FG Depleting Nigerian Shippers With Ridiculous Customs Duties – Nicol

FG Depleting Nigerian Shippers With Ridiculous Customs Duties - Nicol
Rev. Jonathan Nicol is the President of Shippers Association Lagos State (SALS)

By Kenneth Jukpor

Rev. Jonathan Nicol is the President of Shippers Association Lagos State (SALS). After a recent stakeholders seminar on the place of ethics and integrity at the ports, where he was the Chairman, he spoke to MMS Plus. Nicol explains how the dearth of ethics and integrity has affected the nation’s port operations, how fiscal policies have affected shippers; he also highlights other challenges and narrates the reasons behind the court case with shipping lines. Excerpts:

What do you take home from this enlightenment seminar on the place of ethics, integrity and the need for importers and freight forwarders to comply with Customs clearance procedures?

This ought to be a continuous process and the essence is to change the attitudes of people. However, to change a cherished habit of an individual takes a lot of sacrifice. Nigeria is 57 years but we have been clearing cargoes for the last two centuries. If somewhere between the 1980’s and 1990’s the integrity of people somersaulted, we have to ensure that we return to the old religion of doing things the right way.

Looking at the maritime sector which seems to be a reflection of the Nigerian society that is engulfed in corruption, dearth of ethics and integrity, what solutions would you proffer?

The situation in the port cannot totally be likened to the nation as a whole. However, you would agree with me that the port system brings all kinds of people with varying backgrounds to do one job which is to get goods out of the ports, either as licensed Customs agents, unlicensed individuals and other stakeholders at the ports. The system creates job opportunities for various individuals. So, they come together and some decide to cut corners, although a lot of them may not actually do this, the good ones would be persuaded to begin such malpractices when they realize that it would enable them make more money.

We have credible licensed companies and individuals. I don’t think if you have a credible Customs license you would want to engage in such illicit practices. Those who get involved in such illegal deals are those who have contracts or customers but don’t have the clearing licenses. They get credible agents to stamp for them so that they can clear their goods and they engage in fraudulent activities. However, the Customs only recognize the agent whose stamp was used when there are problems. We have a lot of such situations in the system and we asked the government to regulate such practices that is why we have the Council for the Regulation of Freight Forwarding in Nigeria (CRFFN). Only regulated freight forwarders with Customs license and CRFFN license should be allowed to clear goods. CRFFN has not done enough to warrant them to pick money called Practitioners Operating Fees (POF) from the pockets of Shippers. POF is somehow tied to the cargo and this is unacceptable. Any lesser organisation can effect registration of freight forwarders in Nigeria. It is not unique.

How does the place of ethics and integrity affect the shippers?

Without the cargo, all other stakeholders wouldn’t be there. There would be no need for ports, shipping lines, terminal operators, ships, etc. You find that the history of all these stakeholders can be traced back to the availability of cargoes. The freight forwarders also exist to deliver the goods to the owners because there is cargo. The cargo brings everybody together. Just as most stories start with the phrase ‘in the beginning’, the beginning of this story starts with the cargo which is provided by the shippers.

In the last two years, the volume of cargo depleted at the Nigerian ports as a result of what I call the somersault of some government policies. Ethics of normal trade was comprised geared towards short changing Importers. I recall that in 2012, I said that if the situation continued, in the next 10 years, our ports would be empty. Presently, over 75% of the nation’s cargo has been diverted to neighbouring ports. It seems like the government was looking into the future with one-eye with regards to port operations but every normal human should look at things with the two eyes. I don’t see how a man who is looking with one eye can claim to have seen everything when someone who uses two eyes cannot claim to have seen everything.Using one eye to look brought about the collapse of integrity and this is far reaching involving the high and mighty and the down trodden.

Those shippers who left had good reasons to. They moved their entire household and businesses to neighbouring countries and within five years they prospered. It means that there is something wrong with the Nigerian system. However, some of us remain here to re-introduce the ethics and integrity in order todevelop this country because we don’t have another country. It takes extra courage and patriotism for one to do business at the Nigerian ports. It is like a concentrated venue for suffering and this is not supposed to be so. It was part of our struggle for better procedures, moderate charges and efficiency that gave birth to the term ‘ease of doing business’ at the ports.

What are some of these policies that have been responsible for downturn of shipping activities in the nation’s ports as shippers jettison the country?

Some of them are forex (foreign exchange) issues. For instance, you raise a Form M, and at the point of entering the Form M, the exchange rate was about N110 to a dollar but by the time you get your goods to make payment the dollar has risen to N300 but the normal thing is for you to clear your goods at N110 because that is what you entered at initially point of the Form M and approved by the Central Bank of Nigeriabut the Customs would demand that you pay your duty at the current exchange rate. So, you have to look for extra money to pay Customs duty which wasn’t part of your budget. Ethics, where is it here?

Customs make more money on duty while the shippers are crying because they have overspent. Again, this adds to the pressure to smuggle and engage in corrupt practices. The customs duty in Nigeria is too high and I don’t know why the government isn’t doing anything to address the situation. The Senate Committee on the Reforms on Customs and Excise should have corrected this. The Senate is the last hope of Nigerians. The government makes money daily from this duty as well as other avenues at the ports, so why are they in a hurry? Why are they taking away the business of importers? They are impoverishing the shippers when they jack up the duties arbitrarily by outrageous percentages, sometimes by 100%. During the time of Gen. Ibrahim Babangida, he started increasing the HS code from 5% to 10% and ten years later we were paying 20%. There were lots of cargoes during the period so we were willing to pay.

In the past shipping provided an avenue for people who wanted to start life as a shipper. All you need is probably $2000 to $5000, depending on what you want to import/export and you begin to import and sell.We had in place Government Agencies in the Ports to solve problems and facilitate trade. The synergy was almost perfect. You start by importing and selling and from the profits you import more until you grow to the level where you could import a whole container. Industries couldn’t function much due to lack of electricity. Import restrictions have been in our platform for the past 35 years to protect our Manufacturing Sector These opportunities have been destroyed by two factors; people who don’t have knowledge of port operations placed in sensitive administrative positions as head of government agencies. The other issue is that the government is insensitive to the issues affecting shippers; otherwise they would have reduced the customs duties to the barest minimum. This would even attract the smugglers to pay rather than taking the risk ofpassing through unapproved routes at fantastic speed. It is risky to even be a smuggler but Nigerians are taking all the risks.

What is the development on the issue of Shipping Lines Agency Charges (SLAC), which the Court of Appeal has directed the shipping lines to refund?

When Nigerian Shippers’ Council (NSC) was summoned to court, Shippers Association went to court with them primarily because the Council was set up by government to protect Shippers. The Federal High Courtand the Appeal Court declared SLAC as an illegal charge. Some shippers have started jostling to know when the money which has been calculated to amount to about 6-7 billion naira would be disbursed. What we did by joining the Shippers’ Council was to show that government agencies cannot just be bullied like that.

As private entrepreneurs we took up the fight because we pay the charges. However, the emphasis shouldn’t only be on the money but also on the journey so far or what really brought them to court. Shippers’ Council was set up to protect the shippers so we wouldn’t wait for the shipping lines to kill the Council before we show our solidarity to them. On the other hand, they tried to remove our name as Shippers Association from the case but the Court still ordered them to return the monies (SLAC). Now, they have run to the Supreme Court and we have followed them. If we had a trustworthy society, the Ministry under which all parties operate should have called to order because these shipping lines are violating an international law. It is also wrong to say that shippers shouldn’t have joined the case because we pay the charges. The Ministry of Transport should have done more to assist the Council because this battle isn’t just for the Council; it bothers on ethics and integrity on the constant inflow of revenue for the country.

Mr. Hassan Bello’s has been reappointed as the Executive Secretary of the Nigerian Shippers’ Council. How would you appraise his first stint and what are the areas he can improve?

Hassan Bello is a gentleman to the core. Although, the rules of engagement that the government gave to the Council at that time was to control prices by discussing shipping companies charges and transport charges, Hassan Bello has performed excellently. When you give someone the responsibility to negotiate, isn’t that regulation? I don’t understand why people feel that the Council doesn’t have the powers to regulate.

Hassan Bello isn’t the kind of radical fellow that would roll-up his sleeves to go to the port and say “why did you do that?” I recall that when Mrs. Dora Akunyili was the Director General of the National Agency for Food, Drug Administration and Control (NAFDAC), she was everywhere in order to control substandard drugs. She did so well that the government decided to give NAFDAC the powers to prosecute people.

The Nigerian port system cannot be corrected completely by Hassan Bello’s gentleman approach because people that operate in this sector are like rogues and they are the biggest cowards because when the chips are down they would be the first to say “I wasn’t part of it”.

It got to a stage when some government agencies didn’t want to see Hassan Bello but he would always to go to them and say “let’s talk”. He is very good at collective bargaining. Every violent act ends with dialogue. That is an admirable quality about him.

How close is Nigeria to attaining the much anticipated modern electronic port system?

Do we have the capacity to do that in Nigeria at the moment? Such system would mean fewer jobs as agents or freight forwarders but as a shipper it would mean fewer hassles. I would love to have my goods arrive at my warehouse while I relax but is this achievable at such a time in Nigeria? In my opinion Nigeria isn’t ripe for such development. Freight forwarders are going to lose their jobs in the next few years and they are not aware of it. With the ongoing reforms at CRFFN a lot of freight forwarders would lose their jobs when electronic port system is in place, perhaps, with new external operators and an economic port regulator with scanning visions on activities of all stakeholders abiding with the ethics and integrity to bring reduction of cost and ease of doing business in Nigeria.


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