Customs operation in 2013

The year 2013 ended on a happy note for the Nigeria Customs Service (NCS) as the Federal Government assented to the wish of the incumbent Customs management to take over the process of cargo inspection at the nation’s seaports, airports and land borders. This followed the expiration of the contract agreement between the government and the three Service Providers namely Cotecna Destination Inspection Limited (CDIL), Global Scansystem Limited and SGS Nigeria Limited.
The Service Providers were in 2006 contracted by the F.G to supply cargo scanning machines under a seven- year build, own, operate and transfer basis. They were also required within the seven year period to train customs officers in operating and maintaining the scanners after their exit.
At the end of the seven year contract precisely in December 2012, government extended the contract of the SPs twice, first in January and thereafter in June 2013 for fears that personnel of the NCS were not fully prepared to operate and maintain the scanners.
However, the government in its own wisdom, perhaps after it was convinced of the readiness of men and officers of the NCS to implement the destination inspection scheme, directed that the Service take full control of cargo scanning at the nation’s seaports, airports and land borders. Accordingly, the NCS, last December fully took over the process of all import transactions to Nigeria. What this means is that Customs will now take charge of managing all areas of the inspection processes including the processing of the electronic Form M, control of the scanning machines and the issuance of the Pre-Arrival Assessment Report (PAAR) which replaced the Risk Assessment Report (RAR) formally issued by the service providers.
As common in every transition process, the NCS encountered some challenges at the take off of PAAR. Few days after the takeover, top management of the NCS led by Assistant Comptroller General (ACG) headquarters, Tahir Musa, visited the premiere Customs Command where it openly acknowledged that the PAAR scheme was not working as anticipated as a result of over 99, 300 ‘unprocessed’ RARs transferred to the Service thereby causing congestion in the issuance of PAAR.
“Over 99,000 transactions were handed over to Customs. We are suppose to take charge of these 99,000 as well as take care of fresh transactions and the process of handling these 99,000 that some of them had their RAR, some were just on form ‘M’ level and to do this effectively well, we realized the 99,000 unfinished transactions will clog the system and slow us down. We are aware that the first PAAR was generated within 58 minutes of upload. We find out that because of these 99,000 plus, PAAR is not coming out at the speed we have anticipated,” Controller in charge of transition, Austen Warikoru had said.
Inspite of these initial hiccups, the government decision mandating the NCS takeover of the DI scheme may translate into higher revenue for government. Already, the premier command has started witnessing the dividends of the new e- clearance regime.
Customs Area Controller, Apapa Area Command, Comptroller Charles Edike disclosed in Lagos that at the takeover of the DI scheme, the premier port which was generating between N400 million and N500 million now generates more than N1 billion daily. He attributed the rise in revenue to the measures instituted by the Comptroller General of Customs to address the various teething problem encountered at the onset of the DI takeover.

Rice importation

There is no doubt that the Federal Government’s decision to ban importation of rice through the land borders took a great toll on the nation’s economy last year. The government had introduced the rice policy of 100 percent levy and 10 percent import duty in February 2013 to boost local produce of the commodity. The policy has however done more harm than good to the nation’s economy as vessels conveying the commodity and meant for Nigerian ports are being diverted to neighbouring ports of Cotonou in Benin Republic.
It is on record that not a single rice vessel berthed at any Nigerian ports for over ten months in 2013, yet imported smuggled rice has continued to flood the Nigerian market.
The policy has not only crippled business in Nigeria but has also impacted negatively on the overall customs revenue collection in 2013.
Customs Comptroller General, Dikko Inde Abdulahi, disclosed in Abuja when he appeared before the Senate joint committees on Finance and Appropriation that the service lost a whopping sum of N105 billion that would have been collected as import duty due to loopholes from in the rice import policy.
Abdulahi had explained that out of the estimated N 718 billion budgetary revenue target of the Service, only N530 billion was collected as revenue leading to a short fall of about N188 billion.
The policy had also escalated the influx of smuggled rice from neighbouring countries into Nigeria.
Genuine rice importers will certainly not forget 2013 in a hurry as incalculable damage was done to their business as a result of smuggling due to the ill-conceived policy.

Tariff on vehicles

One of government policies that also signposted year 2013 was the increase in tariff on imported vehicles. The Gederal Government, had through a memo by the Finance Minister and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, directed that imported fully built unit (FBU) cars shall now attract 35 per cent duty and 35 per cent levy, totalling 70 per cent charges.
According to the memo, the duty on buses had also been raised from 10 percent to 35 percent without levy. The minister’s directive dated November 14, and also sent to Federal Inland Revenue Service, the three former destination inspection firms namely Cotecna, Global Scan Limited and SGS Nigeria Limited said the increase in duty from the present 20 per cent was aimed at boosting local production of vehicles and attracting foreign investments.
However, importers and clearing agents have kicked against the increase, stating that if implemented, it would have adverse effect on the economy.
Former Chairman, Association of Nigerian Licensed Customs Agent (ANLCA) Tin Can Island Port Chapter, Kayode Farinto said that the increase on duty payable on imported cars would be a policy somersault as in the case of the policy on rice leading to loss of revenue for the government. He said if implemented, the increase would lead to smuggling through the country’s various porous borders as the few assemblers in Nigeria do not have the capacity to meet local demand.
“I think they have gotten it wrong again and this is the second time they are getting it wrong. The first time was when government proposed to place ban on the importation of rice knowing fully well that the local supply cannot meet the local demand and we have all seen the aftermath effect of this. The Comptroller General of Customs did said that the federal government lost about N150 billion to the ban on rice importation and the annoying part of it is that rice is still coming into the country from the northern axis of this country,” he said.

Conclusion

As the year 2014 rolls in, it is our hope that the NCS will perform optimally under the PAAR regime in order to receive the nod of the president to pass the Customs and Excise Management Act (CEMA) bill as, according to the Customs Comptroller General, the NCS performance under the new import regime will determine whether the President will grant his assent to the CEMA bill.
It is also expected that the government will, with a sense of urgency review the policy on rice otherwise smuggling of the commodity will continue unabated and revenue expected to accrue as import duty will also be lost to neighbouring countries. Already it is on record that Nigeria loses an estimated N1 billion daily to smuggling of rice.
The increase in tariff on imported vehicles by government has also continued to be a major cause of concern for Nigerians. While the idea behind the policy is a good one, the timing according to industry watchers is wrong as the measure was not properly thought out.
They maintained that the policy, if implemented will lead to severe job losses, increase in smuggling through the country’s porous borders and in turn loss of revenue for the government.
If the policy is to be sustained in the years ahead, the government should first put in place necessary infrastructure otherwise local automobile production in Nigeria will forever remain a mirage.