Fuel Subsidy Removal will Increase Unofficial Agberos Payments Collection – Funsho Doherty

Funsho Doherty, The governorship candidate of the African Democratic Congress (ADC) in the March 18 gubernatorial election in Lagos State, expressed his agreement with the removal of fuel subsidy. However, he expressed concerns about the potential impact of this policy on Lagos State, stating that it is likely to face the hardest of its implementation.

In a recent open letter dated June 6, 2023, Doherty highlighted how the removal of fuel subsidy has exacerbated the issue of unofficial payments made by road transport workers to the ‘agbero’ network in Lagos State. He explained that the state has an established system of exorbitant payments, which are collected from road operators on a daily basis.

He said “This practice by itself already imposes a regressive burden that subjects low-income earners to high effective tax rates that are reflected in their transport fares.” 

Why Lagos will be hardest hit by the fuel subsidy removal.

Doherty further provided additional reasons to support his assertion that Lagos would bear the brunt of the fuel subsidy removal. He pointed out that Lagos is a densely populated urban area with a significant population relying on daily commutes facilitated by korope, Keke, and Danfo buses, all of which are fueled by petroleum.

In addition, he drew attention to the limited availability of mass transit options in the state, while emphasizing the notorious and persistent problem of traffic congestion, which ranks among the highest in the world. Furthermore, Doherty pointed out that the state’s resource management over the past 24 years has been inadequate, emphasizing the urgent need for improvement.

Doherty’s proposed solutions

In light of these challenges resulting from the fuel subsidy removal, Doherty put forward the following short-term solutions to address the impact.

He argued that the informal ‘agbero’ system of levies and taxes collection should be disbanded.Instead, redirect the foot soldiers towards managing the social impact of the subsidy removal with technology introduced to administer compliance and enforcement.  

Also, the implementation of personal income tax relief in Lagos state should be proposed which is aimed at increasing the threshold for taxability and offering support to individuals with low incomes, thereby providing much-needed relief to the most vulnerable taxpayers.

In addition, there should be an advocate for the adoption of a cost of living salary adjustment policy for Lagos government workers, with a specific focus on prioritizing low-income earners. The government also must  encourage private-sector businesses to implement similar measures.

Furthermore, the government should conduct a thorough assessment of the proposed $12 billion 4th mainland bridge project to ensure its alignment with the increased urgency to establish efficient multi-modal mass transit systems in Lagos within the next 10 years. Also, scale up ferry service on key water transport routes like Ikorodu to Lagos Island.  

There should also be a comprehensive evaluation of all current mass transit arrangements and implement measures to enhance and expand Bus Rapid Transit (BRT) services by removing any existing constraints. While taking necessary steps to eliminate conflicts of interest, thus promoting quality and accountability in the transportation system.

Doherty suggests short term steps

Doherty suggests that in the longer term, the Lagos state government should ensure that within 10 years, the Lagos Metropolitan Area is effectively served with efficient and cost-effective multi-modal mass transit and more rail lines should be introduced on an accelerated timeline.  

Also the government should propose the acceleration of new town planning and development initiatives that incorporate integrated mass transit, infrastructure, and affordable housing plans. This approach would achieve distributed and decentralized development, fostering vibrant communities that are spread across Lagos.

The government must as well work towards establishing a comprehensive vision for fostering a broad-based, inclusive, productive, and prosperous economy. This vision should be accompanied by concrete outcomes that effectively enhance living standards for residents across all levels of the socio-economic spectrum.