The Make or Mar Revenue Target for Customs

With declining cargo throughput and vessel traffic, the Nigeria Customs Service (NCS) needs to adopt new measures aimed at meeting its revenue target in the first quarter of the year, writes John Iwori

The NCS has several functions. The key ones are   trade facilitation, anti-smuggling and revenue generation. These functions are geared towards realising the fiscal policies of the federal government.

Of the three key statutory functions of the NCS, revenue generation remains the most attractive.  From available records, NCS remains a great revenue earner. From earning millions in the early 80s, it has moved to earning billions in the 90s and it is presently eyeing trillions. For instance, the NCS is expected to generate over N1 trillion this year. This is a target given to it by the federal government through the Federal Ministry of Finance. The Customs High Command, as a way of ensuring that it meets its target every year, also gives its commands across the country various targets to meet. This is one of the factors responsible for the stiff competition among Customs formations as each command strive to meet up. Whether it will meet this target remains to be seen as a lot of factors often come into play in NCS meeting its target over the years. The federal government depends on the revenue generated by the service to implement the budget, hence NCS is under pressure to deliver.

Focus on Maritime
While the price of crude oil is falling in the international market, the value of naira is depreciating against major currency, especially the United States dollar. The naira had slumped 18 per cent against the dollar as oil prices collapsed by almost half since June 2014. This prompted the Central Bank of Nigeria (CBN) to lower banks’ trading limits and introduce a new dealing system since February 2015. This has succeeded in preventing lenders from buying dollars on the interbank market without matching orders from customers who need to import goods. With dwindling income accruing into the central till due to the decline in the value of naira against the dollar as well as the poor price of crude oil in the international market, calls for the diversification of the economy have become strident. Many stakeholders have called on the federal government to step up efforts in getting alternative sources of income to fund the budget. There are fears in some quarters that if this is not promptly carried out by the authority, the Nigeria’s economy may fall into recession and eventually become bankrupt in the months ahead unless there is a significant increase in the price of crude oil in the international market.

 Lagos base lawyer and former President of the Nigerian Bar Association (NBA), Mr. Olisa Agbakoba had in early 2015 drew the attention of the federal government to the need to harness the enormous potentials in the maritime industry for the benefit of Nigeria. Agbakoba made it clear that the maritime industry could provide as much as N7 trillion annually if  the sector’s potential are  fully harnessed by the federal government. Since Agbakoba and others made the call, more attention is being paid to how the maritime industry can become a veritable source of income to the country.  In fact, the federal government is now focusing on ways and means it can make the shipping sector the mainstay of the economy as many other countries that do not have crude oil have done. In a bid to actualise this, all eyes are now on NCS. The Customs High Command had, in a bid to fulfill its mandate in line with the new thinking, is doing everything possible to ensure that all  leakages in the system are blocked in all Customs formations across the country. Already the Comptroller General of Customs (CGC), Colonel Hameed Ibrahim Ali (retired) has initiated ways to plug the leakages of government revenue.

Low revenue
The NCS has not been able to generate revenue the way it was doing in the past. The first quarter results of Apapa port in 2016 showed that it fared badly compared with the same period in 2015. According to the report which was collated by NCS, Apapa Area Command, from January to March 2015, it generated N74.6 billion while in the same period in 2016, it generated N61.7 billion. A further break down showed that in January, February and March 2015, the command generated N20.7 billion, N21.5 billion, N32.3 billion respectively. On the other hand within the period under review, the service generate N23.4 billion, N19.7 billion, and N18.4 billion for January, February and March 2016 respectively.

Reasons for low revenue
Besides the leakages in the system, there are other factors responsible for  the low revenue generated by NCS. From the data obtained by THISDAY, the general downturn in the economy, restriction of 41 items announced by the Central Bank of Nigeria (CBN) last year and the fluctuation in the exchange rates of the naira against the U.S dollar. Confirming the development, the Customs Area Controller (CAC), Apapa Area Command, Comptroller Willy  Egbudin said the restriction on these 41 items by CBN affected most of the cargoes that are usually imported into the country through Apapa port. They are mostly bulk cargoes such as wheat and sugar.

“How can we generate revenue to the level the command was doing in the past when there is a restriction on these kind of cargoes? It is one of the principal factors responsible for the low revenue generated by the command. It is a simple Arithmetic. When cargo is not coming in, we cannot generate the much needed revenue. This is because it is from the cargo coming through the ports that we generate the revenue,” he said.

Strategies to curtail losses
The NCS High Command is worried by the low revenue it is presently generating from its flagship command, Apapa. However, THISDAY checks revealed that the service is not resting on its oars as it  is strongly believed that if Apapa command meet up in its revenue generation mandate, NCS would be in a vantage position to fulfill other functions concomitant to its roles and responsibilities as a principal revenue earner into the coffers of the government.

 Egbudin noted that despite the poor vessel traffic and low cargo throughput, the command has put some measures in place to shore up its revenue in the months ahead.
These include charging men and officers in the command to ensure 100 per cent examination of containers, as well as proper classification and evaluation of cargoes imported into the country through Apapa port.  Egbudin stated that under his watch, men and officers are being encouraged to send weekly return of infractions and interventions including the names of the officers that did it for a reward.

 “This is meant to boost the morale of the officers and encourage them to do more. It will also encourage other men and officers to emulate them,” he said.
Moreover, a committee has also been set up to look into cases of unpaid duties, untilised pre-arrival assessment report (PAAR) and bonds that are supposed to be resolved.  Others are regular stakeholders meeting to make port users to key into the Comptroller General of Customs (CGC) policy thrust of zero tolerance to corruption; blocking of leakages in the system; and training and re-training of men and officers so that they will be alive to their roles and responsibilities.

Expectations
Expectations on NCS, by extension on Apapa Area are  high. This is  so because  Apapa Area Command is considered the  cash cow in the NCS family.  However, the  command is already making a success of its premier position.  It has continued to interface with stakeholders on the way forward.  A typical example is the recent sensitisation programme for exporters, agents and the general public. The forum was meant to educate them on the standard procedure for wood exportation.

Giving an insight for the sensitization programme, the command in a statement in Lagos said: “The federal government is trying to encourage exporters, because in the past, people depended only on the exportation of oil products. But now, that they have known that the price of oil has fallen, so there is a need to look elsewhere. The Federal Government has opened this window for exporters, especially those who are exporting wood. And the message is that if exporters want to export wood, it must be proceed either wholly or partially.”

Blaming the seizure made by the NCS on the inability of the exporters to follow the standard rule in exporting wood, the CAC noted that the procedure is simple if understood.
His words: “We are not against anyone one exporting wood but it must be done within the arm bit of the law. So, I feel it is necessary for them to understand what it entails, what they should do and the need for them to do the right thing. Sit down. Check the processes and see where you are getting it wrong and amend it. We cannot bend the rule or the procedure because it is difficult for you. It is a procedure designed by the FG and it has to be done that way. If you have any challenges in the course of time, contact DC export office for clarification and your questions will be answered. We want you to come forward, tell us your challenges”.

Appreciating the NCS for the sensitisation programme and drawing their attention to some areas of concern to the exporters, the Secretary General, Product Exporters of Nigeria Association, Mr. Odiase Joseph noted that export generally has been a thriving business in Nigeria. And that the major challenge has been on export of timber.

“Over the years, there has been a misconception of what the policy says as to what type of wood is allowed for exportation. And the meeting is for them to clarify, sensitise the exporters, their agents, and the general public that wood products itself is not prohibited, it is raw timber, unprocessed timber that is not allowed for exportation. It has gone a long way in educating our people,” he said.

Harnessing the potential
Many stakeholders in the maritime industry have averred that there is need to harness the huge potential in the maritime industry so that Nigerians can fully derive the full benefits. The inability of the federal government to harness the potential in the  maritime industry has denied  Nigerians of deriving its numerous gains as some other countries such as Singapore, Malaysia, and Philippines. Unlike Nigeria, these countries do not have a drop of crude oil in their soil. They depend solely on the maritime sector of their economies to meet the yearning and aspirations of their citizenry. As a proof that the maritime industry is a dependable source of revenue, Philippines, for instance, has continued to export its seafarers and in return raking in millions of US dollars into economy annually.

According to data collated by the International Maritime Organisation (IMO), the Philippines remains the highest supplier of seafarers to the shipping world.
Nigeria can begin to toe the same line by ensuring that it consolidate on the gains it has already recorded in the maritime industry through a robust strategy of placing NCS on a pedestal that it can attain set goals and objectives. One of the ways it can achieve this is by supporting the service to deliver satisfactorily on its mandate as one of the greatest revenue earners into the economy. All stakeholders should ensure that it can live up to expectations as enshrined in the provisions of the laws establishing it. In the face of dwindling income from the oil gas industry, NCS, especially Apapa Area Command, needs all the support and motivation to ensure that it deliver on its core mandate as the flagship of NCS.