As N300bn Customs Deal Raises Dust

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Eromosele Abiodun urges the government to suspend the deal aimed at accessing the over N300 billion in the Comprehensive Import Supervision Scheme for modernisation of the Nigeria Customs Service, which is now subject of investigation by the House of Representatives.

Recently, the federal government approved the engagement of a consortium of four firms to enter into a 20-year concession arrangement with the Nigeria Customs Service (NCS) and the Infrastructure Concession Regulatory Commission (ICRC) for a Customs modernisation project and establishment of digital and paperless Customs administration.

The presidential initiative on the NCS modernisation or “E-Customs Project,” requires the establishment of a digital/paperless customs administration. The government then approved the engagement of the consortium composed of Bionica Technologies West Africa, Bergan Security Consultants& Suppliers, Africa Finance Cooperation and Huawei to establish a project special purpose vehicle to enter into a 20-year concession arrangement with NCS and ICRC. However, the move has generated controversy with stakeholders alleging that due process was jettisoned. According to them, the selection of this the consortium was not advertised and no tender was issued to pick the best companies.

Some industry analysts also questioned why the government is making the move now that the NCS appears to have unlocked the hidden advantage in adopting trade facilitation following the Service’s modernisation introduced in December 2013. This modernisation gave birth to the introduction of the Nigeria Customs Information System (NICIS) in 2014 and by 2017, the NCS had migrated to NICIS II, a further improvement on their system. Interestingly, from 2017 to date, through NICIS II, Customs has generated above N1trillion in revenue for the country.
This is aside being able to have integrated other government agencies, such as the National Agency for Food, Drug Administration and Control (NAFDAC), Standards organisation of Nigeria (SON), National Drug Law Enforcement Agency (NDLEA) among others.

With the implementation of NICIS II, importers, clearing agents and some customs freight forwarders, are showering the Service with commendations.

According to them, the NCS has built a robust system especially since 2017 when it introduced the NICIS II which is centres around a paperless the platform, and accommodates various organisation Central Bank of Nigeria (CBN), Federal Ministry of Finance, SON, NAFDAC, NIACOM Insurance Certificate, NAQS, NSA and FIRS, commercial banks and more than 3,000 private sector companies (importers, shipping lines, airlines, clearing agents).
Last month, the NCS generated over N115 billion revenue despite the closure of land borders. This is said to be due to the electronic payment of duties and taxes thereby securing revenue collection and removing opportunities for fraud. Besides, clearance time is also drastically reducing for revenue collection and electronic certificates, leading to better turnaround times and therefore many more revenue cycles.

Why Now
Customs agents, who spoke to THISDAY, were unanimous in condemning the move and expressed surprise as to why such a complex decision is been taken now.

For instance, an agent, Tunde Awotona, explained that changing such a complex Customs system to an untested IT system that has never been implemented in a big country might have an impact on the revenue collected by NCS and could have a serious impact on the ability of importing and exporting for several months.
According to Awotona, “There is no need to introduce an inexperienced consortium to work on Customs issues. Such programmes should be based on public private partnership (PPP) as the contractual framework as it is a well-proven business and funding model. The granting of a 20-year concession in a non-tendered and the non-transparent process seems precisely to be the type of business model that the Nigerian government has been trying to move away from, so why on this.”

According to a source in the House of Representatives, “The selection of this consortium has never been advertised and no tender was issued for the selection of the best companies. The process was never made transparent and the current contract holders were never given an opportunity to bid. More worrying, the supposed partners within the consortium do not have any discernible experience to warrant their inclusion in such a huge and sensitive endeavour.”
He further alleged that, “Huawei, as the technical partner, has never implemented, anywhere in the world, an automated system for Customs and has no experience in the Customs environment. This is a major risk as NCS play a vital role in revenue collection for the FGN.

“In addition, the security debate around Huawei is not new, although it has intensified in recent months. Huawei is considered by many governments to be a surrogate for the Government of the People’s Republic of China, and therefore an espionage threat.

“The United States security forces have warned Huawei equipment could be used to create a “backdoor” into foreign mobile and data networks. Having such a company monitoring all trade transaction in Nigeria could be a major issue. With the implementation of NICIS II, NCS has built a robust Customs System. NICIS II links around a paperless platform various organization CBN, FMF, SON, NAFDAC, NIACOM Insurance Certificate, NAQS, MLSN, NSA and FIRS, commercial banks and more than 3000 private sector companies (Importers, Shipping lines, Airlines, Clearing agents).”

The source, who do not want his name in print added: “Last month, NCS generated over N115 billion in revenue despite the closure of land borders, because the electronic payment of duties and taxes has secured revenue collection and removed opportunities for fraud.

“Clearance time is also drastically reducing for revenue collection and electronic certificates, leading to better turnaround times and therefore many more revenue cycles.

“Changing such a complex Customs system to an untested IT system that has never been implemented in a big country might have an impact on the revenue collected by NCS and could have a serious impact on the ability of importing and exporting for several months.

“There is no need of introducing an unexperienced consortium to work on Customs issues. Such programs should be based on Public Private Partnership (PPP) as the contractual framework as it is well-proven business and funding model. FGN or governmental agencies should have shares of the structure.”

The source added that in the current set up government has no share in the Special Purpose Vehicle that would be created.
“No capital expenditure investment on the part of the government or the Governmental agencies, as the private sector partner should invest 100 per cent upfront. Additionally, the granting of a 20-year concession in a non-tendered and non-transparent process seems precisely to be the type of business model that the Federal Republic of Nigeria has been trying to move away from,” he said.

Motion against Deal
In a bid to prevent the nation from been shot changed, Chairman of House Committee on Public Petitions, Hon. Jerry Alagbaoso, had on October 10, 2019, moved a motion on the floor of the House of reps that the deal be investigated
Specifically, he said: “There are some foreign companies who are very eager to sponsor, finance and provide technical services to what they call the modernisation of Customs, without recourse to the National Assembly. My motion is the need to investigate the curious concession proposed arrangement between the consortium Bionica Technologies West Africa Limited, who are the sponsors; Bergan Security Consultants and Supplies, who are co-sponsors, African Finance Corporation, who are lead financiers and Huawei, Nigeria Customs Service and ICRC for customs modernisation project.
“The House is aware that various customs modernisation projects in the past. For example, in the 90s, the United Nations Conference on Trade and Development (UNCTAD) paid for the installation of ASYCUDA++ and training of customs officers for three years.

“The House is also aware that the Federal Government agreed to engage former pre shipment companies for valuation and classification of goods, hence some service providers namely Webbfontaine, Cotecna, SGS and Globalscan were engaged for that purpose.

“This contract was to last for seven years, from 2005 to 2012 when the service providers handed over to Nigeria Customs Service. By 2011, one could say the positive effects of this included competent and committed workforce for Nigeria Customs Service, personnel understanding of the new process and benefits to stakeholders.”

He added: “It resulted to collection of proper revenue due, elimination of corruption and other benefits. The House notes that with these put in place, there exist a one-stop shop which allows all trade transactions to be conducted through a single system domiciled with the customs. For example, all other government agencies like NAFDAC, SON and the rest have dissolved into a single platform with the Nigeria Customs Service.

“In 2011 there was an illegal concession between the Federal Ministry of Finance and a company with inadequate capital base called Single Window System and Technologies, signed in secrecy during the government transition period and this responsible house of representatives had a public hearing and stopped it to save Nigeria billions of Naira Vide the votes of Wednesday, 13 July 2011, the house.

“In 2017 another move for customs modernisation was made by the Technical Committee on the Comprehensive Import Supervision Scheme, purported to be acting on behalf of the Federal Government called Adani Systems Nigeria Limited to modernise, maintain, develop the scanning of goods in the country in line with the pre shipment inspection act for a period of 25 years.

“Again the attention of Controller General of NCS was drawn to this and the concession was stopped. Curious that in September 2019, another concession, which will last for 20 years (that is the subject matter now) is being suggested to NCS, ICRC, Federal Ministry of Finance, Federal Ministry of Budget and Planning, Federal Ministry of Justice and this agreement is for pro-rata sharing of one percent Comprehensive Import Supervision Scheme and a $300m investment.”

“Worried that billions of naira will be frittered away from the account of the one per cent Comprehensive Import Supervision Scheme with the CBN, regarding the cost of this latest customs modernisation by different parties involved. Further worried that there is no difference in substance, scope and structure between the failed concession attempts of 2011, 2017 and this 2019.

“There is already a national single window platform in the Nigeria Customs Service and officers of the service are performing beyond expectations, collecting duties in billions of naira on daily basis.
“Convinced that the federal government is being misled by advise on this one percent Comprehensive Import Supervision Scheme, which has accumulated in billions of naira in the CBN. A motion for CBN to account for this money was moved in the 8th assembly, the house therefore resolved to mandate the committee on finance, customs, public petitions, committee on agreements to expose the foreign and local collaborators involved in this project either as sponsors, co-sponsors, financiers and others.

“Mandate the CBN to account for the funds between 2012 and now and urge all parties involved to maintain status quo until the outcome of the public hearing and report back in three weeks. Three or four foreign companies are bringing their selfishness into our national agenda.

The fact that it failed in 2011,2017 there is no way it cannot fail in 2019, “Alagbaoso said.