- Posted March 26, 2014 by
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Nigerian Customs reforms - Impact on SMEs
In his speech, President Jonathan stated that the reforms will ‘boost security in the country by helping to curtail the influx of illegal small arms and light weapons into the country and enhance trade in the West African sub region’.
Earlier in an interview on ‘Sunrise Daily’ on Channels Television, in Dec. 2013, the Public Relations Officer, Nigeria Customs Service, Deputy Comptroller Wale Adeniyi, confirmed that apart from check - mating illegal business transactions across borders, this step has generated great revenue for the Nation.
According to him, “In the last few years the roles of customs has gone through some changes. There have been more challenges, more functions. The dynamics of situations in the international system has changed, so much so that we now have other issues related to border security.”
“While trying to guaranty that the bad guys do not come in, we also must ensure that the good ones who are doing legitimate trade must have their processes facilitated.”
In achieving these goals, Adeniyi listed the key standards employed by the Nigerian Customs. These standards include quick service delivered in good time and simple procedures, with a mind-set of achieving quick turnover. He said.
Notwithstanding, despite the Common External Tariff Concordance linked to the Customs PAAR for easy navigation and accurate classification to ensure its feasibility, the introduction of the PAAR has been greeted with knocks.
Before now, government appointed destination inspectors at the Nigerian Ports were saddled with the responsibility of issuing the Risk Assessment Report (RAR) to vessel owners during clearance, which was issued in five working days. This contract was terminated by the Federal Government in the last quarter of 2013 and the Nigerian Customs Services took over with the introduction and issuance of Pre Arrival Assessment Report (PAAR) to “fast-track goods clearance at the ports”. A move reportedly taken 'in accordance with international best practice, economic competitiveness, enhancing trade, revenue collection and border security'.
The impact of the Pre Arrival Assessment Report PAAR and FOB reforms on small and medium scale businesses is not without criticisms as some genuine entrepreneurs have expressed frustrations over challenges confronted when clearing their cargoes, due to delays in the issuance of the Pre Arrival Assessment Report (PAAR) and the increased FOB value of imports. They appealed to relevant government functionaries to intervene in their plight.
According to the Managing Director of Cambistry Ventures Limited - Lagos, Mr. Ikechukwu Okafor whose business is one out of the many businesses currently affected by the tardiness in issuing the Pre Arrival Assessment Report.
The long process involved in the new Customs reforms have been unfair to genuine business owners as they have to wait for months before their consignments will be attended to, a development he said is rather stalling business activities, likewise, the longer the goods are delayed, the demurrage keeps skyrocketing. “My consignment arrived on 24th February, 2014. As at today, PAAR has not been issued. I have approached my bank to find out why and their response is that they have in arrears 3,000 PAAR yet to be issued. My Business is suffering the loss of revenue with unnecessary demurrage charges. You can verify these from any of the banks.
“The other problem is the uplifting of the FOB value of the imports therefore making the importer to pay more duties. This action is of the belief by Nigeria Custom Service that most importers under- invoice their imports. The FOB value of my recent import was uplifted from $52,000 to $71,000. A 36% increase. This alone translated to increased duty of circa N700, 000. This development is certainly not favourable for genuine private business operators in the country”. He said.