The lingering face-off between exporters and the Nigeria Customs Service (NCS) over the redemption of Negotiable Duty Credit Certificates (NDCCs) under the Federal Government’s Export Expansion Grant (EEG) has been resolved.
The Federal Government said on Monday that Customs can now accept the certificates, on the payment of seven percent of the debit value of all certificates presented by exporters.
Before now, revenue considerations and red tape in the Customs department had accounted for non-redemption of the duty credit certificates.
The EEG scheme, created in 2005, is an initiative of the Federal Government to create incentive for the stimulation of export-oriented activities. It was calculated that this would lead to significant growth of the non-oil export sector.
However, piling backlogs of the certificates with the customs thwarted the export drive. The Federal Government on Monday attested to the build-up of backlogs, thus confirming persistent claims by stakeholders that the Customs Department has been a stumbling block to the smooth operation of the EEG scheme.
According to Yerima Ngama, Minister of State for Finance, who spoke in Lagos at the Nigerian Economic Summit Group’s (NESG) Dialogue with the Private Sector on the ongoing Reforms for the Improvement of the Nigerian Business Environment, government has set processes in motion to clear the backlog and make the scheme work efficiently.
“I found out that the bulk of the NDCCs were still with the Customs. There are lots of backlogs,” he said.
Proffering reasons for the backlogs, he said Customs was reluctant to accept the certificates because their acceptance would amount to undermining their duty collection targets.
“The more NDCCs they collect, the less the duty they net in,” he said.
The minister however said government saw the need for a review, which has now been done. Said he: “The first review we embarked upon was to prepare Customs to accept the NDDCs. We agreed all exporters should pay seven percent of the debit value. This we consider is better for them, than the burden that will place on them from banks, by way of rediscounting of the instrument.”
The minister said that following instructions to that effect, Customs had started collecting seven percent on all NDCCs used for export .
BusinessDay had earlier reported that the Nigeria Customs Service rendered NDCCs valued at N60 billion worthless, and that business owners across the country, engaged in non-oil business, were stuck with the certificates.
According to Central Bank of Nigeria (CBN) data, in 2011 alone, non-oil exports in Nigeria accounted for N485.2 billion. Industry analysts told BusinessDay that considering the cumulative figure from 2005 when the scheme was created, up till now, and considering government’s current drive to boost non-oil exports, the N60 billion attributed to stalled EEG certificates was a conservative estimate.
Holders of the certificates say that Customs officials, in defiance of the supervising ministry, are deliberately refusing the certificates in order to collect gratifications and/or to meet their revenue targets.
A letter addressed to the Comptroller of the Nigerian Customs Service, dated December 1, 2010, signed by Olusegun Aganga, then Minister of Finance, had directed the Customs boss to accept the NDCCs for payment of import duty for industrial machinery and raw materials. The Comptroller General had earlier issued orders to formations in his department to restrict the use of the instrument.
It would be recalled too that Minister of State for Finance, Yerima Ngama and his Trade and Investment counterpart, Samuel Ortom, appeared before the Senate Committee on Investment, to explain the workings of the EEG and NDCC.
The invitation of the two ministers by the Committee was sequel to complaints by some beneficiaries of NDCCs that some operatives of the Nigerian Customs Service were not always forthcoming in honouring the certificates, leading to difficulties in import transactions.