5 February 2019

Nigeria: Why We Increased Expatriate Card Fee - Nigeria Govt

The upward review of the Combined Expatriate Residence Permit and Alien Card (CERPAC) fees by Nigeria is a measure to check abuse of expatriate quota and develop local content, PREMIUM TIMES has been told, amid controversy surrounding the policy.

The Minister for Interior, Abdurahman Dambazau, in an exclusive disclosure to this newspaper said the review was a part of reforms aimed at checking 'fraudulent' practices by firms granted expatriate quota as well as increasing opportunities for Nigerians.

In Nigeria, CERPAC is mandatory for expatriates. It allows them to live and work in the country.

It is renewable annually or every two years depending on the validity the period given, according to the spokesperson for Nigerian Immigration Service, Sunday James.

The interior ministry reviewed the fees for the card from $1,000 to $2,000 in December, following a request by the service provider, Continental Transfert Technique Ltd, or Contec.

That was without a prior warning to the foreign nationals who require the card and, as such, many of them were reportedly surprised at the banks they had visited to pay for renewals.

Reforms

"The increase is part of reforms being carried out because of the fraudulent nature in the expatriate quota which has been denying Nigerians employment and also revenue," said Mr Dambazau, responding to questions on the basis for the hike, now challenged by a senior lawyer and activist, Femi Falana.

He said: "Some companies bring in labourers in their hundreds and register them as experts/professionals but pay them as labourers while they remit most of the money to their countries.

"Many of them do not employ Nigerians to mix so that our people take up management positions after some time."

According to audit and financial consulting firm, Deloitte, the development could be a divergence from Nigeria's efforts towards promoting ease of doing business in Africa's largest economy.

It said the review will lead to increase in the operational cost of running a business and engaging expatriates to reside and work in the country.

"Further, the ability of companies to employ expatriates that possess the technical expertise required in a particular industry may be impaired and as a result, impact industry performance," Deloitte said.

In any case, the firm also took sides with the Nigerian government, stating, however, the review may be seen as a part of the efforts of authorities to check the influx of expatriates into the country with the aim of achieving indigenisation as well as to develop local content and skills.

In addition, Deloitte added that "it would assist companies to strictly monitor the transfer of knowledge from the expatriates to the Nigerian understudies. It could also be a way to encourage companies on the need to develop its local talents to take up more senior level positions."

Controversy, lawsuit threat, sharing formula

PREMIUM TIMES understands that the service provider for the production of CERPAC, Contec, wrote the interior ministry on December 11, 2018, seeking for a review of the fee charged for the cards from $1,000 to $2,000.

Two days after, December 13, the ministry replied through the permanent secretary, Mohammed Bello. In the letter obtained by PREMIUM TIMES, Mr Bello conveyed the approval of the minister, Mr Dambazau, to the company.

Following the approval and "immediate implementation" of the review, Mr Falana petitioned the minister for finance, Zainab Ahmed, seeking a probe of the contract between the interior ministry and Contec as well as alleged fraud and abuses.

"If our requests are not granted, we shall not hesitate to institute legal proceedings at the Federal High Court for the recovery of the huge fund that is being criminally diverted by some highly placed officials at the ministry of interior and their foreign collaborators," threatened Mr Falana in the petition to Ms Ahmed, obtained by this newspaper.

He expressed worry that "within two days of applying for the increase, the Minister of Interior approved the request."

He noted that engaging "foreign consultants to collect it (CERPAC fees) is a contravention of the Presidential Executive Order No. 5 which has 'prohibited the engagement of foreigners to perform services that can be provided locally by Nigerian citizens'".

Contec is owned by an Irish-Indian businessman, Benoy Berry.

However, it considers itself a "Nigerian corporation" in the U.S. court filings seen by this newspaper. On its website, it says its chairman, Mr Berry "initiated the CERPAC project, which is a partnership with the Nigerian government to develop secure technologies for passports and resident cards".

Mr Falana said asking the foreign nationals to pay the fees in U.S. dollars is a breach of the CBN Act 2014, which stipulates that the currency issued by the Central Bank of Nigeria shall be the legal tender for the payment of any amount.

"The most fraudulent aspect of the illegal increase is that out of the huge revenue realised for the payment of the CERPAC fee, only 30 per cent of it is paid to the Federal Government at the official rate of N306 while the foreign consultants are allowed to pocket the remaining 70 per cent.

"It may interest you to know that the foreign consultants have been directed by the minister of interior to pay the said 30 per cent into a dedicated account in a commercial bank in flagrant contravention of the Federal Government's policy on Treasury Single Account. which unifies Government accounts to enable the ministry of finance to maintain oversight of the Government cash flow," Mr Falana said in his petition.

'No 70:30 sharing formula'

The Contec contract for the production of CERPAC was entered into on behalf of Nigeria by the ministry of interior, two senior officials of Nigerian Immigration Service (NIS) told PREMIUM TIMES.

The Comptroller-General of the NIS, Mohammad Babandede, said he would not comment on the contract as well as the hike of the fee: "NIS is only an implementation agency."

Mr Babandede said the contract is between the ministry of interior and the company, echoing a remark of the agency's spokesperson, Mr Sunday, earlier contacted by PREMIUM TIMES.

However, Mr Babandede provided details of the sharing formula, challenging Mr Falana's claim.

The revenue from the CERPAC fees is shared between four entities - the company, the federal government, the ministry of interior and the NIS - not a 70:30 two-way model between the company and government, according to the NIS chief.

In the December 2012 agreement, according to Mr Babandede, the revenue was shared as follows:

Contec - 50 FG - 40 Interior ministry - 5 NIS - 5

In December 2014, he said the formula was reviewed because of the company's plan to open 28 additional offices from eight it then had to improve production and service capabilities. Then, the sharing ratio changed to 72:20:1:7 in favour of Contec, the federal government, the ministry of interior, and the NIS, respectively.

Between 2014 and 2018, Mr Babandede said authourities were satisfied that "all the 28 offices were opened".

Therefore, with new offices opened, there was a need to review the sharing ratio to reduce the revenue accruable to the company.

Consequently, in December 2018, the contract was reviewed to give 55 per cent to the company, 33 per cent to the federal government, five per cent to the ministry of interior and seven per cent to the NIS.

The NIS chief further added that the agreement is a tripartite deal involving the ministry, commercial banks and the company.

Before the review of the sharing ratio in December 2018, a senator, Solomon Olamilekan, on October 11, 2017, said Nigeria "is in bondage."

That was at the Senate during a debate on the revenue of the immigration, as reported by The Cable.

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