Whither e-Customs Project?

Eromosele Abiodun writes that as predicted by stakeholders, the $3.1 billion e-Customs projects appear to have hit the brick wall with the delay in the formal signing of the agreement by parties involved

Late 2019, the federal government approved the engagement of a consortium of four firms to enter into a 20-year concession arrangement with the Nigeria Customs Service (NCS) and the Infrastructure Concession Regulatory Commission (ICRC) for a Customs modernisation project and establishment of digital and paperless Customs administration.

On September 2, 2020, the Federal Executive Council (FEC), presided over by President Muhammadu Buhari, ratified the NCS modernisation scheme estimated to cost about $3.1billion.

Stakeholders in the industry had kicked against the project on the grounds that the existing Customs automation platforms could be upgraded to fit the purpose, rather than wasting a whopping $3.1b on a new project, which will start from scratch.
Since the ratification of the project by the FEC, there has not been any meaningful development about its commencement date, or acquisition of necessary facilities that would aid operations.

The presidential initiative on the NCS modernisation or “E-Customs Project” requires the establishment of a digital/paperless customs administration. The government then approved the engagement of the consortium composed of Bionica Technologies West Africa, Bergan Security Consultants & Suppliers, Africa Finance Cooperation and Huawei to establish a project special purpose vehicle to enter into a 20-year concession arrangement with NCS and ICRC.

However, the move generated a lot of controversy with stakeholders alleging that due process was jettisoned. According to them, the selection of this the consortium was not advertised and no tender was issued for the selection of the best companies.
Some industry analysts also questioned why the government made the move when the NCS appears to have unlocked the hidden advantage in adopting trade facilitation following the Service’s modernisation introduced in December 2013.

This modernisation, they believe, gave birth to the introduction of the Nigeria Customs Information System (NICIS) in 2014, and by 2017, the NCS had migrated to NICIS II, a further improvement on their system. Interestingly, through NICIS II, customs has generated massive revenue for the country. This is aside being able to have integrated other government agencies, such as the National Agency for Food, Drug Administration and Control (NAFDAC); Standards organisation of Nigeria (SON); National Drug Law Enforcement Agency (NDLEA), among others.

With the implementation of NICIS II, importers, clearing agents and some customs freight forwarders, were showering the Service with commendations. According to them, the NCS had built a robust system especially since 2017 when it introduced the NICIS II which is centered around a paperless custom, and accommodates various organisation CBN, FMF, SON, NAFDAC, NIACOM Insurance Certificate, NAQS, NSA and FIRS, commercial banks and more than 3000 private sector companies (Importers, Shipping lines, Airlines, Clearing agents).

Contrary to stakeholders’ opinion, facilitators of the project believe it would improve Customs’ clearance efficiency in facilitating trade, stimulating end-user satisfaction, and fostering mutually beneficial relationships between consumers and the Customs.

When implemented, the e-Customs project would encompass, among other things, the deployment of e-Customs Production Applications, including e-Clearance, e-Port System, Risk Control Centre (RCC), Logistics Management System (LMS), Electric Cargo Tracking System (ECTS), Intelligent Gate (i -Gate) and Mobile Enforcement (ME).

FG’s Position
The Minister of Finance, Budget and National Planning, Zainab Ahmed, had while appraising the project said it has the potential to yield up to $176 billion in revenue for the country.
She said the main objective of the project was to completely automate every aspect of Customs business and institutionalise the use of smart and emerging technologies to enhance the statutory function of the organisation in the area of revenue generation.

She revealed that the project would be financed through Public-Private Partnership (PPP), for a concessionary period of 20 years.
“So, Council has ratified Mr. President’s approval for the PPP concession for a 20-year period to Messers e-Customs HC Project Limited, as a concessionaire for the delivery of Customs modernisation project.

“This is a project that will not have an immediate cost to the government, the investors are providing all of the financings and this revenue will be deployed in three phases, and they will look over the investment in the concessionary period of 20 years.

“The key point is that it is not costing the Federal Government anything, the $3.1 billion being proposed will be sourced by the sponsors and the partners,” she said.
She further said the project would enable the complete automation of the NCS processes and procedures using the application and information technology in all aspects.

According to her, the PPP group approved for the project is led by Messers Y Technologies with four other members.
She added, “The Bionica Technologies West Africa Limited, Bargain Securities and Supplies Nigeria Limited are lead sponsor and co-sponsor. We also have The Africa Finance Corporation (AFC) as the lead financier, and Huawei Technology as a technical service provider.”

Although the minister said the Customs currently has some of its functions and duties automated, adding: “This is end-to-end automation of all of Nigeria’s Customs Service processes and it’s going to bring huge value to the country.

“So, this investment of $3.1 billion is broken down into capital investment of $1.2 billion, which will be done in three phases over 36 months by these investors, and $1.1 billion is our projection of the operational cost over the 20-year period of the implementation of this project.

“This project has the potential to yield up to $176 billion of revenue and the consortia that are providing this investment are going to be paid overtime according to the schedule that is negotiated for their investments including their profits and cost.

“So, this is the best possible way for Nigeria to roll out important capital projects using funds from the private sector, and providing service for the use of the Nigerian people and the government,” she said.

Stakeholders Disagree
Meanwhile, stakeholders in the industry are worried that the automation drive, as laudable as it sounds, is a smart way of concessioning the Customs, through private business interests.
They also described it as another white elephant project and a drainpipe
The President, National Council of Managing Directors of Nigerian Licenced Customs Agents (NCMDLCA), Lucky Amiwero, said government should always consult experts in the industry before taking such critical action.

He also bemoaned the introduction of a digital system, at the expense of existing ones, which equally cost the nation millions of naira.
According to him, “This is just a clear waste of resources because we have an existing e-platform (which means electronically supplied information). That is what they (Customs) are using at the moment, and they can upgrade it if it is not up to date. If the license is giving problems, they can review the whole thing and make it to suit their expectations.

“By the provision of the agreement between Webb Fontain, and the Federal Government represented by the Ministry of Finance, they are supposed to have transferred the platform back to Customs because it is a Customs property. What they are using now is e-platform and they can upgrade it as they deem fit.”

Conversely, a finance expert partnering with the Bionica-led consortium, Ben Okoye said with the new project, the government would be able to free up resources, which could be channeled to other areas, activities and projects.
“This will in turn support and build the local economy of the host communities, through direct or indirect participation of small and medium-sized companies by affording them the opportunity to serve as service providers. It will also improve the quality of service delivery of the NCS as a result of the effective infrastructure that is in place, and restore consumer confidence in NCS officials and processes,” he added.

On his part, a leader of the National Association of Government Approved Freight Forwarders (NAGAFF), who did not want his name in print, said the introduction of e-Customs was a duplication of electronic technologies that have been promoted by the same Customs over the years.

“We don’t understand what Customs is doing. They are just deceiving the importing public. They already have the National Integrated Customs Information System – NICIS II. They started with ASYCUDA 2.7, which means Automated System for Customs Data. We had not completed that process before they took us to ASYCUDA 3.0., from there, to ASYCUDA World. Now, we have NICIS 1, and later NICIS 2. We don’t even know where one starts, and where it ends. That has been the problem. They are just confusing the stakeholders.

“They should just stop these ideas; they are just confusing the importing public. This is a mere strategy to embezzle the government’s money. Let them come out and tell us what value the e-Customs will add to our operations. What we know is that the entire logistic chain is facing a lot of problems, and until we deploy technology to the fullest in the entire cargo clearance process and documentation, we may not get it right in this country,” he said.

Motion against Deal
The House of Representatives was also against the project. Chairman of House Committee on Public Petitions, Hon. Jerry Alagbaoso had on October 10, 2019, moved a motion that the deal be investigated

Specifically, he said: “There are some foreign companies who are very eager to sponsor, finance and provide technical services to what they call the modernisation of Customs, without recourse to the National Assembly. My motion is the need to investigate the curious concession proposed arrangement between the consortium Bionica Technologies West Africa Limited, who are the sponsors; Bergan Security Consultants and Supplies, who are co-sponsors, African Finance Corporation, who are lead financiers and Huawei, Nigeria Customs Service and Infrastructure Concession Regulatory Commission (ICRC) for customs modernisation project.

“The House is aware that various customs modernisation projects in the past. For example, in the 90s, the United Nations Conference on Trade and Development (UNCTAD) paid for the installation of ASYCUDA++ and training of customs officers for three years.

“The House is also aware that the federal government agreed to engage former pre-shipment companies for valuation and classification of goods, hence some service providers namely Webbfontaine, Cotecna, SGS and Globalscan were engaged for that purpose. This contract was to last for seven years, from 2005 to 2012 when the service providers handed over to Nigeria Customs Service. By 2011, one could say the positive effects of this included competent and committed workforce for Nigeria Customs Service, personnel understanding of the new process and benefits to stakeholders.”

He added, “It resulted to collection of proper revenue due, elimination of corruption and other benefits. The House notes that with these put in place, there exist a one-stop shop which allows all trade transactions to be conducted through a single system domiciled with the customs. For example, all other government agencies like NAFDAC, SON and the rest have dissolved into a single platform with the Nigeria Customs Service.

“In 2011 there was an illegal concession between the Federal Ministry of Finance and a company with inadequate capital base called Single Window System and Technologies, signed in secrecy during the government transition period and this responsible house of representatives had a public hearing and stopped it to save Nigeria billions of Naira Vide the votes of Wednesday, 13 July 2011, the house. In 2017 another move for customs modernisation was made by the Technical Committee on the Comprehensive Import Supervision Scheme, purported to be acting on behalf of the Federal Government called Adani Systems Nigeria Limited to modernise, maintain, develop the scanning of goods in the country in line with the pre shipment inspection act for a period of 25 years.

“Again the attention of Controller General of Nigeria Customs Service was drawn to this and the concession was stopped. Curious that in September 2019, another concession, which will last for twenty years( that is the subject matter now) is being suggested to Nigeria Customs Service, Infrastructure Concession Regulatory Commission, Federal Ministry of Finance, Federal Ministry of Budget and Planning, Federal Ministry of Justice and this agreement is for pro-rata sharing of one percent Comprehensive Import Supervision Scheme and a $300m investment.”

“Worried that billions of Naira will be frittered away from the account of the one percent Comprehensive Import Supervision Scheme with the Central Bank of Nigeria, regarding the cost of this latest customs modernisation by different parties involved. Further worried that there is no difference in substance, scope and structure between the failed concession attempts of 2011, 2017 and 2019. There is already a national single window platform in the Nigeria Customs Service and officers of the service are performing beyond expectations, collecting duties in billions of naira on daily basis. The fact that it failed in 2011, 2017, there is no way it cannot fail in 2019, “Alagbaoso said.