Customs in Fresh Bid for Destination Inspection Regime

02 Dec 2012

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Inde Dikko Avdullahi,  Customs CEO

After seven years of the regime of  Destination Inspection (DI)  which replaced  Pre-shipment Inspection of  goods  coming into the country, the  multi-national agencies  that  handled the  contract  at the ports  and border stations are handing over  to the Customs Service in what is seen as  a test  case  for the service, reports Francis Ugwoke

As the multinational agencies end their seven-year contract for Destination Inspection (DI) regime, the Nigeria Customs Service (NCS) is again faced with the challenges of providing the service alone.  The contract is expected to end December 31 this year with the Customs required to fill in the gap.  In the past one-year, there have been questions in some quarters on what happens if the Destination Inspection Agents (DIA) leaves.  The question has been whether the Customs Service has the capacity to take-over from the agencies or allows the Federal Government to re-negotiate the juicy contract. Although there has not been any doubt that the Customs can handle this, what has been the concern of stakeholders is the issue of the huge capital involved in acquiring the necessary equipment for the scheme.  The other issue is corruption in the system that may lead to some compromise during scanning services provided by the agencies.  But the Comptroller-General of Customs Inde Dikko Abdullah insists that the service is equal to the task of providing DI as the DIAs end their contract this year. This is coming as the Ministry of Finance and the Presidency are said to be keen on allowing the Customs do the job. This position is even as the two are said to be under pressure to renew the contract as against the understanding that at the end of the seven-year contract with the agencies, the Customs will take over the scheme.

From Pre-Shipment Inspection to Destination Inspection
It will be exactly seven years in December 31, 2012, when the Federal Government terminated the contract of Pre-shipment Inspection Agents (PIAs) for Destination Inspection (DI). It was part of the reforms in the system.  But it was basically aimed at ending decades of pre-shipment inspection which objectives were eroded. For instance, while billions of Naira were paid to the PIAs, there were discrepancies in their jobs. It turned out that the trade policy, which was aimed at checking trade malpractices including under-valuation, capital flight, concealment, under-declaration  and importation  of  contraband  was a failed scheme. The PIAs did not do their job well. The importers were enmeshed in trade malpractices. Many of the importers were at liberty to bring into the country even contraband under other names without being detected. 

Incidentally, the goods were inspected by the PIAs before shipment.  Importers also had the liberty of under-valuing their goods in such a ridiculous way that those who imported goods of N100million were able to compel their trading partners to write what they want on the invoice. The result was that apart from Nigeria losing so much in what would have accrued to the government as duties also suffered the risk of contraband coming into the country.  Most of the malpractices were uncovered as the goods were inspected in the ports on arrival in Nigeria. This in turn negated the need and huge amount paid to the PIAs.  It was this situation that forced the Federal Government to cancel the scheme for DI.  With this arrangement, all imported goods don’t need to be inspected outside the country but on arrival in the country.

How Destination Inspection Worked
Stakeholders drawn from the government circle and the ports industry believe that the scheme has worked well. First, it ended the era of double inspection as was the case before pre-shipment inspection was scrapped. Under the scheme, both the agencies appointed for the exercise and the Customs Service carried out the inspection.  The agencies, which include  SGS, Global Scan and Cotecna,  provided scanning machines at seaports, airports and border stations  that were used  in checking the risk status of goods coming into the country.  While doing this, the Customs was involved in ensuring that high-risk goods as detected by the system were impounded.  The scanning exercise has not been an easy one for importers as they have had to complain of shortage of the scanners in most ports and border stations.  For instance, freight forwarders complained bitterly of having to wait endlessly to have their importers’ goods examined. The problem has been attributed to system failure or inadequate scanners.

Conflict between Customs and DIAs
For the past seven years, some officers and men of the Customs Service and DIAs were in cold war that not many people knew. 
There was always conflict between them on the correct value of goods that are being scanned. Sometimes customs had to query the value approved by the DIAs as either being too high or low. It was like the situation when the Professional Import Duty Administrators (PIDA) was appointed following allegations of so much corruption in the ports.  Sources said as much as they try to hide it, there has been so much suspicion among the two. Incidentally, some officers of the Customs had initially thought that the appointment of these agencies would affect their jobs. But not so much, except in few areas, which are usually resolved.

But the fact remains that the importer in most cases would falsify the true value of his imports in deliberate move to evade payment of appropriate duties. Some freight forwarders have had to complain also that DIAs were over valuing some goods.  Yet, an insider maintained that such complaints were expected from customs agents who work for the importers.

Customs Readiness for Destination Inspection
The Nigeria Customs Service is already celebrating the end of the contract for the DIAs in what confirms the cold war over the years.  This was demonstrated during the week when the Comptroller-General of Customs Mr. Inde Dikko Abdullahi said his organisation was well prepared to take over from the agencies.  Abdullahi told those who attended the Annual Customs Conference held in Katsina that the Service has all it takes to perform  the DI  fully without the  DIAs.  According to him, necessary expertise and facilities are in place for the exercise. 

The customs boss assured importers, freight forwarders and all other stakeholders that his organisation would succeed as it takes over DI from DIAs.

What Stakeholders Say
Industry stakeholders who reacted to the destination inspection contract between government and the DIAs said it was unnecessary in the first place.  They believe that the Customs has all it takes to carry out the job, adding that more Nigerians could have been employed and given necessary training by the Customs to carry out the assignment. Their argument is that the agencies could not have employed as much as the Customs would have done in their bid to maximise profit.  Maritime lawyer, Mr. Emma Ofomata, said that it is a welcome development for the Customs to take over from the DIAs. 

He said that as far as he is concerned the engagement of Pre-shipment Inspection Agents that later transformed into DIAs was a military arrangement, adding that what they are doing is simply a customs function.  He said that the end of the seven-year contract with the DIAs has become an opportunity for the Customs to take over. Ofomata called on the government to give the Customs all the support needed to carry out the assignment. According to him, the Customs should have the necessary facilities, such as scanners and uninterrupted power supply for them to succeed in the exercise. He added that this should be followed by training programmes for officers that will do the job.  “There are teeming Nigerian youths fresh from the University that the Customs can employ and train for this assignment. What makes any organisation in such assignment is training and retraining,” he said.

Similarly, freight forward, Chief Max Onyeabor, while maintaining that the Customs can handle the DI scheme said government should encourage the organisation to invest in equipment and human capital development.  Onyeabor said what drives every sector is technology, adding that the service would succeed and even do better than the outgoing agencies once it invests heavily in modern equipment in the new scheme.

Tags: Business, Nigeria, Featured, Destination Inspection

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