• Thursday, March 28, 2024
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Govt needs to simplify trade by removing all bottlenecks to attract more volume- Jonathan Nicol

Jonathan Nicol

Over the years, shippers (importers and exporters) grapple with difficulties trying to clear their consignments from the nation’s seaports due to the cumbersome procedure and multiple taxation as well as levies imposed on the by government agencies.In this interview, Jonathan Nicol, president of the Lagos Shippers Association, shares with AMAKA ANAGOR-EWUZIE the travails of Nigerian shippers as well as the things shippers want from President Buhari’s administration in the next four years. Excerpts:

 What does Buhari’s re-election mean to Nigerian shippers? 

The past four years have been difficult for shippers and not much was done as far as infrastructural development in the maritime industry was concern. We made a call to government to save our souls because the bills we were paying were out of this planet. Maritime is a sector that is badly revenged by government agencies. We took time to compute what the shipper made when he eventually clears his goods after computing how much was paid for clearing goods.

Unfortunately, it was sad that shippers do not even make up to 10 percent and this occurs even in the manufacturing sector, and once the private sector is badly ravaged, the country is 60 percent sick.

We noticed that the sector does not have very experienced individuals in its agencies. We had people, who had never done this business before and it took them time to study the industry. We grappled with their lack of experience for months before they started to pick. So, that again was a big setback.

Can you share the experience of shippers while clearing his cargo from Nigerian ports?

Government gave the agencies targets and there was nothing like trade facilitation. For instance, an agency that was asked to make N500 billion, ended up declaring N530 billion. But the question is, is that the basis for development? In the past four years, we never had any infrastructural development.

The bills shippers paid were not regulated. When you want to bring in your goods, you start with the SONCAP certificate. After, you go for Form ‘M’, which takes one week before you can place order for your products. It takes the manufacturer a minimum of one month or two, and when the shipper gets his shipment, the first quarter would have gone.

It is in the second quarter of the year that you will now begin to receive some of the goods. This means that in the first four months of the year, companies will be paying salaries and don’t forget: no light, no water and no road to pass. You have to subsidise from the little revenue saved to meet up with these pressures. By the time the goods will come in, the shipper will be looking for money to clear it from the port.

We don’t have much problem abroad negotiating for the freight. The problem is dealing with our local charges and Shippers Council has been finding it very difficult to negotiate a downward review of these charges.

Customs says the PAAR is an advisory document, prepared based on the invoices from the importer’s supplier. I get upset with government policy because all the problems that we have in the system is from Government that gives a tag on the neck of its agencies to bring billions of naira.

We have this five percent VAT computed by taking the FoB and total CIS value; seven percent port charge; one percent ETLs surcharge before getting the VAT. It is believed that the five percent VAT has covered your goods and you also pay the Customs duty.

PAAR is not even a document that government should display on its platform. It is a deceitful aberration to take one percent Comprehensive Inspection Scheme (CIS) charge for a job that Customs officers were trained to do. In other words, the shippers are paying the Customs twice. Customs say they are generating funds for government by making people pay for what is not supposed to be paid for.

Government policies encourage corruption. On one consignment, the shipper also pays shipping line agency fee with five percent VAT, and terminal charges with another five percent VAT. This means a shipper pays 15 percent VAT on one consignment. If it is goods that need NAFDAC certification, you will also pay another five percent VAT, amounting to 20 percent.

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When the goods leave the port, you will now have the Federal Operations Unit of Customs to contend with. It is worrisome that the same Customs that releases the goods turns to intercept the same goods on the high way. Hardly will you see Customs officers on the highway in Britain and USA.

The clearing agent will also put five percent VAT on his bill on the same consignment. So, you have 25 percent VAT and 10 percent withholding tax and all these have legal backing for the agencies. These are all receipted payments because the amount given as bribe is more than the legal payment. If you seat back to calculate how much was spent, you understand why people smuggle the same goods at cheaper price.

We need to start the clean-up from government agencies and policies because they are creating difficulties. For instance, an agency like Standards Organisation of Nigeria (SON) is only interested in their statutory charges, and none of them is facilitating trade. Why doesn’t government simplify trade by removing all these bottlenecks rather than equipping quasi-military officers to arrest shippers’ cargoes?

The Federal Inland Revenue Services (FIRS) says they will keep the withholding tax till when you want to pay income tax, the company can use part of it but you must pay the five percent VAT. If you don’t pay the five percent, you will be penalised.

Meanwhile, FIRS is still holding your 10 percent, which would have taken care of the five percent. The 10 percent will continue to build up with their receipt for so many years. So, anytime the shipper says he cannot pay the VAT due to paucity of fund, the FIRS will say that you have violated the rule.

Shipping trade ought to be one of the most lucrative businesses all over the world and we have the ocean flowing into our lagoons and creeks, so for the next 1,000 years, we are guaranteed. So, why is government in a hurry to take all the money from shippers? This is one of reasons they are leaving the shores of this country to countries where government encourages them. Today, we see sporadic development offshore Benin Republic where you see choice houses built by Nigerians.

Government made so much money from the maritime sector, from tax, over N1 trillion from Customs, billions from NPA, SON, NAFDAC and other government agencies like NIWA, which brings the total monies generated from the sector to trillions. Yet, we don’t have good hospital, no good roads, no power and no amenities for the citizens, then why do we need to pay tax to government?

FIRS has started accessing people’s account to debit 30 percent tax from their gross income and turnover. This has gone beyond professionalism because the monies are not ploughed back to developing the system. People still run generator to get power.

What shippers want from Buhari’s administration?

First, we need complete restructuring of the sector. We need professionals to take over agencies in the sector. We do not want Federal Government to put tags on the necks of these agencies to generate whopping sums as revenue; rather they should be allowed to do their jobs. It is when Nigeria has enough cargo that governments make more money. We do not want these agencies to enslave people to pay monies they ought not to.

Customs should be manned by professionals, who will not be killing people on the high way, seize their goods and cars. If a smuggler beats the network of a law enforcement agency in the developed world, they will look for him to learn how he was able to do that in order to improve, but in Nigeria, they will shoot you. Because of the tortuous system we have, people study the import adjustment policy day and night to identify loopholes that would enable them escape.

We need a ministry of maritime. The National Transport Commission is coming to checkmate cost of doing business, but Ministry of transportation is over-loaded. Maritime ministry will enable us pay serious attention to trade facilitation and service delivery.

We also need to bring back our importers, who have taken their businesses to other countries by making our trade platforms simple. The easiest way to get people to align with government is through simplified trade.

Beyond PEBEC, government needs to look at ease of doing business because PEBEC is not doing any adjustment in the system. There should be a platform to discuss our challenges because government is for the people and by the people.