Outrageous Fees On Vacant Sites Choke Outdoor Business | Independent Newspapers Limited
Newsletter subscribe

News, Slider

Outrageous Fees On Vacant Sites Choke Outdoor Business

Posted: Mar 8, 2016 at 4:29 am   /   by   /   comments (0)

Olamide Bakare, Lagos

Outdoor business owners are fast losing sleep over the astronomical fees imposed on vacant sites across the country by signage authorities as a large percentage of them may shut down soon if urgent intervention to rescue the situation is not made.

With the rate at which many billboards are being abandoned in several parts of the country arising from the outrageous fees imposed by several state owned outdoor regulatory agencies, there are fears that outdoor operators as well as others in the same value chain may soon join the growing list of the unemployed if situation continues in that trend.

Although no exact figure had been put on the enormous loss since the development came into being, findings by Independent reveals that aggregate losses could be in the region of billions of naira. Some operators, who do not want to be named, said the situation had assumed dangerous dimension as the hardship inflicted by the huge fees continue to bite harder, with most of them condemning governments’ action on the matter. They say it was imperative for the authority to allow good reason to prevail, noting that businesses in this period were experiencing hard times.

In a recent interview with Babatunde Adedoyin, President of Outdoor Agencies Association of Nigeria (OAAN), the OAAN boss disclosed that no less than 70% of sites in Lagos were vacant but failed to tow the position held by some operators that the reasons were largely as a result of huge fees. To him, it was a combination of many factors some of which include forex restriction and the downturn in the economy.

Multiple sources from the OAAN secretariat also revealed that the rate at which sites were being marked down for demolition across the states were becoming worrisome as many a practitioner were being thrown out of business as a result of the unfortunate development. One of the sources told our correspondent that just few days ago sites located in states such as Kaduna, Port Harcourt were brought down.

Bemoaning governments’ insensitivity, the source said the mood among stakeholders was that of depression since many of them were losing huge stake of their investments. According to the source, many stakeholders were surprised that the decision to remove billboards in several states were done without due and proper consultation with stakeholders.

A market operator, who owns a number of sites in the Lagos metropolis, explained that many outdoor operators who started businesses few years ago are beginning to close shop because of the huge indebtedness to the government, which has become a serious burden, putting their business in perpetual danger.

He lamented the high handedness of the regulatory agencies, saying that time had come for stakeholders to demand the legal interpretation of the regulatory body itself. According to him, what is being witnessed across several states of the federation must have been instigated by the action of the Lagos State government which started it ab initio.

While condemning some of the rules set out by the Lagos regulatory body, the source, who cited an example of the rate being charged by LASAA on unipole located in Ikeja which attracts a fee of about N2.5 million, argued that the regulatory agency was fast becoming an albatross to the growth of the industry.

The source wondered how government could have asked the owner of a site to pay the same value for it six months after a site had been declared vacant. To him, such regulation was draconian and may likely sound a death knell on many outdoor businesses if allowed to stay.

In his view, the continued pressure by state owned regulatory agencies could constitute a big drawback for the industry to reach its potential, saying that if governments relaxed the rules, the outdoor business would have been a huge employer of labour by now.

Part of the rules instituted by the Lagos State Signage and Advertising Agency (LASAA) reads that the owner of a site must pay 10% discount on the medium pending the completion of a six-month allowance for vacancy. The law further states that the owner of the site must be made to pay the same fee after completion of six months grace if he fails to find business on a site.

Asked if the body was ready to take the government up if the situation persists, a source who was privy to a series of meetings held by stakeholders with Lagos State House of Assembly upon the start of legislative business few months ago, told Independent that the professional body was still awaiting the report of the House and as such would not be willing to comment on any issue associated with LASAA.

He also noted that apart from the implication for outdoor business owners, the clients are also bearing the brunt since a greater number of them are now beginning to focus their attention on other aspects of the marketing mix to deploy their message. A classical example is the recent decision of Airtel Nigeria to cancel its billboard order till further notice, a development many consider inimical to the growth of outdoor.

“It is indeed painful that the outdoor business would be losing the billboard order of a big telecommunication player (Airtel) worth N7 billion,” he lamented.

Though the outdoor business still ultimately remains one of the biggest employer of labour in the marketing communication business, the signs that things are not looking well are seen in the volumes of vacant sites spread around as the industry continues to go through a rough patch.

It would be recalled that the regulation of outdoor came into being when the then Lagos State government appointed Alabi Makanjuola with the motive of boosting its revenue. Even though his appointment was received with excitements, his action during his reign was considered too harsh by virtually all the stakeholders.

At that period, the fear of Mako, as he was then called, was the beginning of wisdom. Since then, the regulatory agency, according to source had been pushing different motives to stifle outdoor business particularly locally established players. The most recent of the move, as gathered by Independent, is the alleged plan by some big shots in the state to bring on a widely respected outdoor agency, Jean Claude Decaux to operate in Nigeria with the plan to use it to feather their nest.

With the development, it remains to be seen if a large number of stakeholders, who are already scared of what lie ahead for their business, would not go under in the event that the regulatory agencies continue in the same fashion.

Independent also learnt that most of the digital products deployed by operators cost a fortune, that the restriction on forex had also compounded their woes.

For example, small digital LED takes close to N100 million to construct in USA, and operators are miffed by the fact that the regulator, which seem not to have much knowledge about the business, is putting much economic pressure on the outdoor owners through this arbitrary fee.

Apart from the cost differential that applies to countries where the product was coming from, the forex restriction as well as the cost of exchange rate was doing more than enough to harm the business.

The overall implication of all of these, according to operators, is that businesses are laying off their staff and clients are not renewing their structures.

Inside source in LASAA explained that there were several sharp practices which had been going on between some chieftains of the ruling party in the state and the LASAA management. He disclosed that LASAA was not playing by the rule as it is said to be using different standards for outdoor structures.

“Unfortunately, LASAA is not applying the same rule to BRT buses because it does not pay to LASAA but LAMATA. You can now see the injustice the practitioners are talking about. I think for me that is double standard,” he said.