I was driving through traffic on Sunday and saw 7–8 people selling bottled water at Mile 2, Lagos. What has always puzzled me was how do they make money? How do the economics of traffic hustle break down? Enough people actually earn a living off this for there to be something there. An obvious return on investment (ROI).
Let’s do the mathematics.
What is their market? Let’s use bottled water as an example. 20 bottles retailing at N50 per unit ($0.32 — $1 = N158) is N1,000 ($6.3), I know that the gross margin on bottled water (bought in low level bulk) is 20%. So if they were to sell out daily they would ‘make’ N200 ($0.64), I don’t know why but my feeling is that they would have to sell more than 20 bottles for it to make any type of economic sense. But even then, the numbers are slow and marginal so it doesn’t really matter. Over the course of the month they would earn N6–10,000 ($38–63.3)/month. That sounds stupidly low, but I remember the contract cleaners at our office were be...
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