Lagos State has seen a spike in the motorcycle-hailing services. This new business trend sprouting across the state is coming as a safe and more reliable alternative to regular motorcycles, but the parameters are contributing next to nothing to the state’s coffers, writes Robert Egbe.
The Lagos State economy is a giant one. It boasts as one of the few self-sufficient states in the country and its success has continued to set it apart as the benchmark for the others. Internally Generated Revenue (IGR), mainly through taxes stood at $1.3 billion (N258.7billion) in 2015 — three times more than the state with the second most IGR and 39% of the total IGR by Nigeria’s 36 states.
According to the Nigerian Bureau of Statistics, the country’s commercial hub generated a staggering N382 billion in 2018. The figure surpassed the earnings of a combination of 29 states! But Lagos’ success looks even better compared to other African nations. With GDP in 2014 pegged at $90 billion, Lagos’ economy stands as the 7th largest in Africa- bigger than Cote d’Ivoire and Kenya, two of the continent’s most promising economies.
A finely tuned IGR model and a growing economy have made Lagos into Africa’s leading city and one of the world’s fastest growing megacities. Lagos, like most other states, relies so much on its IGR to function. The provision of basic services and amenities like hospitals, schools, roads and other infrastructure is funded by the revenue it generates. It is important to note that governments all over the world are consistently under pressure to increase revenue through taxation in order to provide better services within their jurisdiction. In view of this, significant sources of revenue such as taxes, licenses, fines and fees, grants, financial aids, and loans must always be keenly paid attention to for any economy to thrive.
Lagos being a hotbed for enterprise relies heavily on taxes in generating revenue. Small scale firms and the large institutions contribute a significant chunk to the coffers of the state in the form of taxes. In maintaining its enviable feat of raking in whopping sums as its revenue, especially in the area of taxes, it ensures that it drags all the businesses operating in the state under its tax net.
Despite its effort to generate funds and several awareness initiatives aimed at making organisations interested in the payment of taxes, some firms that operate fully in Lagos sabotage the economic drive of the Lagos State Government in its effort to increase revenue by brazenly cutting corners.
Recently, Lagos State has seen a spike in the motorcycle-hailing services. This new business trend sprouting across the state is coming as a safe and more reliable alternative to regular motorcycles. Their primary purpose is to help Lagos residents zap through congested traffic.
However, it is interesting that a large number of companies in this technology-driven business have their motorcycles registered with the Ogun State Government with their number plates bearing that of the gateway state, despite functioning fully in Lagos.
Leading the pack of motorcycles in this category is the Chinese-owned ORide. ORide, a subsidiary of OPay, which started operating in Lagos in May 2019. There is also the U-Go services and Max.Ng – both of which are bike-hailing companies operating in Nigeria’s most populous city.
Getting a motorcycle registered in Lagos is almost the same process as that of a car or any other motor vehicle. There are processes that must be followed for two-wheelers to be approved for use in Lagos. Letters must be written, taken through the right desks, duly signed and approved and the appropriate documents received.
Their conspicuous use of the neighboring state’s number plates while operating in Lagos draws curiosity. The move may be attributed to the companies’ disregard for due process or attempting to bypass the system by reducing its remittances to the coffers of the government hence the reason behind it running to the neighbouring state to register its vehicles.
According to investigations, the riders of the motorcycles of the trio of ORide, U-Go Services and MaxOkada have been serially harassed by men of the Vehicle Inspection Service (VIS) and the reason may not be far-fetched. The motorcycle-hailing companies, like all others, operate fully in Lagos. Their customers are Lagos residents who live and also work in Lagos. Therefore, registering with another state ultimately means that funds that would have ordinarily accrued to the state are being contributed to the economy of another state.
Many might argue that using a plate number different from the state’s in which you operate does not violate any law. However, the angle in which business minds analyze these cases speak to economic sabotage and the argument is simple – the motorcycle-hailing companies are headquartered in Lagos and have their operations exclusively in the state. Its customers are Lagos residents who live, work and also pay taxes in Lagos. It generates the revenue with which it pays its staff from the state, yet, they dole out funds for the renewal of the particulars of its numerous motorcycles to a neighbouring state.
It is also imperative to note that when registering a motorcycle for commercial purposes in any state, the two-wheelers taxis are expected procure hackney permits and other regulatory permits that are subject to periodic renewals in the state. This process helps the State Government regulate the sector whilst generating the needed revenues to run the state.
A former Commissioner for Finance in the state, Mr. Akinyemi Ashade, had last year expressed optimism that the monthly IGR would rise as the state continued to implement its reforms, adding that the target was to grow the IGR to N50 billion from N34 billion. “The target we set for ourselves is N50 billion; we know it is a marathon, we will win some and we will lose some, but we are committed towards ensuring that we meet the target,” Ashade said.
However, when businesses such as ORide, U-Go Services and Max.Ng deliberately avoid walking into the revenue net of the state, perhaps the N50 billion target would easily be a mirage and the social benefits to the over 20 million of people who call the state home will be shortchanged eventually.
Will gokada and easy mobility also become guilty of this? Only time can tell.
