Uche Usim, Abuja
Comptroller-General of the Nigeria Customs Service, Hameed Ali has been in the news since he initiated the closure of the land borders in August, to allow for thorough military and paramilitary drills aimed at fumigating the land frontiers to ward off diehard smugglers.
Ali said there was no sense in soaring the economic saboteurs who make fortunes by turning the country into a dumping ground for goods that can be produced locally.
However, battling sophisticated smuggling rings is not the only headache of Ali.
He is currently fighting to secure National Assembly’s buy-in for the urgent review of the Customs and Excise Management (CEMA) Act, which he describes as obsolete and retrogressive because it does no longer capture current realities.
Ali, while speaking with journalists in Abuja, insists the review of CEMA Act will open a fresh window of opportunities for the Service to grow exponentially.
On the ongoing land border drill, Ali noted that 317 smugglers have been arrested, while 21,071 bags of 50kg parboiled rice have been impounded.
Other items seized are; 190 vehicles, 891 drums of petrol, 2,665 Jerry cans of vegetable oil, 66,000 litre tanker of vegetable oil, 133 motorcycles, 131 bags of NPK fertilizers used for making explosives, among others.
He foreclosed any plans to reopen the borders anytime soon, adding that diplomatic engagements were ongoing with neighbouring countries on how to comply with established trade protocols to end the exercise.
He speaks more in this interview.
Suspension of fuel supply to border filling stations
We discovered that some fuel stations situated around the borders were diverting petrol to other countries and selling at exorbitant prices.
They get approval to discharge the product legitimately in the day but at night, siphon it out. This has been going on for a long time.
Now, we have restricted supply to 20km before the border. Let’s monitor the outflow. We want to know where the outflow is coming from.
Petrol is sold at N395/litre in their domain but they buy from Nigeria at less than N145/litre.
With this border closure, it has jumped to N600/litre. Meaning, we are the one subsidising petrol for neighbouring countries. So, marketers are making a kill. It’s attractive to take petrol out and sell there.
CEMA Act review
The Customs and Excise Management Act (CEMA) long overdue for a review. So, we are looking at those laws and do a holistic review. It’s a 1958 law. Many things that were not captured as criminality acts are now criminals acts.
Some laws are totally outdated and no longer reflect current realities. Some penalties of N600 as at that time was a lot but today, they mean nothing. N600 fine for an infraction today means nothing. So, punishment should be commensurate with current realities. That’s why we seek the CEMA Act.
2020 budget proposal
The revenue target for 2020 is based on the Medium-Term Expenditure Framework (MTEF) approved by the National Assembly and the revenue target set for the NCS is N1.679 trillion. It consists of N1.5 trillion for the federation and N178.62 billion for non-federation.
When compared to the 2019 revenue target, the 2020 figure is higher by N741.43 billion (44.17%).
The 2020 budget leverages on Information Communication Technology (ICT) tools as a major driver in achieving the target, which he said was totally captured by the e-Customs project in line with the dictates of the World Customs Organization (WCO).
The Service’s strategy is anchored on computerization and other ICT tools for effective and efficient service delivery that guarantees robust revenue inflows to government coffers.
More so, the government should be advised to limit waivers and exemptions that would be granted within the fiscal year to priority sectors of the economy.
e-Customs
The e-Customs project is a modernized electronic business system which enables the NCS to perform its statutory duty and security functions by efficient interconnection of all relevant trade ecosystem partners, agencies, regulators for effective trade facilitation and revenue generation. It has already been approved by President Muhammadu Buhari. We will roll it out soon.
Anyone or organization that wants to succeed in this fast-paced 21st century must deeply embrace ICT.
In the next one year or one and a half years, if you don’t have deep ICT knowledge, you would lose relevance in NCS.
Your performance record will be online and your bosses will assess you online. You will do all your operations online. The paper works will go. The processes of declaration and revenue collection will be fully automated using ICT. That’s where we are headed.
Secondly, with the introduction of biometric access modification with a definite drive towards strengthening the existing risk management structure, this development will reduce or eradicate the abuse and manipulation of system and thus increase revenue generation. The e-Customs is envisaged to automate excise and export platform which is aimed at enhancing revenue generation drive.
The use of e-Customs project for border surveillance through artificial intelligence instrument monitoring the border areas will effectively reduce smuggling and invariably enhance revenue collection.
The planned installation of scanners under the e-Customs project at various key Customs formations is to further fast-track the clearing of goods and avoid port congestion.
The use of e-Customs project for border surveillance through artificial intelligence instrument in monitoring the border areas will effectively reduce smuggling and invariably enhance revenue collection.
The use of e-commerce to address informal trade and electronic transactions will boost the revenue through electronic trade.
Proposed slash in vehicle tariff
We have forwarded a proposal for downward review of vehicle tariff to our supervising Ministry, which is the Finance Ministry for consideration so that Customs duty on imported vehicles remain 35%, while the levy be reduced from the current 35% to 5 or 10%. This position, if approved, will encourage compliance and boost revenue because the 70% duty and levy is encouraging smuggling of vehicles.
Challenges
We could have done more in revenue generation but there are factors that made it difficult. We have government policies like 43 items that were banned from forex access by the CBN. It narrowed down imports due to forex restrictions. It reduced import and duties we collected. Secondly, most scanners are not working and it necessitated 100% physical examination of cargo. It hampered electronic examination of containers, which is faster and ensures quicker vessel turnaround.
These scanners were procured in 1997. They came under a maintenance contract sort of arrangement but we introduced politics into it. We removed those foreigners hitherto handling them and put indigenous hands and they have died. We should not buy those type of scanner avain. They keep requiring upgrade of software and systems and we can’t keep up.
So, going forward, we have gone into PPP for the private sector to handle and maintain them. With that, Customs can focus on its core operations. This arrangement is encapsulated in the planned e-Customs project.
Again, only two commodities are excisable, which are cigarettes and alcohol drinks. We expect the expansion of excisable items to include carbonated drinks and this initiative will enhance excise revenue.
Another issue is the porous borders we have. Nigeria has 4,070 square kilometers of land border. Customs personnel cannot be everywhere at the same time. These are where smugglers use to ply their illegitimate trade. But the e-Customs will address this through use of drones to monitor and police the borders.
Again, the expected automation of all transit procedures from mother ports to bonded terminals or from command to command will drastically reduce several transit leakages occasioned by diversion of cargo, thereby safeguarding revenue, health and security of the nation. The Service will also leverage on capacity building for effective and efficient service delivery.
There will also be an intensive and deliberate anti-smuggling campaign beyond common boundary in order to curb trade irregularities and economic sabotage. There will be more stakeholder collaborations in various economic units. This will help bridge gaps and build confidence among players in the trade value chain and thus encourage meaningful level of compliance.
We will ensure every kobo we collect goes to the appropriate accounts. I have a screen that tells me what we collect. We cannot dip our hand in our coffers and spend. We have to follow due process to get funds to spend.
The concession given to the public by the Service, which enables the payment of Customs duty with penalty on all illegally imported vehicles will serve as a motivator. This will boost revenue collection.
The Service is advocating for the reintroduction of import taxes on petroleum products. The petroleum tax regime of 2004 before its suspension imposed N1.50k per litre of petroleum products. It is the considered opinion of the Service that this regime be reintroduced in line with international best practices as it’s currently operational in over 36 countries at an average of $2.24 per gallon”
Like I have said in many fora, there is the urgent need to review the CEMA Act because what we have now is obsolete.
Why borders were closed
The temporary closure of the nation’s borders is an ongoing border drill initiated by Customs in collaboration with other security agencies. It is intended to protect the nation’s economy from dumping, increase foreign direct investment in Nigeria, enhance imports through seaports and airports, discourage illicit activities along the trade chain and enforce and promote collaboration and compliance with neighbouring countries on international trade protocols.
We hope that by the time we get to the end of this exercise, we would have agreed with our neighbours on the type of goods that should enter and exit our country.
For now, all goods, whether illicit or licit, are banned from going out and coming into Nigeria. Let me add that for the avoidance of doubt that we included all goods because all goods can equally come through our seaports.
For that reason, we have deemed it necessary for now that importers of such goods should go through our controlled borders where we have scanners to verify the kind of goods and how healthy they are to our people. Despite the rights for movement of persons as contained in the enabling ECOWAS protocols, there must be the primacy of security over such rights. When it comes to security, all laws take back a seat.
We want to protect our nation, we want to make sure that our people are protected. You must be alive and well for you to begin to ask for your rights. Go and the people in Maiduguri when Boko Haram was harassing their lives, the only question was survival, there was no question of rights. This time Nigeria must survive first then before we begin to ask for our rights.
Recruitment
We have 15,992 personnel and plan for 3,200 additional intake. We got the approval for the fresh recruitment we’re carrying out.
We are also at the last stage. It’s a thorough process and when we are done, every local government area in Nigeria will have a representation.
2020 budget expenditure
The Service proposed a budget expenditure of N238.15 billion for the 2020 fiscal year which will be sourced from various quarters.
There is 7% cost of collection is put at N112.42 billion; the 2% VAT share of NCS is expected to be N7.5 billion, 60% CISS is estimated to be N42.41 billion, expected share of 2019 target surplus of N9.4 billion, intervention of 2018 received in 2019 will be N17 billion and committed funds for ongoing capital projects will be N49.42 billion. These total N238.15 billion.
As regards our expenditure performance from January to October 2019, the Service has approved and expenditure budget of N145.48 billion. Out this figure, N102.58 billion (70.51%) was the actual receipt of inflows for the period. An estimate of N32.85 billion is expected as inflow to the Service for November and December 2019 and thus brings the total receipt to N135.43 billion.
The receipts were utilized thus; personnel cost for January to October was N63.4 billion, while overhead cost was N6.14 billion. The capital cost from June to October is N3.03 billion, totalling N72.57 billion as total expenditure. The capital and recurrent expenditure for November and December 2019 is N20.91 billion.