Logistics and courier firms say they are extorted by touts who claim to represent local council development areas (LCDAs) in Lagos State, alleging that this is squeezing an industry that is just beginning to gain an online traction.
According to logistics players who spoke with BusinessDay, their dispatch riders carry up to 35 documents while on duty, with touts purporting to represent the LCDAs demanding ridiculous charges and fees ranging from mid-year paper tax to mobile permit fee.
Some of the documents requested by the touts in Nigeria’s economic capital, according to these players, are: radio licence, mid-year paper, unified clearance, consolidate permit certificate, and vehicle road tax.
The logistics firms also say they are asked by the touts to present Ogun State paper, vehicle road tax for Zamfara State, mobile permit for Zamfara State, state carriage for Zamfara State even while in Lagos.
However, the legal documents logistics companies are expected to have in the state are insurance paper, road worthiness, vehicle licence, Ministry of Transport licence (state) and Lagos State carriage.
The main local governments/LCDAs flagged by logistics players are Alimosho, Mushin, Ikotun, Yaba, Eti-osa (Ajah), and Ikorodu.
“If a rider makes N10,500 in a day, he would have to settle the area boys with N5,000,” Benedict Philips, a logistics player and member of Association of Lagos State Carrier Operators, said.
“Two months ago, they came up with Mid-year Paper. We went ahead to pay N3,000 for it. One month down the line, they told us that Mid-year Paper is now a scam because the government has not approved it. Over 500 companies with a minimum of two motorcycles have already registered for it. Then you go to another local government and they ask you about Media Paper. So, to be on a safe side, the riders are forced to just have it with them,” she explained.
She further said the number of logistics firms had risen by between 20-40 percent since COVID-19 pandemic in March, stressing that the tax enforcers expect them to have a document as soon as it was announced.
The Nigerian Postal Service (NIPOST) recently imposed N20 million for a new licence on international courier firms and N8 million annually for renewal, and for the new local firms N10 million for licence and N4 million yearly for renewal.
But the ICT minister, Isa Pantami, cancelled it after public uproar. However, logistics and courier companies in Lagos say they are still asked to show proof of payment for the NIPOST fees even when it has been cancelled.
Bolaji Beckley, CEO of Agility Eko Logistics and Agility Express International, said he was at the Lagos State Ministry of Transport for three months to report the touts and was told to write a letter and petition all the local governments he encountered such.
“Everything looks like extortion. Even when we make that money, we will give most of it to the local governments,” he said.
Beckley explained that the number of logistics companies had increased by 40 percent since the start of the pandemic, but warned that the firms might be forced to shut down on the back of these extortions.
Logistics industry is gaining traction as COVID-19 pushes more clients online. One Ken Research estimates that Nigeria’s logistics industry will reach $1.5 billion by 2025, basing its projection on Lekki Port, rail infrastructure and improved infrastructure.
Nigeria jumped to 131 from 146 in 2020 World Bank Doing Business Report, signalling an improved business environment, but the country is still saddled with multiple taxes and lack of accountability by governments at various levels. Businesses are weary in Africa’s largest economy, with inflation rising to 12.82 percent in July, 2020, and poverty among the consumers reaching 44 percent in 2018, according to World Poverty Clock.
Unemployment rate has reached 27 percent in the second quarter of 2020 from 23 percent in the third quarter of 2018. The GDP contracted 6.1 percent in the second quarter of 2020, according to the NBS. The country is facing a worsening foreign exchange crisis, including low Foreign Direct Investment and Diaspora dollar inflows.
Wasin Adesina, chairman, Ikorodu Local Government, one of the local governments flagged by logistics players, said he did not ask the touts to collect levies or disturb businesses.
“Don’t you know the activities of the area boys? I don’t have any connection with them and I cannot be answerable to their actions,” he said.
“So, on their own, the delivery companies should ask them why they are doing that. That is not part of my business. Everybody knows the activities of the area boys; they are uncontrollable. They are everywhere. I don’t even know them,” he further said.
Rafiu Olufunmi, executive chairman, Eti-Osa East, another local government identified by logistics players, said he had asked the logistics firms to report any time they face harassment from touts.
“I have told the riders that every time they stop and extort them, they should report to the local government. And if they don’t stop, they can get the area boys arrested. I have even had a meeting with the area boys to ask them to stop harassing the riders,” he told BusinessDay.
“These boys have no approval from the government to be extorting them. These companies are allowed to go about their businesses since they have their permits,” he said.
The state frowns at touting and is taking steps to curb the malaise, Gbenga Omotosho, Lagos State commissioner for information and strategy, said, saying the issue of area boys will be escalated to the State Security Council.
He advised logistics companies to forge a common front and meet with Conference 57, which is a forum of all LG/LCDA chairmen, with law enforcement agencies in attendance, to discuss their grievances and clarify legitimate taxes and levies.
“Representatives of logistics companies should also exploit the internet in getting information about legal taxes payable to local governments rather than resort to hurriedly paying bribes anytime they are apprehended on roads,” he said.
The state government cannot dictate what levies local governments can collect in as much as they are legal, he further said, but the government will intervene and ensure normalcy is restored where there are illegalities.
“All local government officials are expected to be properly kitted and recognised. Where some unscrupulous individuals take advantage of the system to commit crime, the law enforcement agencies are expected to arrest and prosecute them where such infractions are reported,” he said.
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