How Nigeria bleeds through abuse of the Import/Export waiver scheme

Funso Olojo

The economic resources of Nigeria have suffered fatal and multiple attacks by unscrupulous importers and exporters over the years through gross abuse of the otherwise legitimate waiver scheme. This invasion has therefore eroded the financial base of the country, part of the dire consequences Nigerians are currently facing.

Waiver is an incentive granted by government to importers and exporters, manufacturers, government agencies, among others, which exempts them from payment of duties and taxes for goods exported or imported into the country.
The waivers include 2.5 per cent duty on textile machineries and their spare parts, negotiable Duty Credit Certificate (NDCC), 2.5 per cent duty, VAT-free policy on industrial machineries as well as the Export Expansion Grants. Waivers, in another clime, are granted in a regulated process and determined on a case-by-case basis by governments to protect local businesses and jobs. It is an incentive or concession granted to businesses that have the potentials to add value to the economy.
Regrettably, these have been abused in Nigeria and become a major drain on the economy. The indiscriminate granting of this special offer has degenerated to such a ridiculous and frivolous level that importers of some finished products and food items have become major beneficiaries ahead of importers of raw materials and machineries who are meant to be the focus of the concessions.
More ridiculous is the fact that churches, NGOs and influential individuals get this prime offer to the detriment of the economy.
Consequently, Nigeria is said to have lost in excess of N4trillion to this frivolous approvals since the return of the democratic rule in 1999.
The abuse of this process commenced from the administrations of former President Olusegun Obasanjo and continued through the regime of late President Umaru Musa Yar’Adua and the immediate past government of former President Goodluck Jonathan under whose watch the process was said to have been most abused and the economy recklessly raped.
Importers of rice, palm oil, energy equipment, textile machineries, steel and vegetable oil were the biggest beneficiaries of the waivers reportedly extended to them by the government from 1999 to 2012.
The reckless rape of the resources through this means was so much that its approval was suspended in 2012 by the former government of Jonathan.
Curiously, the abuse resumed on a huge proportion shortly after through to 2014 when the bubble burst.

In 2014, the then Comptroller-General, Nigeria Customs Service, Alhaji Dikko Abdullahi told the bewildered members of the Joint National Assembly members on Finance and Appropriation which were investigating reports of alleged over-bloating of the 2013 budget that, the service could not meet its revenue target for that year due to the massive abuse of import waivers and duty exemptions which hit N603billion within nine months of that year.
Alarmed by this revelation, the committee summoned the then Minister of Finance and the Co-ordinating Minister of the Economy, Ngozi Okonjo Iweala, to answer 50 probing questions on state of the economy. Question number 15 of the 50 questions posed to Mrs Iweala was on the management of waiver policy. She was asked to produce a detailed report on the exact amount of money Nigeria lost to import duty waivers and the justification for granting such duty exemptions.

According to her, the government lost about N171billion between 2011 and 2013 to waivers granted to some critical sectors of the economy such as manufacturing, agriculture, power and gas to boost the growth of the economy.
However, the Nigeria Customs gave a lie to these figures when it said the actual amount lost to the reckless and indiscriminate granting approval for concessions was N1.4trillion. Between 2000 and 2008, Nigeria lost an estimated amount of N276.9billion. In 2011 alone, about N37.2 billion was lost to the abuse of the scheme.

This revelation opened a Pandora box of how the Ministry of Finance, which was the approving authority, indiscriminately granted waivers and concessions to ruin the Nigeria’ s economy. It was revealed that during the regime of former President Obasanjo when the abuse started, about 1,843 corporate organizations and high net worth individuals benefited from the abuse of waivers while these figures increased during the immediate past government of former President Jonathan.

The Customs authority lamented that more than 65 per cent of these incentives were recklessly and inappropriately granted as they were granted for the import/export on questionable and unapproved goods, ranging from rice to fish and kola-nuts that had no significant bearing on the economy. The agency further disclosed that the grant was given to export-oriented companies and local
manufacturers to export raw materials. Instead, these local manufacturers sold their certificates to dealers who then used same to import cars and other luxury items into the country which added no value to the economy. The most recent of such serial abuse was by auto manufacturers under the automotive policy and rice importers under the rice policy of government.

The Customs has raised alarm that some of the operators under the auto policy were in the habit of hiding under the policy to bring in fully built brand new vehicles as CKD or SKD in a bid to enjoy the concession on duty payment.

However, waiver abuse under the current government of Mohammed Buhari may have been nipped in the bud due to the tight fiscal regime of the government. Also, the current Customs Comptroller-General, Hameed Ali, was said to have frowned at the abuse to which the programme had been subjected over the years and vowed not to entertain any frivolous requests for waivers from the Ministry of Finance and the Presidency that have the statutory powers to grant such requests. His stance, it was learnt, may not be unconnected with his desire to plug all revenue leakages that will enable the service meet its mega revenue target.
Joseph Attah, the National Public Relations Officer of Customs disclosed that Customs does not grant waivers but merely implement any waiver request from government. Attah, who was not categorical on the frequency of such requests from the government to the service in recent times, however hinted that the frequency was not torrential as it was under the previous government.
“I am a spokesman for the Customs and not the presidency. It is the presidency that will tell you why it is not granting waivers as before or how many waivers it has granted. Our duty as an agency is to implement such requests from government “the Customs image maker declared.