retired Col. Hameed Ali CUSTOM CG

Customs Loses N600bn To Diverted Vehicle Imports

| Leave a comment

Nigerian ports have lost a whopping N600 billion in the last three years due to diversion in the importation of vehicles from the nation’s ports to neighbouring ports, especially the Cotonou port in the Republic of Benin, LEADERSHIP findings have revealed.

This figure is said to be the value of the revenue that ought to have been collected by the Nigeria Customs Service (NCS) if the vehicles were shipped directly to Nigerian ports.

This is even as activities at the terminals designated for handling of Roll on Roll off (RORO) have plummeted.

Similarly, rice smuggling through the country’s borders has been on astronomical increase since the ban on rice importation through the country’s land borders.

The federal government had in March, announced the re-introduction of the ban. This was a reversal of an earlier policy in October 2015, which allowed rice imports through land borders provided appropriate duty was paid.

LEADERSHIP recalls that the NCS had stated that during the five-month period October 2015 and March 2016 when the importation was allowed, a total of 24.992 metric tonnes of rice valued at N2.34 billion was imported through the land borders. This however fell short of the projected revenue to be generated with the removal of import restrictions.

The smuggling of rice has continued at the land borders unabated, as evidenced by the volume of foreign rice in the country. Between January and February 2016, about 9,238 bags of rice were seized from smugglers, with about N64.67 million as duty paid value.

According to figures by the terminal operators in Lagos ports, the number of cars and vans discharged at the ports dropped by 63 per cent from 27,000 units in January 2014 to 8,000 units in January 2015 and 5,000 units in August 2016. It was learnt that Nigerian ports, which previously handled the importation of over 400,000 units of vehicles annually, now handle just about 25 per cent of the figure.

Terminal operators attributed the lull to the implementation of the automobile policy adopted by the country under the administration of former President Goodluck Jonathan.

LEADERSHIP recalls that the automobile policy was introduced in October 2013 to encourage local manufacturing and discourage importation of vehicles as well as gradually phase out used cars (popularly known as Tokunbo cars).

The commencement of the implementation of the policy in 2013 raised the tariffs on imported vehicles from 20 per cent to 70 per cent.

The managing director of Grimaldi Agency Nigeria Ltd, a terminal designated for the handling of Roll on Roll off (RORO), Mr Ascanio Russo, told LEADERSHIP in an interview that the terminal could only handle an average of 72,000 vehicles yearly since the start of the automotive policy.

“The major beneficiary of this policy has been Benin Republic because many of those vehicles go to Cotonou and from there, they are moved back to Nigeria. This was very evident in 2014 and 2016.

“Annually, the country is losing N200 billion to neighbouring ports. Interestingly, the volume of vehicles going to Cotonou has not shrunk; in actual sense, it has continued to increase. Today, out of four vehicles for the Nigerian market, three are discharged in Cotonou,”said Russo.

The chairman, Seaport Terminal Operators Association of Nigeria (STOAN), Princess Vicky Haastrup, said that for trucks, the volume dropped from 2,700 units in January 2014 to 1,700 units in January 2015.

According to Haastrup, the fall in vehicular imports into Nigeria had led to an increase in the number of cars and vans discharged at the Cotonou Port.

“In Cotonou port, the total number of cars and vans discharged in January 2015 was 30,000 units against 20,000 units discharged in January 2014. This represents a 50 per cent growth. Similar trends have been registered also for trucks,” she said.

The managing director of the Nigerian Ports Authority (NPA), Ms Hadiza Bala Usman, said a review of the automotive policy was being considered by the government.

She said: “There’s been a period of implementation of the automobile policy. There’s a need to relook at it to determine the opportunities lost by the federal government vis a vis the automotive industry. This is on-going.

“We’ll aggressively sustain this discussion to ensure that, in a timely manner, the government concludes its assessment of this policy and takes a decision on the way forward as it relates to the revenue being lost within the Authority and also the development of the automobile industry itself.”

LEADERSHIP recalls that the Nigeria Customs Service at the Ports and Terminal Multi-services Ltd (PTML) declared a 32 per cent drop in revenue to N63.18 billion in 2015 as against N91.45 billion earned in 2014.

The command’s public relations officer, Mr Steve Okonmah, attributed the shortfall in revenue to the diversion of vehicles importation from Nigerian ports.

He noted that the policy had a devastating effect on the economy, as clearing agents had fewer jobs at the terminal because of the diversion of vehicles to Cotonou Port in the neighbouring Republic of Benin.

Okonmah traced the revenue shortfall to low importation and high costs.

Speaking on statistics of vehicle imports at the command, Okonmah noted that in 2013, vehicle imports dropped to 172,174 units, declined further to 129,361 units in 2014 and to 66,823 units in 2015.

He pointed out that though the figure for 2016 was not ready, there were indications that it could be lower, especially with the economic crisis in the country.

As a viable alternative to the subsisting auto policy, the president, Association of Nigerian Licensed Customs Agents (ANLCA), Prince Olayiwola Shittu, has urged the government to adopt a-five year rolling plan of graduated tariffs whereby the lower the age of the car, the lower the duty on it, so that older vehicles would be made to pay higher duties.

Meanwhile, some stakeholders in the nation’s auto industry have applauded the recent plan by the federal government, through the National Automotive Design and Development Council (NADDC), to introduce a credit scheme for local auto manufacturers.

Speaking with LEADERSHIP in Lagos, the director, Policy and Planning, Mr Luqman Mamudu, disclosed that in order for the federal government to achieve its auto policy, the government, through the NADDC, had planned to launch a credit purchase scheme to give opportunities to Nigerians to purchase vehicles assembled in Nigeria at N7.5 billion interest free rate, with counterpart funding from a company in South Africa, all in order to help Nigerians buy new vehicles.

He said:  “This is what we have been working on for the past two years. We looked at the available access to asset financing in the country; we found out that the high interest rate is frustrating the purchase of new vehicles. This is the gap we want to fill. We are currently working with a company in South Africa which has footprints in eight African countries where they have developed a commercial and financial model to recoup their investment.”

Mamudu said the council was also planning to build capacity in local assembling to attract component manufacturers to set up their factories in Nigeria.

‘‘We are building three laboratories in Lagos, Kaduna and Enugu at the cost of about N3 billion. The one in Lagos is an emission testing laboratory to test for the level of emission. We are almost 90 per cent complete. We also have a component parts manufacturing testing laboratory in Enugu. We are doing all these to prepare for the next stage of component development because this is where job opportunities are enormous, but the entire process requires patience on the side of government and investors.

“We have to encourage these Original Equipment Manufacturers (OEMs) to come with their capacity. If we create the right environment for them, they will come with their capacity to produce here, and if this happens, we can export from here to earn foreign exchange. We are calling on the OEMs to use Nigeria as a hub for the whole of West Africa, but we must be steady and focused so that we do not lose the opportunity,” he said.

He noted that Nigeria currently has the capacity to assemble 384,000 vehicles yearly, but that only 25,000 vehicles had been assembled so far.

Mamudu further pointed out that the federal government would continue to pursue strategies to stop the influx of second-hand vehicles into the country, noting that this scheme would go a long way to give alternatives to people who patronise fairly used cars.

Speaking to LEADERSHIP on the credit scheme, the director-general of the Lagos Chamber of Commerce and Industry, Muda Yusuf, said the policy, which had attracted investment from about 45 assemblers and part builders such as Toyota, Ford and Volkswagen was laudable.

According to him, government must look at policies that will improve the economy and help people survive the current hard times rather than the ones that bring further hardship.

On the ban of ‘tokunbo’ vehicles or increase in tariff on vehicles in the country, he said it was not realistic at the moment, adding that even in advanced economies, fairly used vehicles are still being sold.

The chairman, Nigeria Automotive Manufacturers Association, Mr Tokunbo Aromolaran, in a telephone chat with LEADERSHIP, disclosed that the investors in the Nigerian auto manufacturing segment are indeed hopeful and that is why there is still tremendous activity in the automotive sector in spite of the very difficult operating environment of policy uncertainty, dearth of skilled labour, poor infrastructure and scarce foreign exchange.

Aromolaran explained that with the relative unavailability of foreign exchange and the fluctuation experienced lately in the money market, the OEMs still cannot operate at optimal capacity with the current level of patronage.

“We need volumes to drive down the unit cost of vehicles. And when viewed against the economics, our industry, the environment has to be right with good policies, implementation of the auto policy, enhanced purchasing power, introduction of consumer credit, government patronage and, above all, restriction of imports, including used car imports.

“It is time for the government to reel out policies needed to assist OEMs to operate optimally and empower patrons too,” he said.

comments powered by Disqus

Daily Columns