Towards trade facilitation and border protection
01 August 2024 |
4:10 am
The recent seizures of a large cache of arms and ammunition by the Nigeria Customs Service (NCS) has again, necessitated the need for increased border protection, even as the NCS continues ramping up revenue to supplement Nigeria’s sparse earnings from under-produced crude oil. After the Federal Inland Revenue Service (FIRS), the NCS remains at the…
The recent seizures of a large cache of arms and ammunition by the Nigeria Customs Service (NCS) has again, necessitated the need for increased border protection, even as the NCS continues ramping up revenue to supplement Nigeria’s sparse earnings from under-produced crude oil. After the Federal Inland Revenue Service (FIRS), the NCS remains at the forefront of revenue generation and border protection. While leveraging aggressive enforcement and deterrence-based policies in hopes of reducing smuggling and improving revenue might have worked in the past, it is expedient for the government to build a sustainable and functional system that looks beyond profit to protecting Nigerians from non-state actors, who are resolute in ensuring anarchy, remains the order.
Earlier in July, the NCS seized a large cache of sophisticated illicit weapons hidden in a shipping container that originated from Turkey. It was described as one of the largest seizures in the history of Port Harcourt, for a country and region grappling with rising crime fuelled by illegal arms trade. Despite the importer paying $2.7 million duty for the container and trying to smuggle it out of the port through a private bonded terminal, the NCS managed to impound it on June 21. Earlier this year, in mid-March, Customs seized arms and weapons during a routine inspection of imported goods in Lagos while in January, Nigeria’s National Drug Law Enforcement Agency intercepted another shipment of arms in Lagos, along with 1,274 parcels of cocaine and other drugs.
Research by non-profit organisations like the Institute for Security Studies (ISS) showed that Nigeria’s seaports and waterways have become hotspots for illicit firearms trade that is controlled by corrupt security personnel and businessmen. Between 2010 and 2017, a total of 21.5 million weapons and ammunition were shipped to Nigeria. Illegal weapons are reportedly going to kidnappers, armed robbers, petroleum pipeline vandals, urban militias, ethnic militias, and cultists, with data showing that in 2020, Nigeria had an estimated 6.2 million arms in the hands of civilians.
However, since the confirmation of Adewale Adeniyi as the Comptroller-General of Customs, the urgency of implementing radical reforms to reposition the Nigeria Customs Service has been on the front burner. The NCS recently told senators that the government lost N1.3 trillion through waivers and concessions, amid reports of seizures of contraband and revenue collections and shortfalls by its various commands. Reports of endemic corruption persist. President Bola Tinubu’s ambitious economic turnaround programme must therefore include reforming the NCS.
To realise the President’s eight-point economic revitalisation agenda, NCS needs to be drastically reformed. Apart from personnel and leadership shortcomings, the service faces other challenges. One is under-funding and lack of infrastructure; another is political interference, and the proliferation of government agencies at the ports that hinder customs work. These agencies number 22, according to shippers. The NCS must, therefore, adopt and maintain the latest technological equipment and do away with manual inspection of goods. The indiscriminate grant of waivers, exemptions and concessions by the government drains revenue and should be stopped. Such fiscal measures are carefully planned and judiciously applied elsewhere to stimulate the economy, not for politics or cronyism. Training, retraining and merit-based recruitment should replace the existing nepotism and abuse of the federal character principle that have degraded the efficiency of the service for decades.
After a series of internal repositioning, boosting staff welfare and morale, strengthening links with international organs to promote best practices and fostering a merit-based sense of geopolitical equity in the posting of commanding officers, the Service, under Adeniyi, set up the Revenue Review Performance Recovery Team (RRPRT), which has helped shore up the revenue profile of the Federal Government to new heights.
The need to increase revenue collection is particularly acute in countries that currently collect less than 15 per cent of GDP in taxes. This level of taxation is an important tipping point to make a state viable and put it on a growth path. The International Monetary Fund (IMF) says Nigeria recorded a tax revenue to gross domestic product (GDP) ratio of 9.4 per cent in 2023. This is a decline from the 10.86 per cent reported by the National Bureau of Statistics (NBS) for 2021. To cover for the shortfall, the federal government has had to depend on Customs for revenue generation through the borders.
In the first half of 2024, the Nigeria Customs Service announced an increase in its revenue, generating N2.74 trillion, surpassing the N2.54 trillion target by eight per cent.The performance also represents a 127 per cent increase over the previous year’s revenue.The service collected N1.39 trillion in the second quarter of the year, exceeding the quarterly target by 10 per cent and 131 per cent increase over Q2 2023.
To resume economic growth, reduce poverty, and support climate action, the World Bank argues that countries need to increase tax collection and make tax systems more equitable and efficient. Governments need to balance goals such as increased revenue mobilisation, sustainable growth, and reduced compliance costs with ensuring that the tax system is fair and equitable. Fairness considerations include the relative taxation of the poor and the rich; corporate and individual taxpayers; cities and rural areas; formal and informal sectors, labour, and investment income; and the older and the younger generations.
With Tinubu’s backing, Adeniyi and Wale Edun, the Finance Minister and Coordinating Minister of the Economy, should strive hard to achieve this objective. Edun and Adeniyi should work hard to efficiently fulfil the NCS’ three-fold mandate of collecting revenue, combating smuggling, and facilitating international trade. Adeniyi should stamp out corruption and ensure the adoption of ICT in all customs operations. The primacy of trade facilitation and border protection cannot be ignored nor jettisoned for revenue. As a former spokesman of the NCS and now, the new Comptroller General, CGC, Adeniyi understands the role of perception and meeting stakeholders’ expectations; the NCS under him cannot afford to remain the same or leave the borders porous.
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