The core contradiction is this: You cannot build a modern market economy when the social contract between the state and its citizens is broken.
1. The Paradox of the “Informal” Market
Nigeria does have a market economy. But it’s informal, fragmented, and inefficient.
Because citizens don’t trust the state to provide power, roads, or security, they pay a “private tax” instead: generators, private security, boreholes, toll roads.
That hustle gets Nigeria to a certain point. Then it hits a hard ceiling.
Without public infrastructure funded by formal taxes, businesses can’t scale.
So, we end up with millions of micro-enterprises instead of globally competitive industries.
2. The Resource Curse: Tax De-linking
For decades, Nigeria didn’t need citizens’ taxes – don’t mind if they don’t pay. Oil paid the bills.
That created a detachment:
The government wasn’t accountable to people because it didn’t rely on their money. People didn’t demand accountability because they weren’t paying direct income tax.
Now that oil can’t sustain us any longer, the state is rushing to formalise taxation. Citizens are resisting — not because they hate taxes, but because there’s zero proof of concept that their money won’t just be used for luxury SUVs. We are trapped.
3. Rational Resistance: Game Theory
In a corrupt system, tax evasion is rational self-preservation.
If you believe your naira will be looted, paying tax is not a civic duty. It’s a guaranteed loss with zero returns on investment (ROI).
The Bottom Line
Nigeria will continue to see pockets of growth from grit, tech, and demographics.
But sustained, long-term growth will remain impossible without fixing taxation. And we can’t fix taxation without restoring trust. It’s a catch-22.
The Historical Parallel
19th-century Britain lived off colonies and tariffs. The ruling class was unaccountable to its own people back home. Sound familiar to Nigeria’s ruling class relying on oil and not tax?
The shift in Britain only came when intellectuals forced the conversation. The Fabian Society established the London School of Economics (LSE) in 1895 specifically to build the economic case for progressive taxation and public spending — linking money to visible public value.
Citizens pay taxes when they see the connection: my money = roads, light, schools, security.
As long as oil flows, Nigeria remains trapped.
That, however, can change if intellectuals step in to make the case, just as it happened in Britain: every generation fears leaders will mismanage their taxes, many of the leaders are either dead or in no position to mismanage, but the alternative is stagnation – which every generation has endured.
It’s a hard sell. But there is no other way than to pay first and then demand accountability, because the ruling class don’t really want the citizens to pay taxes, as long as there is oil money or worse they borrow and still mismanage.
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