Inside Lagos Kiosks: How Retail Businesses Stay Small, Grow Big

Inside Lagos Kiosks: How Retail Businesses Stay Small, Grow Big

Special Report

It’s a cliché, but true that the economy, employment rate, and ease of doing business in Nigeria, the most populated country and biggest economy by gross domestic product, are all headed south. But moving northward is the resilience and resourcefulness of kiosk retailers operating in the country’s ever-expanding informal sector: staying small but growing big. Bayo Akinloye reports

Nigeria’s informal sector is worth N40 trillion and that includes the micro- and small enterprises. At the moment, the country’s gross domestic product amounted to $410 billion in 2019, recording the highest GDP in Africa (South Africa’s GDP was worth $350 billion and ranked as the second-highest on the continent and three North African countries, Egypt, Algeria, and Morocco, followed suit). Yet, the country remains vulnerable to the global economic disruption caused by COVID-19, particularly due to the “pronounced decline in oil prices and spikes in risk aversion in global capital markets.”

Besides, as of November 2020, the World Bank noted that 40 per cent of Nigerians (83 million people) live below the poverty line, while another 25 per cent (53 million) are vulnerable and with the pandemic, many of these 53 million people could fall into poverty. The economic impact hinges on oil prices. Oil accounts for over 80 percent of exports, a third of banking sector credit, and half of the government revenues. Oil prices also affect growth in non-oil industries and services, with additional pressures arising from foreign portfolio investors’ reassessment of risks and domestic liquidity management.

Inside this bubble, Lagos’ informal sector is beginning to buckle. In Lagos State alone, according to the Executive Director of Micro Enterprises, Bank of Industry, Toyin Adeniji, the informal economy employs about 5.5 million people (about three-quarters of the state’s 7.5 million labour force). A 2016 report indicated that the informal sector made 41 percent of contributions to the country’s national GDP; a few years later, in 2018, it rose to 65 per cent.

“If one were to proffer an estimation, it could very well be posed that with steadily increasing growth and activity, the informal sector’s contributions to our 2019/20 GDP would potentially surpass 70-80 percent.

“However, this year is unlike any we could have imagined – and for those whose welfare are reliant on the daily income of the informal sector, and who cannot ‘work from home,’ the reality is bleak,” said Adeniji.

Unemployment and underemployment are expected to increase, affecting poor households and increasing the share of the population vulnerable to falling into poverty. Only agriculture is expected to positively contribute to growth in 2020, the BoI director suggested. But there is no killing Lagos kiosk retailers often called ‘mallam’ or ‘aboki.’

Lessons from the Kiosk

Call it a ramshackle wooden box, a hole-in-the-wall mini-mart, a carved-out container.

Often nondescript, thousands of retail kiosks dot Lagos’ sprawling landscape (ghettos and GRAs) and are like multi-coloured murals. A kiosk often has two large by-the-side collapsible windows, raised up to add breadth and width to the small structure and provide a wider display of wares. If lived in, the kiosk has a small window. The wooden kiosks are easy to assemble and dismantle.

Some have called it a lean, mean, fighting machine: it costs little to nothing to set up. The cost of maintenance is said to be minimal. It does not depend on electricity (lack of regular supply of electricity in Nigeria is said to have crippled many promising and already thriving businesses, not just in the micro, small and medium enterprises but also big-time industry players).

Cramped with consumer goods, from chewing gum to condom, aboniki to kulikuli, alabukun to 7-Up, the kiosk is nothing but a one-stop-shop for consumables. You can buy a cigarette there and do not have to worry about how to light it.

How Retail Kiosk Operators Stay Small, Grow Big

It’s a cliché but true that the economy, employment rate, and ease of doing business in Nigeria, the most populated country and biggest economy by gross domestic product, are all headed south. But rising on the north is the resilience and resourcefulness of kiosk retailers operating in the country’s ever-expanding informal sector: staying small but growing big.

Considered unglamorous compared to supermarkets, big stores, and other expansive shops in Lagos, kiosks and their operators are somewhat despised, but largely patronised by the masses. In Ojota (in Kosofe Local Government Area) alone, there are at least 57 retail kiosks managed by ‘mallams’ and ‘abokis.’

One kiosk retailer, Adamu, since 1986 has been plying his trade at the head of Olatunji Street in Ojota, along Ogudu Road. His kiosk remains largely the same, weather-beaten and nondescript. He sells consumables: biscuits, candies, lighters, matches, alabukun, Kulikuli, aboniki, teas, powdered milk in the sachet, chewing gums, condoms, cigarettes, paracetamol (and other over-the-counter analgesics), plasters, pens and pencils, noodles, sausages, among others. The list is endless.

He has recently acquired a medium-sized cooler to keep some drinks for sale. The kiosk is jam-packed, every item lined up horizontally and vertically in delicate poise, indicating organisation and attention to detail.

“Adamu is more than a trader. He’s a life-saver,” a resident told THISDAY. “It was in the middle of the night and my child was very sick. I rushed to Adamu’s kiosk and with one knock, he opened his kiosk. It was the 7-Up and alabukun that I bought from him that night that saved the life of my child.”

This incident illustrates two things that keep retail kiosks in business even during this COVID-19 pandemic: selling consumables and running an almost 24-hour business. These ‘mallams’ or ‘abokis’ have been running a round-the-clock business for decades. To date, no big-time mart stay up late for business as the kiosks do.

Some kiosk retailers even serve as watchmen

David, a kiosk retailer, explained how the business can be started.

“It usually starts with getting a place for yourself. And that is not as difficult as renting an office or a shop. I have worked here as a security guard for some time now.”

Regarding how he started his micro-enterprise, he disclosed: “With the good relationship I have built with my boss, I felt free to approach him for a kiosk; for a space just by the fence. He granted it, and that’s mostly what I needed for a start.”

His story is similar to that of many other kiosk retailers. They work as watchmen in a compound or street and saw a need to augment their meagre salary.

“All you need is a carpenter and a design according to the space you were given. How much you pay (for erecting the kiosk) depends on how big or small you want it to be and your shop is set,” added David. That is not all there is to kiosk retailing. Knowing the little things one’s environment needs is a qualification that every kiosk retailer must acquire as that also plays a major role in determining their success.

Kiosk retailers admitted how hard they have been the butt of jokes and uncouth remarks. Yet, they have learnt to be friendly and sometimes helpful in the neighbourhood. By keeping their kiosks what they are and reinvest the profits in farming, educating their children, living a spartan life, delaying gratifications and selling anything that the community wants that sells. They also understand the need to sell on credit to trusted customers.

Venture Capital and Reinvestment

Every venture needs capital, and anyone who takes on a business is always concerned about how much he needs to start. For kiosk retailers, that is not always the case. Semiu, who operates a kiosk on a Lagos street, told THISDAY: “It’s a case of cutting your coat to your cloth. There is no rule about that. If you have N,5000, you start with N5,000. If you have N10,000 you start with N10,000.”

According to a study of kiosk retailers in Zaria, Kaduna State, by Shuaib Ndagi Sayedi and Dr. A.M. Abu-Abdusamad, 41.9 per cent of those surveyed got venture capital from personal savings, 35.4 percent got venture capital through “various forms of gifts,” and 22.6 percent got theirs through loans from individuals.

“It is important to note that none of the leaders got his venture capital through a loan from the bank. This could be because banks do not advance loans to non-existent businesses. This means the majority of leaders got venture capital to start kiosk business by personal savings or self-effort in flyover area Kwangila-Zaria,” the researchers said.

The same report revealed that 35.5 per cent started the business with less than N10,000, 25.8 per cent with between N10,000 and N20,000; 50 per cent started with over N50,000; 9.7 per cent started with between N21,000 and N30,000; 6.5 per cent had between N41,000 and N50,000 to start retailing.

Isiaka, another kiosk retailer along Ikorodu road said he has been in the business for over 20 years.

“I resigned from my workplace because my employers didn’t want me to operate a kiosk while I worked for them as a security guard. So, I came here. Since then, I’ve been doing this business for more than 20 years now,” he explained.

Many of the kiosk retailers, who spoke with THISDAY admitted that they had no intention of expanding their kiosks or moving to a big shop. According to them, the profits made are reinvested in farms back home in the northern part of the country or even in neighbouring Niger and Chad. They travel home from time to time to farm. While they are away, they often have somebody deputise for them. Some of the kiosk retailers said they have large families they are not ready to bring to Lagos.

For Isiaka, there is another reason. “I work with a company. They gave me this space to do this business. I get paid monthly while I’m still doing this business. That’s why I’m not thinking of getting a shop.”

Some kiosks are inherited. Semiu inherited his kiosk from his father. But there are instances of some retailers selling their kiosks to potential retailers as they move up north to invest fully in their farms. Sometimes, they bring in a relative to take over.

Musa at Biode Park in Ojota said, “I just came here. My brother travelled back home. So, I’m here in his stead.”

“When my father decided to go back to the north finally, he brought me to operate the kiosk,” stated Semiu.

Alhaji, another kiosk retailer, explained that he has two wives and has been able to support his family.

“I have been traveling so much recently, and soon I will be travelling again to my country, Burkina Faso, to see my new wife because she is pregnant. If I don’t have this kiosk, it would have been difficult for me because the transport fare is high,” he revealed.

Paying Their Dues to Local Councils

Lagos government prides itself on its huge internally-generated revenue. In its revenue drive, it does not overlook kiosk retailers. Ibrahim, a kiosk retailer, said: “They come as early as the beginning of the year to sound a warning of impending payment of our dues. Afterwards, enforcement follows. And if you can’t pay, they will lock up your kiosk.”

The kiosk retailers also understand what it means to have ‘Lagos sense’ to ensure their businesses stay small but grow big. Mustapha, another retailer, explained: “Sometimes they come in two different groups. You pay the first group and the other comes later asking for the same fee. That’s why it’s good to get a receipt from them so that you will show any one of them who comes asking again.”

How much do they pay to the government? “We only pay N3,000 for the whole year,” said David. “By June, they must have started to collect the money, and that’s the only money we pay to them.”

Baruwa, whose kiosk is at Ogudu road added: “I pay to council every year. Why shouldn’t I pay? I give them N2,000, and that’s all I pay for the year.”

But sometimes, some of the retailers do not have to pay probably because council officials are not able to cover all the streets.

“I don’t pay to the council; they don’t come here. I have not seen anybody here asking me to pay any money,” admitted Husseini.

The macroeconomic situation is more challenging now than in 2015-2016 when oil prices fell sharply and Nigeria experienced its first recession in 25 years. In the current situation, Nigeria has fewer buffers and policy instruments to cushion adverse effects, according to the World Bank.

While Nigeria has made some progress in socio-economic terms in recent years, its human capital development remains weak due to under-investment, leaving its economy especially vulnerable to the COVID-19 outbreak and its consequences. Inequality, in terms of income and opportunities, remains high, and has adversely affected poverty reduction. The lack of job opportunities is at the core of the high poverty levels, regional inequality, and social and political unrest. With COVID-19, the country’s “recession is likely to push an additional five million Nigerians into poverty in 2020, bringing the total newly poor to seven million” last year.

To provide the Nigerian government with “timely evidence” to guide its policy response, a new high-frequency survey – the Nigeria COVID-19 National Longitudinal Phone Survey (COVID-19 NLPS) – was initiated in the country. The survey implemented by the National Bureau of Statistics with technical support from the World Bank was designed to measure and monitor the economic and social impacts of the COVID-19 crisis by tracking households’ welfare and behaviour every month over a period of 12 months. The survey began in May 2020.

The survey covers important topics including knowledge and concerns about the pandemic, access to food and other basic needs, employment and income loss, and safety nets and coping strategies.

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