By Innocent Orok
Even as Nigeria was ranked 130th position out of 190 global maritime nations in the Ease of Doing Business rating by the World Bank late last year, the Nigerian government apparently rolled out the drums in celebration, telling anyone who cared to listen that improvement has been recorded, three place up the ladder.
Notwithstanding the fact that our ports overall growth index has almost on the same spot at the bottom rung of global scale. Government and its agencies in the maritime industry will almost always devise their own colourful statistics benchmarked against informed ratio to attract unqualified applause and commendation.
Nigerian officials are constantly reactive to adverse international rating, and will always construct imaginary and fantastic growth curve, to counter critical ratings otherwise not in sync with our exaggerated posturing.
This is the long shadow of corruption that characterizes our maritime and ports system, which appears to continually fatten and warped on wrong prognosis, with no end in sight for real time growth blueprint, while our system struggle unceasingly at the precipice of rational gauge and minimum growth average.
Those whose business it is to know have asserted that the Nigerian government is the enabler of corruption in the ports system as well as other sectors of the economy. Where government officials are believed to account for over 70% of illegalities and corruption. The scenario has encouraged an atmosphere of endemic corruption, where the ports have been likened to a national cake attracting diverse characters who engages in the sharing.
As such, the port system has been reduced to a notorious gateway of varying economic criminalities through every conceivable window of trade, be it administration, operation, contract, importation or exportation.
It is an understatement that presently, there appear to be system collapse, with government agencies, officials, contractors, traders and port users all engaged in the helpless morass of decay and corruption.
For a long time already, the Nigerian port has been rated the most expensive in the world, despite the claim of been the sub regional hub in West and Central Africa.
Aside not developing at the pace other ports in the West and Central Africa and the world as a whole is developing, the various players, importers ,shipping companies, terminal operators, clearing agents and government agencies rather than seek means of reducing the cost of doing business are in fact devising more sophisticated ways to sustain the corruption enterprise, through defrauding government of its requisite taxes and levies and making the Nigeria port a mockery of economic gateway where general malpractices tend to become more sophisticated by the day.
The situation has produced a cartel of syndicates that specializes in falsification and outright doctoring of official documents, trade receipts, correspondences, statistics, evaluation reports, tenders, bonds, superannuation, contracts, requisitions, procurements and purchase, import, export and shipping documents etc. The trend and quantum is increasing by the day, even as experts have warned that the Nigerian port industry has become like the monster marauding at the Nigerian oil industry.
Bill of Lading, Packing List, Ship manifest, Pre Arrival Assessment Report (PAAR), Form ‘M’, Bank payment receipts, including statutory standard instruments such as the Standards Organisation of Nigeria Conformity Assessment Certificates, MANCAP and SONCAP. Nigeria Customs data capture and processes are not spared as the Customs documentation Harmonised System (HS Code) has been ruptured to synchronize with the fifth.
It is such that after the initial Customs system capture have been done, the HS code for the item and duty generated based of genuine valuation, the importer at the point of payment changes the HS code to read lesser amount. There is a general atmosphere of compromise where these elements operate unhindered.
Their offices and business premises are well known and they exist in all the ports, but mostly found in Apapa and Tin Can ports, where the business is believed to thrive more. The kingpins amongst them act in the same manner like the deviants in the oil and drug industry, regarded as highly connected, and almost untouchable like their counterparts in the foreign shipping arena.
The kingpins and cabals are billionaire friends of government, friends of the ruling party, friends to top government functionaries, judiciary, customs, police, department of state security, special services like NAFDAC, SON, NESRA, the presidency, governors, permanent secretaries etc. The close knit connection makes the business very lucrative and rewarding.
It is by no means limited to Nigerians, foreigners most especially Asian nationals also known to have been embedded in the enterprise and cut a huge chunk of the pie.
They deploy all trading tools like Fast Track, Manufacturers Bond Scheme through Diplomatic consignments to cheat government and engage in economic rip off.
CUSTOMS DUTY EVASION
The Nigeria Customs Service in the last ten years have been evolving through a paperless customs procedure in line with the World Trade Organisation (WTO) and World Customs Organisation (WCO) targets in ICT clearing procedures. The Service has migrated from Asycuda to Asycuda ++ and other intermediate models until the current NICIS II. Even before now, the Customs had introduced a portal called the Nigeria Trade Hub which warehouses the Pre Arrival Assessment Report (PAAR) in 2016. The PAAR process was to solve the problems of delays and false declarations in the clearing process.
The Central Bank of Nigeria (CBN) developed its own control instrument known as Form ‘M’ issuable at the commercial banks, which require importers to present their list of items for verification. The processes also require shipping companies and their importers to submit their shipping documents online to both the customs and the dealer banks. All these seamless trading processes were to curbed corruption in our ports. Based on these otherwise windows of interconnectivity for seamless processes, government and the Customs few years ago sold the prospect of trade facilitation with a contraption known as 24hrs Cargo clearance in Nigeria ports, which later was adjusted to 48hours cargo clearance timeline.
That dream remains farfetched, bugged down by inefficiencies and corruption.
WHAT WENT WRONG?
While government and the Customs were celebrating the successful system enthronement of paperless customs clearing system, importers, their Agents, and the shipping companies were perfecting their strategies to beat the innovations which has been declared a failure through “Non Compliance”.
For instance, the PAAR process required that an importer and his shipping company must submit their documents ahead the arrival of the consignment. The Customs will then value it and give the required duty based on what is stated in the bill of lading. It was expected that this will allow the importer to pay his duty before the arrival of the consignment, to ease clearance. This however never saw the light of the day through official compromise and importers and their agents defeatist mechanism.
HOW DO THEY DO IT
A case study will suffice, using a 1x40ft container import document in December 2019 with container No. PCIU 8833810, which was released from the APM Terminal, Apapa port. The Importer was Safesea Trip Logistics Impex Services. The importer claimed to have imported new tyres for light trucks, entered the Form ‘M’ with the required duty of 10% duty, 10% levy and 5% VAT in the Customs system. But at the point of payment the HSCode was altered, and they paid only 5% duty. 5% VAT was not paid, nor was the 10% Levy processed paid. Conversely, the importer at the end of the day paid only N800, 000, as against N4, 942,567.96. He defrauded government of over N4, 000,000, from just a single container. Imagine if such importer had up to 10 or 20 containers of such items.
Within the same period government suffered the same revenue loss, another 1x40ft container with No GATU 8511731. The importer, Desnick Divine Ventures , opened a Form ‘M’ with good description as Heat Exchange Unit with HS code 8419500000 which carries 5% duty, O% VAT and O% ETLS. But, when the container was opened, its actual content according to documented report was stainless cooking ware sets, which actual HScode is 7323.93.00.
The actual duty for HScode is 7323.93.00. is 20% duty,35% levy and 5% VAT. Again, this importer paid only N874, 201, as against N8, 456,567.96.
Beating the customs PAAR process, HSCode (CEMA) and CBN Form ‘M’ requirements is now a simple everyday task, according to investigation.
To do this, all the consignee does is to bring his clearing agent on board, while securing the collaboration of the shipping company and some Customs officers, which results in the criminal amendment of the ship manifest, to reflect whatsoever they desire to pay, contrary to what was originally entered in both the PAAR and Form M documents.
Instructively, the changes in the manifest with the Shipping company also directly bears on a corresponding HS code to give the consignment a lesser value; secured from the seat compromised customs officer.
One ports source who volunteered information on why things have sunk to this level said ” You know before now, we were used to Machine Outside (MO), where shipping documents are forged or cloned outside customs knowledge. You hear of fake bank payment receipts among others. But due to the technology in the Customs and the Banks, these methods are no longer working, if you try it, you will be caught red handed. Am not saying the MO and forging of bank recipients are totally eliminated, but if you do, it is either your consignment may end up getting multiple alerts which will attract Debit Note (DN) on your consignment or your goods is seized .
Aside from this peculiar case, multinational companies in Nigeria in the guise of manufacturing and producing firms also abuse the Fast Track tool provided by the Customs to facilitate quick clearance of large volume of consignments. Those enjoying the special arrangement have risen to about 150 as at today. The Fast Track policy allows importers to take their goods from the ports to their warehouses, escorted by customs, who later conduct 100% physical examination.
Records have however shown that the same Customs has compromised largely in making this policy a failure. For instance, the guideline provides that for every three containers moved out of the ports on the basis of the policy, are escorted with armed Customs officers up to the designated warehouse. On arrival at the owners warehouse, the guideline further stipulates that customs officers in the Post Clearance Audit Unit (PCA) and Customs Intelligence Unit (CIU) must be on ground to break the seal and open the containers for 100% examination before the owner can offload into his warehouse.
Again our findings have shown that the Customs are not implementing these guidelines, having allegedly been settled. This is the critical lax that has exposed the Fast Track policy to serious abuse, while government loses billions of naira daily to revenue leakages.
This group of importers further misuse the policy by bringing in uncustoms goods, while it cannot be ruled out that dangerous items including contraband goods have continued to find passage into the country under the failed Fast Track policy.
Aside from the Customs, there are various abuses perpetrated by Importers of Standards Organisation of Nigeria (SON) related products, despite various standardisation procedures put in place by the organisation. It is no longer a secret that importers have for a long time already been manufacturing fake SONCAP certificates to defraud the system.
Perhaps, it should be stated that this unpatriotic acts by Nigerian importers is the reason fake and substandard products are flooding the Nigerian markets.
According to an official of SON who does not want his name mentioned, he said the agency is overwhelmed. His words, “My brother we are trying our best, the situation in our ports now is pathetic. An importer will bring a consignment and manifest it as A, before you know it, he has amended the document to read B. Sometimes before the consignment leaves the ports, he may have further amended it to read C or D. In this situation what do you do? And as you know we are not inside the ports, so is a very unwholesome situation “.
The Minister of State for Transportation Senator Gbemisola Saraki said recently that Nigeria ports is still the most expensive in doing business in the region, due to multiple taxation.
The Comptroller General of Customs, Col. Hameed Ali (rtd) has all the time sermonize the urgent need for compliance on the part of his officers and other stakeholders. It would appear though that despite these efforts, compliance is still long distance away.
SON DG, Osita Aboloma said recently that the sheer volume of seizures over infractions ought to have nurtured a reversal of attitude but expressed sadness that thev situation is not so.
The National President of ANLCA, Iju Tony Nwabunike who visited SON recently, said he is putting arrangement in place to embark on a sensitization of his members to play by the rules.
Dr Boniface Aniebonam, founder of NAGAFF is another strong voice in the maritime industry that has been shouting his throat hoarse, on the need for stakeholders to eschew corruption and embrace compliance. NAGAFF recently launched a 50 man Presidential Compliance team to assist its members to comply with due processes and clearing procedures.