Stakeholders Pick Holes in Nigerian Postal Commission Bill, Identify Anti-competitive Clauses that Negate Business Growth

Emma Okonji

The Association of Nigerian Courier Operators (ANCO), has faulted the Nigerian Postal Commission Bill, which has passed three readings at the National Assembly and awaiting harmonisation and assenting into law by President Muhammadu Buhari.

The courier stakeholders raised concerns over Article 68(2)(b), which stipulates 2 per cent contribution to the commission’s fund by all courier operators, from their annual turnover, as part of their annual dues.

They also identified Article 10(1)(a) of the bill, which gives exclusive powers to the Public Postal Operator (PPO) that is owned by government and managed by the Nigerian Postal Service (NIPOST), to collect, accept, process, convey and deliver postal articles weighing up to 1kg.

According to them, the identified articles in the bill, were anti-competitive that could negate courier and e-commerce growth in Nigeria.
Reacting to the bill, the stakeholders expressed their worries about the exclusive powers given to the courier operator that is managed by government. They were also worried about the two per cent compulsory contribution to the Nigerian Postal Commission fund. They were of the view that the exclusive rights for PPO like EMS SpeedPost that is controlled by government, would amount to anti-competition that would negate the growth of courier business in Nigeria.

The private courier operators called on members of the National Assembly to revisit Articles 10(1)(a) and 68(2)(b) of the bill and amend same, before harmonisation and assenting into law.

Policy Consultant to ANCO, Dr. Chukwuemeka Ujam, said the bill, if passed into law without amending Articles 10(1)(a) and 68(2)(b), would ground private courier business in Nigeria.

According to Ujam, “Article 68(2)(b) requires licensees to contribute 2.0 per cent of their turnover to the commission’s fund. This is not a fair method of levy, as courier companies’ revenue encompass debts, several other taxes and levies by various states of the federation, like the Federal Airports Authority of Nigeria (FAAN) and airport charges.

“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 the Courier and Logistics Regulatory Department of NIPOST (CLRD), 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.”

He argued that the proposal of an additional 2 per cent on revenue, would discount 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 two per cent on revenue line, creates a cherry-pick scenario without identifying the realities of overheads and other cost lines before extracting a profit, if any, ”Ujam said.

He further said: “The company income tax averages 35 per cent on profit before tax and upon further analysis, two per cent on gross revenue in addition to annual licensing fees, will impact profit before tax by over 30 per cent, which technically amounts to double taxation. By implication the industry will be made less attractive to investors when compared with industries without this additional layer of tax, and dividends payable to investors will diminish.”

Addressing the potential impacts of the bill, Ujam said the exclusive powers and the additional two per cent contribution would further force consumers and businesses to use the Public Postal Operator, rather than express service companies, thereby damaging local businesses, and forcing local courier companies to close, thereby reducing foreign investment.

A senior management staff of NIPOST, who spoke in anonymity, told THISDAY that since the bill had passed the third reading at the floors of both the Senate and House of Reps, it would not be necessary to comment on it.

The source however said the private courier operators were more concerned about making profit without recourse to the Nigeria government and the Nigerian populace, hence they raised such concerns.

Going down memory lane, the source said the seventh and eight National Assembly could not pass the Nigerian Postal Commission Bill as a result of needless agitations from private courier operators.

The source added that the exclusivity power given to the Public Postal Operator in the bill, was meant to protect national interest, and that the two per cent revenue that would be contributed by both government-owned courier operator and the private operators, would be used to run the commission.

The Nigerian Postal Commission, which seeks to repeal the Nigerian Postal Services Act 2004, empowers the proposed commission, the responsibility of regulation and supervision of the postal sector, which includes: Postal Services, Cargo and Logistics, E-Commerce Services and Courier/Express Services.

In addition to other responsibilities, the commission shall grant and renew postal licenses in accordance with the provisions of the bill and monitor and enforce compliance with license terms and conditions by licensees.