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Atom Lim: Lagos: Where businesses die young

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Atom Lim: Lagos: Where businesses die young

By Atom Lim

It’s generally difficult for new businesses to survive their first three years. But in Lagos, it is almost impossible. If crooked officials in the megacity don’t kill the business, sometimes along with its owner, the cost of doing business will.

Imagine the scenario. You take a loan from the shylocks at the banks to set up a business. It’s tough but you convince yourself you can repay and get rid of the leeches.

As you set up, you realise you have to spend a significant part of your capital on diesel or petrol to generate electricity for the business because the public source is useless. It’s tough but you are determined to succeed.

Then one day, maybe just after 2 weeks of operations, officers of the Lagos state government pay you a visit.  They say the generator PHCN has forced you to use is a threat to the environment and you are required, by law, to pay for emission.

But the emission charge is not all. They say you also have to pay for storing petrol in a tank.  Now you are really frustrated and are asking the officials which of your sins contributed to PHCN’s ineffectiveness.

Anyway, you don’t want any trouble so you “settle” these officials or pay up the official levies.

The next day, another set of officials come along. This time, the state wishes to collect a host of levies: Corporate Parking (within company premises)! Commercial premises rate! Vehicle Radio Permit or Clearance! Vehicle Environmental Protection! Computer Use permit! Computer license fee!

Then you realise the true meaning of the Welcome to Lagos you see every so often!

Unlike in many states, internal revenue is a serious issue in Lagos. Taxation in the state got worse when the Obasanjo administration denied the state its share of the federal revenue because it created more local councils. For years, the defiant state was self-reliant, with state and local council organs coming up with all kinds of tax schemes for revenue generation. At a point, Lagos was taxing for everything but marital sex and a few other very personal activities. The effect was an alarming increase in cases of multiple-taxation that remains a challenge to businesses which are at the bad end of this crazy revenue drive.

In response to public outcry, the state passed the Local Government Levies (Approved List for Collection) Law which it said would check multiple-taxation. While it is possible that this law reduces the extortion schemes of local council officials, there is doubt that the law is effective in easing the cost of doing business in Lagos.

Many of the levies which suffocate businesses in the state are legitimate. Yet, in most cases, they are unnecessary, senseless or laughable.

I am not a tax expert and I find certain things about taxation in Lagos hard to understand. How does the state tax a businessman for using a generator when it is the state that has failed to provide him public power? The policy-makers call it emission charge just to make it seem like they are serious about climate change or the other global environment issues that they hear of at workshops in America. They, however, fail to realize that even in countries where companies are charged for emission, the focus is on emission as a result of industrial production; not power generation.

I often wonder how much the Lagos government pays for emission. It must be billions of naira when you think that every office has its generator, not to talk of the over 300 smoky Ashok Leyland buses that ply BRT lanes.

Oh, I forgot the law applies only to business owners. This reminds me of a recent experience I should conclude with.

Officials of the Federal Ministry of Labour recently visited a business premise in Lagos and asked the owner if he was complying with “international best practices”. They asked if the retailer was paying the N18, 000 minimum wage! Most states aren’t paying that. They asked if he gave his staff lunch meals! The officials themselves have never been given lunch meals by their employer. To cap it, the officials asked if he provided soap for his staff since they were required to wear uniforms to work.

The business owner died, of laughter.

Atom Lim is a commentator and development worker. In his former life, Atom practiced journalism and frequently blogged for leading media organisations. He is also a recovering corrupt Nigerian, having participated in a few rackets. He regularly expresses his views on twitter with the handle: @atomlim

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