Increased Customs Revenue Spells Doom For Nigeria’s Economy–PEBEC

Despite the federal government’s tendency to set revenue targets for the Nigeria Customs Service (NCS), fresh reports have emerged that increased Customs revenue generation leads to multiple economic disadvantages for the nation.

While the popular notion is that an improved revenue generation by Customs connotes enhanced imports and curtailed smuggling, there are indications that high Customs revenue are negative pointers that guarantee stagnation of a nation’s economy.

Customs continuously receive annual national targets from the federal government with the figure later unbundled by the Service for each Command. This practice has seen Area Controllers at various Customs Commands jettison trade facilitation in an unhealthy drive to attain and surpass their respective fiscal targets.

For 2019, the Service was given a revenue target of N887billion which the Comptroller-General of Nigeria Customs Service (NCS), Col. Hameed Ali (Rtd), assured that the figure would be significantly surpassed.

According to the Customs boss, the management had earlier set a higher target for itself with the aim of surpassing the revenue generated in 2018 which was over N1.2trillion.

Nevertheless, several economic experts and port stakeholders have admonished the NCS to pay more attention to the provision of an enabling environment for port business to thrive.

The Executive Secretary of Nigerian Shippers’ Council (NSC) Mr. Hassan Bello subscribes to this school of thought as he posited that facilitation of trade will not only increase the patronage of Nigerian seaports by shippers, customs agents and shipping companies, but will also enhance development at the ports and make their operations be at par with what is obtainable in ports of advanced countries.

Speaking with MMS Plus last week at a night of engagement on ease of doing business organized by the Presidential Enabling Business Environment Council (PEBEC) and Lagos State Government, the Deputy Controller, Tariff and Trade, Customs Headquarters, DC Anthony Ayalogu said that an improving economy should have lower Customs revenue.

“There is a Key Performance Indicator (KPI) for development of a country and it states that the higher a nation’s customs revenue indicates that the nation isn’t growing. The indices of calculating a country that is developing is that its customs revenue should start dwindling. This means that instead of importing finished products that would attract duty of 20%, the nation is found bringing in mostly raw materials because the industry has capacity to produce. So, more duties come in at 5% because they are raw materials and this means Customs revenue would be low. This means that there is development”, Ayalogu told our correspondent at the Lituation sub-national tour.

According to him, when Nigeria starts bringing in vehicles and all electronics as Completely Knocked Down (CKD) units with about 5% instead of Fully Built Unit (FBU) attract duty of over 35%, a massive drop in Customs revenue would be recorded but it doesn’t mean that the nation has failed.

“We may have lost income via Customs revenue but the nation would have gained tremendously in terms of growing the economy” he said.

The Customs boss also stated that revenue generation for the government isn’t the main function of Customs as the Service had more pertinent tasks including; collation, control before collection.

“There are three ‘Cs’. The first one is to collate data and be accurate and accountable. The next one is to be able to control it by ensuring that the goods and services conform to the nation’s standards as stipulated by other agencies. The last function is collection of revenue” he added.

Also speaking at the event, the Special Adviser to the President on Ease of Doing Business, Dr. Jumoke Oduwole, said that the World Bank Doing Business (DB) team had noted that Nigeria was one of the top-20 improvers in doing business out of 190 countries in the ranking.

She stressed that the World Bank’s announcement acknowledged reforms spearheaded by the PEBEC in the areas of operationalizing a new electronic platform that integrates the tax authority and the Corporate Affairs Commission (CAC).

Highlighting other the reforms pioneered by PEBEC, she mentioned the visa-on-arrival process boosted by e-payments for services at all Federal Airports Aviation Nigeria (FAAN) operated airports, simplification of cross border trade with streamlined shipping documents from 14 to 8 on imports and 10 to 7 on exports.

On the Lituation tour, she noted that the Lagos event was the kick-off with the next edition coming up in Ekiti, while Jigawa, Delta and Enugu states have agreed to host PEBEC for the private sector driven event.

Oduwole, also assured that PEBEC was collaborating with all relevant Ministries, Departments and Agencies (MDAs) to ensure all aspects of infrastructure gaps which affect the ease of doing business is addressed.

“The Minister of Power is a member of PEBEC because we can’t talk about ease of doing business without improving those hard infrastructure challenges. Power supply and broadband are very important, for access to credit the Central Bank of Nigeria (CBN) Governor is a PEBEC member, the Ministries of Transport, Works, Finance and the National Economic Council (NEC). The essence is to enable us talk about all these issues and adopt a holistic approach to addressing them. We don’t just talk at the Council, it’s a working Council that has KPIs, a solid structure and deadlines for our activities. We have a National Action plan and that is why we are beginning to see some results” she said.

Meanwhile, in another development, Greenview Development Nigeria Limited (GDNL), owners of terminal E, Apapa Port have lamented high level of insecurity on the waterfronts at Lagos ports with attacks on ships at berth occurring once in every two months.

The General Manager, Operations at the facility owned by Dangote, Mr. Yakubu Abdullahi revealed this yesterday during a stakeholders’ forum organized by Nigerian Ports Authority (NPA).

Speaking at the meeting which held in commemoration to the 2019 Global Customer Service Week, with theme “The Magic of Service, Abdullahi lamented the terminal which is opposite Ogogoro village lacked the presence of security patrol thus poses serious danger to the facility.

“I am happy with the report of the Lagos Port managers highlighting the surveillance and patrol of the water front but we have an experience that is very negative. Every two months, pirates come on board and attack our vessels at berth. This means that the patrol needs to be increased and be more coordinated because the marine police and the Nigerian Navy, if they are taking part in the internal water, they will need to understand what is really happening”, he said.

“This same set of people, once they launch attack on the vessel, no challenge, they operate free and leave and they come through the waterfront. Particularly our own terminal GDNL, we are directly opposite Ogogoro village and I don’t think the village is a legal village and government has to look at that aspect with a view to finding solutions to the problem” he queried.

Earlier, the Port Manager of Lagos Port Complex (LPC) Mrs. Olotu Funmilayo had called on the security agencies including the Marine Police to begin to patrol the waterfronts to prevent theft as highlighted by GDNL.

As part of efforts to address this menace, the Managing Director, NPA, Ms. Hadiza Bala-Usman revealed that plans have been concluded to deploy security boats to monitor the waterfronts of the terminals in a bid to protect cargoes and address other security challenges facing the port concessionaires.

Usman, who was represented by the Executive Director, Marine and Operations, Dr. Sekonte Davies also harped on the need for port stakeholders to synergies in a bid to address the challenge.

The Managing Director assured that NPA Security, Nigerian Navy and the Marine Police will work in unison, re-strategize and develop a template to curb the menace of pirate attacks on ships at berth.

The Authority also admonished terminal operators to support importers and agents who opt to evacuate their cargoes via the waterways using barges, noting that some terminals have reportedly introduced frivolous charges for cargo evacuation using barges.