Federal Republic of Nigeria,
Aso Rock, Federal Capital Territory,
Re: Agitation for the concession of the e-customs modernization – An appeal to restore and preserve national interests.
First, it is important to reiterate that, the Destination Inspection of cargoes otherwise known as “Bill at Sight” in the Customs nomenclature remains the traditional Customs work, which involves effective administration and modernization seals in all facets of customs operations, spanning classification, valuation, manifest processing, examination, documentary clearance and release of goods.
Secondly, past attempts to circumvent these traditions resulted in short-changing the customs of their core functions or traditional roles, at the long run results to a total defeat to the government’s original intents, mostly of exposing the economy to private sectors oligopoly and exploitations, depleting our foreign reserves.
For instance, the introduction of Pre-shipment Inspection – PIA SCHEME in 1979, robbed the customs much of its professional abilities, as the responsibility of classification and valuation of imports were transferred to the Inspection Agents.
Under this scheme, the customs responsibility was merely to collect duty assisted by the Inspection Agents whom were increasingly getting more money as enriched by the government, while the customs service gets poorer.
With a focused institutional reform, from 2004 upwards, the Nigeria Customs Services has under gone high level training and maximized revenue generation corresponding to its sufficient funding in meeting its capacity building and modernization objectives and premised on efficiency.
The ever increasing yearly revenue generation is an attestation to the fact that, the service is making giant strides in attaining efficiency, mostly as it relates to the service’s specialized areas of operational obligations ranging from valuation, tariff, classifications, intelligence, cargo inspections, preventive, etc.
It amounts to subtle insult on the government intelligence and a total embarrassment to its citizens when some unpatriotic elements collude with some proxy, non-capacity foreign firms to propound unrealistic data and concepts, recruits the services of portfolio-economic jobbers and stage manage a process to narrow an initial ideal with a broader view, merely to protect their particular business interests.
Mr. President, you cum your administration represents integrity of purpose and a wind of positive change in the governance and survival of our dear country Nigeria, as such Nigerians are looking up and as well calling on you to stand firm against too much pressure from individuals or entities pressing their own selfish interests, priding themselves as foreign investors, while cleaving for a space to add mostly unrealizable impetus only in the economic fortunes of the nation, especially on the brownfield portfolio development, but highly uninterested in the greenfield portfolio developments.
As reference above, the present agitations by a clique of retired government officials and their so-called foreign collaborators (priding themselves as investors), angling for a concessionary grant or a contract award to evolve e-customs modernization is nothing but a profound decoy or fluke.
Suffice to state that, like their erstwhile professional colleagues had badly performed in the past, they also lack the capacity to deliver goals, except to exploit the economy further in their own crystallize manipulations, labeled as “inspection services” in the manner of their gone colleague.
It has been the stock in trade of such so called firms and their collaborators to push their ways through, by hiring political and professional jobbers to do their biddings, launders their image, curry supports in an unwritten agreement with enormous financial undercurrent (inducements) aimed to propagate their selfish interests and ulterior motives, which have never added any meaningful value to the nations and its economic value chain, other than exploiting it.
Mr. President, do permit us to remind and be guided by the “Report of the Presidential Committee on the Restructuring of the Nigeria Customs Services -2004”, to offer an insight to the subject matter:
Pre-Shipment Inspection Scheme of 1979
Without dwelling more on history, it is pungent to point out that the situation that prevailed prior to 1979 when the then government resolved to appoint a Pre-Shipment Inspection Agent -PIA, prevailed post their appointment.
To buttress this assertion, while the scheme lasted, several operational flaws became obvious, the government in its wisdom re-modified the scheme via the Pre shipment Inspection Act of 1996 (Decree 11 of 1996).
There are noticeable glaring inadequacies in the Pre-shipment Inspection Act of 1996, and the legal agreement between the Pre-shipment Inspection Agents (PIA’s) and the Federal Ministry of Finance, especially in the areas of responsibilities and penalties.
At this point, the PIA known as the “Professional Imports Duty Administrators- PIDA and its issuance of Imports Duty Reports – IDR” , quickly comes to the mind.
The major limitation often facing the PIAs was their inability to oversee stuffing and apply seal to containers at the time of inspection. This limitation was partly responsible for the practices of concealment and under declaration.
Another limitation of the PIAs was their inability to enter into the port of shipment in some countries within their zones of coverage, being private companies not recognized by the Port Authorities in those countries, thereby limiting inspections to the exporter or shipping agents warehouses.
The issuance of the Clean Report of Inspections -CRis by the PIAs was sometimes characterized by unnecessary delays (14 days or more).
The level of publicity of the Pre-Shipment Inspection Scheme was very low and inadequate.
The Nigeria Customs Services has been ‘neglected’, whereas the PIAs are paid between USD$70 million to USD$75million annually (from 1979 to 1999; @ $75 /20years = USD1.5billion), while the Nigeria Customs Service gets a partly allocation of less than N1 billion.
With the PIAs inefficiencies and obvious limitations, the federal government bid to achieve foreign exchange management coupled with the desire to control dumping, ensure conformity of imports with purchase orders, plug revenue leakages, etc. was defeated as the prevalence situations in the customs ports prior to 1979 reappeared in greater dimension.
Wherefore, the federal government in March 1999 officially stopped the Pre-Shipment Inspection Scheme and government reintroduced Destination Inspection Scheme, and again by September 1999 reverted to Pre-Shipment Inspection, giving reasons that the Customs was not prepared to tackle the problem that led to the introduction of the PSI in 1979.
By the year 2004, the federal government took to institutional reforms, hence, its plans to return to Destination Inspection Scheme. Two lines of opinions trailed the revert to Destination Inspection Scheme; first opinion emphatically posited that contracting the DI Scheme to foreign companies (agents) was a further drain of the nation’s resources, the other opinion merely offered that the customs was not in position to successfully manage the scheme due to perceived incompetence, corrupt tendencies and lack of relevant technical skills necessary for modern customs operations. Afterwards, the federal government adopted the Automated System of Customs Data -ASYCUDA.
Pursuance to ensuring measures to plug revenue leakages and capital flight associated with Destination Inspection, the federal government adopted the migration from ASYCUDA 2.7 Site to ASUCUDA ++
The UNCTAD was contracted to undertake the ASYCUDA migration project at the cost of: (a). UNCTAD Components @ USD$2,950,000:00 and the Non UNCTAD Components @USD$66,900:00.
X – Ray Scanners
The federal government entered into agreement with Messrs. COTECNA Inspection of South Africa to provide installation and operation of X-ray Scanners in 14 Sites to interface with the ASYCUDA 3.0 on the basis of Build, Own, Operate &Transfer -BOOT.
Amongst other terms/conditions contained in the COTECNA & federal government contract agreement, is that, “the importers would pay 1% FOB value of their imports for the scanning services out of which COTECNA would be paid 50% in each import scanned”,
It was discovered that, this agreement was heavily skewed against Nigeria and its national interests because it dispenses the services of PSI, while the COTECNA is wholly responsible for Nigeria imports processing.
The COTECNA was comfortably collecting 1% FOB value on all imports, including bulk cargoes (rods, rice, flour, etc.), even where it is obvious that scanners cannot scan bulk cargoes. This practice tantamount to collecting fees for services not rendered.
Here again, in this foregoing arrangement, professionalism continued to eluded the customs, since the COTECNA continued to assess, classify and value imports thereby making a return to Destination Inspection a mockery.
Mr. President, the story of concessioning, out-sourcing or contracting the traditional customs works under whatever guise as may be packaged by private interests, is endless. It has never achieved sets goals other than defeatism of national objectives.
Mr. President, before proceeding to inform you on the present milestones covered within the years of diligence returning of customs work to the Nigeria Customs, it is worthy to reinstate the cost implication of developing the Information Communication Technology – ICT by the private interests as follows:
Being cost of the Webb Fontaine and Destination Inspection contracts from 2006 -2013:
a). Cost of contract for the issuance of Risk Assessment Report – RAR and ICT Infrastructure provisions = USD$312,000,000.00 per year (multiply that by 8 years = USD$2,496,000,000.00).
b). Total cost implication, in Naira equivalent @ N165/$1 prevailed exchange rate = N411,840,000,000.00.
c). Cost paid to the Inspection Agents from 2004 to 2012 as 1% CISS (scanning fees) = N253, 921,794,540.42.
An Update on the Benefits of Customs Modernization under the Destination Scheme tagged the Pre Arrival Assessment Report – PAAR Regime:
The Nigeria Customs Services developed its own ICT Infrastructure to drive its home tailored Destination Inspection Scheme, at the following Cost implications:
a). Cost for the NCS PAAR and Single Window Schemes ( Nigeria Trade Hub) = N100,861,992.00.
b). Cost of PAAR additional enhancement support =N62, 523,200.00.
c). Cost of NCS Data and Disaster Recovery Centre =N489, 073,696.32.
d). Total Cost implication = N652, 458,888.32 equivalent to dollar value USD$ 3.954, 296.30.
With the available statistics in terms of performances on total volume of cargoes handled, revenue generated, workforce employed, anti-smuggling activities records so far under the PAAR Regime, shows that, the customs has outperformed the totality of the years of the Private Inspections regimes hijacked core customs functions (as ceded by the past government).
For instance, the customs by taking back its traditional core functions, in relation to handling classification, valuation, examination under the PAAR Regime had saved the federal government the above amounts that were earlier exploited and collected by the Inspection Agents as 1% CISS fees (scanning fees) and yearly contract service fee.
Furthermore, total revenue generated by the customs under the PAAR Regime from 2014 to 2019, runs into tens of Trillions
For emphasis sake, the total 1% CISS (or scanning fee) collected and saved for the government by the Nigeria Customs Service from 2013 to September 2019 runs thus:
i). Year 2013 = N43, 536,963, 183.43.
II). Year 2014 = N50, 107,770,808.89.
iii). Year 2015 = N48, 600,448,691.00.
iv). Year 2016 = N47, 144,508,794.43.
v). Year 2017 = N57, 255,198,270.65.
vi). Year 2018 = N68, 912,159,092.27.
vii). Year 2019 (Jan. to Sept.) = N53, 112,507,269.08.
Total CISS collection from 2013 to Sept. 2019 = N368, 669,556,109.75 (Three Hundred Sixty Eight Billion, Six Hundred and Sixty Nine Million, Five Hundred and Fifty Six Thousands, One Hundred and Nine Naira Seventy Five Kobo, Only).
Your Excellency, the essence of reporting this cost implications is to buttress the fact that, contracting or outsourcing customs work means a deliberate drain of our national resources, whereas encouraging the customs to discharge its traditional works means national prosperity, pride and well-being of the nation cum the citizenry.
For the umpteenth time, permit me to reinstate that, the incessant recourse by the past administrations to shortchanging the customs work via concession or outsourcing, owing to the pressure from some unpatriotic elements and their foreign collaborators, to say the least, retards sustainable national economic development and stampedes the customs professionalism and modernization drives.
The customs like any other human elements does better when appreciated, commended and encouraged but feels disenchanted and morally dampened when shortchanged and treated as a never do well.
At this stage of customs modernization process, the true efforts that it requires now are to support and encourage the customs in its drive and determination to attain and instill professional integrity (self-discipline), especially amongst the younger workforce.
The endless gang up, increasing appetites to access and amass easy wealth through the government by foreign firms
Your Excellency, we make bold to state that, most of the so-called foreign firms parading themselves as foreign investors are not actually what they pride themselves to be, rather they are merely an “army of occupations” (to sound modest cosmetic corporate packaging instead of referring them as “revenue parasites”), seeking an opportunity to exploit and render the national economy unproductive and render its currency valueless, than they met it.
In the customs modernization quest since 1979 to 2013, their incursion into the economic activities via Finance Ministry has caused the nation more economic harm than improving it; disadvantages overwhelmed its advantages at the long run; being paid for services rendered without cost function nor corresponding value/benefits attached to it.
A Candid Suggestion
Your Excellency, please permit us to offer the following candid suggestions without prejudice;
a). The International Cargo Tracking Note -ICTN when it was repackaged and reintroduced by the Nigeria Shippers Council in 2014, before it was suddenly stopped by the government, inculcated the sense of due compliance on the Shippers/Shipping Lines, especially as it relates honest declaration of cargoes.
- Your Excellency, placing the Comprehensive Inspection Supervision Scheme – CISS (with no cost functions nor benefits before the Shippers) side by side with the International Cargo Tracking Note -ICTN (with enormous cost functions, beneficial to both the government and the entire Customs port value supply chain), the Nigeria Shippers will preferably, with their two hands widely open and gladly welcome the later, owing to its cost contents or functions factor.
- We hereby call on Your Excellency, Mr. President, to officially, cancel the continuous collection of 1% of FOB Value -tagged as Comprehensive Inspection Supervision Scheme -CISS, a cost functionless fee, still imposed on the shippers under the Nigeria Customs Services administration of the PAAR Regime.
- Note that the Nigeria Customs Services presently manages its ICT & Scanning Operations as reintegrated and obtains in its constituted functions (Customs and Excise Management Act -CEMA ’54), effectively.
Presently, the approval of 7% of annual total collection by the past governments forms basis for its yearly budgetary allocations..
- Therefore, other than continuing this practice of “1% imposition fee” without cost function on the shippers, which wets grounds and has become an attraction to the “revenue parasites, disguising as investors”, hence, the several attempts in 2012 and 2017, to lay their hands on the 1% inspection fees collection, the present approach is now packaged and christened as the “e-Customs modernization concession”.
- Stakeholders are keenly watching the ongoing drama in its scenes, especially, the stagemanaging approaches to further curry government favor with intent to amass easy wealth, through serial deployment of business antics as adopted by some unpatriotic elements amongst the citizenry and their foreign collaborators.
Their antics are clear, ever willing to exploit the system by any means available at their disposal to lay their hands on the CISS collection contracts award. They can go as far as falsifying date to boast of bumper revenue generation far above the customs records in efforts to convince the authority.
Then deploy direct and indirect means to mounting pressure in all fronts, with a tradition of monetary inducements options, yet, all for their own business interests only and not really for the national interests.
- Your Excellency, the stakeholders, especially, the trading public will deem the cancellation or suspension of the 1% CISS fee imposition on imports as a positive cogent imports relief from a proactive leadership under your watch, and in line with your policy thrusts: “Next Level”- of a healthy change..
Presently, scanners installed by the erstwhile Inspection Agents (Service Providers) are now moribund (nonfunctional). This is not too good for the image of the nation; it limits the attainment of port operational efficiency and performance. It also portends danger to the security of the nation.
Wherefore, to add impetus in this regards, since the Nigeria Customs initial plans to acquire and install its own customized robust scanners seems to be jettisoned, the Service, can indeed outsource the installation of scanners to the terminal operators via a duly supervised M.O.U.
Under such M.O.U arrangements, where the scanners will be provided by the terminal operators, the Nigeria Customs Service shall as it is a tradition, provide the image analysts in addition to manning the scanners.
On this premise, the Nigeria Customs Service shall in partnership with the respective terminal operator reintroduce a “1% Scanners Fees” (to be shared on an agreed terms), which replaces the 1% CISS, as obtains with the earlier FMF Contract with the PIAs.
Your Excellency, in view of these considerations, on behalf of the larger number, we implore you to please use your good office to stop the growing gang up to concession the e-Customs Modernization by some unpatriotic elements fronted by their foreign collaborators.
The Nigeria Customs Service has come of age, and shown cause that it can administer itself if allowed to do so and supervised with a right attitudes.
All that is required in this regards is to bond over (via a clearly spelt out performance indicator undertaken) and then appoint a career customs officer to pilot the affairs of the Service. As may be spelt out in the performance undertaken, such career officer must undertake to instill and boost professional discipline, reinvigorate the Services with highly spirited and patriotic workforce.
Please treat with utmost sense of patriotism and as a passionate professionally reviewed advice without prejudice.
Thanks for your attention.
Long live Mr. President,
Long live Federal Republic of Nigeria.
Fwdr. Dr. Eugene Nweke.
HOD, Sea Empowerment and Research Centre LTD GT.
Photo: President Muhammadu Buhari of Nigeria
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