Nairametrics| The Lagos State government is at loggerheads again with the private sector. Just recently the state introduced the Clean Lagos Initiative, a policy it claims will deliver a cleaner Lagos at a cheaper cost to the government and to tax payers.
The Clean Lagos Initiative involves going into partnership with foreign investors who the state claims have the experience and expertise required to maintain a cleaner Lagos. The investors, the report claims, will bring in about 600 compactor trucks into Lagos State. They also plan to employ 27,000 sweepers in Lagos and will have refuse bins strategically located within the state. This however, comes at a great expense. It might send about 333 PSP operators currently in Lagos out of business.
PSP operators are private companies that collect and dispose refuse in the state. They service Lagos residents buy collecting and disposing of refuse in return for fees from the state government. Lagos State charges residents for refuse disposal and pays PSP’s from amount collected. The state government introduced the scheme when the Lagos State Waste Management Agency (LAWMA) could not carry out these tasks efficiently.
Why change the game?
- The government’s argument is that the PSPs do not have the required capacity to do the job. According to them many PSPs have irregular service, and most evacuate refuse once a week or towards the end of the month.
- The government is also unwilling to tax Lagosians more to improve efficiency which can only be driven by renewed investments.
Last year, the state also signed an N85 billion four-year deal with a foreign investor in a Public Private Partnership (PPP) arrangement. The new firm, will operate across all wards of the State using 600 compactor trucks and will be responsible for cleaning public roads and evacuating household wastes. The PSPs will therefore now be restricted to commercial waste.
PSP’s have kicked against this move for the following reasons;
- They were not carried along by the Government
- They also claim that all Lagos state needed to do was to ask them to increase their level of investments
- They have investments millions of naira in optimising refuse disposal and could lose their investments with this move.
- Some claim to have even purchased Compactor Trucks worth between N8million to N20 million.
- They have also obtained bank loans to purchase trucks. The loans are tied to the cash flows generated from fees paid by Lagos State.
The new policy is currently represented in a bill on the floor of the Lagos State House of Assembly and is being debated.
One of the reasons why govt has never really been able to perform at the level many expect (and this is a worldwide issue) is that welfare “sometimes assumed” is always put before efficiency. This is another case in point. I will always choose efficiency and sustainability.
I believe that the local PSPs may lose out, but this should be a lesson for them to work on their capacity. Also I believe there will be opportunities in other states as well. Maybe it’s time to focus elsewhere. But I feel the govt doesn’t owe anyone any favors. This is clearly a customer and supplier relationship, both sides must seek to derive the most value from their relationship.
Also local business men should start asking questions as to why it is always impossible for them to compete with foreigners if given a level ground. It’s easy. Insufficient access to capital at a good price and insufficient capacity. The sooner we work on this, the better for us
The PSPs can go to EFCC to probe the foreign investors and investigate their Nigerian partners to probably get the big picture. On another note, it could also be a fulfillment of trade deals implied in some of the foreign bond agreements that the state went into while accessing funds.