FG moves to close multi-billion naira smuggling loophole

The Federal Government yesterday lifted the ban on the importation of textile and other sundry items, thus taking what appeared to be a decisive step towards plugging the huge financial hole through which smugglers and some corrupt customs officials had deprived the country of massive revenue.

A circular issued by Olusegun Aganga, minister of finance, to the Comptroller-General, Nigeria Customs Service, said: “This is to confirm that Mr. President has granted approval for the under-listed products to be removed from the import prohibition list (trade).

Furthermore, Mr. President has approved an import duty rate of 10% plus 10% levy on health and energy drinks (i.e. Power Horse, Red Ginseng, etc, which had been excluded from import prohibition), and the extension of the age of used motor vehicles to be imported into the country from 10 to 15 years of manufacture.”

The circular, titled “Revision of schedule three-import prohibition list (trade) of the 2008 – 2021 common external tariff (CET),” also puts the new import duty and levy on cassava at 20 percent and 15 percent respectively; import duty and levy on toothpicks, furniture and textile at 20 percent respectively.

Analysts told BusinessDay last night that the lifting of the ban on textile, especially, was a good development that would block some of the loopholes which smugglers and corrupt elements in the Nigeria Customs Service had exploited over the years to milk the nation of trillions of naira in revenue.

The action of the government, the analysts said, is also in line with a recent report of the World Bank on Nigeria which noted that the nation’s list of banned items was “unnecessarily too long” and as such, encouraged corruption.

“Besides, it will open the window of opportunity for the Federal Government to plough back the huge funds to be recovered into the development of the real industry. It will also provide international retailers with the opportunity to open shops in Nigeria, and those made-up garments that Nigerians go to other countries to smuggle in will be made available and appropriate tariff paid on them,” the analyst said.

It is estimated that over N750 billion is lost yearly to smugglers and corrupt customs officials as a result of the ban on textile alone.   This spurred the World Bank to warn recently that the list of banned items in Nigeria was too long and that neighbouring countries were taking advantage of it, just as it was also fuelling corruption in the customs.

“Whenever tariff duties differentials do exist between two neighbouring countries, the tariff wedge provides opportunities for customs officials to extract rents from imports and smuggling,” the World Bank declared.

Reacting to the development, John Aluya, chairman, Apapa branch of Manufacturers Association of Nigeria (MAN), noted: “We, as manufacturers, are not saying they should not lift ban on these products, but there should be a local protection tariff. They can bring in these things but the Nigerian government should have local tax duty of about 40 percent on textile products coming into Nigeria.”

Jaiyeola Olarewaju, executive secretary, Nigerian Textile Manufacturers Association (NTMA), in a chat with BusinessDay said that 20 percent import duty on textile and 20 percent levy could be a way to protect local production if well implemented by men of the Nigeria Customs Service.

Olarewaju, while commending the funding access granted to local textile manufacturers by the Federal Government, however observed that it would achieve far less than the desired goal of the textile sector’s revival if issues like smuggling, faking and counterfeiting and energy crisis were not readily addressed.

Before the lifting of the ban on textile import, smuggling, faking and counterfeiting of textile products had thrived, with the customs not doing much to curtail it; as such, it accounted for over 80 percent of fabrics, especially printed ones, sold in the country’s open markets.

Ibukun Awosika, chairman/ CEO Sokoa Chair Centre in Lagos, told Business Day that it is a wake-up call for furniture manufacturers in Nigeria to become more competitive. “There was a boom in production when there was a ban on furniture import. The government probably lifted the ban because of some people who want to benefit from it. We have made a lot of investment in furniture manufacturing since the ban on import in 2004 because it made the business so attractive to both local and international operators that we even started exporting some of our products to Ghana.

We generate our own power to produce and a lot investment had been made. This is a challenge to us.

We are already working on a huge furniture industrial cluster in Ogun State, which has already attracted people from other countries. Unfortunately, if anybody can now begin to import furniture products into the country, it means our effort to industrialize the country and create more jobs through manufacturing is frustrated. We have created a lot of jobs through our huge investment in production. Government’s inconsistent policies have been the problem of manufacturing in the country. Well, goodluck to those who came up with the new policy”, she said.

Meanwhile, the decision to extend the age limit of used cars imported into the country from 10 to 15 years has, since yesterday, also continued to elicit reactions.

Chukwuma Oke, for instance, called for caution on the implementation of the new development. He spoke of the need for a close monitoring of the decision, because in the past, a lot of importers of these fairly used cars had abused the age limit order.

“Today, all you see on Nigerian roads are nothing but death traps, in the name of ‘Tokunbo’ cars,” he noted.

Another analyst who does not want his name in print, while picking holes in the development, queried the long or short term benefit of extending the age-limit of used cars to 15 years.