• Sunday, December 03, 2023
businessday logo

BusinessDay

How extortion, multiple taxes worsen food prices

Food prices still surging amid FG’s stabilisation plan

The extortion by louts who claim to represent local government areas (LGAs) and the imposition of multiple taxes on trucks conveying agricultural produce are fuelling a surge in food prices and preventing the industry from reaching its potential, logistics operators have said.

The players who spoke with BusinessDay say their truck drivers carry an average of 30 documents while conveying food products across states, with louts purporting to represent LGAs demanding ridiculous charges and taxes.

They say the indiscriminate and imposition of many taxes on their operations are driving logistics costs, fuelling a surge in food prices and preventing the industry from creating jobs.

Some of the documents requested by hoodlums in some LGAs, according to these players, are airport route permit, urban city carriage permit, federal ocean terminal refinery route permit, road maintenance route permit, independent power plant pollution permit, flood and erosion control permit, oil and gas and petroleum permit, inter-state and inter-local government permit and vehicle road tax.

However, there is no specific law in the country that states the legal documents logistics firms conveying food produce are expected to have in the country as most LGAs come up with ridiculous documents to extort money from operators.

“LGAs come up with all kinds of taxes just to extort money from truck drivers. If you refuse to pay, the louts will impound your vehicle,” said Temitope Olagoke, a truck driver who usually conveys food produce from the North to Lagos.

“We pay as high as N100,000 per trip on permits to local governments in some states, and this extra cost is usually added to the cost we charge for transporting the produce,” he said.

Musa Yusuf, another truck driver, said the experiences from the louts claiming to represent LGAs are horrifying, saying it is also responsible for the surge in food prices across the country.

“When you spend N1.3 million transporting 30 tonnes of food items from Kano to Lagos, you will automatically transfer the extra cost to consumers who buy your products,” he said. “This is another reason food prices are rising, apart from the Russia-Ukraine war.”

Food prices have increased at a faster pace in Africa’s biggest economy in recent months owing to the Russia-Ukraine war and high transportation costs.

Nigeria’s food inflation, the key driver of the headline inflation, hit 24.13 percent in November 2022, and over 90 percent of the country’s working population spends 60 percent of their income on food and related expenses, analysts say.

The situation has exacerbated poverty in Africa’s most populous country, with 63 percent of Nigerians (133 million) suffering from multidimensional poverty, according to a recent report by the National Bureau of Statistics.

Ridwan Oguntade, director at I.K Elesan Transport Company, said the situation of extortion by hoodlums is worst in the South-East and South-South regions, adding that some drivers don’t ply the route owing to the constant harassment by the hoodlums.

“The same N1.3 million you use to transport 30 tonnes of food items from Kano to Lagos, which is a 950km journey, is what you will still spend to transport food items to Onitsha, which is a 600km journey. This is because the number of permits is higher in the South-East region than the South-West,” Oguntade said.

“The permits are all extortion. Even when we make that money, we will give most of it to the local governments,” he said.

He added that extortion by security operatives along major highways is also compounding the issue.

Read also:  Insecurity, climate change seen keeping food prices high in Nigeria

A video currently trending on social media posted by @jimmy2timw showed that a truck driver paid for 72 permits issued by Irele Local Government in Ondo State to transport food items across the South-West region.

Many businesses are weary in Nigeria. They are faced with a worsening cost of doing business crisis coupled with accelerating inflation and foreign exchange scarcity.

Godwin Oyedokun, a professor of accounting and financial development at Lead City University, said it is not illegal for local governments to charge certain levies but it should be done with decorum.

“The effect of all these multiple charges and taxes will increase the prices of the goods transported as the cost will be added at the end,” Oyedokun, who is also a chartered accountant and tax practitioner, said.

“Most of the taxes and charges do not get to the coffers of the government. Our tax system has to be rejigged to ensure that those louts don’t take advantage of the lapses.”

He urged the local government to sensitise the public on the nature of taxes and charges they collect to eliminate the activities of louts on the roads if truly they are not in connivance.