Lagos: The multiple tariffs being collected by government agencies at the ports have become an albatross in the Federal Government’s drive towards making Nigeria the maritime hub in the West Africa sub-region, reports Oluwakemi Dauda: The Federal Government obviously has to look beyond the economic gains it intends to derive from the numerous tariffs imposed on importers and exporters working in the nation’s maritime industry and look at the implications that multiple taxation poses to the economy. It makes the nation’s seaports unattractive for business, thus denying the government the opportunity to generate substantial revenue for the country.
Stakeholders insist that, given the depth of the Nigerian market, the Federal Government has little or nothing to lose if she stops multiple taxation at the ports. By so doing, the nation’s seaports, these operators argue, would become the hub for international freight and trade in West and Central African sub-region.
However, in contrast to the great expectations of Nigerians that the Federal Government can use the port to attract investors to boost the nation’s revenue profile, the multiple tariffs being collected by its agencies at the ports have a cog in the wheel of fortune considering the preponderance of smuggling and other sharp practices perpetrated by some unscrupulous individuals in the industry.
World Bank case study
According to the World Bank report, goods worth $5billion (N750billion),which translates to 15 per cent of the nation’s total imports, are being smuggled illegally into the country. The goods, according to the report, are being smuggled into the country from the Republic of Benin on a yearly basis.
Tagged: ‘How Nigeria’s trade policy facilitates unofficial trade and impacts negatively Nigeria’s Customs Efficiency and Economy,’ and anchored by two leading experts of the World Bank, GaÃl Raballand and Edmond Mjekiqi, both of the African Transport Unit, the report observed that: 'Most importers bring their goods and vehicles through the Cotonou port because it is very efficient and less expensive.'
Confirming this report, a senior government official who does not want his name in print, said smuggling activities through seaports of neighbouring African countries, has not abated despite the Federal Government’s announcement reversing the age limit of vehicles imported through the nation’s seaports from 10 year to 15 years.
An importer, who spoke with The Nation under the condition of anonymity, gave plausible explanation as to why they (importers) still prefer other ports even though the final destination of the vehicles is Nigeria, said that importation through the nation’s seaports is not attractive for local business people due to the soaring cost of processing and documentation of same.
But officials of the Nigeria Customs Service at Seme border, who spoke under the condition of anonymity attributed the development to importers’ tendency to 'cut corners.'
‘‘Nigeria has six major seaports in different parts of the country. I see no reason why importers still prefer ports of neighbouring countries if not that they are planning to cut corners. Majority of these importers are not ready to pay import duty, which makes smuggling more attractive, since it guarantees additional profit for the dealers and makes it cheap enough for the end users to buy. And that is why I support the idea that the Federal Government should stop multiple taxation at the port', the importer stressed.
Security agents, shipping companies and terminal operators have since formed what maritime analysts have described as a triad of vicious extortions in recent times.
Importers and clearing agents working in the nation’s maritime industry said they were not happy with the policy of Federal Government on the huge number of agencies representing it at the ports and the tariffs imposed by them.
Speaking with The Nation in his office in Lagos, recently, the National President, Association of Nigerian Licensed Customs Agents (ANALCA), Alhaji Olayiwola Shittu said the greatest challenge facing maritime transportation is the issue of multiple taxation and unnecessary charges by terminal operators, shipping companies and service providers which are not commensurate with the services rendered by them.
Importers and clearing agents, the ANLCA chief said, pay huge amount of money at different points in the ports before their goods are cleared.
The shipping companies, Shittu said, also force agents and importers to pay deposit for containers loaded by trucks. He alleged that in most cases the terminal operators look for needless excuses so that the monies would not be refunded after the agents have returned the containers.
Expatiating, Shittu said: ‘‘Normally, the tax on imported goods is five per cent but an importer would be wasting his time to think that is the only tax to be paid. There are several other government charges that make the tax to go up to as high as 15 per cent. For example, after paying the five per cent, you will still have to pay a sub-charge, which is seven per cent, this is called development charge.
'The same Federal Government has not developed any new port over the years; we are beginning to ask questions pertaining to that money. Apart from this, you have to pay 0.5 per cent tax called Economic Community of West African (Ecowas) Trade Liberalisation Scheme; this is the money set aside by the government to take care of the Ecowas interest. The service provider put in place to ensure that proper documentations are made to meet some certain standards, you pay them one per cent.
‘‘The increase in the money for clearing goods in the ports will continue to escalate as long as terminal operators are charging whatever they want, and as long as the security agents are there to extort money. If your goods are put on a wooden panel for off-loading or up-holding, plank guarantors will tell you that that particular goods abroad was not registered, so the owner should pay a particular amount of money in their office or find something for 'the boys.'
Importers, who spoke with The Nation, said the terminals operators are charging very high tariffs. Clearing agents are also complaining of arbitrary charges by the concessionaries. They said the cost of doing business has become so high that some importers who have to abandon their cargo at the ports because of the high tariffs. One of the importers and Chairman, Oguns Maritime Venture, Mr. Kayode Ogunsanu, said many importers, having to pay more than what they budgeted for to the terminal operators, were forced to route in bound cargo to negihbouring ports of Cotonou or Tema.
"With such transport hiccups confronting importers and clearing agents, can we say the country is moving towards becoming the hub in the sub-region,’’ he asked.
"One of the major problems confronting our ports is high port charges and we hope the government will also address it so that the country would become the preferred destination as postulated by government,’’ said an importer, Mr. Fredrick Solomon.
Speaking on behalf of other importers, Solomon said after the concessioning of the ports, most importers and clearing agents still believe that the much expected reduction in the prices of cargo clearance has remained a mirage even as concessionaires keep on inventing new ways of collecting levies from importers. The increases, operators said, is not in line with government’s promise of lower rates few years after concession.
The concessionaires on their part, he said, are blaming the high charges on the rising prices of petroleum products to run their machines, the cost of acquiring cargo handling equipment and the need to make returns on their investments. But the importer said that an increase of over 100 per cent higher than what importers used to pay before concession is not competitive.
Another importer and maritime lawyer, Mr. Rotimi Salako said shipping lines, terminal operators and off-dock terminals have jacked up their prices, while demurrage on containers have also tripled far beyond what was charged before the concession.
According to the lawyer, for a 20-footer container, shipping companies charge N5,000 for document release, container cleaning N3,000, shipping line charges N28,000, telex release N5,000, amendment charges N15,000, as well as five percent Value Added Tax (VAT) of all the total charge. They explained that the shipping companies also collect N580 for NPA as Maritime Organisation of West and Central Africa (MOWCA) levy and demurrage on containers that were not returned on time.
Terminal operators collect N3, 500 delivery charges, N25, 000 terminal handling charges, N400 vehicle entry permit, N2, 500 to position containers for examination and N1, 500 storage or rent charge for first three days after grace period and N3, 500 after 24 days. For the off-dock terminal, according to him, they collect N20,000 as transfer charge, N2,000 as release and documentation, N5,000 as royalty to terminal operators, N2,500 to position containers for customs examination, N3,500 as labour charges for examination, including N1,250 as terminal delivery charge and N400 for vehicle entry permit.
Before the concessioning, the importers said the charges were N1, 204 as wharf age and N1, 294 for documentation and release, terminal delivery order including vehicle entry permit, stressing that importers also pay five per cent VAT of the total charges. The NPA also charge N375 as demurrage after three days grace period and N750 for 40-footer, no matter the number of days.
Apart from the charges, which importers pay to the shipping lines, terminal operators and bonded terminal operators, they also pay to the Customs seven percent port levy, five percent Value Added Tax, Negotiable Duty Credit Certificate, 0.5 percent ECOWAS Trade Liberalisation Scheme, one percent Comprehensive Import Supervision Scheme, 20 per cent rice levy and 10 per cent duty, including 10 percent textile levy as well as 30 per cent surety and other levies.Last year, Lagos State Government came up with Wharf Landing fee in which cars are to pay N300, 20-footer container N500 and 40-footer containers N1,000.00 respectively.
Parity with other ports
Importers, who spoke with The Nation said the review would eliminate arbitrariness and ensure parity with other ports particularly those of neighbouring countries. Speaking on behalf of other importers in Lagos last week, the Managing Director, Sea Investment, Mr Richard Ogoegbunam said port tariff must be competitive and also have to be commensurate with services rendered by the terminal operators.
To reduce the cost of doing business in the ports; Ogoegbunam said the Nigerian Shippers’ Council had abolished service charges, bank charge, commission on turnover and concessionaires service charge. He also praised the council for abolishing port administrative charge and sorting charge.
Ogoegbunam said the council had been implementing the Inland Container Depots (ICDs) project on Build Own, Operate and Transfer (BOOT) basis to bring shipping services to the door steps of shippers. He said the ICDs would also assist in decongesting the seaports and make them more user-friendly. He criticised Customs bureaucracy at ports saying the bureaucracy they mposed by Customs on containers and Roll on/Roll off (RORO) vessels by customs procedures were a challenge to ports operations.
He explained that the interference of multiplicity of government agencies at the ports also posed a major challenge to ports operations. According to him, the Single Window Electronic Trade Facilitation initiative, which could resolve the cumbersome problem of clearing procedures and the associated delays in cargo clearance should be resolved.
'This system eliminates human contact and the use of discretion, which have been identified as major causes of delay in the clearance procedure’’, he said. He said the electronic system would not only facilitate trade but also ensure improvement in revenue generation and higher turnover.
The system, he said, would also incorporate a system for truck control, which would ease movement of cargo out of the ports. He however, acknowledged that cargo handling deliveries had improved.
Shittu said that the solution to the problems especially in the area of revenue generation was for all the relevant operators in cargo clearing including Customs, terminal operators, shipping companies, freight forwarders to publish their charges to enable people know the amount required of them.
He said the Customs should as well make public its databank that contains the charges for a particular item, without necessarily making it a secret affair. According to him: 'The only solution we have for this country on revenue generation, as the Joint Action Committee of the Freight Forwarders have presented to the Minister of Transport, is for the freight forwarders in collaboration with Customs to publicise the charges, by knowing how much to pay for the job done per 20 foot or 40 foot container.
'If an importer decides to pay the man more than what we have publicised, that is left to him. In doing that, we are also asking the Customs service to issue a benchmark for its collection. What I mean by benchmark is that Customs has what we call databank of all imported goods, why are they making it secret?
'They should publicise their data bank, so that an importer who is going to bring in Global System for Mobile (GSM) handset will know how much it will cost him to bring in a container load of it. The government should also help as regards the shipping companies, so that we will have one stop shop as it is the practice in Cotonou and other countries, so that you will know the value of duty you are paying in total.'