Trade facilitation gap in Nigeria boosts other economies

There are indications that the Nigerian economy may be battling with huge revenue losses to economies of other neighbouring countries as a result of inefficient drive for trade facilitation by government agencies, BusinessDay findings show.

It has been alleged that government agencies saddled with the responsibility to facilitate trade activities in Nigeria have been more concerned about revenue collection and security, while giving little or no attention to trade facilitation, which encourages balance of trade and economic growth.

Maritime industry players have attributed the dismal performances of Nigerian trade to several factors traditionally associated with trade facilitation, such as complex customs requirements, high tariffs, lengthy and non-transparent bureaucratic procedures associated with the movement of goods and services across international borders.

“The challenges importers face at Nigerian ports are so enormous that some of us (importers) prefer to bring in our goods through the ports of Lome, Benin Republic,” Vincent Anyanwu, managing director, McVin Limited, said.

Anyanwu told our correspondent that the documentation processes at the Nigerian ports were lengthy and this had led to undue delay in the clearance of goods at the ports, which in turn result to high cost of demurrage and port congestion.

Apart from lengthy documentation process by the Customs, some policies of the government tend to encourage diversion of goods laden vessels to the ports of Benin, Lome, and Ghana where port activities are less cumbersome. As a result, the nation’s revenue is experiencing a slope.

In the last quarter of 2015, the Nigeria Customs Service (NSC) had a revenue shortfall of N230 billion, saying its average monthly revenue had now fallen to about N50 billion from an average N80 billion.

Hameed Ali, comptroller-general, NCS, attributed the shortfall to low domestic and international trade as well as the dwindling foreign reserves of the country. Ali also noted that smuggling activities were crippling the nation’s economy.

Ali emphasised that “what people tend to forget is that customs is not only created to collect revenue, it is supposed to create trade facilitations and to be part of the security arrangement of the country. So, trade facilitation is one of our biggest and most important roles.”

In the World Bank ‘Doing Business 2015 Report,’ Nigeria was ranked 156th out of 189 countries monitored. In terms of ‘Trading Across Borders,’ Nigeria was ranked 28th in sub-Saharan Africa.

According to the report, to export from Nigeria, the average port dwell time is 22 day. For export procedures, it takes 33 days; while the average port dwell time in Lome is 18 days and in Abidjan 14 days.

Another typical example of this anti-trade measures in the country that aids smuggling activities that are crippling the nation’s economy includes the Nigerian automotive policy which imposes 35 percent tariff on commercial buses, trailers, trucks and semi-trailers while the same items attract 5 percent in Ghana.

The policy and other artificial bottlenecks created by the Customs are said to be discouraging importers from routing their consignments through Nigerian ports which is causing a huge revenue loss to Government, private sector on the massive diversion of vessels and number of unemployment in the economy.

Lucky Amiwero, National President of the National Council of Managing Directors of Licensed Customs Agents confirmed the ineffectiveness of Nigerian policies to promote trade in the country, saying that “it’s quite unfortunate that this is a country that has not built manufacturing structures because we don’t have facilities and our infrastructures are actually in a bad shape, we cannot compete favourably. The whole thing is very clear.”

According Amiwero, Nigeria is an import dependent economy; it cannot go into manufacturing overnight. “It is something that will be taken in a gradual state.”