BEVERLY HILLS, March 01, (THEWILL) – Operators of courier and logistic firms facilitating e-commerce in Nigeria are being squeezed by multiple, unending layers of taxes from the federal, state and local government authorities across the country, THEWILL findings have revealed.
The anomaly is impacting negatively on a key industry that is changing the landscape of global business and has transformed many firms into multi-billion dollar enterprises. Events of the last 12 months triggered by the Covid-19 pandemic, also created a world of new normal and brought tremendous developments in the area of online shopping and e-commerce generally.
While Nigerian players have keyed in to compete in the global space, their efforts are being frustrated at home. Officials of government agencies are squeezing them in a bid to boost revenue and, perhaps, enrich their private pockets. Interaction with industry players in Nigeria’s major cities and in the up-country areas shows that the industry is choked with multiple taxes among a myriad of challenging factors.
In Lagos, for instance, dispatch riders of courier and logistics firms are required to carry over 30 tax-related documents while on duty to enable them to access their destinations. In many cases, touts from Local Council Development Areas (LCDAs) which complicate the role of Local and State Government revenue officials, demand ridiculous fees for permits and other documents. They mount road checks at strategic places in a mood that betrays their readiness for “official” assault and battery.
THEWILL checks show that the documents required from the courier and logistics firms are literally countless. They also multiply by the day and are changed without notice. In many cases, they are the same permits approved by the state but obtained from a different local authority. Revenue officials often insist on the courier and logistic firms paying for the permits in their (the officials’) domain. This is increasing the operating expenses of the courier and logistics firm and causing them to lay off their workers or drastically reduce their pay.
Among the documents requested by the revenue officials are: unified clearance, mid-year paper, radio licence, consolidated permit certificate, vehicle road tax and dustbin permit. Others are environmental sanitation levy, vehicle road tax and state carriage. Sometimes they are required to obtain the stage carriage of adjoining state (such as Ogun) in Lagos and vice versa. An operator said at a time, touts in a Lagos LCDA asked them to present Ogun State and Zamfara State vehicle road tax, mobile and state carriage permits even while in Lagos.
In June 2020, the LCDAs came up with Mid-Year Paper for which logistics firms rushed and paid N3,000 for each motor-cycle to avoid obstruction on the road. After about a month, the government authorities told the courier and logistics operators that the Mid-Year paper was a scam as the government had not approved it and that a ‘genuine one’ has been issued.
“Yet, over 500 firms with a minimum of two motor-cycles had already registered for it and obtained their papers. Then you go to another LGA, they ask for the same paper that was said to have been cancelled. To be on a safe side, the companies buy the Mid-Year papers from all sources – both temporary, prohibited and genuine, and you can imagine what this means for a firm with 10 or more motor-cycles”, said Anthony Ekere, a dispatch rider in a logistic firm in Lagos.
THEWILL confirmed that the legal documents that logistics companies are required to obtain in Lagos are: vehicle licence, insurance paper, road worthiness, Ministry of Transport (MOT), and Lagos State carriage. “But the touts are not bothered about these; they want you to carry the bunch of papers showing all manner of permits in different colours. Recently, they came up with Covid-19 road permit in some local government areas”, Ekere said.
Contacts made with courier and logistics operators in the up-country areas through the telephone revealed similar trend. A logistics firm operator in Owerri, Imo State, John Akaonye, said that local government touts have turned the roadblocks into an ATM of a sort, mainly for checking the papers of dispatch riders.
“Sometimes, the faces you see in the morning are not the ones you see in the afternoon. God save you if you are deficient in any area. They will milk you dry,” Akaonye said. In Port Harcourt, Rivers State, the requirements include “environmental pollution permit, waste paper basket, Covid-19 movement permit” in addition to the regular ones.
Respondents from Kaduna, Federal Capital Territory (FCT), Kano, Calabar and Benin-City all express concerns over the excesses of local council revenue officials squeezing logistics firms with multiple taxes in levies, permits and other forms of exploitation. Gov. Willie Obiano of Anambra state recently ordered the dismantling of revenue roadblocks operated by local government officials and some touts.
At the national level, the courier companies are not finding it easy, either. They have been in a long-drawn battle with Nigerian Postal Services (NIPOST) which plays the dual role of a regulator and operator. The battle has taken a toll on the courier and logistics firms leading to many of them closing shop as they cannot cope with the financial and regulatory pressure.
For instance, NIPOST in 2020 imposed N20 million for new licences on international courier firms and N8 million annually for renewal. It also pronounced N10 million licence for new local firms and N4 million yearly for renewal. But the Minister of Communication and Digital Economy, Isa Pantami, cancelled the policy following public outcry against the draconian. Courier and logistics firms in Lagos are still asked to show proof of payment for the NIPOST fees which has been pronounced cancelled.
The President, Association of Nigeria Courier Operators (ANCO), Mr Okey Ubah, said the dual role of NIPOST as operator and player has worked against the operators. He told THEWILL that NIPOST churns out policies that would favour it to the detriment of the private operators who struggle to meet up usually at a huge cost. He said a Bill has been passed by the National Assembly awaiting the President’s assent to terminate the dual role of NIPOST, maintained that NIPOST being a player and a regulator has not augured well for the industry.
On multiple taxes, Ubah said “Local government papers are never enough. You cannot say at any time that you have got all the papers the local governments need to allow you operate your business as a courier and logistics operator. This is what a regulator should focus on – streamlining the tax requirements by the three tiers of government to provide a uniform tax system for the industry across the country.
“Courier is time-consciousness; it is a business that moves with time. The road blocks and harassment by local government revenue officials affect our service delivery. Nigeria’s business environment is hostile. Many of our colleagues who invested hugely in infrastructure – imported equipment and machinery to transform the e-commerce sector, have closed shop because they cannot cope with the high operating cost”, Ubah told THEWILL in a telephone interview.
He revealed that about 100 members have closed shop in the last five years, and some are hanging on the balance waiting for when things will get better after spending a lot to establish their firm.
“You cannot talk of e-commerce without the courier and logistics firms. They are at the heart of the business. E-commerce cannot develop in isolation from the courier and logistics operators. But the challenge is myriad: poor infrastructure, bad road network, insecurity, high cost of fuel, inflation – all these militate against the business.
“The space is wide enough but the operating environment is not condusive. Many workers have been laid off as investors have also lost huge capital. Multiple taxes are killing e-commerce in Nigeria.”
Recent report by the National Bureau of Statistics showed that the non-oil sector contributed 91.84 per cent to real GDP, higher than 91.22 per cent recorded in 2019. Post and Courier Services Under Transportation and Storage Sector grew by 0.19 per cent in full year 2020 from 0.16 per cent in 2019 and 0.09 in 2018, an indication that the backbone of e-commerce should receive the full support from the authorities.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
