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Buga Gyang, Comptroller General of Customs
Two weeks ago, I wrote a piece on how our economic regulations and law encourages corruption.
The basis of my arguments then was that we establish laws and regulations that are very inconsistent with rational economic thoughts and nearly impossible to comply with. Consequently, we all pay a fraction of the compliance cost to the man in-charge of implementing the laws and regulations.
Last week, my publisher, Frank Aigbogun asked me to join him at a conference organised by the Nigerian Economic Summit Group (NESG) on Customs and Port reforms. As some of you are probably aware already, we are very good at talking, and this conference is no different. However, the beauty of this kind of conferences is that you come across some people who make you proud to be a Nigerian. They are forthright, sharp, and courageous. I will come to this later.
Border laws and regulations
After oil exports, tariffs on goods imported into the country provide the Nigerian government with its second largest source of revenue, and this has been growing tremendously in the last few years, after some measures of reforms. Year after year, the government reduces and increases tariffs as it deems fit. Generally, tariffs on raw materials, base metals and capital equipment are lowered while they are usually raised on items such as plastic, rubber and aluminium articles, sometimes to as high as 65 percent.
Sometimes, it is found that the government announces cuts and increases on the same items year after year, creating and generating so much uncertainty in trade practices. Consequently, frequent policy changes and uneven duty collection make importing difficult and expensive and create severe bottlenecks for commercial activities. Of course, the problem is aggravated by our dependence on imported raw materials and finished goods. Because of these systematic problems, under invoicing and smuggling are often used to avoid paying full tariffs.
I doubt very much if our trade policies, as it relates to tariffs and prohibitions on goods are consistent with World Trade Organisation (WTO) prohibitions against certain non tariff trade barriers. The problem is that there is the possibility that, it is nearly impossible to guess the direction of tariffs and general trade policy of the government and in that case, it suggests, very strongly, that there is no strategic basis for our tariffs.
The consequence of a trade platform such as ours is that importers face inordinately long clearance procedures, high berthing and unloading costs, erratic application of customs regulations, and corruption regulations and corruption. High tariffs and erratic applications of import and labelling regulations make importing high value perishable products difficult. In addition, it is no news that disputes among the tens of agencies at the ports over the interpretation of regulations often cause delays, and frequent changes in customs guidelines slows the movement of goods through the ports.
Two weeks ago, I had asked if anyone ever wondered why all the goods that are banned by the government simply and very simply still find their ways onto our streets and homes? Afterall, if you listen to government officials, industry and manufacturing operators, it is always the same complain that goods that are banned are found littered around the country in stores, and in our homes.
The economics of it is that things that are supposedly banned are very expensive, the customs man has become very rich, the law has never been kept, the economy is loosing money in taxes, and the industry is not developing, and by extension the wider economy is not benefiting. I can imagine that the person that came up with the law thought he had done Nigerians some good. My general view is that trade regulations should emanate from the strategic view of the economy and its production patterns over time and should be measurable. In my opinion, our current trade practices are opaque. Except harmful for human consumption, why ban goods especially things like clothes that we do not make but like wearing.
Personalities and economic development
I have often refrained from talking about personalities on this page because I believe that the very important and crucial goal that we desire, will only manifest and indeed, the symptom of that progress, will be the institutionalisation of the drivers of our progress. Nonetheless, as a student of the history of economic growth and development, the beginning of the process of development in many countries often comes down to someone being dissatisfied with the present circumstances and able to do something about it. Basically, it boils down to leadership.
The gentleman I described above in the second paragraph is Sanni Abubakar, the Assistant Comptroller General of Customs. At the conference, while everyone proffered solutions to the crisis we have at the ports, Abubakar maintained that the goal of achieving the 48 hour turnaround at the ports is, practically impossible unless the platform for trading in the country, that is the way goods are permitted into the country, is fundamentally altered. According to him, the tariffs on goods and the prohibitions list of goods banned from entering into the country is just too long. Consequently, it is not that Nigerians are determined not be non compliant of our laws and regulations or that the customs are determined to remain corrupt, it is the circumstances that make importers want to circumvent the law, and the customs vulnerable to corruption.
This is the same argument I made two weeks ago. Our border laws are the most inconsistent with rational economic thoughts, our production patterns, our strategic trade policy and I sometimes wonder if our tariff system is not just one aspect of someone waking up and fixing up percentages. They are just too arbitrary. We must reconsider, and very quickly do so, any law and regulation that potentially criminalises the majority of the people. If you say some kinds of clothing are banned, and the President wears it, the Ministers in charge of the ministry of commerce and industry wear it, the governors wears it, and the top CEOs wear it, I consider it a joke. We say second hand clothing is banned, and on my way to Lagos Island, travelling through Orile, that is all you see. It means the government has criminalised everybody and thus nobody in particular, and we have all paid a fraction to the man in charge. So, can anyone genuinely say it is not nearly impossible in Nigeria not to be corrupt.
Take rice, for instance, Abubakar argued that the legitimate importation last year was about 300 metric tonnes, while local production is about same. However, he reckons that total consumption of rice in the country was much more than that, in the region of 3,000 metric tonnes. How did the rest come in? Of course, through neighbouring countries. The economy has lost, production has not happened, the customs man have built more houses, and rice is still expensive. Why are we fooling ourselves?
Our tariffs are totally and unrealistic punitive. If we do not produce the things we think we should produce, instead of working on why we are not doing so, we waste endless resources practicing 1960s economics that says if you ban this or that, producers will be encouraged to produce them in replacement. Since that is not happening, instead of looking for a replacement strategy, we stick to this dogma.
In conclusion, I mentioned that I refrained from mentioning personalities, even though I recognise that the progress we require and desire can only be initiated and driven by people of exceptional capabilities, intellect, and vision, especially at this stage of our development. In the last administration, in relation to economic development, two appointments stood out. These were those of Ngozi Okonjo-Iweala and Chukwuma Soludo. Okonjo-Iweala ensured we achieve macroeconomic stability, and yes, I recognise that the economic environment helped but it does not in any way diminish her achievement. Soludo proved to be a man of vision and the banking consolidation was a masterstroke.
I often argue that pedigree is of little importance to me when it comes to achievements in office. It depends on the responses to problems and opportunities. So, the present crop of ministers can examine the current position of things, and do great things as well. In relation to this piece, the two ministers of Finance, Shamshudeen Usman and Remi Babalola are the key people. I have listened to both of them at close quarters and I find them impressive. I can imagine there are plethora of issues that may concern them, but if they manage to sort the mess in our trading platform, they will turn out to be inspired appointments as well. Towards Economic National Development (END).
Last week, my publisher, Frank Aigbogun asked me to join him at a conference organised by the Nigerian Economic Summit Group (NESG) on Customs and Port reforms. As some of you are probably aware already, we are very good at talking, and this conference is no different. However, the beauty of this kind of conferences is that you come across some people who make you proud to be a Nigerian. They are forthright, sharp, and courageous. I will come to this later.
Border laws and regulations
After oil exports, tariffs on goods imported into the country provide the Nigerian government with its second largest source of revenue, and this has been growing tremendously in the last few years, after some measures of reforms. Year after year, the government reduces and increases tariffs as it deems fit. Generally, tariffs on raw materials, base metals and capital equipment are lowered while they are usually raised on items such as plastic, rubber and aluminium articles, sometimes to as high as 65 percent.
Sometimes, it is found that the government announces cuts and increases on the same items year after year, creating and generating so much uncertainty in trade practices. Consequently, frequent policy changes and uneven duty collection make importing difficult and expensive and create severe bottlenecks for commercial activities. Of course, the problem is aggravated by our dependence on imported raw materials and finished goods. Because of these systematic problems, under invoicing and smuggling are often used to avoid paying full tariffs.
I doubt very much if our trade policies, as it relates to tariffs and prohibitions on goods are consistent with World Trade Organisation (WTO) prohibitions against certain non tariff trade barriers. The problem is that there is the possibility that, it is nearly impossible to guess the direction of tariffs and general trade policy of the government and in that case, it suggests, very strongly, that there is no strategic basis for our tariffs.
The consequence of a trade platform such as ours is that importers face inordinately long clearance procedures, high berthing and unloading costs, erratic application of customs regulations, and corruption regulations and corruption. High tariffs and erratic applications of import and labelling regulations make importing high value perishable products difficult. In addition, it is no news that disputes among the tens of agencies at the ports over the interpretation of regulations often cause delays, and frequent changes in customs guidelines slows the movement of goods through the ports.
Two weeks ago, I had asked if anyone ever wondered why all the goods that are banned by the government simply and very simply still find their ways onto our streets and homes? Afterall, if you listen to government officials, industry and manufacturing operators, it is always the same complain that goods that are banned are found littered around the country in stores, and in our homes.
The economics of it is that things that are supposedly banned are very expensive, the customs man has become very rich, the law has never been kept, the economy is loosing money in taxes, and the industry is not developing, and by extension the wider economy is not benefiting. I can imagine that the person that came up with the law thought he had done Nigerians some good. My general view is that trade regulations should emanate from the strategic view of the economy and its production patterns over time and should be measurable. In my opinion, our current trade practices are opaque. Except harmful for human consumption, why ban goods especially things like clothes that we do not make but like wearing.
Personalities and economic development
I have often refrained from talking about personalities on this page because I believe that the very important and crucial goal that we desire, will only manifest and indeed, the symptom of that progress, will be the institutionalisation of the drivers of our progress. Nonetheless, as a student of the history of economic growth and development, the beginning of the process of development in many countries often comes down to someone being dissatisfied with the present circumstances and able to do something about it. Basically, it boils down to leadership.
The gentleman I described above in the second paragraph is Sanni Abubakar, the Assistant Comptroller General of Customs. At the conference, while everyone proffered solutions to the crisis we have at the ports, Abubakar maintained that the goal of achieving the 48 hour turnaround at the ports is, practically impossible unless the platform for trading in the country, that is the way goods are permitted into the country, is fundamentally altered. According to him, the tariffs on goods and the prohibitions list of goods banned from entering into the country is just too long. Consequently, it is not that Nigerians are determined not be non compliant of our laws and regulations or that the customs are determined to remain corrupt, it is the circumstances that make importers want to circumvent the law, and the customs vulnerable to corruption.
This is the same argument I made two weeks ago. Our border laws are the most inconsistent with rational economic thoughts, our production patterns, our strategic trade policy and I sometimes wonder if our tariff system is not just one aspect of someone waking up and fixing up percentages. They are just too arbitrary. We must reconsider, and very quickly do so, any law and regulation that potentially criminalises the majority of the people. If you say some kinds of clothing are banned, and the President wears it, the Ministers in charge of the ministry of commerce and industry wear it, the governors wears it, and the top CEOs wear it, I consider it a joke. We say second hand clothing is banned, and on my way to Lagos Island, travelling through Orile, that is all you see. It means the government has criminalised everybody and thus nobody in particular, and we have all paid a fraction to the man in charge. So, can anyone genuinely say it is not nearly impossible in Nigeria not to be corrupt.
Take rice, for instance, Abubakar argued that the legitimate importation last year was about 300 metric tonnes, while local production is about same. However, he reckons that total consumption of rice in the country was much more than that, in the region of 3,000 metric tonnes. How did the rest come in? Of course, through neighbouring countries. The economy has lost, production has not happened, the customs man have built more houses, and rice is still expensive. Why are we fooling ourselves?
Our tariffs are totally and unrealistic punitive. If we do not produce the things we think we should produce, instead of working on why we are not doing so, we waste endless resources practicing 1960s economics that says if you ban this or that, producers will be encouraged to produce them in replacement. Since that is not happening, instead of looking for a replacement strategy, we stick to this dogma.
In conclusion, I mentioned that I refrained from mentioning personalities, even though I recognise that the progress we require and desire can only be initiated and driven by people of exceptional capabilities, intellect, and vision, especially at this stage of our development. In the last administration, in relation to economic development, two appointments stood out. These were those of Ngozi Okonjo-Iweala and Chukwuma Soludo. Okonjo-Iweala ensured we achieve macroeconomic stability, and yes, I recognise that the economic environment helped but it does not in any way diminish her achievement. Soludo proved to be a man of vision and the banking consolidation was a masterstroke.
I often argue that pedigree is of little importance to me when it comes to achievements in office. It depends on the responses to problems and opportunities. So, the present crop of ministers can examine the current position of things, and do great things as well. In relation to this piece, the two ministers of Finance, Shamshudeen Usman and Remi Babalola are the key people. I have listened to both of them at close quarters and I find them impressive. I can imagine there are plethora of issues that may concern them, but if they manage to sort the mess in our trading platform, they will turn out to be inspired appointments as well. Towards Economic National Development (END).
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