beyond this, he pays what he called “normal market tax.” Receipts are issued for these payments. In addition, there are small but compulsory levies: N200 daily and N500 weekly, which traders must pay to continue selling.
Now, if NTA is successfully implemented in 2026, this problem that is outside of tax reform could just be a silent saboteur. This is not unique to the Lagos market alone; it is everywhere in Nigeria.
While it is important that policymakers are aware of the above, some people believe the tax reform will ease the price of food in the market.
Farmers predict lower costs in food production due to tax reforms
Sani Danladi, a tomato farmer in Kaduna, said the tax reform policy will cut down input costs for companies whose annual revenue falls within the ‘small company’ range.
“I believe this tax reform will reduce the amount we farmers spend on farm inputs like fertilisers and farming tools, especially for companies within the ‘small company’ mark.”
He said that since farmers are not burdened with other levies, he believes the tax reforms will bring relief to farmers and consumers.
Similarly, Femi Oke, chairman of All Farmers Association of Nigeria (AFAN), Lagos Chapter, reiterated that there will be a decline in input costs on the back of the tax reforms. “There will be a reduction in importation costs for farm inputs, hence food prices will drop.”
According to him: “We don’t pay any other levy to other bodies, so there will be some sort of respite for us.”
While farmers are optimistic that tax reforms will lower input costs, the reality of unofficial levies in markets may determine whether Nigerians actually feel the relief at their dinner tables.
