Experts have warned that the current draft Bill to repeal the Nigerian Postal Service Act and give it ‘monopolistic’ roles will make the industry less attractive to investors and lead to loss of jobs. MARK ITSIBOR reports
There has been much need to repeal and retool it for efficiency and generation of revenue for government. Many, especially operators in the industry have long clamored for the rehabilitation of the Nigeria Postal Service to promote the provision of a modern universal, efficient, reliable, affordable and easily accessible postal service with the widest range and coverage throughout Nigeria.
However, while federal lawmakers in the House of Representatives seem to have risen to their responsibility of remaking the agency with the current draft Bill for an Act to repeal the Nigerian Postal Service Act 2004, and establish the Nigerian Postal Commission seem, there are indications that the Bill will be more destructive than reformative if it is passed into law without removing some of the provisions.
For instance, article 68(2) (b) requires licensees to contribute 2.0 per cent of their turnover to the Commission’s fund, a move operator in the industry have said is not a fair method of levy. Their argument is that courier companies’ revenue encompasses debts (some of which the courier companies may not be able to collect), several other taxes (FIRS, taxes and levies by various states of the federation, FAAN and airport charges, throughput charges by FAAN pension funds and NSITF, NHF, local government charges, signage fees of various states).
The industry is currently beset with a variety of taxes at national and sub national levels some of which include statutory company income tax, VAT, WHT, FAAN/SAHCOL/NAHCO charges at the airport, annual license renewal with CRD, LASAA signage levies, mobile adverts and similar charges in other states of the federation all of which are responsible for the high rate of attrition in the industry.
Clause 10(1) a states that the Public Postal Operator will have exclusivity over the delivery of postal articles weighing up to 1 kg. As currently drafted, that is seen to suggest that even if there are consumers who wish to use courier for transport of time-sensitive documents internationally, a courier company would be violating the public postal operator’s monopoly by doing so.
“Proposed legislation in Nigeria would grant monopoly powers to the post office for all packages under 1kg. The legislation also proposes levies on the revenues of all couriers operating in the country. These measures would further force consumers and businesses to use the Nigerian Post rather than express service companies, damaging local businesses, forcing local courier companies to close and reducing foreign investment,” industry consultant, Dr Chukwuemeka Ujam said in reaction to the issues.
Industry watcher raised fears that such a broad restriction would force Nigerian businesses and consumers to send an estimated 65 per cent of their packages through the Nigerian Post. Countries without competitive, high-performing logistics sectors have been shown to attract less foreign-direct investment and incur higher costs for doing business and slower delivery times.
In the eyes of most of the private sector operators, the current legislation is a threat to the tremendous progress that has been made in Nigeria in previous years and is a step backwards. The popular view is that if customers must rely on only Nigeria Post to transport their expedite packages, competition and services will suffer.
Ujam said a clear distinction between postal articles and courier articles is required. He said this may have potentially significant negative impacts on commerce in the country (for example, in relation to bills of lading and other documents of trade).
“If this provision cannot be dropped, we humbly request that a provision is Inserted to confirm that courier companies can provide their services in respect to documents with weight of less than 1 kg if sought by the customer provided, they charge no less than three times what the Public Postal Operator charges for a similar package,” Association of Nigeria Courier Operators (ANCO) said in a review of the draft Bill.
When similar provisions were proposed by the Postal Regulator in 2020, it was estimated that if they were implemented up to 100,000 Nigerians could lose their jobs as a result
For the association, the proposal of an additional 2 per cent on revenue discounts the fact that not all revenue becomes profitable and is collectible at the end of the financial year as some portion will be reported as bad and doubtful debts while some will be written off as bad debts. “The desire to introduce another 2 per cent on revenue line creates a cherry-pick scenario without identifying the realities of overheads and other coastlines before extracting a profit, if any,” Barrister Johnson Emale who works with one of the courier local firms said, while asking that the name of his firm should be mentioned for fear of possible victimization.
The company income tax averages 35 per cent on profit before tax and upon further analysis, 2 per cent on gross revenue in addition to annual licensing fees will impact profit before tax by over 30 per cent which technically is a doubling of CIT. Emale said the implication is that “the industry will be made less attractive to investors when compared with industries without this additional layer of tax dividends payable to investors will diminish substantially while also stifling executive and staff compensation tied to profit before tax.”
Although the lawmakers argue that the move will encourage local and foreign investments in the Nigerian postal industry and the introduction of innovative services and practices, in accordance with international best practices and trends and ensure fair competition in all sectors of the Nigerian postal industry, there is a general skepticism over the assurance.