How Competing Interests Stalled Signing of $3.1bn e-Customs Project Six Years After

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Eromosele Abiodun

Competing interests by parties in the $3.1billion e-customs project, which aims at modernising the operations of the Nigeria Customs Service (NCS), has stalled the formal signing of the deal six years after it was conceptualised in 2016.

THISDAY investigation revealed deliberate moves by the parties to have domineering roles in the deal, which, if signed as planned, would be executed over a 20-year concession period.

The investment of $3.1 billion was broken down into capital investment of $1.2 billion, which would be done in three phases over 36 months period by the investors, and $1.1 billion projection of the operational cost over the 20-year period of the implementation of the project.
Comptroller-General of Customs, Hameed Ali, confirmed the state of the deal recently, while explaining the 2021 operational feats of the service.

Ali said, “E-customs take-off process now at the stage of final signing of agreement.”
In a statement signed by the Public Relations Officer, Joseph Attah, Ali said the project was expected to impact positively on trade facilitation, fight smuggling, block revenue leakages, and significantly impact on revenue generation and national security.

The project, which had enjoyed the buy-in of late Chief of Staff to President Muhammadu Buhari, Malam Abba Kyari, started suffering setbacks after his demise in the wake of the COVID-19 pandemic.
Bionica Technologies West Africa Limited and Bergman Securities and Supplies Nigeria Limited, who were named lead sponsor and co-sponsor, respectively, of the project seem to be struggling to overtake each other.
The project also has Africa Finance Corporation (AFC) as the lead financier and Huawei Technology as a technical service provider.

THISDAY checks revealed that Bergman brought Bionica into the project but there appeared to be divergent pursuit of interests and less cohesion among the parties
Sources said Ali was more favourably inclined towards Bionica, but had not been able to pull the project through.

More setbacks for the project reared their heads at a recent public hearing on amendment of Customs and Excise Management Act (CEMA) at the National Assembly, where the finance ministry sought to strip the NCS of its revenue collection function.

Minister of Finance, Budget and National Planning, Zainab Ahmed, had postulated that the e-Customs project would yield about $176 billion revenue through the NCS, but she has since made a complete volte-face, advocating recently that the revenue collection function of the Customs be taken away. Speaking through her ministry’s Permanent Secretary, Ahmed said, “The single most important function of the Customs Service anywhere in the world is trade facilitation. But in the introduction of the chairman, I hear him talk about revenue, collection of revenue. This is the secondary service of the Customs all over the world.

“Revenue collection by Customs is a distraction. The reason is that the main function of the Nigeria Customs Service is trade facilitation. But the trade facilitation has been pushed to the background because of the focus on revenue collection.

“In other climes, the best practice is moving towards unifying revenue collection. If we want to go that far, and achieve that best practice, our submission would be to move revenue to the Federal Inland Revenue Service so that Customs Service can really focus on trade facilitation function.”

With the finance ministry’s recent position, the e-Customs deal signing may not happen soon.
Further checks revealed that the 20 years timeline of the deal would read from the sign-on date, which is not looking feasible at a time the Buhari government is left with just 16 months to go.
The project had always attracted controversy, as stakeholders and experts in the maritime sector described it as an unnecessary duplication of an existing customs modernisation project, which was seen productive and improving with time.

Stakeholders also argued that e-Customs was an avoidable costly venture that should not be undertaken by an indebted country seeking to maximise revenue collection from non-oil sources, including the NCS.
President of the National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), Lucky Amiwero, described the $3.1 billion e-Customs project as an avoidable duplication.

Amiwero said the NCS presently operated an e-customs model powered by Webb Fontaine and the approval for another one was not necessary. He said all that was needed was an upgrade of the existing platform being used by the NCS to meet the demands and expectations of trade.

He said Customs processes in Nigeria had since migrated from manual to electronic and the expected e-customs or modernisation project won’t be different from what was on the ground.
Amiwero said, “What we call e-customs is what we have in Webb Fontaine. I was actually the person that wrote to the government before all of these things came to materialise.

“In 2001, I put up a write-up about something, which I don’t want to mention. It was the model that the federal government changed to set up the whole thing. So what Customs is doing and what Webb Fontaine has is e-customs. If government is talking about another e-customs project, then they don’t know what it means.

“It is simply electronically transferred transactions. Is that not what Webb Fontaine is doing? Central Bank is doing e-banking and Customs is doing e-customs. There was a time Customs processes were manual and you had to carry things from shipping companies to terminal, etc., but now all those things are gone. So what you have on ground is already e-Customs, and no need to duplicate it. We should improve on it.”
A retired Comptroller of Customs, who preferred anonymity, described the $3.1 billion deal as a fraud that should not be allowed to stand

He said, “This has been an issue from the days when we were in Customs. They want to take the Comprehensive Import Supervision Scheme (CISS), collected from Free On Board (FOB). Ironically, it is foreigners that were collecting this money all through the pre-shipment inspection time.

“When we came back to Destination Inspection, it was reverted and that is what they have been struggling to collect back. As far as I am concerned, Customs has been properly modernised, the Secretary-General of World Customs Organisation attested to that during his visit to Nigeria.

“E-Customs has always been there, at least starting from 2000, and has passed very rigorous scale. Customs has done tremendously well in that area. So, for anybody to say they want to put in $300 million to modernise Customs is a fraud and anybody supporting it is an enemy of Nigeria.”
A look at customs total revenue collections and volume of declarations processed by the NCS in the last three years showed yearly improvements.

In 2019, NCS processed 1,206,441 transactions and collected N1.331 trillion as total revenue. In 2020, the service had 1,326,990 transactions, showing a 9.99 per cent increase, with total yearly revenue of N1.555 trillion. This was a 16.80 per cent increase from previous year’s figure.
In 2021, the service recorded 1,711,500 declarations with total collection of N2.240 trillion, which is about 44 per cent increase.