Multiple Taxation, Port Gridlocks, Over-Regulation Hurting Manufacturing Companies – CEOs

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Three hundred and eighty out of 400 chief executive officers (CEOs) of manufacturing companies in Nigeria say multiple taxation and over-regulation are hurting the productivity of their enterprises.

In the Manufacturers Confidence Index (MCCI) for the second quarter of 2021 compiled by the Manufacturers Association of Nigeria (MAN) and forwarded to The ICIR late Wednesday, the CEOs said there was an urgent need to streamline taxes to reduce negative impacts of multiple taxation on companies’ margins.

The CEOs said that apart from the  approved list of taxes and levies charged to companies by the Joint Tax Board (JTB), there were a large number of outside taxes, levies and fees imposed on manufacturers by revenue-generating agencies of the government.

Multiple taxation has become a major problem facing businesses in Nigeria.  Manufacturers complain that they pay frivolous taxes such as radio and television taxes imposed by local governments.

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Logistics firms told this reporter in 2020 that Lagos touts demanded up to 35 documents from their dispatch riders plying various local governments.

“If a rider makes N10, 500 in a day, he would have to settle the area boys with N5, 000,”  logistics player and member of Association of Lagos State Carrier Operators Benedict Philips 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 bikes 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 meet all their demands,” she said.

Micro businesses also told The ICIR that area boys collected illegal taxes and levies from them in Nigeria’s richest state.

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On their part, manufacturers said it was important for the government to publish the list of taxes and levies compiled by the tax board and ensure that all charges to the manufacturing sector were legal.

Similarly, 380 out of the 400 CEOs of manufacturing firms said that overregulation by government agencies had depressing effect on manufacturing productivity.

They said manufacturing companies suffered multiple regulation on a single manufacturing process due to several levies imposed on them by agencies of the federal, state and local governments.

“The Federal Government has in its possession the Steve Orasanye Commission report on Harmonization and Rationalization of Government Agencies. It is important to commence full implementation of the content of the report backed with proper monitoring and evaluation,” MAN said in the report.

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Eighty-one per cent, amounting to 324 CEOs enumerated, agreed that inefficiency at the national ports negatively affected productivity in the manufacturing sector.

Gridlocks at Apapa and Tin Can ports have continued to delay in and out movement of raw materials and finished goods.

Currently, 5,000 trucks seek access to Apapa and Tin Can ports in Lagos every day, despite that the two ports could only accommodate 1,500 trucks, the Lagos Chamber of Commerce and Industry (LCCI) said in a recent report sent to the reporter.

Chief executive of Jon Tudy Interbix, exporter of packaged foods to the United States via Apapa, Jon Tudy Kachikwu, told The ICIR that  he often lost most of his products on Apapa bridge.

“I used to spend N350, 000 to move my food products from Iddo in Lagos to the port city but the cost of doing this has more than doubled in one year due to the state of our ports.”

Manufacturers said in the survey that the challenges at the national ports were hydra-headed: From the gridlock on the access road and delay in clearance of cargoes to high and undue demurrage and poor port equipment.

” To address this unfriendly situation, Government needs to review the current status of the ports and address all port-related challenges.  More so, it is important to consider developing other ports outside Lagos State so as to decongest the Apapa and Tincan ports,” the CEOs suggested.

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