Bento Africa, a Nigerian HR-tech company launched in 2019, is under investigation by the Lagos State Inland Revenue Service (LIRS) and the Economic and Financial Crimes Commission (EFCC) over allegations of failing to remit taxes and pensions for its clients.
These claims, which include forged tax receipts and unremitted PAYE taxes, have raised concerns about Nigeria’s tax collection system and the risks businesses face when outsourcing payroll functions.
Following the allegations, Bento’s CEO, Ebun Okubanjo allegedly resigned, giving up both his equity and debt stakes in the company. However, reports suggest otherwise, as he has been seen around the company, conducting business as usual.
In his resignation email, Okubanjo admitted to challenges in scaling HR and payroll systems across Africa and revealed plans to start a new venture called Ada AI, an AI-powered sales assistant.
The case has severely damaged client trust. Major companies like Moniepoint, Paystack, Kobo360, and Bamboo stopped using Bento’s services in 2024, showing the far-reaching impact of the scandal.
Investors were caught off guard by Okubanjo’s sudden exit and the lack of clear communication, raising concerns about Bento’s corporate governance.
This case has raised concerns about deeper tax issues including the reliability of Nigeria’s tax collection systems and the responsibility businesses have when outsourcing payroll functions.
Weaknesses in PAYE Systems
The PAYE tax system is designed to make tax collection seamless by requiring businesses to deduct and remit taxes on behalf of their employees.
However, the accusations against Bento highlight just how fragile this system can be. If true, the alleged forgery and under-remittance expose gaps in enforcement that allow companies to exploit the process.
Considering that PAYE taxes contributed to the ₦433.4 billion generated in Q1 2024 significantly to Lagos State’s internally generated revenue, such vulnerabilities threaten state budgets and public trust.
We asked a tax analyst from KPMG for his thoughts on the Bento case. After dismissing the company’s excuses as insufficient, he noted, ”Nigeria’s decentralized tax system makes it easier for businesses to exploit gaps. Tax responsibilities are split between the federal and state governments, each with its own rules and enforcement practices. This inconsistency often leads to confusion, allowing companies to take advantage of differences across tax regions”.
To address this, he recommended, “Introducing stricter penalties and creating a centralized, digital tax system, similar to what exists in the United States, would improve transparency, enhance compliance, and reduce opportunities for tax evasion”.
Outsourcing and corporate responsibility
For businesses that outsource payroll services, Bento’s case is a clear warning. Reports show that some Bento clients now face millions of naira in unpaid taxes and pensions due to alleged failures by the payroll provider. This serves as a reminder that outsourcing doesn’t absolve companies from their legal responsibility for tax compliance.
Businesses must recognize that relying solely on third-party assurances, without independently verifying receipts and remittances, can result in regulatory penalties, reputational damage, and strained relationships with authorities.
The role of audits
This case shows why regular audits are essential. Bento’s clients only discovered fake or missing receipts after regulators prompted them or after conducting their own checks. Without regular audits, businesses may miss critical issues until they become larger problems.
To help tackle this, the LIRS and FIRS have teamed up to create a Joint Audit and Investigation Team. This collaboration aims to make tax administration smoother, reduce compliance costs, and improve business conditions. However, as of January 2025, there has been limited public information on the team’s progress
Technology and tax compliance
Bento’s defense that it relied on manual processes to remit taxes reveals a broader issue with outdated systems. Manual methods are not only slow but also leave room for fraud and errors. Automating the tax remittance process through digital tools, such as API integrations, would enable real-time tracking, ensure accuracy, and make it easier for both businesses and regulators to verify compliance.
Nigeria isn’t alone in this
Bento’s collapse has raised concerns for Nigeria and the wider African fintech industry. As Okubanjo stated, “Until Africa modernizes its tax and remittance systems, scaling is mission impossible.” This is because Africa’s tax systems are facing some challenges, such as differences between regions, outdated technology, tax evasion, and corruption.
Countries like Kenya and South Africa which are working on digital tax systems still struggle to reach everyone, especially in the informal sector. Uganda also faces issues with corruption, and Nigeria’s complex tax laws make it hard for businesses to comply, as seen with Bento.
At the same time, Bento’s problems highlight that poor management and ignoring tax rules can lead to big issues. If Bento had paid more attention to its tax responsibilities, it could have avoided these problems. This was why Ezra ‘God’ Olubi, co-founder of Paystack, sharply criticized Bento’s attempt to deflect blame, stating, “When you’re caught with your pants down, blame the system and imaginary forces conspiring against you.”
Ghana faces similar issues
Bento Africa’s troubles extend beyond Nigeria, as the company faces similar allegations in Ghana. Reports indicate that Bento collected taxes and pension contributions from its Ghanaian clients but has yet to forward these funds to the appropriate authorities. As a result, finance and payroll managers in Ghana are struggling, with no solution in sight.
Like Nigeria, Ghana also operates a decentralized tax system, with the Ghana Revenue Authority (GRA) handling tax collection and the Social Security and National Insurance Trust (SSNIT) managing pensions. Weak oversight of payroll service providers like Bento creates loopholes that allow delayed or missing remittances. Without real-time tracking, businesses can misuse tax payments without immediate detection, putting companies and employees at risk.
However, this isn’t the first time Ghana’s tax system has dropped the ball.
In 2023, the Fair Wages and Salaries Commission conducted a nationwide payroll monitoring exercise across 120 public sector institutions, uncovering and removing “ghost” workers, i.e, individuals who were listed on the payroll but did not exist or no longer worked for the institutions. This exercise alone saved the government GH₵345 million. This case exposed major gaps in oversight, showing how poor monitoring allows financial leakages.
As businesses and tax authorities begin to see the need to balance system improvements with making sure companies follow the rules, Africa may also look to fix its tax systems.