Saturday, 2 April 2016

The Dark side of Regulation OAAN VS LASAA.


What is your assessment of out-of-home industry in the last 3 months of 2016?
It won’t be out of place to say that economy is in total recession and in a situation like this there is no way it would not affect our industry. This first quarter of this year is not rosy at all. In my short introduction I was trying to say that clients are cutting budget. Some clients are not sure what they want to do this year and some can’t even access foreign exchange to bring in raw materials and since they do not have raw materials they can’t produce hence they can’t advertise. The problems are there and we are hoping that next quarter would be better.
But for the first quarter of this year, as we speak there are no media orders from most companies, some of them are still trying to put it together because of the uncertainty that were facing today. That is the basic truth and I can’t start mentioning organisations. Some are evening owing the last two quarters of last year; I am talking about multinationals
 
With the hard time facing your industry, what is your relationship with the regulators?
Unfortunately, the regulators are looking for money; they will tell you is all about environment but not in all cases. Primarily is about money for them and that is why now that they are not getting much money from the centre, their governors and finance department are looking inward and they are putting more pressure not only on our members but other people. If you are a landlord in Lagos, you will understand what I am talking about from tenement rate to ground rate and it has been all kind of charges. Lagos State Signage and Advertisement Agency (LASAA) is trying to collect money at all cost and everybody is looking for ways to get money from operators because allocation coming from the centre is little or nothing therefore, most of them are now thinking that there are internally generated revenues and unfortunately those of us they are trying to get the money from are having the same problem.  Our clients are not doing well, they are not giving orders they are not paying.
This is not peculiar to Lagos it is all of them. As we speak our boards are being pulled down in Kaduna, Rivers, Abuja and we have been to all these places and the story is all the same except that charges in Lagos is higher maybe because they are the pioneer of these agencies. For sure we don’t have any sympathy from them that is the truth.
 
In Lagos OAAN have been able to establish a certain level of rapport with LASAA but how about outside Lagos?
First and foremost we have not settled anything with Lagos we are still discussing. We are trying to arrive at an amicable solution; we are praying and hoping that in a shot time this would come to an end. You realise that this is a professional association and as a company you are compelled to practice in all the state of that federation. We have some of our members that practice only in the east, we have some that practice only in the west and we even have some that practice only in Lagos and whatever policy that we have it should be safe whether it is in Lagos that is we try not to put our annual general meeting Lagos all the time. As I speak someone is in Kaduna and Abuja doing some discussion with the regulators there. It is a professional association and the policy is the same whether you are in Lagos, Abeokuta or Uyo their problem there is our problem here. Because today it might be in Lagos and tomorrow you may want to practice in Uyo.
 Is it true that Lagos State is aiding a foreign company to come and practice in Lagos?
We are not sure but we are hearing it as rumour because we don’t have fact and if we do not have fact it becomes speculation. We have asked the LASAA MD that we heard from a reliable source that this foreign company came to their office and a meeting was held, he neither denied nor confirmed. To us is still a rumour and we also asked the registrar of APCON who told us that to his best of knowledge they have not been to him and they can not practice in Nigeria without going APCON.
Emmanuel Ajofu, VP:
There is no smoke without fire as I said earlier on we need a partnership that will work. If my friend has heard about it, it can only come through sources. If they are coming into Lagos LASAA must be involved and also you can also ask LASAA and let’s have the imput of what he wants to say. It is difficult for us to seatback. What is happening is that the president was mild when he saying about our suffering. I want to say that we are endangered specie. We are endangered specie because today clients are not doing business with us not because they are not also trying to sell their products but because our medium suddenly not meeting up in terms of costs and that is because of the transfer cost from regulators and so if they chase us out of business we may never come back because the clients would have also found new ways of selling and if they try those new ways and those new ways are cheaper for them so they won’t come back therefore we are an endangered specie.
And then one hand they are now coming from back to say a foreign company is coming and of course the way the dollars is now they will come very easily and what are they offering that we don’t have. So I think that since we are partners in this thing we you hear anything you tell us by asking them and then if they say yes we should also have the courage to ask them what happen to players who also provide employment and pay taxes so that we bring it to public domain and let the public begin to question them about some of these policies because we have reached a situation where we must cry out in crying out we are not saying that we are saints but we are saying that you people should us and I think we are endangered specie.

What drive your rates; it is a regulator’s fee?
Of course that is a fixed cost that we must take in to account. All of us are old enough to know what were charged in those days before the advent of LASAA. LASAA came and the price went by over 1000% and so the regulators want to make money but like we keep telling them today Nigeria have oil but we don’t have anywhere to sell. A Lagos state government does not go to the federal government as say give me what you were giving me before, they will share only to the extent of what they have received. We are telling them allow us to pay to the extent that we have also received and they are not reasoning and we must get them to understand that. If they can take what has been received then they should also allow us to pay what we have also received.

Does this instant only take place in Lagos?
No that is why we are not talking about Lagos alone. As we speak we are having issues in Kaduna, don’t forget governor of Kaduna was the one who did what he did in Abuja so he wants to do the same thing in Kaduna. They statt by saying beautify the environment and at the end of the day it is rate increase and so it is very clear we need to come down to address this issue.
 
The debt and payment on vacant hoardings
We have been battling with LASAA on the issue of vacant billboards, like the VP said we are the endangered specie, whatever money we spend come from the advertisers. And when the advertisers do not release this money they cut their budget. The regulators still insist that we must pay them the same amount money that we pay when the billboard is occupied. Where do they expect us to get the money from? Is actually the cost of the debt they say we owe? It is not possible for us not to owe because we can’t walk into the bank and take a loan to pay for vacant billboards.
We believe as regulators you must understand the environments that you regulate and they must also know that a percentage of what we give to them come from advertisers and they have the right to take their money to anywhere they want to take it to. We are here today talking about this rate being too high and we are asking to them bring it down and let us pay as we received but they say no. if these billboards are standing we must give them same N3million that we are paid when occupied. It is something that every other state has copied. It all started from Lagos and anywhere you go they will say they are paying in Lagos. Therefore they can’t blame us because that has been the major debt they have in this industry.
And when this new people come on board we try to engage them, the same thing in Calabar. We had a stakeholders forum and it was very fruitful forum and they understand that money cannot come the way it used to come, so they brought down their rates and even told us instead of paying for vacant billboards we should pay a token like a tenement rate and that is what we expect every regulator to copy and not just say this is Lagos if you cannot pay you quit. The rate that we pay in Lagos is 40% to 50% of our income.
 
Do your members owe LASAA?
Yes, we owe LASAA and the debt is a result of charges on vacant billboards. When there is a doubt or conflict that should not be the subject of what should make it a force. We are saying to LASAA that we did a job and we had an agreement with people that gave us the job and LASAA is saying that they do not know that agreement and we believe that government is a continuum and very soon this present management of LASAA will be a thing of the past. I do not know why people do not learn from the past. I don’t know OAAN will enter agreement with somebody and when the current leadership departs and another comes in and it will begin to say it doesn’t know anything about such agreement. We are still talking about this thing and we expect LASAA to set aside those debts until we resolve them because we are claiming that money and he is saying that he doesn’t know about the money and he is still dealing with us on the account of the money that we expect him to pay us. I rather would say that we have told them clearly that we should set it aside until we resolve this issue and all hands are on desk to resolve this issue.
As par other debt I am yet to know of a company that does not pay so what we are saying to them is we are growing concern and we are into a long distance relationship and they should understand and this master servant relationship means if out-of-home operators go out of business he will go out of business too. I expect LASAA to treat us like clients, they way we massage our clients that is the way he should be massaging us.
For good business to survive it is all about credit, there is no country where business activities are carried out that no one will owe because business is usually run on credit except in Nigeria where you want to acquire a property they will ask you to pay for everything at once. Is not done that way that is why people are steeling massively.
Most importantly if start charging for vacant site, boards that do not carry any campaign, if you have 12 boards and have campaign on 6 and the other 6 are empty, you are going to pay the same amount of money and if you do that next year you are out of business.
In this case what do you want me to do? to pay LASAA and go under instead I will continue to owe them.


What came out of the meeting with minister and what he requested from OAAN
The information minister like in a normal government setting invited us for a meeting asking us to soft-pedal that they want to do a lot of campaigns on the economy, security and change agenda but we ceased the opportunity to also tell him our own problem and he asked to write a formal letter which we have done and he said they will look into it with governor of Lagos State and the national leader of their party. We are still expecting the feedback.
 But one of your members said in Calabar a rebate is given to attract you people
That is what I was saying in Calabar, they had a stakeholder’s forum, which attended, they brought down their rates to encourage us to come, they are not charging for the vacant billboards but pay a token to the state at least something comes to the government.
 Do you present a any strategic model to government on how this industry operates?
Well, as an Association I will say we have tried to educate them about the business runs because they need to understand first and foremost. Unfortunately some of them are being controlled by their finance ministries. They will tell my commissioner for finance  has gone out there and he has counted the numbers of billboards and he is expecting N40billion this year. The man that is appointed as director general will want to keep his job and when the commissioner is speaking he is being directed  and he won’t be able to say how it actually play out on the field.
As soon as they come of the meeting they start chasing us for more money meanwhile the DG knew it is not possible. In Lagos we wanted to have a meeting like this but they are dashing us because they know what we want to ask for are not out of place. Until when we were force to write a petition to the House of Assembly, that was when we were forced to come and talk. These are kind of things you get when you work for the government. They believe they have the government backing and they don’t want to you and they just want to do what government want them to do that is to bring money without looking at the morality whether this money can come or not.
It is a question of education and then listening to us but they don’t listen unless we force them either by going to court or by going to the House of Assemblies. It is like a conspiracy amongst government department, ministries and agencies and even arm of government see us as cash cow but the business has changed drastically.
We are just lucky that Lagos State Assembly just called us if it was other states, the governor would say go and get money from them. Unless very few governors who probably come in from the private sector would understand and say let’s form a committee but majority of them are politicians and they have not really been to organised private sector and see how these things are done.
In addition to what chairman has said what we have done so far is to encourage each government in each state to always ensure that anybody that will man their regulatory agency signage in particular should be a professional especially someone who has the background in outdoor. Because we realise that one or two states that have such people we have been able to get good rapport with them because they understand where we are coming from and because they have been there before.
For example, Oyo State, we have one such person there and we have good interaction and he has been able to understand most of the things we say. For instant the vacant boards that we talk about Oyo state understands our plight because it is also a practitioner. When you don’t get revenue from somewhere why are you paying such board and they only thing they have done is to ask us to pay a ground rent.
For this house if you are paying a ground rent to Lagos for this house I don’t think you will pay up to N50,000? But if you have unipole here they will ask you to pay N3 to N4million even if it is empty. These are the issues and in Oyo state they are saying pay a token as a ground rent so that something will come in to government coffers in as much as your board is standing, if it is occupied you can prorate and pay the balance. If it is 6 months or 3 months you pay whatever that is left.
I think Enugu like too, there is a professional there and we enjoy a good relationship because the people at the helms of affairs understand the ethic of the business. For example in Lagos State, the MD of LASAA is a lawyer and a columnist so how such a person would understands what we are talking about? It would be pretty difficult. The government has given him a responsibility, go and get me N10billion from outdoor, he wants promotion so he wants to get that money at all cost even at the detriment of the industry. So those are things we are facing and it is not as if we owe or intentionally want to owe if at all we owe them.
Put it on the table the boards that are occupied are fully paid for but the debts are mainly from the vacant sites. If Cadbury for instance last year said they want 1000 boards and if in their budget this year and cut and for the 1000 boards they acquired last year and say this year we need 300 boards what happens to the 700 boards if no body is ready to take them up there become vacant and even as much as there are vacant nobody will pay for it. You continue to pay from your own pocket. Other media are not let that I wonder why outdoor is treated differently.
 Why do you think the second quarter could be better?
I believe that with discipline coming from government down to local industry probably would start doing much better and they will require less foreign exchange . I am saying they are doing okay but they will have business to advertise and all these foreign drinks would soon disappear from the market because the fact is that government is not ready to fund such commodity. If government is serious about what it is saying the local company will pick up and of course the market is here and we also have to be discipline. For instance if you want import BMW in India you have to pay tax of over 500per cent and that will discourage then you patronage local car manufacturers. So the money is circulating around there and I think this what the government should do and it will help employment and other industry such as PR, publishing, journalism would flourish.
GODDIE OFOSE
BRANDS & MARKETING
THE NICHE NEWSPAPER
AND
CHAIRMAN, BRAND JOURNALISTS' ASSOCIATION OF NIGERIA

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