Post Service Providers Era: Historical Achievement For Customs

04 Jan 2013

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Nigeria Customs Service

Maijidda Suleiman
Today marks the end of the era of service providers contracts for the provision of core Customs responsibilities in Nigeria.
Over the years, through contracts with the federal government, core Customs services had been outsourced to private companies that conducts Pre-shipment Inspection (PSI) or Destination Inspection (DI) activities.

PSI activities are conducted in exporting countries in order to verify the quality, quantity, price and classification of such exported goods, while DI activities are carried out in combination with scanning technology on imported goods in importing countries. The concept is normally introduced to enhance Customs functions as a stop-gap measure while waiting for Customs reforms and modernisation.

However, the World Customs Organisation (WCO) has observed that this option is usually more cost effective than in-house operations for many reasons including the stimulation provided by competition in the private sector. And apart from being more cost effective, lot of defects have been identified with this option in the Nigerian environment.

First, the contract was found not to have been based on Nigeria Customs Service business requirement and also not in line with international best practices on Customs reforms and modernisation as specified in Kyoto Convention on harmonisation and simplification of trade.  As of today, the activities of service providers has been rested in the developed nations, which is why President Goodluck Jonathan deserves commendation for the will and support that has brought to end the era of service providers in Nigeria with effect from today.  

Over the years, the function of Customs administrations has evolved from revenue collection to include protection of industry and citizens, trade facilitation as well as trade security and environmental issues. Customs administrations have continued to improve with the dynamism brought about by the evolving global world, and it’s a good thing that Nigeria is taking this step today.

The WCO’s stand that “if any country must rely on contracting core Customs services to private companies, then such a country should as well disband its Customs administration,” is not farfetched if the defects associated with the service provider’s contract and their service delivery in Nigeria is anything to go by. For example, there has been observed cases of duplication and multiple issuances of Risk Assessment Reports (RAR) on high FOB imports with intension to defraud the federal government to the extent that between February and July 2012, 414 RARs with a value of N5.5 billion were duplicated. One particular RAR with FOB value N229 billion was found to have been duplicated by a service provider for the same consignment, thereby drawing double payment for single import.

Incidences like these further justifies arguments by experts that some of these core Customs services contracted to the private sector are usually treated by benefiting firms as mere business ventures by the organisations which would go to the extremes to secure such contracts primarily for profit making.

In the WCO’s view, such practice usually results in a situation where there will be no trust in the Customs frontline and post clearance capability. This has prompted the Organisation to, in recent years; develop several diagnostic studies and programmes aimed at championing broader international Customs capability with high benefits to governments of its member countries.

More so, there is also the related issue of national security with the service provider’s operating system. This has to do with the vulnerability of national data on security arising from Scanning Service Providers (SSPs) hosting of data base abroad.

There was also the issue of the absence of a harmonised risk management system among the three service providers resulting in non-uniformity in the cargo clearance procedure and inefficiency, leading to frustration of trade facilitation effort of the government.
Rather than this concept which adds no value to trade, the WCO has continuously harped on the need for governments to focus on capacity building for Customs officers to enable them take-over the management of these contracted services for better delivery.

Although there has been a strategy by the service providers to prolong their contract by refusing to provide strategic capacity transfer, but the NCS has been conscious and proactive to have begun internal capacity building intervention with a view to taking over these services since 2009. 

The need for the NCS to take over from the service providers cannot be overemphasised for many reasons including that the contract has a-no-penalty clause which gives no room for sanction in cases of delays and non-fulfilment of contractual obligations. This has given room for gross misconducts in the system with no punishments whatsoever.

There have been cases of misclassification and gross under valuation of imports resulting in large volume of demand notice and interventions by Customs officers. For instance, in March 2012 alone, N633 million was recovered on ceramics tiles alone from 304 RARs issued by the service providers.

Furthermore, while some scanners are yet to be supplied after seven years in some commands such as Seme and Ilorin, there is the absence of standard scanners operating procedure among the three service providers in places where scanners have been supplied even as the support and maintenance services to be delivered are not specified in the contract.

Against this background, President Jonathan must again be commended for the interventions and forth sightedness which has enabled the Customs Service under the leadership of Comptroller-General Abdullahi Dikko, to take the bold initiative of engaging 12,000 officers in various strategic areas in preparation for a  comprehensive and seamless takeover programme from the service providers.

At the moment, a specialised software, Pre-Arrival Assessment Report (PAAR) has been designed and developed by the Service to take care of all the observed defects in the risk assessment report process. The PAAR software which was solely designed and developed by the Nigeria Customs Service manages and maintains national data on trade and security.

The software will efficiently handle import on the basis of pre-arrival of cargo thereby facilitating trade, ensuring security of the nation and improving revenue collection.

According to the World Trade Organisation (WTO), as of November 2011, at least 25 countries, most of which are in sub-Sahara Africa, had contracts with private inspection entities for PSI and DI of which Nigeria was one, but this would no longer be after today. With a commitment to capacity building under the Dikko-led management, the NCS now has capable hands to take-over the running of all its functions, and thereby retaining capital flight.

As a consequence of critical assessments of the performance of inspection companies and inefficient capacity-building and training activities, many Customs administrations have exited these outsourcing contracts and the WCO, with its accumulated knowledge, is able to assist its members with the process of discontinuing these contracts.

Summarily, the modernisation campaign began embarked on by the Service in 2009 has today resulted in a history making event as the Nigeria Customs Service takes over full management of all Customs operations, thereby priding itself among the 21st century Customs administration.

Tags: Business, World, Nigeria Customs, Nigeria, Post Service Providers Era

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