Experts predict 40 per cent fall in 2015 Customs revenue
…say new CGC’s revenue target unrealistic
Experts in the maritime industry have predicted a gloomy financial year for the Nigeria Customs Service. Their forecast is based on an interplay of factors which they claim would seriously undermine the revenue performance of the service.
Unlike previous years, especially under the administration of the immediate past Comptroller-General of Customs, Alhaji Abdullahi Dikko, who voluntarily resigned his juicy position after six years on the saddle, during which Customs recorded bumper revenue harvests, maritime commentators believed that the Service will experience a drought this year and subsequently years, if the existing factors remain constant.
They said that the economy is in recess and that will affect the capacity of Nigerians to import.
Unlike in previous years, especially under the administration of the immediate past Comptroller-General of Customs, Alhaji Abdullahi Dikko, who voluntarily resigned his juicy position after six years on the saddle, during which Customs recorded bumper revenue harvests, maritime commentators believed that the Service will experience a drought this year and subsequently years, if the existing factors remain constant.
They said that the economy is in recess and that will affect the capacity of Nigerians to import.
”The capacity of Nigerians to embark on importation now is seriously hampered by the general recess in the economy. Also, the purchasing power of average Nigerians have been curtailed by the economic downturn, those factors that will combine to affect importation and invariably affect the revenue generating capacity of the Customs”, a Lagos
based importer declared.
They also pointed to some of the policies of the Federal government, especially the Forex restriction order slammed on some selected 41 products.
In June this year, the Central Bank of Nigeria (CBN) announced a restriction to access foreign exchange to importers of some 41 products in a bid to shore up the fast depleting Nigerian foreign reserve.
The list of 41 items include rice, private jets, textiles, tomato paste, cement, margarine, palm kernel, vegetable oil, poultry products (chicken, eggs and turkey), Indian incense, tinned fish in sauce (Geisha, Sardines), cold rolled steel sheets, galvanized steel, roofing sheets, wheelbarrows, head pans, metal boxes and containers, and enamelware.
Others are steel drum, steel pipes, wire mesh, steel nails, wire rods, security wire, wood particle and board, wood fibre boards and panel, plywood board and panel, wooden doors, toothpicks, glass and glassware, kitchen utensils, tableware, tiles and wooden fabrics, plastic and rubber products, and soap and cosmetics.
”It is obvious that this policy will affect the volume of importation which will automatically affect the revenue performance of the Customs”, Mr. Kayode Farinto, the National Publicity Secretary of the Association of Nigeria Licensed Customs Agent (ANLCA) noted.
He said already importers are having an issue with opening of Form ‘M’, one of the principal conditions required of an importer before he can embark on importation.
Farinto, who is also the Managing Director of Wealthy Honey Investment Nigeria Limited, believed that this policy together with other obnoxious policies of government will not only cripple the economy but also pauperize the citizen.
”Under this harsh and tough condition, how will you expect people to engage in importation and if the volume of importation drops, then how will Customs hope to meet its revenue target,”? he asked rhetorically.
Mr. Eugene Nweke, the National President of the National Association of Government Approved Freight Forwarders (NAGAFF), corroborated the position of Farinto.
”Obviously, the policy of CBN will affect importation and invariably the revenue performance of the Customs. Not only the Customs will experience hardship in terms of revenue but Nigerians as well will feel the brunt of the policy”, the freight forwarder said.
Other economic analysts also observed that the policy will not only affect imports, but said that export will be affected.
”Most Nigerians, especially manufacturers, will find it hard to engage in exportation of their products which will invariably affect the Excise Duty of the Customs”, an analyst interjected.
Some analysts noted that in as much as some items such as tooth picks, poultry products, steel nails, soap and cosmetics are justified by the ban, they said including rice on the list will further deplete the revenue fortunes of the Customs.
Their position was further corroborated by the Customs authority which declared that revenue from rice forms the major source of its revenue.
The revenue from rice form more than 70 per cent of revenue of Apapa Customs, which incidentally contributes over 60 per cent to the overall revenue figures of the Customs.
At the wake of the hike in duty of rice by government to 110 per cent last year, Apapa Customs lost a substantial chunk of its revenue to the hike as importers of the products diverted their consignments to the neighbouring ports from where they were eventually smuggled into the country.
Mr. Charles Edike, the Apapa Customs Area Controller, lamented the loss of the command to the policy, adding that rice is the main stay of the command.
At that time also, terminal operators cried out over their losses as a result of the unfavourable policy on rice.
Princess Vicky Hastrup, the Chairperson of Seaports Terminal Operators of Nigeria (STOAN), declared that the terminals experienced reduced patronage as vessels laden with rice diverted to other countries.
However, the pressure eased a bit when government, due to public outcry, relaxed the policy.
Experts, however, lamented that the gains recorded by Customs, terminal operators and other port users when the price hike on rice was relaxed have been frittered away with the new CBN policy on forex restrictions for some items including rice.
Apapa Customs will once again experience a drastic dip in its revenue drive due to this policy. If importers of the products cannot access forex, how are they going to import and how is Customs going to rake in revenue? a concerned analyst queried.
Mr. Emmanuel Ekpa, the Public Relations Officer of Apapa Customs told Business Hallmark that though the effect of the Forex restriction has not immediately become noticeable, he said it is sure to come in the coming months.
”You know this kind of policy has a spiral effect. We have not really started to feel the impact because most of the imports on which we collected our revenue last month must have been ordered before the policy was announced. The effect will start to be noticeable when importers start to place fresh orders”, he disclosed.
According to him, the command generated N30.1 billion in the month of August.
The real test will come in the subsequent months.
Mr. Chris Osunkwo, the Public Relations officer of Tin Can Island port, the second highest revenue- generating command after Apapa command, put it more succinctly.
”Definitely, the Forex restriction is going to affect our revenue.”, declared Osunkwo.
”The hardest hit are the small- time importers, who I prefer to call occasional importers, who import one, two or three containers. These are the category of importers that will feel the brunt and they are more in numbers and form the bulk of our clientele”, the Customs officer said.
He said that even though the big importer can ‘swing’, but they will still feel the pinch.
He stated that Customs will invariably be affected in terms of low yield in revenue. According to him, the Command generated the sum of N22.7billion in August, but the real test for the command will be its revenue in September and subsequent months when the effect of the policy is expected to manifest.
In view of this scenario and the expected dip in the revenue of the Customs due to this policy, stakeholders sneered at the mandate given by President Muhammadu Buhari to the new Comptroller General of Customs, Col. Hameed Ali (rtd.).
In his response to the general disapproval of the appointment of the retired army officer, President Buhari said the mission of Col. Ali in Customs was to triple its revenue.
He said this became imperative in view of the free fall of oil revenue and that government has now focused on Customs to shore up its earnings.
The new CGC, on assumption of duties at Customs headquarters last week Thursday, reiterated this mandate when he held its maiden meeting with senior Customs officers.
“The mandate he has given me are three basic things: go to Customs, reform Customs, restructure Customs and increase the revenue generation, simple. I don’t think that is ambiguous, I don’t think
that is cumbersome. It is precise and I believe that is what all of you are here to do”, he told the Senior Officers.
However Mr. Kayode Farinto declared that the new CGC will fail in his mission to improve on the revenue generation of Customs.
”How is he going to do it?’ he asked rhetorically.
The ANLCA chieftain noted that the government has lined the path of the new Customs boss with landmines with the policies and programmes of the Federal government.
”He was programmed to fail”, he declared matter of fact.
Mr. John Atte, who acted briefly as the Acting CG before Col. Ali took over, has raised the revenue bar of the Customs.
Less than 24-hours after Dikko handed over to him, DCG Atte gave a marching order to the commands to raise their revenue performance from the initial monthly returns of N13billion to N35billion, a pronouncement which Prince Olayiwola Shittu, the National President of ANLCA, described as a tall order that is very much difficult to realize.
The August revenue returns of Apapa and Tin Can Customs Commands, the two highest revenue earners for Customs which account for about 80 per cent of overall revenue figures of the Service, lend themselves to the projection of experts that the service will record a fatal fall in its revenue generation this year.
The August revenue yields, recorded when the Forex restriction order has not become noticeable, still fell short of the N35billion target.
One can then imagine the level to which these figures will plummet in the coming months when the Forex restriction and other policies of government such as automotive policy, start to bear their fangs.