2016: Customs operation in focus

Hameed Ali
Nigerians including maritime stakeholders in the import and cargo clearance business will never forget year 2016 in a hurry as the country experienced its worst economic recession in 30 years. For the Nigeria Customs Service, 2016 was a mixed bag of good and bad developments but a totally bad one for its stakeholders especially importers and clearing agents reports Shulammite ‘Foyeku.

CBN forex policy and high Customs duty
Year 2016 was characterised by unfavourable government policies including the Central Bank of Nigeria (CBN) foreign exchange restriction to importers of 41 items and the declining value of the naira against major international currencies especially the dollar which drastically affected volume of imports into the country.
Notwithstanding the low volume of importation in the country and the general lull in the business sector, stakeholders said the Nigeria Customs Service recorded an impressive performance measuring its Key Performance Indicator (KPI) in the area of revenue generation and anti-smuggling drive.
Sad to say though, trade facilitation which is one of its core functions was relegated in the pursuit of increased revenue generation.
“If revenue generation and anti -smuggling  concerns are the only yardstick to measure Customs performance,  in that case, the Customs Service performed creditably in the 2016. But where cargo volumes handled in line with trade facilitation, international best practices and adding value to the supply chain also constitutes a considerable yardstick to measure performances, then, I am afraid, we have issues here.
“This is because revenue targets will always be in conflict with trade facilitation targets. Revenue targets mean rigidity and trade facilitation means flexibility, you see they are two strange enemies that can only be resolve by striking a balance in between,” former President, National Association of Government Approved Freight Forwarders (NAGAFF) Eugene Nweke told SHIPS & PORTS DAILY.
In August 2016, NCS announced an all-time revenue generation of N95.76billion, the highest collected in 10 years and in the year under review.
Then Customs Public Relations Officer, Wale Adeniyi had in a statement attributed the feat to the efficacy of the Comptroller-General, Hameed Ali’s policy thrust.
He said, “In August 2016, the Service recorded the highest revenue in 10 years despite the forex (foreign exchange) difficulty, low imports and general economic downturn. The Service generated N95.7billion, a feat that points to the efficacy of the Comptroller-General’s policy thrust.”
Stakeholders however believe the increase in revenue generation was as a result of the CBN directive to the NCS to benchmark its foreign exchange rate for all imports to the prevailing exchange rate of N313/$1 and not at the exchange rate of N197/ $1 which the importers opened their form ‘M’.
This, they say skyrocketed the Cost Insurance Freight (CIF) base of all imports thereby boosting the revenue generation of Customs.

Former Chairman, Council for the Regulation of Freight Forwarding (CRFFN), Tony Nwabunike described the rise in Customs revenue as “illegal” arguing that many importers succumbed to clear their goods at an unnecessarily high tariff benchmark rate because of fear of demurrage.
“The customs is strangulating importers with such policy. If government does not want Form M, why not tell importers so that they will do Destination Inspection. How can you tell somebody to open Form M, and when this is done, you disregard it and calculate duty on different rate. This is uncalled for. And this explains why there is so much suffering, because when the importer clears the goods, he must calculate all his expenses to make profit,” he said.
While the Service kept basking in the euphoria of increased revenue generation, many importers closed shop while others were forced to relocate to neighbouring countries as they could not contend with the high tariff. It was indeed not a pleasant year for few importers who managed to remain in business in year 2016 as they pay through their nose to have their consignments cleared out of the port.
Ban on rice through land border
A major trade policy that also shaped event in the year under review was the reintroduction of ban on importation of rice through the land borders. At the inception of Ali’s administration as the Comptroller General of Customs in 2015, he lifted the ban on importation of rice through the land borders only for him to impose the ban again few months into 2016.
Justifying the reversal, the NCS had in a statement said that rather than abating, reports form border commands indicated an upsurge in the tempo of rice smuggling.
It noted that dwindling revenue from rice imports through the land borders do not match the volume of rice landed in neighbouring ports hence the need for the reversal.
According to the statement, “during the five-month period when the importation was allowed October 2015-March 17th 2016, a total of 24.992 metric tonnes of rice valued at N2, 335,131,093 was imported through the land borders.
“During the period, total revenue generated amounted to N1, 685,112,810. This is considerably lower than the revenue projected to be generated with the removal of import restrictions.
“However, an upsurge in the number of the seizures has been reported across the land borders since January 2016. In the first two months of the 2016, a total of 9238 bags were seized, with Duty Paid Value of N64,666,000 was made by the Customs anti-smuggling patrol teams of  Federal operations and Border commands.
Despite the  increase in the number of seized rice recorded by the Service in year 2016, the smuggling of the commodity had continued unabated majorly due to the inability of importers to source forex and the high tariff of 70 percent imposed on the commodity. The resultant effect was the increase in the price of the commodity from between 9,000 to N17, 000 two months after the ban to an all-time increase of N25, 000 in December 2016.
Granted, while the country may have made appreciable progress in the production of local rice, it has not been enough to meet the consumption demand of the rapidly-growing population. Therefore, there exists an imbalance between production and consumption given rise to smuggling of the commodity.
Ban on vehicle through land borders
Respite came the way of Roro operators at the end of year 2016 when the federal government through the NCS announced ban on the importation of vehicles through the land borders.
The prohibition order according to a statement by the NCS covers both new and used vehicles. The statement indicated that the ban was sequel to a presidential directive restricting all vehicle imports to the seaports with effect from January 1, 2017.
Prior to when the ban was lifted, Roro operation in the country was near comatose as the terminals experienced a significant drop in volume of car importation through the seaports while smuggling of vehicles through the borders continues to thrive.
The ban generated a lot of debate among industry stakeholders including the House of Representative which called for a reversal of the policy. While some kicked against the House of Representative call to the federal government to suspend the ban, others welcomed the ban saying it will help check smuggling and boost Roro operation in the country.
For terminal operators, the ban was a welcome development. According to the Chairman, Seaport Terminal Operators Association of Nigeria (STOAN), Princess Vicky Hastrup, there is urgent need for an urgent review of the high import duty on vehicles from 70 to 20 percent for the government to achieve the desired result.
“We are confident of the ability of President Muhammadu Buhari to turn the economy around. The earlier ban on importation of rice, and now of vehicles, through the land borders is a welcome development.
“We are happy that the President has listened to our appeal to reverse incongruous policies inherited by his government from the former administration and which have deprived Nigerian ports of cargoes to the advantage of the ports of neighbouring countries.
“In addition to this ban through the land borders, we appeal to the President to return the import duties on vehicles to 20% from the prohibitive 70% tariff imposed by the former administration.
“The reversal to the old tariff will serve as an incentive for Nigerians to import legitimately through the seaports and make appropriate payments to government. This will boost revenue collection by the Nigeria Customs Service. It will also lead to the return of lost jobs at the affected ports.
“We also appeal to Customs officers at the border posts to support the Federal Government and the NCS leadership by ensuring that no smuggled vehicle finds its way into the country through the land borders from 1st January 2017 when the new policy is expected to come into effect,” Princess Haastrup said.
Appointment, dismissal and death of officers
Another highlight in customs operation last year was the constitution of a new management team and the dismissal of 46 junior and senior officers for acts of gross misconduct.
The NCS said officers affected in the exercise were investigated for involvement in improper examination and release of containers without proper documentation and payment of duties, illegal release of goods in advance before the arrival of vessels, collection of bribe to release prohibited items, release of export prohibitions, fraudulent sale of seized items, use of fake certificates and bribery to secure auctioned goods.
Also during the course of the year, a major sad development for the Service was the death of 70 of its officers who lost their lives to attacks by smugglers and host communities.
Officers’ welfare
One area the Service fared badly in the year under review was in the area of officers’ welfare. All was not rosy among the officers of the Nigeria Customs Service as the issue of welfare was not taken seriously as envisaged. The Customs CG had during assumption of office promised that officer’s welfare will be given priority but one year after, officers said nothing has been done to better their welfare.
A senior Customs officer at Apapa command who spoke with SHIPS & PORTS DAILY on condition of anonymity expressed worry over the situation.
He said apart from the issue of welfare, the management no longer give approval for administrative cost including electricity bill but are now sourced for by the command.
He said electricity supply to the command has been disconnected close to three month ago due to the inability of the command to pay its debts. He said the command since then was being powered by generator and even owing accumulated unpaid dept for purchase of diesel.
Another officers posted to the border area said the Customs management does not show they are interested in the welfare of officers especially those posted to border areas to patrol creeks.
He said despite the meagre monthly take home pay, some of them while on official patrol are still required to maintain and fuel their patrol vehicles hence they are encourage to look the other way.
“The CG promised to increase our welfare when he came in but till today nothing has happened. There are some monies we had about seven month ago was released for our bonuses and allowances to be paid but till today we did not hear anything about it again. 10 kobo has not been increase to our salary and none of our allowances has been paid.
“There is supposed to be money for maintenance of vehicles but we use our money to fuel and maintain our patrol vehicles while on official patrol. This is where the name corruption comes in.
“When your salary is not enough to cater for you and your family, you have to go extra miles to see how you will squeeze out money somewhere. How would you remit the money that you are supposed to remit to the federal government when you are not getting enough? “If we are well paid, you just do your job and remit government revenue. Nobody will say you are corrupt. That is the problem we are facing,” he said.
Probe on Customs
Towards the last quarter of the out gone year, the Finance Minister, Kemi Adeosun, the supervising minister of the NCS made a damning remark about officers of the Service. She described the NCS officials as ‘cohesive crooks had to break ’.
Adeosun who told members of the Senate Committee on Finance, led by its Chairman, John Owan Enoh who were on oversight visit to her ministry, said the Service stinks of corruption.
Adeosun disclosed that government’s efforts at realising money from revenue generating agencies to meet the expectations of Nigerians were being hampered by high-level corruption still existing in the agencies, especially the Nigeria Customs Service,
Alarmed by this observation, the Senate mandated its committee on Customs and Excise to institute a probe into the activities of Customs with a view to blocking all revenue leakages and enhance revenue generation.
The Chairman of the Committee, Sen. Hope Uzodimma, during an oversight visit to the NCS headquarters in Abuja had said that Service should generate enough revenue to fund the nation’s budget.
Prior to this time, industry stakeholders have decried the high level of corruption under Col Hameed Ali’s administration saying it has gone from bad to worst.
The stakeholders said officers took advantage of the ignorance of the CG being a outsider on some of the technicalities of the operations of the service to exploit importers and their agents.
“The rate of bribery and corruption among customs officers has worsened and this is because the current CGC is not an insider. As long as an outsider who has no knowledge of Customs procedures is in charge, they will steal right under his nose without the man knowing what is happening,” President Save Nigeria Freight Forwarders Importers and Exporters Coalition (SNFFIEC),Osita Chukwu told SHIPS & PORTS DAILY.
National President Association if Nigeria Licensed Customs Agents (ANLCA), Prince Olayiwola Shittu also observed that “corruption at the seaport is at its peak. One officer can decide to hold down your goods for three days and no platform is provided to report these officers’ to,”
The finance minister had corroborated the ignorance state of the CG when she said “Col Hameed Ali is trying his best and instill some discipline but being an outsider in an insider’s place is a difficult job”.

 

Copyright 2016 Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to www.shipsandports.com.ng as the source.

 

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