… It’ll boost local capacity –OPS, STOAN, others
By Moses Akigwe, Uche Usim, and Isaac Anumihe
Smuggling and importation of fairly used automobiles (aka, Tokunbo) through Seme, a border town between Nigeria and the Republic of Benin is one of the most lucrative businesses that most citizens of both countries have been engaged in for many years.
Although some commentators blame the nation’s porous land borers for a growing incidence of trans-border crimes that have inflicted huge losses on the government and citizens over the years, smuggling of fairly used automobiles and other goods have since assumed some legitimacy and notoriety that those engaged in it can go to any length to defend their trade.
This perhaps explained the vitriolic outpouring of emotions by Nigerians last week after the Federal Government announced its decision to ban importation of used vehicles through the nation’s land borders.
Spokesman of the Nigeria Customs Service (NCS), Mr. Wale Adeniyi, who disclosed this in Abuja, said the prohibition order was sequel to a presidential directive restricting vehicle imports into Nigeria through the nation’s seaports only. It however came after the Nigeria Customs Service high command reported the country’s Roll- On-Roll-Off (RoRo) terminals built specifically to handle vehicle imports have become a shadow of themselves following the diversion of more Nigerian – bound cargoes to neighboring countries’ ports.
But some stakeholders opposed to the government’s directive are citing the unsavory consequences of a similar embargo placed on rice imports through the land borders in April 2016 on ordinary Nigerians, as the basis for their opposition against the closure of borders against Tokunbo imports.
And going by the groundswell of opposition against the policy, there are strong indications that the grace period ending December 31, 2016 given by the Customs spokesman for importers to clear their vehicle imports landed in neighbouring ports may really not be realistic after all.
This is even as the NCS appears to be on a collision course with the House of Representatives which has directed the Nigerian Customs Service to put implementation of the policy on hold at least for now, sequel to a motion on the “Need to suspend the ban on importation of vehicles through the land borders” sponsored by Balarabe Salame, (APC Sokoto) .
Rather than an outright ban, the Green Chamber had canvassed the installation of surveillance equipment for effective monitoring, to curtail smuggling, while urging government to expand its youths empowerment programmes, by establishing skill acquisition centres in border communities.
Leading the debate, Balarabe Salame, said the ban would be counter-prodictive. He noted that apart from the loss of revenue, it will impose more economic hardship on Nigerians.
The lawmaker said not only would the employees lose their jobs, a lot of Nigerians would find it difficult to own vehicles as the price would skyrocket.
He warned that the same thing that happened when government banned the importation of rice through the land borders, which automatically shot up the price from N8,000 to between N20,000 and N23,000 per 50kg bag presently, was bound to repeat itself if the nation’s land borders are closed to car import.
Salame also argued that the loss of loss of revenue through the land borders was attributable corruption of security agencies manning the areas, and not because importers were not paying import duties.
He said “Instead of banning importation of vehicles through the land borders, let us strengthen the borders, so that anybody importing through land, pays the correct duties.”
For his part, Hon. Linus Okorie (PDP, Ebonyi) said Section 18 of the Customs and Excise Management Act empowers the minister to restrict import into and out of the country.
Hon. Ahmed Baba Kaita (APC, Kastina), who opposed the motion, said there is a lot of misinformation about the recent ban. He said as painful as the policy may be, it is a step in the right direction.
But the Chairman of Toiletry and Cosmetics section of Manufacturers Association of Nigeria (MAN), Akpan Umeh, differed in his argument, stressing that the ban on vehicles import would inflict more pains on Nigerians because there are not enough plants in the country to produce vehicles to meet local demand.
He stated that with very few plants currently producing vehicles to serve Nigerian needs, the ban expected to come in force early next year, would trigger a spike in transportation fares across the country. “This is not the right time to ban such item,” he added.
An importer, Mr. Eddy Akwaeze, pleaded for 90 days grace instead of one month because, according to him, “some importers have already paid for goods whose shipment will take longer time than one month. He warned that if the government does not extend the grace period, importers may have no option than to continue to smuggle cars into Nigeria.
Meanwhile, Daily Sun investigations show that the decision caught many importers unawares, prompting reactions from industry stakeholders, including importers, Customs clearing agents and terminal operators.
However, stakeholders sympathetic to the ban said it would boost capacity for local automobile assembly plants and further enhance the operations of terminal operators.
It was against this backdrop that terminal operators under the aegis of Seaport Operators of Nigeria (STOAN) welcomed the decision, saying it will reduce the smuggling of vehicles into Nigeria and also revive the operations of Roll-On-Roll-Off (RORO) terminals in the country.
RORO terminals are specialised port terminals that handle all types of vehicles whose activities were whittled down by the high import duty regime imposed on such cargoes by the Federal Government in 2013.
“The ban on the land borders is a welcome development. We are happy that the President is listening to our appeal to reverse incongruous policies inherited by his government from the former administration and which have deprived Nigerian ports of cargoes to the advantage of the ports of neighbouring countries.
“In addition to this ban on import of cars through land borders, we appeal to the President to reverse the import duties on vehicles to 20 per cent from the prohibitive 70 per cent tariff imposed by the former administration,” the association said.
“The reversal to the old tariff will serve as an incentive for Nigerians to import legitimately through the seaports and make appropriate payments to government. This will boost revenue collection by the NCS. It will also lead to the return of lost jobs at the affected ports.
We also appeal to Customs officers at the border posts to support the Federal Government and the NCS leadership by ensuring that no smuggled vehicle finds its way into the country through the land borders from January 1, 2017 when the new policy is expected to come into effect. The policy also led to loss of more than 5,000 direct and indirect jobs at the affected ports,” STOAN Chairman, Princess Vicky Haastrup, said.
The spokesman of STOAN, Mr. Bolaji Akinola, told Daily Sun that after the introduction of the 70 per cent hike, 80 per cent of the members’ businesses were affected, which means the member companies were doing 80,000 units of vehicles annually. This also affected the collection of Customs revenue, which nosedived from over a trillion naira mark a month to a little over N600 billion a month.
According to the Managing Director of Transit Support Services Limited (TSS), Mr. Frank Nneji, while reacting to the ban announced recently by the NCS, said it would have very positive impact on the economy.
He said since the directive was intended to ensure that new and old vehicles pay right duties, it would create a level playing field for both local assemblers and importers of fully built vehicles.
“Vehicles will now be appropriately priced,” Nneji whose TSS assembles both the Forlan and Shacman brands of trucks in the country, remarked.
Also reacting, the Chairman of Innoson Vehicle Manufacturing Company Limited, Nnewi, Dr. Innocent Chukwuma, said the directive by the Federal Government was a welcome development, provided it would be properly enforced and sustained.
But Director General of the National Automotive Design and Development Centre (NADDC), Mr. Aminu Jalal, said it would have two major salutary effects, one of which is the increase in revenue collected by the Customs on imported vehicle.
Jalal disclosed that government loses a lot of revenue through the inflow of vehicles across the land borders, because the importers use fake documents to bring them in, thereby paying little or no duties. He believes that the prohibition would shore up the collectible revenue since the duties would now be paid officially at the ports.
He said the ban would also ensure that importation of second-hand commercial vehicles older than the 15 years age ceiling, which hitherto was unchecked across the illegal land routes, is stopped. Jalal said the local auto assembly industry will benefit from the new order, because imported vehicles, whether new or used, will now be appropriately priced, making buyers give made-in-Nigeria automotive products a look-in.
On their part, freight forwarders under the aegis of Save Nigerian Freight Forwarders, hailed the policy, describing it as a timely intervention to save the RoRo companies whose business fortunes have dwindled.
The National Co-ordinator of the group, Chief Osita Patrick Chukwu, said the government’s decision to ban the importation of all types of new and used vehicles through the land border was timely.
According to him, the ban will create jobs for Nigerians and revive some ports that are now redundant. He described those who bring vehicles through the land borders as economic saboteurs.
“But the government should go further to reduce the tariff and make importation through Nigerian ports more competitive among the West African countries as he argued it will create employment and revive some ports already rendered redundant due to inactivity.
Similarly, a former Executive Secretary of Nigerian Shippers Council (NSC), Dr. Kingsley Usoh, while commending the government on the policy, suggested that it should crush vehicles that are older than seven years, whether they are brought in from the land or sea.
Also, a car importer, Uche Muoka, urged the government to tighten security at land borders to ensure that smuggling is reduced.
“It’s good news to hear that vehicles will now come into the country only through the seaports. It is a good development because with this, government can track and capture its full revenue,” he said.
In the same vein, Director General of Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, said the ban on import of new and fairly used vehicles through land is a welcome development but that the government should be serious in implementing the policy as this would generate more revenue if it is well implemented.
Yusuf noted that for the ban to be effective, the government must create a conducive environment for manufacturers of these vehicles to produce locally-made ones.
He called on vehicle manufacturers in the country to take advantage of the ban to begin to look inward to producing locally-made automobiles for Nigerians.
Reps, stakeholders oppose move
But beside the economic consideration of revenue loss through under declaration and high level of corruption involving government agencies manning the border posts, another major reason that fuelled government’s decision to shut its land borders against vehicle import, according to Daily Sun investigations, was the security threats posed by the trade. It was revealed that smugglers were disguising as genuine businessmen to ferry in arms and ammunition to the country with the vehicles cleared at the land border posts.
According to an ex-Customs official who pleaded anonymity, “arms and ammunition are loaded in the trunks of some vehicles cleared at the border posts and ferried into the country. This is not good for a nation battling insurgency in the North East and militancy in the South South. One begins to wonder where some of these military hardware used by the insurgents come in from. We know the land borders are porous. We also know it is easy to conceal some of these ammunitions in the imported vehicles, especially the buses and trucks. So, with this ban, no vehicle whatsoever will come into the country through the land borders. Anyone seen is automatically seized. Remember the NCS, Seme Area Command, in October 2015, intercepted a used military truck at the border imported into the country under false declaration. Such an incident won’t happen if vehicle importation through land border is outlawed,” he argued.