The Federal Government is eyeing $250 billion in revenue through the Trade Modernisation Project (TMP), which is believed would have a profound, long-term impact on the country’s social and economic development. According to experts and stakeholders in the economy, the project, spread over a 20-year concession period, presents a tripod for revamping revenue sources for the country as it will boost revenue generation, deepen legitimate trade and combating corruption, MUYIWA LUCAS reports.
A greater challenge of revenue generation is the stark reality the country faces, presently. This challenge may get higher even as the federal government under the administration of President Bola Tinubu is on the verge of approving a new national minimum wage for workers given the huge financial requirement to take on the increase in workers’ salaries.
With a workforce of about 1.2 million on the federal government’s payroll, the Minister of Information and National Orientation, Mohammed Idris, was quick to note that the N494,000 national minimum wage initially demanded by organised labour cumulatively amounts to N9.5 trillion annually- a figure he noted as capable of destabilising the economy and jeopardising the welfare of over 200 million Nigerians. Even at the N250, 000 minimum wage demand by labour, this would amount to about N3.8 trillion annually.
Still, the N62, 000 minimum wage being offered by the Federal Government, translating to a little over 100 percent increase on the existing minimum wage, implies that more money will have to be expended in settling workers’ salaries.
The implication is that the government will have to source for more revenue options to cushion the effect of the increment on its finances. Already, the country is challenged by an escalating debt profile, marred by declining revenue from oil partly occasioned by the global shift from fossil fuel investment in view of the renewable energy, production shortfall over the past five years and oil theft menace.
This is why stakeholders are convinced that the Trade Modernisation Project (TMP), a presidential initiative powered by the federal government’s economic rejuvenation and diversification agenda, offers government a veritable means to address its revenue demand. As conceived, the TMP leverages cutting-edge technologies to fully automate and streamline Customs operations and smoothen international trade. The TMP, signed on May 30, 2022, between the Federal Government of Nigeria and TMP Limited, expires on September 27, 2042. , It is being implemented through a Public-Private Partnership (PPP) and detailed in a Concession Agreement (CA).
The project, ratified by the Federal Executive Council (FEC) on April 18, 2023, paves the way for the transformation of the Nigeria Customs Service (NCS) into an efficient organisation equipped with the latest technology, facilitating streamlined services for businesses and government agencies. As part of the initiative, 2,500 Customs officers are slated for training by the first quarter of 2025 to drive the initiative. Already, its first Phase is underway following the investment of over $400 million as at December 31, 2023 by the promoters. Under the agreement, the concessionaire commits to investing $3.2 billion over the concession period of 20 years.
The total projected expenditure for the project across the 20-year concession period is approximately $3.2 billion, encompassing both Capital Expenditure (CAPEX) and Operating Expenditure (OPEX). Each of the three phases, spanning the entirety of the concession, involves significant investment. Phase one involves a CAPEX investment of about $300 million, while phase two and three require investments of $465.4 million and $435.8 million respectively.
The CAPEX of $1.2 billion for each deployment phase includes hardware, Customs application, equipment, application implementation services, technology infrastructure, Marine Deployment, and Special Purpose Vehicle (SPV) costs. The estimated OPEX for the concession period amounts to $1.896 billion, covering fixed and variable costs, expenses, and charges associated with the day-to-day operations of the NCS platform.
The TMP
The project’s three phases cut across deployment, management and eventual handover to Customs officers. The concessionaire is mandated to develop, deploy, implement and ensure the timely delivery of the project at NCS’ relevant locations nationwide, in accordance with the Implementation Schedule, Output Specifications and Standards, and Technical Requirements as set out in the Agreement.
Under the scheme, the TMP is being implemented in line with laid out plans. In the first phase, that is the first to third year of its life span known as the initial deployment, the emphasise is on implementing the project’s core services which covers aspects such as the Unified Customs Management System (UCMS). The UCMS is the core of the operational activities and underpins the decision chain and command of goods clearance for release, in line with requisite taxes and waivers of the Federal Government. Still, the UCMS is divided into three mains clusters covering areas such as the revenue cluster which consists of modules that support the revenue generation functions of the NCS in line with the revenue generating business processes of the Customs. Also is the enforcement cluster- comprising of modules that support the enforcement functions of the Service in line with the enforcement related Business Processes of the NCS. Closely associated with this is the Office Automation Cluster- containing modules that enhance the administrative functions, in support of frontline and operational activities of the NCS. This is to be fully developed during the expanded deployment stage of this phase. Perhaps of significance is the trade portal- to be developed as a central hub of all trading activities that keys into the UCMS, providing the integration interface for Other Government Agencies (OGA). The trade hub will further simplify how the public obtains import and export licenses and other non-NCS related certification that enhances the import and export decision capacity of the NCS. There is also the non-intrusive inspection system that integrates 67 cargo scanners of various types and capacities at sea ports, airports and land borders. The system will provide anonymity in cargo scanning, coordinated release decisions and seamless post clearance audit to ensure optimal performance of inspection image analysts.
The Risk Control Centre (RCC) is where command and control activities will be undertaken to provide nationwide visibility to the NCS. The RCC will be two-tiered with each Zonal Command having its own mini-RCC, all of which are seamlessly integrated into the RCC at the headquarters, while the Electronic Cargo Tracking System (ECTS) allows the NCS to track all cargo transiting through the country. It covers cargo marked for re-export, either through other land borders or through Free Trade Zones, as well as excise cargo for manufacturing purposes. Cargo will be monitored through electronic seals. Still, is the Cargo Release System that will provide physical infrastructure to manage the automated release of cargo once clearance has been obtained. The system will entail the following: an Intelligent Gate System (i-Gate); Truck and driver identification and management system; Electronic seal integration system; and port traffic management integration. Geospatial Services will ensure the use of Geographic Information System (GIS) to enhance the operations of the NCS, majorly through enforcement system, which will provide an operational platform for NCS to conduct physical inspection of goods, while gathering evidence on-the-go, to ensure transparency and preserve the integrity of operations, among other features.
Still under the first phase is the second tranche running from the fourth to sixth year of the project. This phase is the expanded deployment phase and focuses on office automation to support the administrative and operational functions of Customs in line with business processes, finance and accounts, human resource management, document management, tariff and trade policy management, data analytics and business intelligence; continuous capacity building and knowledge transfer.
In its phase two, that is from the seventh to the 12th year of the TMP, the focus is on the deployment of the first upgrade/update to the technology systems including deployment of marine related technology and related equipment. The capacity building activities will continue in this phase to enhance the skills and knowledge of the NCS for technology optimisation.
Phase three, that is 13th to 20th year, will see the deployment of the second and continuous upgrade to the technology systems, as well as hand back of the assets to the NCS, given the expected independence of skills and capacity of NCS personnel, based on the continuous capacity building activities of the project.
Benefits
The Comptroller General of Customs (CGC), Wale Adeniyi, appears to have built his mantra on trade facilitation especially to boosting ease of doing business. In his recent visit to China, Adeniyi reechoed the inherent opportunities embedded in the Nigeria Customs Service Trade Modernisation Project at the Headquarters of Huawei, an information and communications technology company in Shenzhen, China, as he centered his discussions around his passion to modernise customs operations and administration.
In similar vein, the National Public Relations Officer, NCS, Abdullahi Maiwada, agreed that the trade modernisation project will aid trade facilitation and efficiency in customs delivery which remains the essence of trade modernisation.
“It is just about simplification, standardisation, harmonisation and automation of processes and procedure. It is part of our efforts to ensure that we facilitate trade and effectively collect revenue for the federal government and enforce fiscal policies of government in terms of anti-smuggling and other responsibilities,” Maiwada said.
Explaining the process further, Maiwada made it known that under the UCMS, the service would be able to scan 200 containers within an hour, which he noted would significantly aid the decongestion of the the nations ports.
Similarly, the General Manager, Trade Modernisation Project (TMP) Limited, Ahmed Ogunsola, said as the concessionaire, TMP continues to work closely with the NCS, adding that the project commenced in 2022 and “we continue to work closely to deliver on the project”.
Ogunsola explains: “We are currently in the phase one of the project and we would move to phases two and three at the appropriate time. We have made significant progress with respect to the deliverables of the project. We are jointly developing and we will jointly deploy a new customs management system in additional to many other areas. We have carried the customs along in jointly designing and developing these solutions, and there is 100 per cent knowledge transfer in everything that we are doing.” He expressed confidence that the Customs and by extension the nation’s economy would be the better for it at the end of it all. “We believe that by the end of the project, NCS will be a pride among its peers. The project builds on the successes the NCS has had over many decades and this is what will bring the NCS into the 22nd century to ensure that it earns its place of pride among customs administrations around the world. We are building the foundations for changes in terms of deploying new technology advancements in terms of how Customs service’s work. All we are doing is that we are providing systems and platforms as well as services that enhance those functions and activities,” Ogunsola explained.
The Head, Business Processes, NCS, Usman Abbah, also said the UCMS would increase productivity and boost revenues, noting that the systems are protected by seven layers of security and aided by 40 servers.
