Business News of 2014-02-27

Okada business: Nuisance or cash cow?

In their quest to survive what some have described as the harsh economic conditions in the country, many unemployed youth in the country are finding all means possible to making a living.

But these ones have found a way to use their motorbikes to make money; turning their bikes into commercial vehicles to transport commuters from one place to the other.

Known as Okada, a term borrowed from Nigeria, it simply refers to using motorbikes for commercial purposes.

Knowing the dangers associated with the trade, it was formally outlawed in 2012. Since then, the police once in a while go on the rampage to seize a few. In spite of the police action, the trade has fast gained roots in the country. The legislative instrument 2180 (LI 2180)

The operations of these Okada riders can be considered as a total disregard for the law because the passage of the road traffic regulation in 2012 (Legislative instrument 2180), banned the use of motorcycles for commercial purposes.

The Legislative Instrument (LI) 2180 prohibits the use of motorcycle or tricycle for commercial purposes.

The LI 2180 also prevents a passenger from hiring the services of a commercial motorcycle. This means that the Okada riders and the people who hire their services are both offending the law.

According to the Road Traffic Act, anyone who intends to operate a commercial vehicle (cars, trucks) must first be licensed by the DVLA.

However, none of the Okadas are licensed for commercial uses because the law prohibits such a thing. No import duty

The registration of a motorcycle costs GH¢80 while registration plus change of ownership costs GH¢101. The registration of a tricycle costs GH¢95 and registration plus change of ownership costs GH¢116.

Considering the large number of motorbikes in the country now, it is obvious that there is a substantial amount of money coming in for the state.

Unfortunately, unlike vehicles, the importation of motorcycles and tricycles into the country do not attract taxes.

This was confirmed by a District Director for the Ghana Revenue Authority, Mr Opare Adjei, who said companies that imported these motorcycles and tricycles into the country did not pay import duties.

He, however, disclosed that their imports attracted taxes, which are 15 per cent VAT, 2.5 per cent NHIL, 0.5 per cent on EDAIF, 0.5 per cent on ECOWAS, 1 per cent on examination, and 1 per cent on processing. Revenue to state

Presenting the 2014 Budget statement to Parliament last November, the Minister of Finance and Economic Planning, Mr Seth Tekper, forcefully advanced arguments to support the need to extend the tax net to include many businesses that were making huge profits but which operated outside the tax net.

A tax expert and Tax Policy Adviser to the Ministry of Finance, Dr Edward Larbi Siaw, recently revealed that only two million out of the eligible six million taxpayers were found in the tax net.

He wondered how a population of 25 million should have only two million people paying taxes.

He said the country could not continue to increase tax rates for those in the tax net and leave out others. Views from riders

Azoetinga Camara, one of the riders stationed on the pavement in front of the Despite shop, told the paper that he had no work to do apart from the Okada business and his daily livelihood depended on it.

He said the money he got from it was what sustained him and his family.

Interestingly, he revealed why they jump the red lights and also ride in obscure places most of the time, saying “we usually do so because of the fear of the police.”

“We are ready to follow all the traffic regulations if the government legalises our business and the police stop chasing us,” he added.

Yakubu Haruna said he made about GH¢70 a day.

According to him, he has three children and their upkeep and fees come from the sales that he makes daily.

He said the police sometimes, in their attempt to arrest them, went as far as pushing them off their moving motorbikes, which results in severe injuries. He, therefore, called on the government to legalise their operations. Faster and cheaper means of transport

It is a nuisance but it is also a faster and cheaper means to ride in the turbulent traffic in town.

Some members of the public, however, continue to patronise the services of the Okada riders because they believe it offers them a cheaper and faster means to commute from one point to the other.

Some traders at the Kantamanto market disclosed that the Okada riders charged GH¢2-GH¢3 for short distances and GH¢5-GH¢8 for long distances. Risks to road users

These riders pose lots of dangers to road users as they can be seen riding through red traffic lights, riding on pedestrian walkways and in opposite directions to oncoming traffic.

In many parts of the country, Okada riders have turned the pavement to a station, where they wait for passengers.

Some carry babies on their backs and ride on the Okada, exposing their babies to unnecessary danger. MTTU maps out new strategy

The Commander for the Accra Central National Motor Transport and Traffic Unit (MTTU), Chief Supt Anderson Fosu Ackaah, stated that the MTTU was in the process of coming up with a new strategy to wipe out Okada business from the streets.

He says the Okada men are aware of the normal police patrol arrest so they speed off quickly as soon as they see the police.

“I have met with my officers and we have identified five areas where they park their bikes so we are changing our strategy in order to get hold of them,” the commander added. Accidents

Statistics from the MTTU also suggest that road accidents involving motorbikes increased in 2012 and 2013.

Two thousand, four hundred and forty motorbikes accidents that were recorded in 2012 and this number increased to 2,570 in 2013. Way forward

One of the many ways for the government to save the situation is for it to rope the business into the tax net.

First, the government can slap a heavy import duty on all motorbikes which can be used for commercial purposes.

Second, it should also ensure that all Okadas register their business with the DVLA for special fees just as the commercial vehicles.

Third, they should be made to insure their operations with the insurance companies so that passengers who ride with them can get compensation when they are involved in accidents.

Finally, they should be made to form associations with strict regulations to keep them within the laws. For instance, they should not be seen riding in the opposite direction or jumping the red lights with impunity because such acts put the lives of their passengers and themselves at risk.

But for all that to happen, the law must be reviewed.

By this, the government would be sure to raise some more millions to support development activities.