Business

LCCI: Advocating independent dispute resolution at ports

Again, the high handedness of Nigeria Customs Service (NCS) officials at the nation’s ports hit the front burner recently as the Lagos Chamber of Commerce and Industry (LCCI) is seeking an independent dispute resolution framework on product valuation and harmonised system of product classification among the business community. TAIWO HASSAN reports

Indeed, at many fora in the country, activities of the Nigeria Customs Service have been questioned, whether it is solely a revenue generating agency of the Federal Government or meant to aid the business community to ensure smooth trade facilitation at the country’s ports. Nevertheless, the latter has been judged by the business community as its core function, although it remains contentious following various complaints from port users. In fact, members of the organised private sector (OPS) have flayed Customs’ operations at the ports for dragging the country’s economy into retrogression. The concern of the business community is that if the modus operandi of NCS is not modified to improve trade facilitation and revenue generation, Nigeria could be heading to destruction as investors are leaving Nigerian ports for neighbouring countries for cargo delivery.

Port congestion

Following the attitude of the officials to trade facilitation and port operations, there has been surge in port congestion, a situation the business community levied against NCS with port operators and manufacturers paying heavily. Last week, the African Centre for Supply Chain (ACSC) practitioners disclosed that congestion at Nigerian ports was negatively impacting the country’s gross domestic product (GDP) by $14.2 billion annually. They said that financial cost of accumulated delays of trucks constituted about 40 per cent of the total cost borne at the port. The observations were identified as cause of port congestion apart from indiscipline amongst truckers, especially around the Lagos logistics ring, weak technology application, nonimplementation of 24-hour port operations, and manual cargo examination among others. LCCI However, the Lagos Chamber of Commerce and Industry said it was seeking an independent dispute resolution framework between the NCS and the country’s business community that will improved trade facilitation at the gateways. With this, LCCI is calling on President Muhammadu Buhari to intervene by setting up an independent appeal mechanism to deal with issues of valuation and harmonisation system classification between the Nigeria Customs Service and the business community. LCCI’s Director-General, Dr. Muda Yusuf, told New Telegraph in Lagos that a situation where the customs are being allowed to be the sole arbiter of dispute resolution at the ports was hurting investment and weakening investor confidence. He said that managing disputes with the Nigeria Customs Service on matters of product valuation and harmonised system of product classification was one of the most distressing encounters experienced by investors in the Nigerian economy. According to him, lack of independent dispute resolution at the ports is a major shortcoming in the country’s international trade process following the absence of an independent, credible, and prompt appeal mechanism. Yusuf said: “Importers are left entirely at the mercy of the Customs in the absence of a credible, independent window for dispute settlement between the customs and the private sector. “Under the present arrangement, the Customs Service is the accuser and the judge. This mechanism is unfair to investors and not consistent with the principles of natural justice. Many companies have been compelled to pay outrageous additional charges on imports thus distorting their investment plans and projections. “Discretionary interpretations on product classification and valuation pose enormous corruption risks in customs processes. Indeed, the biggest corruption risks in the interface between the Customs and the business community are around these two issues.”

Implications to key sectors LCCI

Director-General explained that this situation was hurting investors across all sec-tors – manufacturing, agro-allied, ICT, construction, services etc. It is a disincentive to domestic and foreign investment; it creates uncertainty and aggravates investment risk, it undermines economic diversification prospects, depresses capacity utilization, and limits the scope for job creation. It is also not consistent with the vision to make Nigeria a top investment destination.

Buhari’s intervention

Speaking on the presidential’s intervention, Yusuf said: “This could be done within the framework of an Executive Order. This is necessary to restore the confidence of investors in the international trade process. “The reality is that the Nigeria Customs Service has a weak Trade Facilitation culture and an absence of customer service orientation. This disposition is hurting investment, frustrating trade, and creating a negative investment sentiment. “A presidential intervention has become inevitable, especially with the onset of the African Continental Free Trade Area (AfCFTA). “There is need to ensure a balance between regulatory controls, revenue generation and trade facilitation functions of the Nigerian customs service,” he added.

NCS’ review

The business community is agitating for strengthening customs’ post-audit system, reducing the number of customs desk that importers have to go through or collapse same to two or three. Use of scanners, evacuation of all over-time cargo from the terminals to create space and enhancing terminal efficiency, effective consequence management for corrupt customs officials, dishonest importers and clearing agents, including naming and shaming of violators.

Last line

LCCI, in its research findings on the nation’s ports, indicated that the economy was currently losing about N600 billion in revenue and an estimated $10 billion (N3.6 trillion) on non-oil export, thereby making the NCS as the biggest institutional challenges facing the business community today.

 

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