• Lament revenue Leakages due to project failure
Tobi Soniyi- THISDAY REPORT
Nearly a year after the Federal Executive Council (FEC) approved a concession agreement to reposition the operations and boost revenue generation of the Nigeria Customs Service, experts are worried that a formal agreement has not been signed by parties thereby stalling the take off of the project.
On September 2, 2020, the Federal Executive Council presided over by President Muhammadu Buhari ratified the Nigeria Customs Service modernisation scheme at the cost of $3.1 billion.
However, nine months after the president’s approval, experts are worried that bureaucrats had kept the agreement under the table even as Nigeria continues to take external loans to finance infrastructures.
“How do you explain that government officials have dithered for nine months on a project approved by the highest organ of government and nobody is asking any questions,” a retired permanent secretary said, asking not to be quoted.
A finance expert also expressed concern that government officials who advise the president on economic matters prefer to jump at foreign loans instead of exploring alternative revenue sources.
“Can you imagine how much leaking revenue would have been plugged if this scheme had taken off early in the current year? But the fat cats at the ports and customs would rather prefer the status quo,” said the top banker based in Lagos.
At the FEC meeting last year, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed had presented a memo approving the e-custom project for the complete automation of the NCS processes and procedures using the application of information and technology in all aspects of Customs administration.
Rising from the FEC meeting, Zainab had told journalists that the concession to Messrs E. Customs HC Projects Nigeria Limited would last twenty years.
She said it was projected that the government would earn about $176 billion during the period.
“The main objective of the project is to completely automate every aspect of the customs business and to institutionalize the use of smart and emerging technologies that will enhance the statutory function of the Nigerian Customs Service in the areas of revenue generation, trade facilitation and enhancement of security,” the minister further explained.
She said the project was approved as a Public-Private-Partnership model and that the Federal Government would not invest any funds in the scheme.
She said the project would be solely financed by a consortium led by Messrs Y Technologies with four other members.
According to her, the committee that led the process also looked at the National Trade Impact process that has been going on for years and confirmed that the Nigerian e-customs project is a subset of the National Trade Impact and would prefer the Nigerian Customs to play it’s lead role in the national trading platform.
She said: “Bionica Technologies West Africa Limited, Bargain Securities and Supplies Nigeria Limited are lead sponsor and co-sponsor. We also have The Africa Finance Corporation as the lead financier and Huawei Technology as a technical service provider.
“So, the council today ratified Mr. President’s approval for the PPP concession for a 20-year period to Messrs E. Customs HC Project Limited as a concessionaire for the delivery of the customs modernization project. This is a project that will not have an immediate cost to the government, the investors are providing all of the financing and this revenue will be deployed in three phases and they will look over the investment in the concessionary period of 20 years.
“The key point is that it is not costing the Federal Government one thing, the $3.1 billion being proposed will be sourced by the sponsors and the partners” the minister had emphasised.
The Nigeria Customs Modernisation project, before presentation to FEC for approval, went through a rigorous diligence test which began in 2016 when 94 companies responded to a bid request by the NCS.
In the exercise, 15 companies were pre-qualified and invited to make presentations on their solutions expected to fully automate all customs operations.
Stakeholders had applauded this impactful vision; especially the benefits of a strong partnership with 100 percent attraction for external finance and having no immediate cost to the NCS or the Federal Government for all projects. Instead, it will increase revenue for the government, create jobs, minimize smuggling and insecurity owing to porous and largely unmanned border posts.
Similarly, the turn around will ensure that the business of the Customs is fully automated using the latest smart technologies provided by Original Equipment Manufacturers. It will also guarantee the evolution of an integrated border management module with Centralized Automated Customs Risk Management System, through real-time remote scanning operations.
Industry players had lauded the step taken by the Federal Government, enthusiastic that it will ensure drastic reduction in leakages and other trade malpractices; transparency, predictability and trade facilitation. It will also address current national security challenges through sharing of information data with other partner organizations. The innovation will also upgrade the Nigeria Customs Service’s current ICT infrastructure, existing scanners and scanning operations and facilities.
In the long term, the direct capital investment through the proposed Public Private Partnership promises a professional execution of the Nigerian Custom Service’s modernization programme. It will ensure that all collectable revenues are accounted for in-line with the Treasury Single Account policy of the Federal Government. This will in turn shore up the pedigree of the NCS amongst the best organised worldwide, as it rapidly reduces and eventually eliminates incentive to leakages while also discouraging corrupt practices.
“A key feature of the e-Customs project includes an integrated and robust infrastructure for customs supervision which will ensure the stability and efficiency of customs operations at its headquarters and branches. The infrastructure includes Cloud Data Centre, All Connected Customs Network, Video Surveillance System and translates to minimising theft of revenue and other sharp practices,” said Eng. Samuel Ajibola, an ICT expert in Abuja.
The scheme is expected to introduce a robust Enterprise Network covering NCS sites at the headquarters, all zonal and area commands as well as border stations. There is provision for a centralized data center with disaster recovery that will enable the service interchange intelligent data with other departments, partner government agencies in the trade chain and other relevant agencies such as the Standards Organisation of Nigeria, Central Bank of Nigeria, National Agency for Food and Drug Administration and Control, Federal Ministry of Finance and Federal Inland Revenue Service.
The e-Customs Project will also introduce advanced and faster X-ray scanners at the airports, seaports and land borders to assist NCS improve clearance efficiency in order to meet trade facilitation needs.
Many customs officers who spoke under condition of anonymity said the project was designed to facilitate and hasten the urgently needed optimization of the NCS systems which will enable trade facilitation and efficient revenue collection. This in turn would enhance Nigeria’s regional and global economic competence; contribute to improving national security through the development of systems and networks aimed at prevention and suppression of smuggling activities; improve Customs’ clearance efficiency to facilitate trade, support end user satisfaction and foster mutually beneficial relationships between consumers and the NCS, as required to improve the confidence of all stakeholders in the NCS.
Besides, a full automation will minimize government spending and allocation to the NCS for tasks already contemplated such as digitization of Customs processes, integration of ICT and intelligence facilities, among others. This in turn would minimize government borrowing and spending whilst diverting funds that could have been used to facilitate this project to address other pressing needs of the government.
Above all, it will eradicate tax and duties’ evasion towards increasing revenue generation with the introduction and interplay of the Unified Customs Management System, e-Port, Logistic Monitoring, electronic-Cargo Tracking and Mobile Enforcement Systems, which all imports and exports would go through.
In the estimation of Chief Ben Okoye, a finance expert, by partnering with the Bionica-led consortium, the government will be able to free up resources which could be channeled to other areas of government activities and projects.
“The will in turn support and build the local economy of the host communities through direct or indirect participation of small and medium sized companies by affording them the opportunity to serve as service providers.
“It will also improve the quality of service delivery of the NCS as a result of the effective infrastructure that are in place and restore consumer confidence in NCS officials and processes,” said Okoye.