20/11/2019

Concerns over N300b Customs deal


Concerns over N300b Customs deal

















A deal aimed at accessing the over N300 billion in the Comprehensive Import Supervision Scheme (CISS) for modernisation of the Nigeria Customs Service is now the subject of an investigation by the House of Representatives. Similar modernisation efforts in the past have not been complemented with the provision of requisite equipment for greater efficiency.

Caroline Nottage, writing on “The rise of Customs modernisation in Nigeria” in thewillnigerian.com, submitted that “customs automation is one of the most powerful tools known to have increased customs efficiency and exposed loopholes where corruption dwells in. Trade facilitation aims at making trade across borders faster, simpler and cheaper while ensuring its safety and security.”

In recent times, advanced countries have effectively implemented, maintained and successfully saved billions of dollars during the era of customs automation. Although Nigeria may not belong to the list of advanced countries, this scenario is also applicable to the country’s Nigeria Customs Service (NCS).

This is because the NCS appears to have unlocked the hidden advantage in adopting trade facilitation following the Service’s modernisation introduced in December 2013. This modernisation 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, between 2017 to date, through NICIS II, customs has generated above N1trillion in revenue for the country. This is aside from 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 this, stakeholders are convinced that the system in the service has not failed; rather, what is needed to be done is to procure technological devices for customs operations because Customs officers were trained abroad on risk management, data analysis, and other facets of customs modernisation during this period and returned to train their colleagues back home.

A new order

Recent findings revealed that there is another “modernisation” initiative in the making for the Service. The deal will lead to the accessing of the over N30 billion in the Comprehensive Import Supervision Scheme (CISS) for modernisation of the Nigeria Customs Service. The money is with the Central Bank of Nigeria (CBN).

The initiative, which is to involve both local and international players, is a subject of concerns. Fingered in the deal are foreign and Nigerian companies, some of whose track records remain largely unknown.

For instance, Bionica Technologies West Africa Limited was pencilled down as the Lead Sponsor for the modernisation exercise; Bergman Security Supplies and Consultants as Co-Sponsor; African Finance Corporation as lead Financier.

To ensure the take-off of the initiative, a directive from the Presidency was issued to the ministers of Justice and of Finance, Budget and Planning, mandating them to finalise the concession agreement between Infrastructure Concession Regulatory Commission (ICRC), Nigeria Customs Service (NCS) and a Special Purpose Vehicle company for the deal.

In the document from the Presidency, the instruction was very clear on the agreement for the modernisation, provides that the CISS and Nigerian Export Supervision Scheme ( NESS) revenue-sharing arrangement “commences on a pro-rata basis against the phase one $300 million investment programme only upon commissioning of investments, verifiable by Central Bank of Nigeria (CBN) letters of credit or valid import documentation; and an appropriate termination clause be effective if the consortium is unable to reach financial close within nine months of the concession agreement being effective.”

Stakeholders’ worries

The Presidential initiatives on Customs Modernisation “E-Customs Project”, the establishment of a digital /paperless Customs Administration approved the engagement of the consortium composed by Bionica Technologies West Africa, Bergan Security Consultants & Suppliers, Africa Finance Cooperation to establish a project special purpose vehicle to enter into a 20-year concession arrangement with NCS and ICRC. Stakeholders say the 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.

Lawmakers have argued that government agencies should have shares in the structures. In the current setup as being planned, the government is not known to have shares in the Special Purpose Vehicle that will be created, as the private sector partners to invest 100 per cent upfront.

More worrying to industry players is that the partners are not known to have any discernible experience to warrant their inclusion in such a huge and sensitive endeavour.

With the implementation of NICIS II, importers, clearing agents and some customs freight forwarders, are showering the Service with commendations. According to them, the NCS has built a robust system especially since 2017 when it introduced the NICIS II which is centres around a paperless the platform, 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). Last month, the NCS generated over N115 billion in revenue despite the closure of land borders. This is said to be due to the electronic payment of duties and taxes thereby securing revenue collection and removing opportunities for fraud. Besides, clearance time is also drastically reducing for revenue collection and electronic certificates, leading to better turnaround times and therefore many more revenue cycles.

An agent, Kayode Anifowoshe, explained that changing such a complex Customs system to an untested IT system that has never been implemented in a big country might have an impact on the revenue collected by NCS and could have a serious impact on the ability to import and export for several months.

“There is no need to introduce an inexperienced consortium to work on Customs issues. Such programmes should be based on Public-Private Partnership (PPP) as the contractual framework as it is a well-proven business and funding model. The granting of a 20-year concession in a non-tendered and the non-transparent process seems precise to be the type of business model that the Nigerian government has been trying to move away from, so why on this,” Anifowoshe said.

Checkmate

On October 10, House Committee on Public Petitions Chairman Jerry Alagbaoso moved a motion that the deal be investigated. He had submitted that there are some foreign companies who are very eager to sponsor, finance and provide technical services to what they call the modernisation of Customs, albeit, without recourse to the National Assembly.

“My motion is on 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 Suppliers, who are co-sponsors, African Finance Corporation, who are lead financiers and Nigeria Customs Service and Infrastructure Concession Regulatory Commission (ICRC) for the customs modernisation project.”

The African Finance Corporation (AFC), which is to be the financier of the project, according to Alagbaoso, will result in a 20-year concession and frittering away of funds in the CISS account domiciled with the Central Bank of Nigeria ( CBN).

Alagbaoso added that in the 1990s there were efforts to modernise the customs by the United Nations Conference on Trade and Development (UNCTAD), which pioneered the process of Automated Systems for Customs Data (ASYCUDA), leading to the installation of ASYCUDA++ and training of customs officers for three years. Besides, he said the House was aware of various customs modernisation projects in the past.

“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 a competent and committed workforce for Nigeria Customs Service, personnel understanding of the new process and benefits to stakeholders.

“It resulted in the collection of proper revenue due, elimination of corruption and other benefits. The House notes that with these put in place, there exists 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.

“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 20 years 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 per cent Comprehensive Import Supervision Scheme and a $300m investment.

“Worried that billions of Naira will be frittered away from the account of the one per cent 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 the structure between the failed concession attempts of 2011, 2017 and this 2019.

“There is already a national single window platform in the Nigeria Customs Service and officers of the service is performing beyond expectations, collecting duties in billions of the naira on a daily basis.

“The Federal Government is being misled by advice on this one per cent Comprehensive Import Supervision Scheme, which has accumulated in billions of naira in the Central Bank of Nigeria.

“A motion for CBN to account for this money was moved in the 8th Assembly, the House, therefore, resolved to mandate the committee on finance, customs, public petitions, committee on agreements to expose the foreign and local collaborators involved in this project either as sponsors, co-sponsors, financiers and others.

“Mandate the CBN to account for the funds between 2012 and now and urge all parties involved to maintain status quo until the outcome of the public hearing and report back in three weeks

“Three or four foreign companies are bringing their selfishness into our national agenda. The fact that it failed in 2011, 2017 there is no way it cannot fail in 2019,” Alagbaoso said.

Recurring decimal

In 2011, a Nigerian incorporated company, Single Window Systems Limited being promoted by a retired Comptroller General of Customs attempted having control of the customs ICT system through the back door.

Hamman Bello Ahmed, the former Customs CGC, has his son and daughter-in-law as key directors of the company.

Upon investigation by the House Committee on Customs, in 2011, Single Window Systems Limited was found incompetent and unfit to handle a job.

In 2017, Adani Systems Limited, a foreign firm alongside other Nigerian companies and collaborators sought to take over customs modernisation and failed. The 2017 failure happened faster with lesser resistance than that of 2011.

On hold pending probe

The House has now put the deal on hold pending an investigation. A public hearing will be held soon.

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