The Ban on Importation of Cars through Land Borders

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Stakeholders in the nation’s maritime industry are divided on the recent ban on importation of vehicles through the land borders. While some say it will worsen smuggling of vehicles into the country, others believe the policy would revive the ailing Roll-on-Roll-off (RORO) terminals and improve activities at the ports, writes Francis Ugwoke

For auto dealers, this is not the best of times. With the federal government policy banning importation of cars through the land borders, business in the coming year will be very tough. The worst hit are the small scale importers who have over the decades depended on importation of vehicles through the land borders. These are importers who go to Cotonou to buy three or five vehicles into the country, sell them and return.

Even the big time importers are not left out. Some of them are known to have also patronised the neighbouring ports, shipping cars to Cotonou ports, and going there to clear them into Nigeria at a much reduced cost. There are also many other Nigerians who on their own go to Cotonou to buy cars for personal use. Those who do this save huge sums of money they would have spent buying cars in Nigeria. Now, that would be history with effect from January 1, when the new policy on vehicles import will take place. The prohibition order covers all new and used vehicles.
The Nigeria Customs Service( NCS) had, about two weeks ago in a statement, said the ban was sequel to a presidential directive restricting all vehicle imports to Nigeria through the sea ports only with effect from 1st January 2017.

The policy is coming after that of rice, which took effect in April 2016. Affected importers were directed to utilise the grace period up till 31st December 2016 to clear their vehicle imports landed in neighbouring ports. One of the reasons for the ban both on rice and vehicles was to check smuggling of the items into the country. Over the years, some officers of the Customs Service had also been accused of colluding with smugglers to bring some of the prohibited items into the country through the borders.

Some officers are being accused of having secret pacts with smugglers under which they are allowed certain hours of the night to smuggle some of the prohibited items into the country after settlement had taken place. Even when duties are to be collected at the border posts for some of the dutiable items, the corruption in the system makes what is collected ridiculous. Following this insincerity on the part of the Customs, the federal government has recorded huge revenue losses, one of the reasons many believe was responsible for the current policy. Yet, the ban is also seen as saving terminal operators in the country who have invested heavily in establishing RORO terminals that handle only vehicles. The new policy will compel every importer to use the terminals.

Effect on Prices
Few days after the announcement of the ban, prices of cars in Nigeria went up. There is also the fear that prices will continue to rise as very few importers will be able to do business. Those who are able to import cars through the seaports with the current crisis in sourcing foreign exchange will place the prices of the cars very high. This is the case with rice, which price before the ban was about N12, 000, but now the price of a bag of rice is between N23, 000 and N25,000.

Reaction from Stakeholders
Stakeholders are divided on the policy, depending on which side one belongs. Some stakeholders are of the view that the policy will impact negatively on Nigerians more than the expected gains for the country. They believe that with the policy, it will be difficult for an average income earner to be able to buy or change his car as the prices will go up. They also believe that the policy will be a big business for both smugglers and customs officers. For instance, former President of the National Association of Government Approved Freight Forwarders (NAGAFF), Dr. Eugene Nweke, said such policy had the tendency of increasing smuggling activities through the approved routes. He said: “I want to believe that this policy is ill-conceived and untimely. In all ramifications, it is not promoted nor was determined by market forces.

The federal government has a duty to ensure that our ports are competitive enough in terms of safety, qualitative service delivery at most economic cost. Both competitive ocean freight and port operational cost, efficiency, speed, predictability and friendliness is the core attraction for patronage consideration on the part of a shipper. Again, the federal government has a duty to promote competition in all spheres of trade services and not continuously being at home with oligopolistic overtures, whereby promoting monopoly in a given sector”

Nweke advised that, “ the application of age limit in the importation of ‘Tokunbo’ vehicles should be benchmarked, the older the vehicle, the higher applicable duty rate it incurs and the newer the vehicle, the lesser the applicable duty rate. This approach will go a long way in promoting an enduring policy application and implementation and will drastically reduce smuggling tendencies”.

The Chief Executive Officer of Maritime Media Limited, Mr Asu Beks, also described the ban as ridiculous because of the negative effect it will impact on Nigerians. Beks said if government had consulted very well, it would not have announced the ban. “It is ridiculous. In the year 2016, a government of the Federal Republic of Nigeria is coming out with such a policy, how did they arrive on that? Who did they consult? Where were the stakeholders? Were the National Assembly consulted? These are things we are looking at.”

He was of the view that government should have equipped the Customs Service to be able to battle smuggling if the reason for the ban was because of the activities of some officers at the border posts. According to him, what is even worse is the fact that the roads leading to the ports where all vehicles will now pass through are in a poor state.

Another stakeholder, former Chairman, National Council for the Regulation of Freight Forwarding, Hon Iju Tony Nwabunike, said he supported the ban because the Customs Service had failed to combat smuggling in the border areas.

He said, “some of the customs officers are not sincere. Ordinarily, there is nothing wrong importing cars if appropriate duties are paid. For instance, in Prado Jeep, they will tell you to pay between N10million and N15 million in Apapa and Tin Can Ports, but you find out the same Prado Jeep, if it is coming through the border, you can pay N1million duty and give them N1million bribe and they will let you go.

So, the problem we have there is the insincerity of some customs officers and not because of the government policy. For me, anybody can import any vehicle from anywhere as long as what is applicable in Apapa, Tin Can is equally applicable in the border posts or even Kano and Kaduna entry points . But the issue is that they leave those areas as the gateway to smuggling. They encourage so many importation from those areas thereby making our ports no go area”.

The Chairman of Seaport Terminal Operators of Nigeria (STOAN), Princess Vicky Haastrup, in her reaction to the ban said it was okay if well implemented by the Customs Service.