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Abdullahi Diko

The reintroduction of the controversial benchmark for all imported consignments leads to 200 percent in the cost of clearing goods at the ports but the Nigerian Customs Service insists it was following the international standard set by the World Customs Organisation

By Pita Ochai

The re-introduction of the controversial benchmark for all imported consignments has allegedly   led to the hike in the cost of clearing goods at the Nigerian ports. The National Secretary of the National Council of Managing Directors of Licensed Customs Agents (NCMDLCA) Uchu Block said the re-introduction of the policy has impacted negatively on customs licenced agents as it has pushed up the cost of clearing goods from the ports by over 200 percent.

He noted that items like grinded corn for the production of noodles which costs about N5 million to clear up till last year, now costs about N17 million for the same item and the same quantity. According to him, the situation is affecting clearing process at the ports.

Chukwuemeka Egwuonu, an importer, also blamed the Federal Government’s new import duty policy for being the major cause of the rising cost of goods in the country. He said that in addition to the increase in import charges, the new policy has created delays in clearing of goods at the ports. “The current import duty policy in the country affects our business in terms of prices. Before now, we used about N1.3 million to clear a container. But now, there is an addition of over N600,000 which has raised the cost of clearing a container to about N1.9 million. So, what we do is to split the increased charges on the goods and the masses bear the burden,” he said.

Egwuonu said that it has become more difficult to clear goods at the ports because the Nigerian Customs Service (NCS) has taken over the duties of the agencies that were operating in the ports. “Perhaps, because there was no smooth transition, the agencies that were handling the process well did not want the customs to know the process. So, these lapses are causing a lot of delays in the clearing processes. We are suffering from these lapses because our goods easily enter demurrage and in that case there is no bargaining, we must pay it,” he said.

He advised the government to explore all channels before coming out with policies that would affect the masses. “My advice to the government is that whenever they want to embark on any major policy decision that affects the masses, there should be a kind of gradual process,” he said.

But the NCS claimed that it was a new scheme introduced to enable the Service meet its revenue target. Chris Osunkwo, Public Relations Officer of Tin-can Island Command of NCS, debunked the re-introduction of the contentious benchmark. According to him, the NCS was only carrying out government’s directive on import charges. The current duty rate, he said, is based on the international standard set by the World Customs Organisation (WCO). “There is no iota of truth there but there is a procedure for determining value for any imported item. Nobody gets up and determines the value of a product. There are laid down procedures and standards for determining it. If what they call benchmark is the application of the standards, so be it because valuation matter is not a Nigeria Customs matter alone. It is a universal thing which was introduced by the WCO. As such, we (Customs) must play by the rules of the game. So, these are standards set by the WCO because we are a member,” he said.

Osunkwo explained that the new scheme has enabled NCS to have uniform charges for similar goods across the ports in Nigeria. “There is uniformity because we receive our directive from government based on its policy and it is this policy that determines how much the Service will collect as duty from any import into the country. Take for example duty on imported vehicles, there is a government policy that says collect 35 percent more on all imported vehicles and there is a government circular from the Ministry of Finance to that effect and that is what Customs is implementing. We cannot act in isolation. We cannot just wake up and jack up the value on imports. Some people criticise out of ignorance,” he said.

TheEconomy also learnt that the Federal Government may be getting more than it bargained for with its new automotive policy as the volume of vehicles imported into the country has declined by 50 percent. The NCS commenced implementation of the 35 percent duty on imported vehicles in May from its original 10 percent. The hasty implementation of the new tariff, which was earlier scheduled to commence July 1, 2014, resulted in protests by clearing agents operating at the Tin Can Island Port and PTML commands.

Investigations revealed that as a result of the new tariff, importers and dealers of vehicles are not placing orders for shipment of fairly used vehicles popularly known as Tokunbo to Nigeria as expected. “We are already seeing the impact as a shipping line. Less than half the orders that should have been placed this month have been placed. Nigerians may not have noticed  this yet ,but in a few months, it will be visible  as importers are no longer willing to ship vehicles to Nigeria because of the high rate of import duty,” an agent to a shipping liner  told TheEconomy on condition of anonymity.

Chukwudi Ike, a freight forwarder and Director General of the Association of Nigerian Licensed Customs Agents (ANLCA) said the Federal Government was being deceived  by the so-called local assemblers of new vehicles. “The issue is that government has not been able to check that most of these so-called manufacturing companies bring in assembled cars alongside the CKDs using the same platform of CKD (completely knocked down) pricing. You still see new cars rolling out from the ports. I think that government is not being realistic,” Ike said.

Idowu Owoade, another freight forwarder, said the new auto policy will worsen the living condition of many Nigerians. He said that the timing of the new automotive policy implementation is wrong. According to him, it will take not less than five years to put in place the right framework for the local manufacturing of vehicles.

Owoade revealed that not only has the volume of imported vehicles declined drastically, the cost of clearing them have increased by as much as 50 percent. “A 1999 Toyota Camry cleared before with N200, 000 is now N300, 000. A 2004 Toyota Camry cleared recently with N400, 000 is now cleared with N600, 000. And for a brand new vehicle, that one is unaffordable,” he said.

Chairman of FCT Car Dealers Association, Auwal Rilwan, appealed to the government to suspend the new vehicle import tariff till local vehicle manufacturers begin full operations. He cautioned that implementing the new policy now will lead to shortage of affordable cars for low income earners and loss of job to many people. He said government should first put the necessary infrastructure in place for local manufacturers to produce enough cars to meet demand before discouraging importation.

He noted that before the new tariff policy, imported vehicles attracted 20 per cent duty and two per cent levy, but the new tariff had doubled the clearing cost of imported cars and it has impacted negatively on the country’s automobile market. He said that very soon, Nigerians will stop buying tokunbo vehicles due to their high prices. He urged government to wait for the investors that are coming to start producing affordable vehicles to meet local demands before limiting importation.

Umeh Emeka Umeh, a dealer at United Berger Motors Dealers Association, Mile 2, Lagos, explained that before government comes up with new policy, it ought to have alternative for the people. According to him, importers find it difficult to remain in business because government is not providing them credit facility to boost their business. “Before the Federal Government can come up with an increment in tariff or the supposedly outright ban on tokunbo vehicles, there should have been an alternative. If we have companies that assemble cars in the country, it will create competition in the market but they are not there yet,” he said.  He advised government to ensure there are functional assembling plants in the country before the implementation of the new automotive policy.  “Therefore, the increase in tariff or supposedly ban on tokunbo vehicles by the Federal Government is not healthy for the economy. If they are manufactured or assembled here, the price should be affordable,” he said.

However, in apparent reaction to the outcry over the hasty implementation of the new auto policy, the Federal Government has shifted the implementation date to January 1, 2015. With the new shift, the earlier announced date of July 1, 2014 has been jettisoned by the federal government.

TheEconomy learnt that the federal government was forced to shift ground because of the intense lobby within and outside the corridors of power on the need to shift the implementation date. I was gathered that in the past few weeks, lobbyists from freight forwarding associations, logistics organisations and importers have intensified the campaign against the implementation of the policy saying it was not good for the well being of the economy. The various lobbies were coordinated by a non-government organization (NGO) in the maritime sector of the economy, Maritime Advocacy and Action Group (MAAG). It was learnt that by the new development, vehicles imported into the country will continue to pay the 35 percent duty, instead of the additional 35 percent levy that would have been collected as from July 1, 2014. Government was said to have had a rethink on the policy’s implementation date after the recent automotive summit which took place in Lagos. The summit which was attended by different interest groups was organised by the National Automotive Council (NAC). The summit was meant to allay the fears of stakeholders on the new auto policy as the participants were asked to table the grievances and assess the successes recorded so far.

It was gathered that Engr B.E Obayi, the representative of the Standards Organisation of Nigeria (SON) representative who attended the meeting, had called the attention of those in attendance to the fact that, none of the assembly plants that have been promising to roll-out the Nigeria-assembled vehicles has approached the agency for standardization of their products. Obayi who also heads the Inspectorate and Compliance Department in SON insisted that any vehicle that comes out of the assembly plants must meet Nigerian standards. He told the gathering that SON has not approved any such vehicles that are currently being assembled in Nigeria.

It was confirmed that the decision to further extend the implementation date by another six months was informed by the fact that none of the assembly plants has actually rolled out vehicles in commercial quantity. In addition, there were issues bordering on standardization, as well as the stiff opposition from stakeholders.

Alhaji Alhassan Dantata, National Coordinator of MAAG, who confirmed the development praised President Goodluck Jonathan for “having a listening ear”. Dantata explained that even though MAAG is support of the auto policy, a proper and realistic roadmap needs to be designed for its proper implementation.  “While we are not opposed to the new policy, our position has always been that the infrastructures must be visible on a level playing field and that the automobile plants must not take advantage of it to the detriment of the average Nigerian. Already, there are fears that prices of imported used and new vehicles will skyrocket, but we are happy that the extension has been granted,” Dantata said.


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