Nigeria loses N25.8bn to import duty waivers in five months

The Federal Government lost the sum of N25.8 billion to waivers and exemption between January and May this year, documents obtained from the Ministry of Finance have revealed.
The country had lost the sum of N55.96 billion, N55.34 billion and N59.42 billion to import waivers in the 2011, 2012 and 2013 fiscal years, respectively.
The waivers and exemptions, jointly approved by President Goodluck Jonathan and the Minister of Finance, Dr. Ngozi Okonjo-Iweala, were granted to companies operating in the agriculture, health, oil and gas, mines and steel and power sectors.
The document stated that the need to improve the agriculture and mining sectors, improve medical services, increase power generation, promote family planning as well as increase the standards of education were some of the reasons for granting the waivers.
According to the document, Indorama Eleme Fertilizer and Chemicals Limited was the highest beneficiary of the waivers with N10.5 billion.
A breakdown of the amount showed that the sum of N6.96 billion was waived for Indorama for the importation of machinery, equipment and spare parts, while the balance of N3.54 billion was waived on fertilizer equipment, catalysts and chemical pile.
Chevron Nigeria Limited was the second highest beneficiary, with N4.87 billion waived for the importation of machinery, equipment and pipelines; followed by Galaxy Backbone, with N2.49 billion for Information and Communications Technology equipment.
Similarly, United Cement Company of Nigeria and NIPCO Plc also got waivers of N1.91 billion and N1.02 billion for the importation of machinery, equipment and spare parts.
Other major beneficiaries are the Borno State Government, which got N984.79 million waived for agricultural machineries; the Federal Capital Territory Administration/Globe Motors for 290 units of motor vehicles used at the recently held World Economic Forum; and Médecins Sans Frontières (Doctors without borders), N568 million for medical supplies.
While defending the Federal Government’s policy on waivers, Okonjo-Iweala had maintained that they were incentives used to support the private sector as a result of some of the regulatory challenges faced in the domestic business environment.
The minister said unlike in the past when waivers were granted to individual businesses, which resulted in rent-seeking behaviours and an uneven playing field for other businesses, President Jonathan had introduced a sector-wide waiver to provide specific incentives for some strategic and job-creating sectors.
According to her, the sectors that currently benefit from waivers are hospitality, power, aviation, agricultural machinery, solid minerals equipment, gas-using equipment, steel and manufacturing.
She said, “There are also additional programmes such as the Export Expansion Grants Scheme designed to promote Nigeria’s non-oil exports. These sectors are seen as strategic areas, which can stimulate growth, support diversification of the Nigerian economy, and create jobs for Nigerians.
“In the past, waivers were granted to individual businesses in an approach that resulted in rent-seeking behaviours and an uneven playing field for other businesses. It was precisely the need to stop such a discretionary approach that led to reforms by the Economic Management Team under the leadership of President Goodluck Jonathan.
“A sector-wide waiver policy was introduced to provide specific incentives for some strategic, job-creating sectors. Under this regime, all businesses in a sector have access to the same incentives.
“In addition, some waivers and exemptions make up for gaps in our economy; for example, waivers to bring in vehicles for sporting events and conferences.”
Okonjo-Iweala said while these policies would have impacts on tariff revenue collection, a trade-off had to be made between short-term revenue collection and long-term industrial development.
She added, “We have to weigh the balance between collecting customs revenues today versus providing incentives to our private sector to stimulate growth and job creation. Smuggling remains a scourge and must be tackled. It is true that some fiscal policies, such as for rice, while leading to greater production, have also resulted in smuggling. Efforts are under way with the Minister of Agriculture to correct this.”

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