CET Puts Ports’ Agencies Under Pressure | Independent Newspapers Limited
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Business, Maritime

CET Puts Ports’ Agencies Under Pressure

Posted: Jun 26, 2015 at 12:31 am   /   by   /   comments (0)

By Andrew Airahuobhor  –   Lagos


If Nigeria does not put its house in order, encourage trade facilitation devoid of bottlenecks inhibiting trade; other West African countries will certainly reap the benefit inherent in the Economic Community of West African States (ECOWAS) Common External Tariff (CET), formally launched in Lagos on Tuesday.

CET would establish a system where once an importer bringing goods into Nigeria pays tariff in any of the ECOWAS countries, he would no longer be required to pay in Nigeria. It will play a critical role in further enhancing economic integration among member countries, as well as raise internal productivity within each country.

“There must be some level of carefulness in the implementation of the CET, the enforcement of the laws, because we are porous, so that we do not allow third parties to benefit, while we lose and then become a dumping ground, our industries will stifled and die away. There must be constant monitoring of the impact of the CET on the economy; the future is watching, history is waiting,” said Ken Ukaoha, National Secretary, National Association of Nigerian Traders (NANTS).

A senior official of ECOWAS Commission, Mr Felix Kwakye said the ECOWAS CET would create a common market for member countries, being one of the focuses of the common external tariff.

Speaking on the CET, as chairman of the committee on the tariff scheme, during the official launch of its implementation at the Nigeria Customs Training College in Lagos on Tuesday, Kwakye said the new CET comes with five categories of tariff rate. They are Category 0, which covers basic social goods and attracts zero percent tariffs. Categories one and two covers basic goods, basic raw materials, capital goods, specific inputs; and intermediate goods respectively, attracting five per cent and 10 per cent tariff respectively.

Category three covers final consumer goods and other products not classified elsewhere, with tariff of 20 per cent, while Category 4 covers specific goods for economic development and attracts 35 per cent tariff.

Chronicling the establishment of the CET, Kwakye said the scheme could not kick off until around 2006 due to many problems, such as war, conflict, civil strife, health issues confronting the West African region since its establishment in 1975.

“From year 2000, leaders began to reflect on the need to come back on track and adopted the CET in 2006 at a meeting in Niamey. At that time we had four bands of the tariff, but another meeting in 2009 gave birth to the 5th band tariff, (Category 4- specific goods for economic development at 35 per cent tariff.)

The ECOWAS CET has provision for temporary Import Adjustment Tax (IAT), which was accommodated to allow countries to adjust to the scheme during the 5-year transitional period, ending in 2019.

“ECOWAS member states are permitted to apply temporary provisions such as the IAT and Special Protection Tax (SPT) to allow them adjust to the tariff system. The application of the SPT is contingent on the behavior of import volumes and import prices following the entry into force of the ECOWAS CET, while the IAT is designed to help countries that have to adjust to a lower tariff structure undergo a smooth transition,” he explained.

The CET is one of the instruments of Customs Union at the second level of the ECOWAS integration after Free Trade. A Customs document shows that while tariff rate of West African countries are generally expected to fall, the CET is predicted to raise the average import tariff of ECOWAS countries by about 12 per cent, according to the simple weighted average rate.

Director-general of the Nigerian Customs Service, Dikko Inde Abdullahi acknowledged that the new trade system was already breeding complaints among clearing agents due to its little understanding.

Dikko who was represented at the formal launch by the zonal controller, Zone A, Assistant Comptroller-general (ACG) Victor Gbemudu, said, “People are complaining in the last two weeks because they lack understanding of the system. It is not a Nigerian affair it is a regional affair. This is not to be blamed on any government,” he said.

Meanwhile, Nigerian ports have lost unquantifiable cargoes to ports of neighbouring countries in the recent past due to attractive operational and administrative environment in those ports.

Port reforms of 2006 that transferred cargo handling operations from government to private companies brought some level of improvements over the past decade, according to shippers, but bad access roads and extortion by government officials pile up traffic and costs, defeating the core objective of the reforms-to improve efficiency and reduce cost by 30 percent.

Nigerian business environment is viable but ‘kickbacks’ and other bureaucratic bottlenecks make cost of doing business in the country very high.

However, the Nigerian Shippers’ Council, (NSC) has said that it has commenced moves to subject all private terminals in the nation’s seaports to a comprehensive audit, so as to situate the prevailing delay in cargo clearance at the ports.

The Council’s Executive Secretary, Hassan Bello said during a working visit to APM Terminal at the Lagos Port Complex, that the Council would work closely with other stakeholders to ascertain where the delay is being experienced in the course of cargo delivery.

He also said that the Council would like to witness the operations of some of these terminals so as to have a firsthand experience of their operations and challenges. Besides witnessing the operations of some of these terminals, the Council will also ascertain the quality of their equipment and how often they are put into use.

He further disclosed that the Council has also concluded plans to establish a Port Community System where all stakeholders will resolve issues affecting the port industry.

According to him, port regulation is democratic, hence there is need for the terminal operators and the port regulator to partner to address burning issues associated with port efficiency and make progress for the growth of Nigerian economy.

Nigeria has been wooing Niger Republic since 2013, aiming to attract up to three million metric tons of the landlocked country’s cargo to Nigerian ports annually. More than 70 percent of Niger Republic cargo transited through Nigerian ports until 2006 due to ‘uncompetitive’ port environment and is currently zero percent.

Niger Republic has been doing about 2.5 million metric tons in Benin Republic, 1.5 million metric tons in Togo and close to a million metric tons in Ghana. From Nigerian Shippers’ Council (NSC) projections, Nigerian ports can do up to three million metric tons annually and up to two thousand Niger Republic bound containers monthly.

Major imports into Niger Republic, like Nigeria, are mostly consumer goods while the country exports uranium, sesame seed, arabic gum, groundnut and skin. The country is now also an oil producing country and it looks up to the ports of neighbouring countries to export its crude oil.

NSC, had on the behest of the Federal Ministry of Transport, led a trade delegation made up of port concessionaires, port administrators, government officials and other shipping service providers to Niger Republic in 2013.

In February 2014, the federal government, as part of a deliberate remedial effort, pronounced Nigerian Shipper’s Council as Ports Economic Regulator. The government, in making this Act, wanted to institute an effective regulatory regime at the ports for enhanced efficiency.

With the implementation of CET formally launched, Nigeria Customs Service and other government regulatory and security agencies operating at the ports and border stations would be under pressure to make the ports attractive and competitive. This is by eradicating bottlenecks and trade barriers that will discourage importers from clearing their goods in Nigeria, thereby resulting in loss of huge revenue.