LASAA imposes 10billion debts charges on local OOH Companies
… as JC Decaux moves to dislocate players in Lagos
Despite efforts being made by various stakeholders within and outside the advertising sectoral groups urging Lagos State Signage and Advertisement Agency (LASAA) to seek the path of peace and reconciliation in resolving its lingering dispute with members of the Outdoor Advertising Association of Nigeria (OAAN), the regulator has stuck to its guns, refusing to shift grounds by imposing a huge and controversial charges totaling about 10 billion naira on the companies.
The major bone of contention for OAAN is LASAA’s arbitrary rule that compels outdoor agencies to pay for accumulated bills on vacant billboards in the past four years totaling about 10 billion Naira only. This tyrannical imposition is coming against the backdrop of the fact that all these billboards have not brought a single dime for these companies in the years under review even as there has been no single campaigns running on them.
This has placed a heavy financial burden on the agencies, most of whom are now grossly indebted to LASAA so to speak, as a result of the controversial vacant billboard charges. It however remains a puzzle how LASSA would have arrived at those charges it has been taunting the companies with as its enabling law only mandated LASAA to charge just 12.5% of earnings earned per billboard. In other words, going by LASAA’s statutory rules and enabling law, only 12.5% of billboards with clients campaign can only be charged by the agency.
Specifically, LASAA laws relating to rental fees charge on Page 262 Of A Law To Consolidate All Laws Relating To The Environment For The Management, Protection And Sustainable Development Of The Environment In Lagos State And For Connected Purposes states that only 12.5% of annual earnings on a billboards structure shall be charged the OAAN members on their hoardings.
The law under item 39(1) states: “the Lease Of Advertisers Of Commercial Space Leased Billboards Or Sign Periodical Lease Or Rent) Will Be Subject To A Fee That Is Equal To 12.5percent From The Rental Charge By The Leasing Company”. Despite The Clear Intentions Of This Clause, LASAA Has Over The Years Jettisoned Its Application To The Letter And Has In Flagrant Violation Of Its Own Laws Enacted A Regime Of Indiscriminate And Arbitrary Taxation And Levies.
As it becomes difficult for these agencies to meet up with this huge financial burden, the same LASAA has surreptiously encouraged JC Decaux, a global Outdoor company to takeover billboards sites in Lagos on the pretext of buying off vacant billboard sites from existing owners. And funny enough, JC Decaux has been approaching OAAN members with a business proposal to sell off their billboard sites to the Paris based global agency under a very ridiculous partnership terms.
Managing Director LASAA, Mr. Mobolaji Sanusi’s insistence that OAAN members pay up the contentious debts, which run into hundreds of millions has distabilised the sector and forced it into a liquidity crisis that seem to be spiraling out of control. Some of the agencies have been pushed to the brink of bankruptcy as a result.
OAAN has called on LASAA to jettison its discretion which makes members pay for vacant billboards, or at least review it, and also wave the backlog of debts in a bid to help the industry get back on its feet. But Sanusi has declined, insisting that they must pay what is owed first before they can negotiate a new term of engagement.
Rather than do a wholistic review or cancel the debts, the out-of-home regulatory agency in the state offered a token rebate of 30% of some billboards products following Governor Akinwunmi Ambode’s intervention. Despite the reduction which took effect first July this year, the issue of the outstanding cumulative debts on vacant billboards over the years remained unresolved. In other words, the 30% reduction only affects the rates payable on certain OOH products.
Speaking with marketing Edge on the issue, a notable OOH practitioner who would not want his name mentioned because of the regime of vendetta by the Lagos agency lamented. “We are surely living in bad and odd times. All our efforts and appeals to LASAA over the years have yielded no result. With the huge debts dangling on our heads, LASAA has withhold assent to renewing our rent permit thereby putting our business in serious jeopardy”, he lamented.
Another leading player, Mr. Sola Olomofe, (not his real names) is very bitter over the bitter pills LASAA has been administering on OAAN member companies. Olomofe who faulted the agency’s 30% rate reduction without attending to the highly controversial past debts stated that LASAA is not sincere about its review. He stated that it is doubtful if the companies heavily weighed down by unprovable and fabricated debts could emerge from its present state of recession and depression if the disputed old debts are not resolved.
His words: “there is no way our future can be assured if our past that has been overburdened with an imposed debts for revenues we never earned from our clients can or should be tied to the future of our business. Right now, our members who are groaning under these debts are being denied renewal on permits to ply their trade in the state”.
OAAN liquidity dilemma has been further compounded by the regulator’s refusal to pay an outstanding financial obligation owed OAAN members for campaign duties carried out on the behalf of the All Progressive Congress (APC) during the 2014 political campaign season. A recent intervention by the Lagos State Governor, who instructed that LASAA offset the APC debt has gone unheeded. Instead of paying the monies, the LASAA MD resorted to divide and rule tactics of granting discriminatory wavers to OAAN members, in an apparent bid to break their ranks.
This atmosphere of uncertainty, with no end in sight, continues to destabilize businesses within the outdoor sector, pushing it deeper into the abyss. Reports from some Out-of-Home operators indicate that this is one of the major reasons why outdoor advertising budget in the last couple of years has hit an all-time low, as advertisers are wary of getting their brands entangled in the quagmire.
The situation has been made even worse with the illegal entry of JCDecaux into the Nigeria advertising market. The French outdoor giant has been operating in Nigeria since 2016, without proper registration by APCON, in contravention of the Nigerian advertising laws, but with full support and connivance of the Lagos State Government and some top shot politicians in the ruling party at the center. The foreign agency is alleged to have been granted juicy sites by LASAA.
This has created more bad blood between the Lagos State government and local OOH operators who worry that their industry may have been offered to the French OOH giant on a platter of gold. OAAN, fearing for its future have decided to institute a legal action against the foreign agency for unlawful practice. They are calling on the court to stop JCDecaux from operating in the country.
But Amidst growing calls for sanction, the outdoor multinational company has applied to Advertising Practitioners Council of Nigeria (APCON) for an operating license.
The move which is evidently aimed at dousing some of the tension that its entry into Nigeria, without proper registration has caused comes about two years after JCDecaux set foot in Nigeria as an outdoor company.
This development was exclusively revealed to MARKETG EDGE by the Acting Registrar of APCON, Mrs. Ijedi Iyoha, who noted that JCDecaux was in the process of obtaining an APCON license; she did not say when the application was made.
There had been mounting pressures on APCON to punish the Paris based outdoor giant for failing to obtain statutory registration requirements before it opened up for business in Nigeria. One of such demands is that all marketing communications agencies must be registered with APCON before they can operate legally. But JCDecaux was said to have willfully ignored that directive and has been making direct investments and carrying out transactions as an outdoor company.
Efforts to get Messers Ololade Arowoshere and Filani Ope who are representatives of JCDecaux in Nigeria to comment on the issues has continued to prove abortive. A mail sent to the two of them requesting for interactive chat was never replied neither did our phone calls to their phone lines picked.
Similarly, an sms sent to the General Manager of LASAA, Mr. Mobolaji Sanusi was ignored as at the time of going to the press. All phone calls made to him were ignored as the calls keep going into call forwarding.
Though the APCON endorsement might address some of the grievances raised by stakeholders, but it will still not address all the worries. The company has been accused of getting undue favours and privileges from the Lagos State government, which are not extended to other operators.
This has pitched the government against members of the Outdoor Advertising Association of Nigeria (OAAN) which accuses the Lagos State government of double standards and insisted the government has failed in its duty to protect Nigerian businesses from dominant global players with superior finances and infrastructural advantages.
More painful, MARKETING EDGE gathered was the fact that an African country, Ghana to be specific locked its doors against JCDecaux when it attempted to enter that West African market a few years ago.
MARKETING EDGE also gathered that in recent times, LASAA has deliberately refused to renew billboard permits for OAAN agencies, in a bid to frustrate the agencies and make way for JCDecaux to claim the sites and expand its operations and presence in Nigeria. The regulator in an apparent display of partisanship in favor of the Paris based agency, encouraged it to do a proposal requesting OAAN members to sell off their sites.
Femi Ogala, General Secretary, Outdoor Advertising Association of Nigeria, OAAN, said quite a number of association members had petitioned authority concerned, urging them to intervene. He also hinted that some OAAN member agencies have been selling off their sites to the dollar agency – JCDecaux as Lagos state has made it difficult for them to find their bearing. Femi Ogala further lamented.
“By our findings, this outfit, which is not a registered member of the Advertising Practitioners Council of Nigeria, APCON, has been allocated some of the juicy spots by Lagos State Signage and Advertisement Agency, LASAA, which he said, is a breach of process. It is quite unfair that LASAA gave JCDecaux such job, leaving out indigenous practitioners,” Mr. Ogala said.
Meanwhile, one of the aggrieved indigenous operators, Moving Media has also dragged the French firm before the court over an alleged breach of advertising status, as the foreign firm was allocated a site less than 200 meters from an existing site in contravention of the Lagos State Signage and Advertisement Agency (LASAA) laws.
Moving Media said it decided to approach the law court in order to instill sanity by enforcing the 400meter minimum distance allowed by advertising code. JC Decaux had noted that the site was allocated upon the filing of Moving Media to LASAA that it was vacating the space soonest. Moving Media denied the claims.
JCDecaux is a multinational corporation based in Paris, France, known for its bus-stop advertising systems, billboards, public bicycle rental systems, and street furniture. It is the largest outdoor advertising corporation in the world.
The company was founded in 1964 in Lyon, France by Jean-Claude Decaux. Over the years it has expanded aggressively, partly through acquisitions of smaller advertising companies in several countries. JCDecaux currently employs more than 13,030 people worldwide and maintains a presence in over 75 countries. In France alone, JCDecaux employs more than 3,500 people.
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