Ifeyinwa Obi
10 May 2008
Lagos — The Nigerian Customs Service, (NCS) and the Nigerian Ports Authority (NPA) have called on the federal government to reduce the high tariff regime in the industry or risk the continued decline of revenue accruable from importation.
The duo expressed regret that the high tariff regime has multiple effects of not only crippling the economy, but also fuels high cost of goods and services and puts down the Customs revenue contributions to the federation accounts.
Meanwhile operators in the Nigerian Maritime sector had over the years been expressing worries over a situation where more than 75 per cent of the total imports into the West African Sub-region reportedly favour the Nigerian market, but only insignificant proportion of the same imports come in through any of the country's eight seaports and approved boarders.
This ugly trend had been attributed to very high cost of clearing goods at the Nigerian ports, even in the face of gross inefficient port system, and this has always compelled importers to route their consignment through neighbouring seaports and only tranship to Nigeria, resulting into a total loss to the government.
This issue was a priority discussion as members of the House of Representatives Committee on Privatisation, recently visited the Nigerian Ports Authority.
The Managing Director of the Nigerian Ports Authority (NPA) Mallam Abdulsalam Mohammed, explained that the age-long problem of diversion of imported goods meant for the Nigerian economy through other seaports of neighbouring African Countries was as a result of high cost of operation. He described the issue of cargo diversion as technical, stating that it occurs as a results of high customs tariff regime.
According to him, "those importers that divert their consignments do so to reduce the amount of import duty paid on a particular good and thereby end up smuggling in the good into the country. For instance, some Nigerians smuggle vehicles of more than eight years, which the government had outlawed, into the country through other neighbouring African Seaports and later drive same into Nigeria by road.
The same thing happened on the illegal importation of furniture, and many other prohibited goods. What the importers are doing is to cut corners because the tariff is high. I am not suggesting that the nation's seaports should be very cheap compared to some of their peers in the west and Central African sub-region, but let us look towards finding an avenue where the revenue for the nations would not be totally lost, because our importers find it too exorbitant to pay."
He however observed that the completion of the port reforms programme and subsequent hand over of the ports for the various terminal operators has invariable produced efficiency and would bring as well cost reduction on the long run.
In the same vein, the Assistant Comptroller General of the Nigerian Custom Service (NCS) Alhaji Sani Nuhu Abubakar recently condemned the high tariff and the federal government fiscal policy. Nuhu, who spoke on behalf of the Comptroller General of Customs, Elder Jacob Buba at a forum for policy dialogue on Custom and Port Reforms in Lagos during the week stated that Nigerians will continue to be non compliant to tariff policy even as the customs will continue to be corrupt as long as the current platforms prevails.
"The fundamental issue which needs to be addressed if Nigerians desire to make any meaningful progress in generating the revenue from imports and suppression of smuggling, is its trade policy. No country on earth has our kind of trade and fiscal policy. Our tariffs are totally punitive and sometimes I ask if they are meant for people on this planet.
The Nigerian importers divert their cargo to Cotonou to discharge because the tariff regime there is friendly and tolerable. 78 per cent of cargo passing through NAHCHO are illegal import. It is either that they are false fully declared or they are concealed and not declared at all. This is because the tariff regime is hostile. What is important and what will move this nation forward, is telling our selves the plane truth for onces," he fummed.
Speaking on the prohibited items, Nuhu pointed out that Nigeria needs to jettison the archaic idea of banning some consumed goods. "The ban of goods especially the ones that are scarcely produced here enable smuggling activities to thrive. High tariff or ban on importation never assisted local manufacturer at all. Over protection even if it is of your child will produce an indolent child.
Why do we insist on protecting what we don't have? Who are we protecting? Last year Philippines collected $49 billion as customs duty. With all our high tariffs and banning, we never collected more than $3 billion in Nigeria. 90% of vegetable oil brought into Nigeria comes illegally. Government is losing enormous revenue on vegetable oil because it is banned.
The Desination Inspection scheme is upside down because of the nation's hostile fiscal policy. Take for instance, rice has 50% duty, 50% levy, this is punitive. But these goods land at Cotonou where tariff are friendly and eventually find their way into the country", he added.
Sharing their views, the President General of the Nigerian Importers Association (NIA) Chief James Onuchukwu, also explained that the high custom tariff on the goods promotes the activities of smuggling, thereby doing a great harm on the nation's economy.
Counting the numerous causes of smuggling activities which he said the government should re-dress, he said: "Apart from the high tariff which is the chief course of smuggling, we should not forget, that the federal government policies are not favourable to the masses as well.
This constitutes in the side of the government in implementing policy formulation without carrying the importers, who it is their business to bring in those goods into the country along, without even putting up an effort to seek the importers opinion. This I think to large extent constitutes the rate of smuggling activities in the country.
"You will as well find out that in any country where the government policy is not favourable to the masses, it promotes corrupt practices. The importers are not smugglers, hence there are government agencies created to watch or monitor the activities of the importation, into the country. If these agencies fail in their duty in any way by compromising to carry out their duty effectively, I think they are too part of the smuggling activities.
What I am saying in the essence is that the customs are part of the smuggling activities. The importers association had set up an anti-smuggling body to check smuggling activities both at the seaports and the boarder stations. I would tell you authoritatively that since the introduction of the body we have intercepted over 100 illegal trucks of goods and we have handed them over to the appropriate quarters.
Last week we intercepted 30 trucks of contraband goods, which have been examined and passed by the Nigerian Custom Service at Idiroko boarder. So you see it is not just the importers offence, I believe that when the tariff is high and hostile like it is today the importers are bound to cut corners. So I employ the government to retrace some of the policies that are hindering the growth of the economy in order to slow down sharp practices in the sea ports and the boarder stations.
I know that Nigeria would generate more revenue from import more than they do now if the tariff is being reviewed and made reasonable," he added.
Also the chairman of the National Association of Government Approved Freight Forwarders Tin- can Island chapter, Decon Pius Ogudu, stated why the tariff regime should be reviewed. He said: The federal government has lost a lot of revenue owing to this high tariff regime.
The duty for a brand new latest jeep, going by the tariff properly, no one would conveniently pay it. It is too exorbitant, and so on other goods. I don't disagree when I hear people say the duties made the importers think of finding a cheaper way out. Most of these importers are traders and they would want to make gain when they sell .
Most times these high charges come down on us the consumers, and this is not good for the masses. Almost every day we hear of smugglers bringing in fairly used cars through unapproved roots , why? Because they want to invade the high duty. If the duty had been friendly, I don't think many people would want to cut corners.
The earlier the tariff is reviewed the better for the nation's economy. Like I said earlier , the country does not generate quarter of the revenue compared to the quantity of goods imported into the country, by sea, air and land. If all the revenues are being collected, Nigeria would be looking at $50 billion annually if not more than, hence most things we use in this country despite the bans are all imported into the country."
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