Import waiver fraud

•This should reduce now that the finance ministry has requisite certificate

One of the last functions of the immediate past Minister of Finance, Mrs Zainab Ahmed, before the formal dissolution of the Federal Executive Council (FEC), was to receive the Full Business Case Certificate of Compliance for the Import Duty Exemption Certificate (IDEC) waiver issued to the ministry by the Infrastructure Concession Regulatory Commission (ICRC). The Full Business Case Certificate of Compliance will enable the ministry to develop, deploy and manage the Automated Customs Gateway Portal through which the import duty waiver scheme can be managed with greater efficiency, transparency and drastically reduce losses to the economy.

It is, however, disturbing that, as the minister revealed, the Federal Government had lost N4.6 trillion from waivers granted to importers in 2017 and 2018 as a result of the late implementation of the IDEC project. Given the fragile state of the economy, which has just tentatively exited a recession, and the requirement by government of all the financial resources it can get to meet diverse challenges, including bridging a severe infrastructure deficit, containing insecurity and ameliorating poverty, it is difficult to understand why the IDEC project had not been pursued with a greater sense of urgency. It was only on June 12, 2018, three years into the President Muhammadu Buhari tenure that the minister wrote to the ICRC requesting its intervention for the actualisation of the IDEC project. This kind of delay is inexcusable.

The Buhari administration has been widely commended for significantly reducing the humongous revenue losses the country incurred as a result of the pervasive abuse of the import waiver policy, particularly under the preceding Goodluck Jonathan administration. This is certainly one of the reasons for the substantially enhanced revenue performance of the Nigeria Customs Service (NCS) under the present administration. Over N1.4 trillion was reportedly lost to import waiver fraud between 2010 and 2014, although former Minister for Finance and Coordinating Minister of the Economy, Dr Ngozi Okonjo-Iweala, claimed that only N171 billion was conceded as waivers to importers. Yet, the granting of illegal waivers to a leading car dealer to import armoured luxury vehicles for former aviation minister, Ms Stella Oduah, was an indication of the gross abuse of import waivers in that era.

That the problem persists even now is not in doubt, even though the scale may be much reduced. For instance, in July 2017, a charitable organisation was granted import waiver for the importation of HIV/AIDS treatment, anti-malarial drugs and mosquito nets. On inspection, however, the NCS discovered 5,999 units of high-end mobile phones and screen covers, neither of which was listed on the manifest nor detailed in the IDEC form, hidden in the mosquito nets.

Again, some imported electronic brands are reportedly granted waivers and allowed to import Completely Knocked Down (CKD) and Semi Knocked Down (SKD) parts, and pay a duty of five percent instead of 20-35% on the understanding that they will assemble the finished products in Nigeria, thus adding value to the local economy and creating jobs. However, these investors end up importing Fully Built Units (FBU) while benefitting from the incentives for CKD and SKD parts. No less than N24 billion has reportedly been lost to this practice in recent times.

There has been the advocacy in some quarters for the abolition of the import waiver scheme to stem the huge revenue losses attendant on its abuse. We disagree. Waiver concessions to importers do not really constitute a loss if they boost investment and productivity in sectors such as agriculture, aviation, health, mines and steel, water resources, gas, power and education that the policy is specifically meant to benefit.

Furthermore, import waivers should be applied to targeted industries as a whole rather than arbitrarily given to individuals in a manner open to abuse. The IDEC it has been issued should enable the ministry of finance improve significantly on the administration of import waivers.