This interview was first carried in our Volume 2, Number 11 edition of January, 2009. On account of the interview, some people took a swipe at us; alleging that we were giving undue publicity to what they referred to as a bad policy of the Lagos state government. But, in the interaction, the special adviser to Governor Babatunde Fashola on tax and revenue matters, Mr Ade Ipaye gave a detailed insight into why the fees must be collected and when its collection may commence. He predicted in this interview that collection of the controversial “wharf landing fees” may commence within the first quarter of the year. And last week Monday, March 2, 2009, the state House of Assembly passed the bill into law.
I want to express our commendation (through you) to His Excellency, Mr Babatunde Raji Fashola for the feasible transformation of Lagos State especially as evident in massive infrastructural development.
Thank you very much.
What informed the idea of “wharf landing fees” in Lagos?
The idea of the fee has been on for a very long time, I was then at the ministry of justice around year 2005 (or so) when we got some papers from the Apapa local government council. They said then that they had been in discussions with the Federal Government, the joint tax board and others and that all the relevant authorities have agreed that if port activities were going on within a local government council, that council should have some funds arriving from those activities for the extra burdens that it bears for hosting the port activities. And this is not unique, it is every where in the world, if you are carrying out business activities especially on the scales that we see in the ports, definitely the local authority must have a share if (I may put it that way) of the proceeds. You cannot do business on such a scale and totally ignore the local communities, so that really is the reason; that is what informed the bill.
What essentially is the fee all about?
The bill will impose a fees on goods coming out of the ports, and the obvious implication of that is that the owners of those goods will pay in accordance with the volume of the goods, so that if I import just a small car, I do not pay as much as another importer who brings in a big container, so the whole point of it is that when goods come out of the port into the local government area, then a token sum of money is payable to the local government authority to enable it to maintain the facilities around the place. And when I talk about maintenance, we should all recognize that there is an extra- ordinary pressure on infrastructures in that locality; if a trailer is going to Maiduguri, or going to Aba, or going to Sokoto, the only road that you can be sure it will pass through is the road of that flows through Apapa local government, there is no other way to get out of the port. And then of cause you know that in trying to load, they will cluster around the place they will sit on the facilities, in the process, the roads go bad, the drainage go bad and the whole place becomes far costlier to keep up than (let us say) Agege local government which may not experience the same kind of traffic. Apart from the fact that you are doing business in my territory and I should have a share of it, that is more or less sentimental, but there are real tangible economic reasons why a local government council should have access to some of the funds. We are talking of =N=300, =N=500, =N=1000; it’s really a token, but it is something that will amount to something tangible for the local government to be able to survive.
Who uses proceed from the collection, is the Apapa local government or the Lagos state government?
It is specifically for the use of the local government, the state government involvement is to facilitate the law. As you know, a local government council cannot charge a tax or fee except such is authorized by the state House of Assembly. The role of the state government in this case has been to assist in collating the provisions and sending them to the state House of Assembly for passage, once it is passed, the administration of the tax, the actual collection, the use of the funds are all the business of the relevant local government council. And we must clarify that you pay this only ones at the point of exit, you do not pay in every local government council you pass through, it is only the originating territory that collects, because I have heard some misgivings that, okay, Apapa local government will collect and when you get to Mushin, you will have to pay again, No, its not like that, you pay it only once. And as to administration we are still looking at the best way, it may be that we are able to agree with the port authority so that as you pay the other fees and charges, you just add the =N=300, =N=500 and =N=1000 or whatever the case may be so that we do not have to set up another structure; we will just find a way of collecting it at source within the ports. Of course, we cannot insist on operating within the ports, so the arrangement now is that we will collect outside, but it may be that all parties involved will agree that oh!, why don’t we do it in a less obtrusive manner, let us do it within the ports. We are open to such suggestions.
Do you think that you have sufficiently carried members of the shipping community along?
Perhaps you were not aware, there was a public hearing; interested people attended, we had summations from people within the shipping sector. I remember that members of the Lagos state House of Assembly said that if anyone had comments to make on this bill, they should still feel free to send in their suggestion since the law has not been passed. It is still an issue and they can send in comments. It was an open thing.
The “wharf landing fee” started during the tenure of Alhaji Munir Muse (now Senator) as Apapa local government chairman. The tendency is for people to think that being former top personnel of NPA, he is taking undue advantage of his knowledge of the port system.
No, people should not think in that narrow context, this is not money for Alhaji Muse’s pocket. At least, he has left the place now, it is not money for the pocket of the chairmen of the local government council, its going to be revenue of the government. The money that comes into the coffers of the state is lumped with other funds and its available for use and for public purposes, it is not separate for use of some individuals so that you can say that they are personally benefiting from it, so I think we should be objective, forget about Alhaji Muse, forget about everybody. You have a local government area that is, for instance, the size of a lap top and you are doing port business there which generates billions of Naira on a monthly basis and we are saying why don’t you make a kind of an arrangement for the local government council within which you operate and this arrangement will come to a few million Naira at best, does it not make sense? I think it makes sense and it makes sense also if you look at it this way; the entire proceeds of business activities, taxes and all that, collected in the ports goes into the federation account, when it is distributed all across the country, the local government that hosted the activity is not given any special consideration, there is no derivation here and it use to be like that for the oil community until the people affected by the activity started fighting, kidnapping, doing this and that. But, should we wait until the people who are immediately affected by this port activity starts crying out and maybe deflating the tires of those trailers that are parked, rioting and so on, must we wait? This is something that some people say that it is going to cause inflation, when you bring in an imported car, the cheapest let me say =N=300,000 or =N=350,000 and we say pay =N=300 or =N=500 naira on it and you say that will cause inflation, is it significant? It’s totally insignificant. This very little money is going to prevent some kind of adverse consequences that we have seen else where, shouldn’t we learn from what is going on else where.
What kind of impact has the Lagos state made on the roads that are leading into and out of Apapa port to justify collection of this fee?
There is construction work going on, on the entire service lane on Ikorodu road. Lagos state government has awarded the contract for the surface of that road. Let us look at LASTMA, I don’t know if they don’t go to Apapa, whether if we are to remove them from that area whether everything will go on well. I don’t know whether if you were to leave the Police as they were, things will be okay. Lagos state government spends billions of Naira on the Police, if you see a Police vehicle pass by, it is likely that for every 10 that you see, nine is for Lagos state; for every 10 reasonably good, new vehicles that you see, nine is for Lagos state government and by our own funding. I live at Akoka near the University of Lagos (UNILAG), all the time I see containers coming from the port, so you don’t isolate the port area and say that what is Lagos state government doing, that question should never arise, because Lagos state is doing a lot in that place. For oil, you know I made the correlation earlier that we have laws that compel oil producing companies to spend a certain amount of money within the community which they operate; they must contribute three per cent to the total annual budget of the Niger Delta Development Commission (NDDC). Apart from this tax, you all know that any oil company that doesn’t build school or anything is doomed and cannot operate. I think one should not struggle at all to justify the “wharf landing fees”, especially at the level at which we have put it because we don’t want it to appear to be another imposition on importers or something that will affect the price of food. It’s insignificant, if you consider the proportion of =N=500, for instance to a container that is worth millions of Naira.
Has the Lagos state government not thought of the possibility of other ‘port states’ like Delta, Rivers etc wanting to copy you and the eventual spiral effect of that on national economy?
We should not be afraid of that. I think what will engage us is the rationale behind it, will this thing make sense, is it a worthwhile or a good thing? And I think it is, I am not afraid that people will copy whatever is good, I have given copious example from oil producing communities, in a sense you will say that if you are taking care of your local community, if you are building schools for them, building hospital, wouldn’t others in Lagos for instance, they are agitating that a company operating in Lagos should do something, what is wrong in that? I don’t see what is wrong in that. If it is a bad thing, then we can be afraid that people will copy, but if it is a good thing, I think we should be happy that other people might be interested in copying, that is how the world develops, if anyone forgot the local community in Apapa and he’s operating port business there and forgot the community, it is a good thing they are being made to remember that this is a local government and people live there and that some people maintain this road and keep the drainages in good. When you talk of Lagos state, I wonder if we don’t collect refuse from there, if we don’t clean the drainage, if we don’t put LASTMA there, if we don’t assist the Police operating there. We do too many things that we shouldn’t even descend to the level of trying to justify what we are doing there. And the impact of the containers is not only on the immediate community, but you are coming out to others, but we are not saying that you should pay here and everywhere. We are saying that once you pay here, we are happy with that.
Some people have likened ‘wharf landing fees to owo omo onile, is the Lagos state government comfortable with that?
Well, I know that omo onile has a negative connotation and it is only to that extent that I will frown at it, but what is wrong? I mean this is not a case in which we sold the ports, let us say that the ports belong to Lagos state and we sold it unconditionally to the Federal Government and we have taken the money, No, we never sold it, it is in the hand of the federal government because of the way our constitution is structured, the way our country has developed and so on, so it is not as if we are trying to sell it again. And when we talk of the adverse impact on the community, it is something that is happening everyday, you can say omo onile has collected the money so why is he coming to disturb again, but you cannot say that for the local government council in Lagos state, so I think we can distinguish it on that basis.
I have read through the Bill and I noticed that goods belonging other state governments and local governments are not exempted.
Yes, they have to pay; we exempt foreign governments, federal government, Lagos state government and local government councils in Lagos state.
Other state governments including your neighbour (Ogun state) will pay?
Yes, when you exempt the federal government, it is in partial recognition of the fact that they operate the ports. We will collect from states and if any state is looking for an exemption, I don’t see why, because of how much. But, if they now want an exemption, they will apply, but they are not specifically exempted by the law.
How soon are we expecting the law to effect?
I think it’s at the discretion of the House of Assembly, but I expect it to be out in the first quarter, that is before the end of March, it could be earlier.
How are you planning for the implementation and do you anticipate any confrontation?
We are making various plans, we are working on that. As I said earlier, if we are able to agree with the people operating within the port so that it is paid in a very unobtrusive manner, the way you pay for other consignments, we will explore that and it a cooperative arrangement with existing structure. But, if that becomes impossible, then we will set up our own structure. Confrontation?, We will be ready, that is why we are making a law before we go, we are not doing it by proclamation, its not the Governor who is saying go and pay =N=500 naira. Once you have a law, it must be enforced by the law enforcement authority; including the Police, so that is why we are waiting to make it law, we are not there now collecting, ones it is law and you resist, then you are against the law and of course there are provisions, penalties and so on. So we don’t need to be afraid because it is the same with all other laws and taxes. Some people may not want to pay and that is why the laws are laws, so that you can enforce them.
Are you carrying members of the shipping community along, especially now that the law is about to be enacted, I mean public enlightenment and things like that?
We are doing some work in that regard now, it is not open, but we have contacts with associations within the sector. We are doing some informal enlightenment, by the time we put up the structure for implementation we know we have to call them to maybe a seminar or workshop to say okay this is what we are doing, this is our role and so on. We will take care of that, it is normal.
Who is Adeola Ipaye?
I am the special adviser to the Governor of Lagos state on taxation and revenue matters. I am a lawyer; before taking on government work I was a lecturer at the University of Lagos for about 10 years and I use to teach law of contract, law of taxation and other commercial law subjects. I am no longer with UNILAG, I am now fully with the Lagos state government.
Are you a politician?
No, I am not, in fact I got into public office first as a special assistant on legal matters and it is based on that I was given this assignment. But now, I am a public officer, so in the general sense you can say that I am a politician.
I hope the shipping community in Apapa will feel the impact of this money when collection starts?
Yes, certainly so, by the time this money is being collected, we will ensure that the people operating in the vicinity are able to see something to show for it. And I might also add that nothing stops the major shipping companies from doing something within that locality outside of this law, we know they make very good profit, the port itself makes very good profit and there must be some project, it is only reasonable that it would execute projects within that locality. So, outside of this =N=500 and =N=1000, I think the operators of the ports should think carefully about what they can do for the locality within which they operate. For instance, we talk of the Lagos State security fund; I can’t remember any shipping company contributing to it. They tend not to be as involved as other companies, but I hope they will, we are doing a lot of roads slated for reconstruction in Apapa area, Lagos state government is spending good money in that locality.