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Boom in smuggling activities over N952/$1 import duty
By AYOOLA OLAOLUWA
Nigerian importers have started to divert their cargoes to neighbouring countries in the bid to avoid the constant hike in import duties by the Nigeria Customs Service (NSC), as well as operational costs payable to port operators on imported goods, Business Hallmark findings have revealed.
BH reliably gathered that many importers now ship their goods to neighbouring countries, where they then bring them into Nigeria through the land borders.
It would be recalled that for several years, Nigerian ports were losing cargoes to neighbouring ports across the West African region, owing to several reasons.
They include the non-availability of deep sea ports in the country to accommodate larger vessels that offer importers economies of scale; constant hike in the percentage of duties on imported goods by the administration of former President Muhammadu Buhari; bid by many importers to avoid paying high import duties on cargoes charged by the Nigerian Customs Service (NSC); high port fees and charges imposed by port managers, as well as slow cargo clearance of, at least, two weeks due to 100 per cent physical examination of cargoes at local ports.
But with the inauguration of the Lekki Deep Seaport in Lagos for operations on 23 January by former President Muhammadu Buhari, the nation started taking over cargoes meant for Nigerian ports from neighbouring countries including Benin Republic, Togo, and Ghana. On April 1, 2023, the first commercial vessel with a draft of about 16.5 metres berthed at the Lekki Deep Seaport.
Afterwards, there were consistent berthing of larger ships that used to find their ways to Benin, Togo and Ghanaian ports.
However, the announcement of the unification of the multiple foreign exchange rates by President Bola Tinubu on Wednesday, June 14, 2023, altered the trend.
On June 26, the NCS implemented the Central Bank of Nigeria’s foreign exchange reform in the maritime sector by increasing the exchange rate used for calculating import duty by 40 percent.
By the time the dust settled, exchange rate used for the calculation of import duty on imported cargoes, including vehicles, had risen from the N422.30 a dollar it used to be to N589 a dollar.
In spite of widespread criticism and stiff resistance from stakeholders, the Customs Service absolved itself of blame, insisting it was only implementing a CBN policy.
“Whatever you see in our system is what has been communicated to us. It is determined by the Central Bank of Nigeria.
“So whatever we are using is what is obtainable as communicated to us. It is a monetary policy, we only implement what is given to us.
“It is a monetary policy and anything monetary is not determined by us, it is determined by the CBN. We only use what is communicated to us”, NCS’s National Public Relations Officer, Abdullahi Maiwada, had justified in a statement made available to media houses.
Expectedly, the implementation of the new tariff by the NSC caused a disruption in the maritime industry, with many importers caught off guard unable to clear their goods. The implementation of the new import tariffs also led to the rise in the costs of imported goods, especially vehicles and frozen foods.
While speaking on the development in June, the CEO of Siktemstar Logistics, Remilekun Sikiru, said that the duties payable on imported goods have gone up.
“For instance, the total duty payable on a Toyota Camry was N901,000 before now; but it has been increased to N1.270million; duty payable on Venza was N1.632million before now, but it has been increased to N2.278million.
“In the same vein, duty payable on Toyota Corolla was N786,000, but now it has been increased to N1.097million while Lexus Rx, which used to cost N1,828,000 now costs N2,550,447”, said Sikiru, who is also the Youth Leader, Association of Nigerian Licensed Customs Agents (ANLCA), Tin Can Island chapter.
The NCS again jolted the maritime industry on November 11, when it adjusted the exchange rate for cargo clearing at the port to N783.174 per dollar.
Not yet done, the NCS adjusted the rate to N770.88/$1 in July and on December 8, the exchange rate for payment of duty paid on imported vehicles was also raised from N783 a dollar to N952 a dollar, making it the fourth time it was adjusted between June and December 2023.
Meanwhile, owing to the persistent increment in the exchange rates for payment of duty on imported goods, more importers, BH gathered, have started diverting cargoes with high import duties like rice, frozen foods, vegetable oil and vehicles to neighbouring ports, where they are then brought into Nigeria.
The beneficiary ports include Seme Terminal, Porto-Novo, Cotonou, Bohicon and Glazoue Ports, all in Benin Republic; Accra, Saltpond, Sekondi, Takoradi and Tema in Ghana, the Dry Port of N’Gueli in Chad; Port of Niamey in Niger, as well as the Lome and Kpeme Ports in Togo.
Apart from diverting their goods to neighbouring countries ports, smugglers now use smaller but faster vessels that can outrun naval boats manning the nation’s waters to bring in goods through isolated islands under the cover of darkness, thereby denying the government the much needed revenue to fund its projects, multiple sources disclosed.
A car dealer, who did not want his identity disclosed, said that he now brings in his goods through Togo and Benin ports.
“Their duties are relatively cheaper and affordable. I can tell you that many importers are taking the same route” (diverting their goods to neighbouring countries).
However, a source at the Nigerian Ports Authority (NPA), warned buyers to be wary of goods, especially vehicles brought into the country through the land borders.
According to him, most of the vehicles and products brought in through land borders are smuggled.
“Appropriate duties are not normally paid on them. Their papers are mostly forged. So, whoever buys them does so at his or her own risk as the products, most especially vehicles, can be seized by men of the Customs Federal Operating Unit (FOU) if they dare venture to drive them on federal roads”.
The source also informed our correspondent that cases of abandoned and overtime cargoes at ports have increased in the last four months.
“Owing to mounting penalties (demurrage) on overtime cargoes and goods, more imported goods are being abandoned at the ports.
“The situation has encouraged many importers to succumb to the lure of smuggling in their goods”, the NPA staff noted.
Speaking on the development, the Public Relations Officer of the Association (PRO) of Registered Freight Forwarders of Nigeria (RFFN), Taiwo Fatomilola, lamented that the duty payable on imported goods have drastically gone up.
“For instance, duty paid on a 40ft container has increased from N7million to N9million. There is also a N350,000 increase on the duty on each car”, the RFFN spokesperson stated.
Also speaking, Jonathan Nicol, a chieftain of the Shippers Association of Lagos State, said if not urgently reversed, the new adjustments would negatively affect importers and shippers.
“More cargos will be diverted to other climes and the nation’s ports will not be as busy as it should have been.
“I also know that the government is aware of the inflationary pressure on the citizens. Increase of cost of clearing at this time is ill-timed during Christmas festive period.
“The government targeted the Christmas rush period to make more money through customs duty, while goods cleared will be difficult to sell.
“The move will definitely lead to an increase in the cost of doing business and induce inflation”, Nicol warned.
The Comptroller-General of the NSC, Bashir Adewale Adeniyi, had in September raised an alarm over the surge in the smuggling of goods and illicit drugs across the nation’s borders.
“There seems to be an upsurge in the smuggling of rice and narcotics. Some unscrupulous elements also try to smuggle arms. We have to have zero tolerance for the smuggling of rice.
“We must not allow them to sabotage our country. We must not let them affect our local currency. When we let them import, they put pressure on our currency.
“We must ensure food security by allowing rice to be produced in Nigeria”, the Customs CG had noted while speaking at an interactive session with officers and men of the Federal Operations Unit (FOU) Zone B during a working visit to Kaduna State.
