Importers Incur N200b Extra Costs In Cargo Clearance Yearly | Independent Newspapers Limited
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Importers Incur N200b Extra Costs In Cargo Clearance Yearly

Posted: May 12, 2015 at 1:00 am   /   by   /   comments (0)

By Andrew Airahuobhor, Lagos


There are indications that over N200 billion extra cost is incurred by Nigerians through illegal payments to multiple government agencies annually, besides the statutory Customs Duty, levies as well as shipping companies and terminal operators’ charges.

While the Standards Organisation of Nigeria (SON), for example, collects N50,000 to certify each container, importers pay N40,000 as Plant Quarantine charge.

This means that importers have paid a total of about N42.53 billion as Quarantine charges to SON, considering that 1,063,380 twenty feet equivalent units (TEUs) of containers were handled in 2014.

The National Agency for Food and Drug Administration and Control (NAFDAC) and eight other federal agencies, most of which were barred from the ports by the Federal Government in 2013, but have continued to operate, also charge various amounts before any consignment is released from the port.

Port reforms that transferred cargo handling operations from government to private companies, brought some level of improvements in cargo clearance over the past decade, but bottlenecks and corruption pile up extra costs, defeating the core objectives of the port reforms of 2006. The reforms were to at reduce import cost by 30 per cent.

Lamenting the multiple charges and illegal collections at the ports, Charles Okorefe, chief executive of Kamany Maritime Services Limited, a Customs Brokerage firm told Daily Independent in a chat: “After paying Customs duty, shipping company and terminal charges, you also pay about 50 percent of extra cost so that your job can be facilitated.

“I don’t know how this can be eradicated, because it is so ingrained in the system that it is treated as normal,” he said, adding that for any document to be signed and stamped, payment is made, swelling extraneous costs of clearing.

In addition, President, Shippers Association, Lagos State (SALS), Rev. Jonathan Nichol, said the Nigerian Quarantine service imposes a N40,000 charge for every 20 feet containers, meaning that an importer with 200 containers also pays N8 million, similar to what is paid to the SON.

He wonders: “How much is the importer making? How long are we going to keep on settling people?”

Sadly, he continued, these charges are added to the cost of the goods and passed on to consumers, just as a long list of levies payable to agencies that examine cargo at the ports before appending their signature on an examination form to release the cargo.

The Nigerian seaports recorded 86.6 million metric tons in cargo throughput in 2014, and 76,886,997 metric tons in 2013. While laden container throughput in 2014 was 1,063,380 TEUs, a growth of 5.2 per cent over 1,010,836 TEUs in 2013.

Before taking their cargoes from the ports, importers also pay seven per cent surcharge as port development levy, although port services have been privatised since 2006. There is also the ECOWAS Trade Liberalisation Scheme (ETLS) charge of 0.1 per cent and five per cent value added tax (VAT) paid to government. Importers also pay five per cent VAT to the shipping companies and terminal operators on the same cargo.

“Is that how to do business? These are all the bottlenecks the Nigerian shipper goes through. All the customs’ tables where they collect “tolls” should be dismantled,” Nichol advised.

Stakeholders in the maritime industry also lament the persistent corruption, large-scale physical examination of containers, and illegal levies imposed by multiple government officials impacts on cargo handling capacity and costs. When all of these costs are added, operators say imports would have paid over N200 billion in extra cost and illegal charges to these sundry agencies and their officials.

Such charges, they say, is why the cost of clearing a 2002 Toyota Camry in Cotonou port is almost half that of Nigeria’s, fuelling high rate of smuggling that has attained a dangerous dimensions as more importers prefer to land cargo in Cotonou.

“The terminals have been modified and have become a lot more efficient than they ever were in the history of Nigeria. But every other thing around the terminal remains inefficient,” Bolaji Akinola, spokesman of Seaports Terminal Operators Association if Nigeria (STOAN) told our correspondent at the weekend.

He said there are still multiple government agencies operating at the ports, with each of them slowing down the cargo clearance process, despite governments’ decision to reduced them to five in 2013. They have looked for clever ways of coming back into the port, he stressed.

“Each have its own cost and add to the cost of doing business, making cost of clearing cargo at the port very high. Some are illegal levies imposed by officials of government agencies. As much as 70 percent of the containers that come into the port are examined physically and in the course of doing that, there are delays in the system,” he said.