Businesses count woes as taxes, insecurity mount

The Nigerian operating environment is becoming increasingly tougher for investors and key business owners who continue to count woes culminating from mounting taxes.

Key investors in Africa’s largest economy also tell gory tales of product theft and robbery,  just as the Boko Haram insurgency rages.

BusinessDay findings show that business owners in the country, whether micro, small, medium or large enterprise, pay an average of ten different taxes and levies each month, ranging from land and property taxes to development, education and other forms of tax.

The trend is worsened by the fact that agencies of government at federal, state levels multiply these taxes, thus contributing to the current situation where one out of every three businesses dies within three years of start-up.

Remi Bello, president, Lagos Chamber of Commerce and Industry, recently drew attention to the steps taken by the Consumer Protection Council to embark on the registration of products of manufacturing firms, which is already being done by  the National Agency for Food and Drug Administration and Control (NAFDAC) and the Standards Organisation of Nigeria, two different government agencies.

The business community wonders why inspection done by SON cannot be accepted by NAFDAC and vice versa.

The local government system, where accountability is virtually absent, also comes up with taxes which it has no constitutional right to.

Mahmud Othman, council member of the LCCI and consultant for AG Leventis, said it was laughable that local government authorities would visit public liability firms, demanding irrelevant charges such as radio and television fees.

“The problem is that once you challenge them, they go to customary court. “Decree No 21of 1998 spelt out taxes payable to each level of government.   Most of the taxes they collect today are illegal. There is a provision for a local government, because of its peculiarity, to come up with a specific levy. But due to indiscipline, local governments come up with all forms of taxes. But the Constitution is clear on what they should do if they need to come up with taxes,” Othman said in an interview with BusinessDay.

Dele Ogunlade, MD/CEO, Matna Foods, producer of starch in a South-West state, told BusinessDay last year how touts would frequently come to his firm, sometimes with police officers, demanding frivolous taxes and levies. According to Ogunlade, failure to pay would always result in fights and scuffles.

“It is often unclear what to pay and sometimes who to pay to,” he said.

In spite of opportunities in Nigeria, the country still has one of the worst records in Doing Business criteria, ranking 170 out of 189 countries, according to the World Bank.   Even at that, the World Bank says an average company in Lagos expends 956 hours per year in paying taxes.

According to PricewaterhouseCoopers (PwC), South Africa requires seven tax payments, while the number of such is 17 in Rwanda 17. Incidentally,  Nigeria has 47 payments.

“The high cost of doing business in Nigeria has put us at a comparative disadvantage and further reduced our capacity to produce for local consumption and export.

“We pray that government should address this issue and fast-track the process in order to make Nigerian products more competitive,” said Frank Jacobs, president, Manufacturers Asociation of Nigeria, in a letter to Muhammadu Buhari, Nigeria’s president.

While the Boko Haram insurgency has stalled businesses in the North-East Nigeria, robbers often divert business people’s trucks and containers at night. Many drivers have often got killed in the process.

In a pre-inauguration visit to Akinwumi Ambode, Lagos Governor, Yaw Nsakor, MD, Unilever Nigeria, urged the state governor to improve security at night through street lights, to ensure that goods are moved smoothly at night.

Shettima Bukar Jallaba, director-general, Yobe Chamber of Commerce and Industry, told BusinessDay that the Boko Haram insurgency now causes constant stampedes, leading to destruction of farms and losses in local markets. Jallaba said many business operators have fled for fear of their lives.

ODINAKA ANUDU