How Government Can Block Revenue Leakages

HOW Government Can Block Revenue Leakages

Mr Charles Okonkwo is the Chief Executive Officer of Andoch Global Service Limited, as a freight forwarder of repute with over a decade of experience he offers analytical and systematic approach to what is expected in ports operation in relation to trade facilitation and revenue generation for the government .


Do you agree that there is a customs revenue leakage in clearing process?

Most time revenue leakage is the common slang of customs and when we talk about reforms the right thing to do is to putthe rightpeople in vital positions to do the right thing, so I find it difficult to believe there is revenue leakage because when we do the right thing there will be no leakages to block, that notwithstanding, a lot needs to be done because the system is less than perfect.

PAAR, as one of instruments of transparency in customs operations, has it been able to meet up to the expectations of all stakeholders?

The PAAR is wonderful, I will give it to them but the truth is that sometimes someone will sit down in Abuja and give your cargo a value of his choice and when you protest it takes you weeks to get a response and in this process we don’t know who to call. If you pick up the phone now and call Customs PAAR Customer Care Office in Abuja, with the intention to report and state your complaint to them that you have a particular document that was overvalued from their PAAR office there in Abuja, first is that it will be difficult to get someone to pick your call and when they eventually pick nobody has any information unlike before when you call the Inspection Agents you can expect to get a positive response.

I think anyone who is at that Call Centre should have a system with records of all the containers using the form M number with information updates on processesas relating to PAAR and valuation and in the next one or two days excess valuation should be reverted to facilitate trade and as a result increase revenue generated.But unfortunately if you call them because they are not informed they have nothing to tell you because they lack information and information is key.

Is the PAAR not a result of your declaration?

The process is; when your document comes to the bank from point of origin, that is, your Letter of Credit(LC)document, it comes to the head office of that bank and the bank summits this document to Customs online, Customs now generates PAAR and gives to you. Now the issue is that the bank will submit this document and customs will still raise the value telling the bank that the value is supposed to be higher, when the value in the document is exactly the amount the importer paid for his goods.

Now at that point when the importer gets his PAARhe writes a protest letter to the bank protesting that the value should be reverted because the transaction is bank financed and you attached certain documents like declaration of remittance form, from the bank and instead of getting the response in one day it runs into weeks when you call the customer care they have no authoritative information.

Assuring you have 50 containers and you protest on PAAR, the demurrage you incur in one day is so frustrating that importers just pay so that the goods can leave the ports. We were told that when PAAR is issued by customs Abuja, no customs officer can contest it once what you declared is what you are carrying but it is very in fortunate that when PAAR is issued from Abuja, every valuation department puts alert on it after examination. And before you know it, that cargo starts to accrue demurrage as a result of valuation. Thequestion now is, why will Customs place alerts on LC jobs that are evidently genuine?

How does physical examination and scanners help the customs to block revenue leakages as regards compliance?

Physical examination is okay but it is sad to note that after examination and the document corresponds with what is in the container, the customs officer can decide that he will not write the report for the release that day, you will have to wait till the next day and he does not come work until 9am or 10am the next morning, the superior the same thing, then he will first of all go and eat, wastes your time and you are not being attended to now as a clearing agent going for examination.?

Your intention is to clear cargo in two or three days but in reality in that period you have not even gotten the report to see your releasing officer and by the time you get to the releasing officer the next thing you hear is that there is no server, when you go for scanning, sometimes you hear the scanner is not working or there is no diesel in the scanner, it is funny.

Assuring you have 70 containers in your Bill of Laden with homogeneous items, meaning the same item, the challenge you face at the terminal is that, some agents will use their good discretion to suggest a homogenous form so that Customs will choose the most appropriate terminal to drop it but Customs will tell you it is not possible and for the terminal to position containers for Customs to examine the whole of them at once, they will tell you they cannot because they are maximizing space.

So the terminal operators cannot drop it the way you want it for them to finish it in one day, and not minding that the cargo is homogeneous, the Customs Officer will insist on seeing what is inside all the containers. The result is that trade is delayed, the importers pay demurrage and the terminal operators gets fatter. There are measures to ensure that importers stay in business because when they are in business they are happy to comply by doing things right.

In view of all this you have mentioned do you think that government still loses revenue

I don’t work in the government or customs, so I won’t know if they lose revenue but I am sure they know exactly where the leakages are because there is a significant drop in importation when compared to what it used to be, thiscan actually beviewed as loosing revenue, it they used to generate N2billionthis time last year and now they can barely make N400million, how do you relate that?

Just like the new Central Bank policies, now a lot of importers are not importing a lot of importers have actually stopped importation or they are moving it to other West African countries.if you look at our tariff, it is hell,it is not the same thing in Cotonou and Ghana, we have a common tariff system but the levies in our tariffare distressing, and when you see the one of Cotonou and Ghana you will be amazed.

All this are sources of revenue leakages because importers prefer to use the ports of neighboring countriessince their tariffsare fair and when we say we have a common tariff system, if it is 5% in Cotonou you get extra 30% as levy using our ports but in Cotonou there is no levy,that is why most importers now prefer Cotonou.

The officers deployed from Abuja, did you witness their activities in the ports?

The two star officers from Abuja are regarded as demigods in the terminals, it is good for them to come and gain experience to see firsthand what is happening at the ports but now they insist onconducting inspection before the releasing official can release, now I have close to 50 containers at the terminal, since Thursday, due to the public holidays they have a bulk of jobs, this is what I would have done in a few days now I am paying for demmurage, if  it was scanning I would have loaded my cargo over the weekend.

Cargos have to go through inspection before referring to the releasing officer, imagine the crowd, trade is delayed. I don’t know what they are trying to achieve but the point is, we can achieve this things,we can still achieve the same results without causing delay.

Thereare ACs and CACs in customs, there in the ports, are you saying they don’t know what they are doing? then remove them and bring the ones you have confidence in here, we can now know that it is still the same procedure, right now we have the people from the AC coming for examination, the tax force1, the AC squad, the same customs the same place all coming for examination. It makes this job look as if it not a professional job.

But I tell you it is a professional job, so instead of making it cumbersome, they can reducing some of these bottlenecks,because these officers from Abuja now feel superior to the officers on ground meanwhile they know nothing in the terminal,if they are here to investigate the accuracy of what is issued in PAAR and consequently block revenue leakages, then they are going about it the wrong way, customs should let us know what they are there for, and there are certain decision that should be put in public notice to avoid generating a negative impact.

How do you think government can block revenue leakages?

If I want to clear a car for example and I call to ask how much it cost to clear a particular model most of them don’t know how much. Why not put this information online, the importer will even see it and know exactly how much the car he is importing will cost him and make his budget accordingly, the agents will also see it, there is transparency, automations like the ASYCUDA Plus was designed to reduce human interface, if this automation is in use people will comply because everything is black and white but they have refused to reduce human interface.

Also they should create an enabling environment for people to do business and their revenue will equally sky rocket, they should reducebottlenecks,up till now people cannot open form M,the banks are not selling dollar,they are not opening LC for people that are importing finished productsbecause of the high exchange rate,since the LC rates and form M rates is quite different from the market price of the dollar, the CBN rate is lower compared to black market.The banks are also no longer allowed to fund LCsbecause of the new CBN policy.

All this has a direct effect on revenue.

Sir, do you belong to any associations and why

No, because the fact is that some of us preferred not to deals with those days when we started clearing, associations used to be like the watch dog of customs but now some of them use their positions to do their personal jobs that is why most of the issues we face now are there, they  don’t go to check what terminal operators charges, what shipping companies charges, what happens when things are not going right, they are just after doing their personal jobs, so to me the association is good but they need to restructure because formerly,if you have issues with delay by a customs officer and you call on the association they interfere immediately and the officer will sit up but now they have sold their birth right.

In your opinion who in the chain of logistics makes the most money?

Well, I will say it is the terminal operators, since they are the one in the middle, while the importers are getting slimmer the terminal operators are getting fatter.

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