April 10th, 2006 MEDIA REPORT #8

The Oyo and Osun States Area Command of the Nigeria Customs Service on Monday evening destroyed and buried imported turkey and chicken worth more than ₦350,000 seized from smugglers recently. The Area Commander, Mr. Madu Mohammed, said that the turkey and chicken that were in 53 cartons were impounded along with other banned items like textile and used tyres from smugglers long the Osogbo Road in Osun State by vigilant Customsmen last week. The smugglers abandoned the Ekiti State Government bus used in smuggling the items and ran into the bush when they saw that the Customsmen did not relent in their chase.

April 10th, 2006 MEDIA REPORT #7

In January last year, President Olusegun Obasanjo placed 41 items in the import prohibition list. A year and six months after the exercise, our industry correspondent, Johnmark Ukoko takes a look at what has been achieved so far. In January 2004, President Olusegun Obasanjo announced an import prohibition of 41 products which he believes could be produced in the country. Some of the products that were banned are: printed textiles, fabrics, mutton, bottled water, toothpicks, leather shoes furniture, plastics and a host of other items. The government took the division to ban the items based on the recommendations from local manufacturer and suppliers who felt that the country could produce them. 

The local manufacturers lobbied the government to take the decision in the interest of the economy and to protect the local industry in particular. The manufacturers felt that the ban would go a long way to save millions of local jobs and keep the economy on the path of growth. The president of Manufacturers Association of Nigeria (MAN), Charles Ugwuh, while commending the ban said it was in the interest of the economy and the manufacturing sector in particular. He maintained that his members have the capability to produce the imported items. The MAN boss believed that all the items under review could be conveniently produced locally. This view was also shared by the president of the National Association of Chambers of Commerce, Mines and Industry (NACCIMA), John Odeyemi, who said the government’s action is bold, timely and well informed. 

To enforce the ban, the Nigerian Customs Service (NCS), announced that they will be raiding the markets to seize the outlawed goods. However, the traders have reacted negatively to this, vowing to resist the threat by the Customs Service. They also got the backing of the president of Igbo National Congress, Peace Nwajolu, who promised his association’s support to the traders. He argued that past seizures were sold back to the traders who now sold the items in the markets at exorbitant prices. Also, the Textile Dealers Association of Nigeria (TDAN) has condemned the Customs threat. The body described the planned action as crude and uncalled for. It also disclosed that textiles already imported before the ban could take up to three years before they can all be exhausted in the market. However, majorly of the manufacturers who hailed the ban as the best thing that could happen to their business have since discovered that the ban is not working as more to these banned products have flooded the market s never before. It is even alleged by sources that most of the banned items are being brought in by powerful Nigerians close to the government.

The sources disclosed that these powerful Nigerians have kept on lobbying for government’s change of position on the issues. The Lagos Chamber of Commerce and Industry (LCCI) has a contrary view on the ban of most of the items. The chambers is of the view that the government’s action was not well informed as most of the items are in short supply in the country. Textiles Dealers Association of Nigeria, an association affiliated to the chamber, at a press conference last year, kicked against the ban. It also disclosed that its members and LCCI will lobby the government for a change of policy. The group berated the government’s action as being ill informed and untimely as most of the items could not be produced adequately locally. However, a year and six months after the ban was made, it appears nothing much has been achieved. Firstly the items that have outlawed, are more in the market now than before. The government that defended the ban now believes that it was misled by the local manufacturers.

The Minister of state for finance, Nnamdi Usuman was bold and honest enough to tell the world that the government was deceived by the manufacturers. She explained that the local manufacturers exaggerated their capabilities. According to her, “The Federal Government has realized that the ban was uncalled for. The government might be forced to review its positions.” Beyond all these is the fact that most of the banned items are coming through the country’s land borders with neighbouring countries.

Reports in the media have also shown that apart form the land borders, the sea and the airports are being used by smart and greedy Nigerians to bring in the goods. However, a year and six months after the ban was made, it appears nothing much has been achieved. Firstly, the items that have been outlawed, are more in the market now than before. The government that defended the ban now believes that it was misled by the local manufacturers. It is obvious that the officials of the Customs have not done much to discourage the smugglers, although some major arrests and seizures have been made in recent time. The general impression of industry watchers is that the Customs has not lived up to expectation. President Olusegun Obasanjo was quoted some time ago saying that if he had his way he would scrap the Customs Service for their poor performance. Analysts have rated Customs law in its performance, noting that corruption which is a big problem in the country is serious in the country’s Customs Service. Industry watchers agree that the ban is good, but it has been poorly enforced by the government and Customs officials.

The reason behind the government’s weak implementation of the laudable action is the political will. BUSSINESS TIMES investigations have shown that most of the big time smugglers are highly connected people with considerable influence in government. Also uniformed people are used to escort these smugglers’ goods into the country. Beyond these known smugglers, who have made nonsense of the government’s good intention, is the fact that some top members of the government also consume the banned items. Recently at the wedding of a minister’s daughter most of the drinks served were imported because people do not like local ones. Manufacturers say they have not witnessed any significant growth in their business, as the intended result has not been achieved. The textiles industry is on the verge of collapse. Industry watchers have berated the government and Customs officials for little results achieved so far. From the look of things, it appears the ban has to be revisited, if the desired result is to be achieved. A review of the import prohibition list has become imperative as some of the items outlawed are the key raw materials of some companies.

These companies have cried out that the ban has to be revisited for the sake of their firms before they are forced to go under.

April 10th, 2006 Media Report #6

The relative peace being experienced in Warri and environs has started yielding good results, as the Nigerian Customs Service, Delta/ Edo Command collected the sum of ₦1.136 billion as revenue in My 2005.

BUSSINESS DAY learnt that of the amount ₦836.5 million was paid into the federation account, while other items such as ECOWAS Trade Liberalization Scheme accounted for the balance of ₦300 million. The ₦836.5 million paid into the federation account exceeded the monthly target of ₦717.012 million by the sum of ₦114.5 million. Delta/ Edo Command has a yearly revenue target of ₦8.604 billion this year against the ₦7.9 billion of last year.

In the month of May this year, Warri Port’s users paid the sum of ₦623.447 million s Import Duty, while Excise Duty accounted for ₦212.85 million and other fees ₦226,200. Of the total revenue for the month under review, ₦43,644 million was realized as seven percent surcharge, ECOWS Trade Liberalization (ETL) ₦23,336 million and ₦2.626 million for National Automobile Council. Other collections include five percent sugar levy valued ₦754,000 CISS ₦68.149 million and VAT ₦162.499 million.

Our source said revenue figures are looking up because of increasing activities at the ports following the relative peace in the area. According to the service, if the prevailing peace in Warri and environs is sustained, then revenue figures are expected to step up in the remaining part of the year. Hitherto, the ethnic crisis that rocked Delta State since 1999 imparted negatively on the port’s operations as its facilities were grossly under-utilized. During the crisis, many ships that wanted to berth at the Warri Ports could not do so, therefore, they were diverted to other ports, amounting to loss of revenue for the Customs Command. Meanwhile, one of the greatest problems restraining large vessels from venturing into the costal water of the Delta Ports have been the shallowness of the channel at the Escravos Bar, which needed to be dredged. 

Story By John UWE, Warri

April 10th, 2006 MEDIA REPORT #5

A conference report from the 2004 Comptroller-General’s Annual Conference which was held in December in Calabar, capital of Cross River State has alleged that AIICO Insurance refused to honour its obligation under Manufacture-in-Bond Scheme (MIBS) guarantee. In delivering a paper, Industrial Incentives: Problems and Prospects, Assistant Comptroller-General of the Nigeria Customs Service, Mrs. F. E. Umoh observed that one of the problems that had hindered effective use of the policy in developing export manufactures is weak structures that support the scheme. Specifically, Umoh noted that insurance companies which guarantee the scheme do not always fulfill their promise, thus contribution to the failure of the policy alleging that AIICO failed to pay duties on an export it guaranteed. 

According to her, “insurance companies with little financial strength and integrity” who are attracted to most of the MIBS traders do not honour their obligations. “These companies do not honour the conditions of the bonds which they guaranteed,” she alleged. She singled out AIICO for refusing to pay the Customs Service nearly ₦64million in import duty on behalf of its client, Messrs International Fractionation and Margarin Product, Lagos. The figure represents duties on red palm oil imported by the manufacturing company and which “one of its derives products palm stearrim was unlawfully sold in the domestic market without permission form the Honorable Minister of Finance as demanded by law.” However, an official of the insurance company who identified himself as Odunayo told vanguard on phone that all matters pertaining to the duties have been duly settled by the underwriter and as such has no outstanding liabilities on the said transaction, but insisted on personal contact with the head of claims department who was said to be away at the time of going to press.

Insurers of export manufactures and other products complain that guaranteeing exports is highly unpredictable as most importing countries in Europe either reject the order for failing to meet standards or specifications. Consequently, in most cases, they say from the onset there is no guarantee that the goods will be accepted and when it is accepted, the oversea importers crash the prices. On the Customs welfare insurance scheme, Umoh acknowledged that NICON paid over ₦125 million as either death, retirement or other benefits to some personnel or their next-of-kin in 2004. “Also during the year applications from retired officers and men and 212 death claims were lodged, processed and forwarded to insurance broker, Hogg Robinson,” the official stated. Besides MIBS guarantee by insurers, all imports are expected under Nigerian laws to be insured locally. But only a small fraction of the imports are insured while a significant number of imports are not insured at all. According to insurers, those who insure are corporate clients leaving out majority of individual importers with either paper insurances to assist discharge of their cargo or inadequate cover. 

Story By Ifeanyi Ugwuadu

April 10th, 2006 MEDIA REPORT #4

The Nigeria Customs Service has been accused of sabotage in the implementation of the Inland and Coastal Shipping Act, also called Cabotage Law, following its demands for 40 per cent duty payment on imported Cabotage vessels. Speaking with our correspondent in an exclusive interview on Tuesday, the President, Indigenous Ship Owners Association of Nigeria, and Managing Director, Morlap Group, Chief Isaac Jolapamo, said that the Customs had insisted on the collection of duty on some Cabotage vessels in his company’s fleet. In a letter addressed to the company and signed by the Customs Area Controller, Western Marine Command Apapa, Mr. Kolo Yisa, on June 17, 2005 the Customs had demanded for “Customs duty payment documents and temporary importation permits for vessels operating permits in Nigeria.” Specifically, the letter requested for “all documents regarding payment of Customs duty for home use or temporary importation,” to be submitted to the office within one week as it affected MT Juwon and MT Molap Trader, two vessels belonging to the Morlap Group.

The letter warned that failure to comply with the directive might “result to detention or prosecution:” even as sources hinted that a similar measure was being adopted in the eastern ports by Customs operatives. Jolapamo said. “Most of the other agencies, apart from the National Maritime Authoritym which were supposed to encourage indigenous hip owners in the implementation of the cabataga regime, are either not prepared for the law or are not willing to let it work,” he said. The new development was allegedly based on a directive from the Federal Ministry of Finance to the Customs headquarters. When contacted on phone on Tuesday, the Customs Public Relations Officer, Mr. Wale Adeniyi, denied knowledge of the development although he said that the agency would continue to implement any government directive. “I don’t know about the issue now, but if they told you that the action was based on a directive from the finance ministry, then there is nothing we can do than to ensure that the directive is implemented. We don’t make laws, we enforce government’s directives,” he said. But, Jolapamo noted that operatives of the agency had been chasing Nigerian-flagged vessels for 40 per cent of the value as import duty, which he argued, was “not supposed to be applicable to the Cabotage vessels some of which had been in the country before the Cabotage Law was enacted.” 

Story By Isiaka Adams

April 10th, 2006 MEDIA REPORT #3

The Nigeria Customs Service, recorded seizures totaling 745 smuggled goods, including 422 used vehicles, between January and April 2005. During the four-month period, the government agency also impounded 323 other goods, which comprised packages of textiles such as guinea brocade and lace, juices, used refrigerators, tyres, drugs, and scrap metals among others. Details of the seizures were contained in a report by the Customs Enforcement and Drugs unit obtained by our correspondent on Monday. The smuggled goods according to the report were valued at ₦1.293 billion. It also indicated the duty levy worth ₦800.841 million was collected on the illegal imports, thereby bringing the total duty value of the seizures paid into the Federation Account to ₦2.094 billion. The report, which noted that 46 persons were arrested by the agency in connection with the smuggled goods. Also disclosed that 16 guns and 1,666 rounds of ammunition were impounded between January 2004 and April 2005.

The details of the anti-smuggling report showed that the largest seizures were recorded in March 2005, where 251 illegal imports, including 127 vehicles, all valued at ₦542.791 million were seized. The agency collected ₦288.297 million as duty levy on the seized goods in March while it paid ₦831.088 million being Duty Paid value of the seizure into the Federation Account. Customs also confiscated 241 contraband, including 111 used vehicles, valued at ₦247.526 million in April 2005. It collected duty levy of ₦220.850 million on the seizures while it paid ₦468.376 million as DPV of the seizures into the Federation Account.

The report also showed that illegal imports valued at ₦259.058 million and ₦244.032 million, were seized in January and February of 2005, respectively, from where the agency paid ₦415.502 million and ₦379.282 million as DPV of seizures in the two months. Out of the total seizures of 116 and 137 in January and February only 61 and 123 were seized vehicles. The report confirmed that eight, five, 10 and 23 persons were arrested in January, February, March and April in that order, in connection with the illegal imports. 

Story By Oluyinka Akintunde, Abuja

April 10th, 2006 MEDIA REPORT #2

The fiscal policies of the government in which importation of hundreds of trade goods was banned this year have begun to take their toll on the revenue generation of the Nigeria Customs Service. But indications are that the Service may not meet its overall target of ₦220 billion for this year going by the poor revenue recorded so far from some of the commands. At Apapa and Tin Can Island ports, which remain the backbone of the Customs in revenue generation, the target is far from being met. For instance, Apapa Customs Command which import duty target for this year is ₦66 billion has so far recorded the sum of ₦23 billion as at May this year. Similarly, the Tin Can Island port with revenue target of ₦52 billion has been able to realize ₦15.5 billion.

Customs sources attribute the poor performance in revenue generation to the ban on so many trade goods. The total revenue from import duty of the two Lagos ports is not up to the target of one of the ports. Freight forwarders had lamented that the ban announced few months ago on importation of some items in addition to what was announced last year was not a problem to international traders, Nigerians who make use of such goods alone, but also to the Customs in terms of inability to meet revenue target.

Former Secretary of the Association of Nigerian Licensed Customs Agents (ANLCA), Apapa chapter Chief Dom Obi described the ban placed on some items as capable of strangulating the people and throwing many into the labour market. “Government, – Obi said,- is trying to strangulate the masses, making the poor to be poorer and throwing many people into the labour market all in the name of economic reform. All this will yield fruit only when people have died.” Obi expressed concern that many items were now in the prohibition list, adding, “When you formulate certain policies not people oriented, some people may be forced to circumvent the law. …Imagine certain brand of pharmaceuticals being banned. That people are able to buy Paracetal is because there is much in circulation. Immediately, this ban is in effects, you will see that process of these drugs will go up, because the pharmaceutical cartel will fix the process at their leisure”, he said. He continued, “Competition, they say brings about quality and price reduction. If you leave the producers or businesses of pharmaceutical in the hands of some people, people will find it difficult to buy drugs.”

Obi gave an example of the importation of Tokunbo vehicles, which, according to him, has made it possible for many Nigerians to own their own vehicles, adding this wouldn’t have been possible if there was a ban on such goods. He noted that before there was demarcation on the ban on importation of shoes, but said that now it has become total ban on both men/ ladies shoes.

Even as we encourage local manufacturers, we must encourage competition. What government should have done is to increase duty rate on these imports. 

Story By Francis Ugwoke 

April 10th, 2006 MEDIA REPORT #1

Volume of imports and exports through the Apapa Port between January and March this year rose slightly by about seven per cent despite the ban imposed on the shipping of some items into and out of the country last year. Statistics collated at the port showed that 3.185,689 metric tones of goods passed through the port during the periods compared to 2,960,986 metric tones in the corresponding period of last year. A breakdown indicated that the port recorded 903,323 metric tones of goods in January, 1,114,569 in February and 1,167,797 in March. Investigations also revealed that the goods comprise 3.1 and 51,370 metric tones of imports and exports respectively. The port posted 884,723, 1,098,069 and 1,151,527 metric tones of imports respectively in the first three months but only 18,600, 16,500 and 16,270 metric tones of exports during the same period.

The port’s public relations officer Josephine Moltok confirmed the figures and attributed the slight rise in the volume of goods to the level of patronage of the port by shipping companies and importers. It was gathered that some shipping companies diverted their vessels from Tin Can to Apapa Port early in the year due to some delay they were allegedly experiencing in the turn around time of their vessels. The development was also hinged on the improvement in the ship turn around time of vessels at the Apapa Port and some incentives put in place by the Lagos Port Complex Manager, Mansur Ajala. Most of the 41 additional items which importation into the country was prohibited last year were mostly imported through the port before they were banned.

Though government has promised to urban some of the items on the grounds that it was wrongly advised to ban them as their production has not commenced earnestly in the country but the promise is yet to be fulfilled. Some of the banned imports include plastics, bottled water, printed textiles, toothpicks, children’s wares and furniture while the exports comprise scrap metals, hides and skin, timber among others. It was also learnt that the port management has moved in recent times to ensure a conducive atmosphere for all stakeholders at the port to operate as part of the ongoing implementation of the international ship and port facility security (ISPS) code. The port has thus entered into discussions with the flour mills of Nigeria Limited, its tenant with a view to enduring that the company properly organizes its operations in such a way that the effluents from its production no longer constitute a sourced of pollution at the ports. It has also taken steps to check the traffic congestion caused by trailers conveying goods outside the port to ensure adequate flow of traffic within the port.

Reliable sources told the BUSINESS TIMES that the port manager has already ensured that the port environment is clean so that it can live to its bidding as the gate way to the nation’s economy. It was gathered that the port had to champion the clearing of the heaps of refuse usually dumped along the access road leading to the ports’ gates as part of measures to ensure a clean environment. 

Story By Shola Fadeyi

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