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Sahel Analyst: ISSN 1117-4668 Page 55
ASSESSMENT OF IMPORT DUTY POLICIES IN NIGERIA: A
CONTEXTUAL ANALYSIS
Idowu Eferakeya1
Abstract This study examines import duty waivers, exemptions and concessions policy
in Nigeria. It adopted an exploratory research underpinned by literature
methodology. The scope spans from 1999 when the country returned to civilian
administration up to 2015. The specific objectives were to determine the existence of
legal instruments backing the policy; determine whether there was any form of
indiscriminate granting of import waivers and abuses; determine the beneficiaries of
these waivers and finally determine the losses in value to the entire economy. From
the investigation the paper was able to discover evidence of existence of legal
instruments backing import duty policy such as Customs and Excise Management Act
(CEMA) Act No.5 of 1958 CAP 84 of 1990 as amended, the Customs and Excise
Tariff etc. Consolidated Act No 4 of 1995 and the CEMA Act of 1958; existence of
indiscriminate granting and abuses in form of waivers of tariffs and duties on
imported commodities under the directive of the Presidency; the beneficiaries such as
Sopon Nigeria Ltd, Aluminium Smelter company of Nigeria Oando Plc, Capital Oil
and Gas Limited and host of others; and the losses in value to the economy
amounting to billions of Naira in the region of N447, 451,296,687.87 through
waivers, exemptions and concessions . The paper notes with distaste how the policy
was implemented with little or no economic consideration, but on political
consideration and concluded that, it was based on a wrong footing since 1999 to
2015. The paper recommends that the country needs to review the waiver policy in
such a manner that would limit the President, the Finance Minister and the Nigerian
Customs of the powers to grant certain waivers. Secondly, every application for
waivers must be investigated thoroughly by the Ministries of Finance and Trade &
Investment to determine the genuineness and authenticity of items waiver applicants
want to import into the country for which duty-free or waiver is sought. The Nigerian
Customs should brace up to their billing and seize those goods that were not granted
waivers but were deliberately imported with approved waivers for other goods. The
National Assembly should be awake to its responsibility and perform its
constitutional checks and balances related to approval of public spending and
scrutiny of policies relating to revenue generation. It should exercise its powers of
oversight to draw the attention of the Presidency to infringement on the Acts relating
to misuse of import duty waivers, concessions and exemptions.
Keywords: Import duty waivers, Concessions, Exemptions, Nigerian economy, Tax
incentive
1 Department of Accounting, Banking & Finance, Delta State University, Asaba
Campus, PMB 95074 , Asaba , Delta State, Nigeria. +2348139078919
goodluck_real2000@yahoo.com
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Introduction
The policy of import duty waiver, exemptions and concession is an
economic instrument usually considered by a country desiring to ensure the
protection of local businesses, promotion of exports and imports of some
categorised goods and creation of jobs. The importance of the policy cannot,
therefore,, be over emphasised from the standpoint of economics. Import duty
waiver, exemption and concession enable a country to grant a concession to
firms by either excluding payment of duty in full or reduction of duty for
certain categories of goods either imported or exported by firms operating in
the country. According to Amaresh (1974) cited in Modebe, Okoro, Okoyeuzu
and Uche (2014) note that charging and waiving of import duty constitute an
integral part of the tax system which governments use routinely to influence
economic and industrial development with the aim of furthering national
objectives. It is a form of tax incentive to encourage capital formation in
selected industries (Boadway, Flatters and Wen, 1996 in Modebe et al, 2014)
Historical antecedents show that several countries in the world,
particularly the developing countries deploy the instrument in a methodical
and constructive manner to strengthen some of their critical industries.
Countries like Japan, China, Malaysia and India according to Periscope (2013)
have at various times in their economic development used import duty
waivers, concessions and exemptions to protect and build up their local
textile, vehicles, agricultural and manufacturing industries which have made
them to become notable as economic powerhouses bolstered by strong export-
led economies. The noticeable advantages derivable from import duty waivers
from these countries obviously spur other developing countries including
Nigeria to develop the policy as a way to propel the economy in the part of
growth and development. Unfortunately, the latching on of the use of import
duty waiver in the country was rather considered pretentious despite the
advertised lofty objectives that it seeks to achieve such as boosting critical
local industries, making available some needed raw materials or goods and to
boost employment in the short and long run. Surprisingly, the way the policy
is administered tends to undermine the very essence it was meant for. It has
been trailed with criticisms particularly amongst stakeholders who accuse the
government of politicking the policy in favour of their cronies without
considering the overall effect on the country’s economy. The agitated question
to ask at this point is that has the country achieved these objectives as
enumerated? Periscope (2013) avers that in three decades now, Nigeria has
been involved in reckless granting of import duty waivers hence the hitherto
lofty objectives have remained a mirage. The import duty regime has been
subjected to manipulations through indiscriminate granting of waivers, abuses
by beneficiaries of waivers which have deprived the nation substantial
revenue and destroyed the supposed critical industries the policy seeks to
protect (Periscope, 2013).
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Sahel Analyst: ISSN 1117- 4668 Page 57
This unfortunate development prompted Guardian Editorial (2016) to
enthuse that the abuse of import duty waiver in the country was handled as an
exclusive license for a few politically connected individuals for some years
now which is a disservice to the nation. Highly placed persons like the former
Speaker of the House of Representative, Aminu Tambuwal in the 7th
House of
Representative, Dr Shamsudden Usman, Yar’Adua’s 2007 Finance Minister
and the former Minister of Finance /Coordinating Minister of the Economy,
Dr Okonjo-Iweala to President Goodluck administration from 2011 to 2015
admitted the existence of indiscriminate granting of import duty waivers,
exemptions and concessions by the President and the attendant abuses. They
also lent their voices on the need to reform the policy for more efficiency.
More criticisms have also come from concerned citizens about the gross
abuses. Others have called for the outright cancellation of the policy in order
to save the Nigerian economy. This obviously brought the issue to the centre
stage of public discourse. As condemnation continue to greet the policy from
economy watchers, financial analysts, manufacturers, customs agents, port
operators and other critical stakeholders, it aroused the interest of academics,
economists and policymakers to have a critical look with a view to assessing
the benefits of the policy more deeply.
Although claims and counterclaims have trailed the policy, it is
pertinent to ask at this point, what are the legal instruments that support the
policy? Do you think indiscriminate granting of waivers, exemptions,
concessions and abuses exist? Are their persons or companies who are
beneficiaries of the policy? What are the losses in value to the economy? In a
bid to find answers to these questions, this paper intends to examine import
duty waivers, exemptions and concessions granted in Nigeria for the period
May 1999 to 2015. The other objectives are to determine the existence of legal
instruments backing the policy; whether any form of indiscriminate granting
of import waivers, exemptions, concessions exist including abuses; who are
the beneficiaries of these waivers and what are the losses in value to the
Nigerian economy
Literature Review
The policy of import duty waivers concession and exemption in
Nigeria is not at the whims and caprices of anyone but certainly provided for
by some legal instruments. Two basic laws govern the charging and granting
of import duty waivers which are Customs and Excise Management Act
(CEMA)Act No.5 of 1958 CAP 84 of 1990 as amended and the Customs and
Excise Tariff, etc. Consolidated Act No 4 of 1995 (Ogah, 2016).The CEMA
Act of 1958 provides the Customs, Immigration and Prison Service Board
with the responsibility of controlling, managing and administering of the
customs and excise laws, collection of revenue for customs and excise duties
and accounting for the revenues as well. The law anticipates and guarantees
fairness to avoid subjectivity and arbitrariness in the administration of CEMA,
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by forbidding the supervisory ministry from interfering with the board’s
powers by way of instruction or order in respect of any particular person
requesting it to either increase or decrease any assessment of duty made or
about to be made or any relief given or to be given or to defer the collection of
any duty (CEMA Act 1958).
According to Customs and Excise Tariff Consolidated Act No 4 of
1995, the Act provides the basis for charging and waiving of custom duty. In
the Act, schedule 1 outlines the duties chargeable on all imported goods and
the list of goods that are exempted from duty payment. In the same Act,
Section II provides the President and Commander-in-Chief of the Federal
Republic of Nigeria the powers to grant waivers outside the laws. In specific
terms the Act states that the President may on the recommendation of the
Tariff Review Board, order, impose, vary or review any duty or levy; add to
or vary any of the schedules or delete the whole or any part of any of the
schedules or substitute a new schedule or schedules thereto. To ensure
transparent exercise of the power of waivers as contained in the Act, Section
11(3) further stipulates that an order must be made under subsection (1) of this
section which shall have effect from the date of publication in a gazette. This
provision ensures that no person or agency of government has prone powers to
grant waivers to businesses or individuals arbitrarily, without first making
such waiver a public knowledge (Ogah, 2016).Indeed it is legitimate for
government to specify in its yearly budgets which later become appropriation
acts, the amendments needed to the existing customs duty schedules with the
main objectives of promoting the development and growth of specified
industries Thus government has powers to regularly amend both schedules
relating to goods that required waiving of import duty and those import duties
are charged( Modebe et al, 2014),)
Is there any form of indiscriminate granting of import waivers and abuses
in Nigeria?
From the Nigerian Television Authority News (2012) reported in
Vanguard Newspapers (2012), it was gathered that the remark of the House of
Representatives investigation in 2009 into waivers granted by the federal
government was questionable and the government was yet to abate the
practice of granting illegal and indiscriminate import duty waivers, despite
repeated orders from the House that the policy be discontinued. Modebe et al
(2014) however, expressed dismay and remark that an increasingly popular
mode of misappropriation of government revenue in recent times is the
practice of granting all manner of indiscriminate waivers of tariffs and duties
on imported commodities under the directive of the Presidency. This form of
hidden expenditure undoubtedly gained popularity under the civilian
administration of President Olusegun Obasanjo from 1999 to 2007.
In the run-up to the 2007 general election, the report of the House of
Representatives on customs and excise according to the editorial of Punch
Newspapers (2011) shows that Nigeria lost over N380 billion in import duties
Assessment of Import Duty Policies in Nigeria: A contextual analysis
Sahel Analyst: ISSN 1117- 4668 Page 59
waived by the federal government to its cronies who are exporters: Such abuse
of fiscal resources by the federal government are used for the purpose of
election financing. Modebe et al (2014) corroborated the assertion and infer
that such is done by the ruling party granting favours to party bigwigs and
financiers who in turn donate to the party and the contesting candidate under
the party platform. An inquiry by the House of Representatives’ found that
former president Olusegun Obasanjo administration over time granted about
one thousand, eight hundred and forty-three (1,843) waivers with several
billions of naira lost by Nigeria Customs. The waivers were not only illegal
but indiscriminately granted to totally undeserving firms and individuals in the
first instance. Some organisations that got waivers for equipment used them to
import furniture, cars, clothing and other luxuries that have neither direct
bearing nor meaningful impact on the economy (Dauda, 2014).
Moukarim, in Dauda (2014) maintained that the granting of waivers by
the federal government has led to the loss of several billions of naira and
millions of jobs. Most of the foreign companies granted waivers to execute
jobs and projects awarded to them abused the waivers by importing more than
what they needed for their projects/jobs and flood the markets with the surplus
thereby killing the local industries leading to great losses in jobs (Nigerian
Manufacturers cited in Dauda, 2014). The foregoing indicates clearly that
those responsible for granting import duty waivers have grossly abused the
policy and this has caused not only huge losses to the economy but denied it
the much-needed revenues and associated benefits
Are there Questionable Waivers and who were the beneficiaries?
Dauda (2014) citing Nigerian Manufacturers notes that foreign firms
obtain waivers from federal government to build airports, roads and other
projects who intentionally import more products than what they actually
required even though such goods can be sourced locally: The remainder are
pushed into the market at reduced prices shutting out demand of local
products Dauda (2014) however noted a custom officer comment in 2011 who
aver that there are many questionable import duty waivers granted in Nigeria
.For instance, a total of N91,506 billion was granted as concessions to 290
beneficiaries between January and December 31, 2011.A firm (name
withheld) enjoyed a waiver of N32.774 billion even when there is no
indication of any line of business of the company. Aluminium Smelter
Company of Nigeria (ALSCON).Ikot Abasi benefited in the sum of N47,789
million and N13,715 million from waivers when the company has ceased
production since 2007.A major oil marketer received over N145.7 billion
worth of waivers while National Petroleum Corporation (NNPC) and a few
other companies received about N143 billion as waivers.
In 2012 according to Dauda (2014), an anonymous customs officer
notes that a total of N191.545 billion was granted to 416 beneficiaries,
involving individuals and private businesses. During the year another 287
beneficiaries got a staggering sum of N83.260 billion in concessions and
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waivers for imports between January 1st and September 31
ST of 2012.In a
related manner, ANL Ltd was granted N8.588 billion concession for
importing kola nuts and another N5.643 million to import tables, kitchen and
household articles that are made of iron cast. Ayo Adeju was granted N2.035
million for importing iron/steel wool, pot scouters and polishing pads and
gloves. Asif Mohammed was allegedly paid N4.148 million for importing
tables and kitchen household articles. A motor dealer was also granted the
sum of N698.177 million for importing fully built four-wheel drive vehicles,
motorised tanks as well as other armored fighting vehicles. Between 2010 to
2013 the records from Customs and Excise Department show that a motor
firm received a whopping sum of about N2.46 billion concession from the
government for importing vehicles with value of about N7.932 billion (
Dauda, 2014).
Relatedly, Apekhade (2014) reports that import duty waivers have
become a routine where politicians and businessmen collude to undermine the
nation’s economy through the granting of fraudulent waivers. The paper noted
that the ominous sign was when Jonathan’s administration curiously lifted the
ban imposed by the Obansanjo’s government on certain products like juice
drinks in defiance to the recommendations of the committee set up by
President Yar’ Adua that reviewed the existing import duties in the country.
Although the CEMA Act gives president Goodluck Jonathan powers to
grant approval for waivers of import duties under strict conditions, Apekhade
(2014) however, observes it is an irony that well-connected importers to the
Presidency secured under different guise underserved waivers on duty, levy,
ECOWAS Trade Liberalisation Scheme charges as well as Comprehensive
Import Scheme and other charges .
Furthermore, Apekhade (2014) chronicles that following the swearing
in of President Goodluck Jonathan in 2011, Network Supplies Limited got the
President’s approval to import 250,000 metric tons of rice with an incredible
waiver on import duty including those of ECOWAS Trade Liberalisation
Scheme, Comprehensive Import Schemes and other charges. Energy
Resources Management limited imported 250,000 metric tons of rice with a
waiver approval contained in a letter signed by Taylor J.0, an assistant
comptroller General (Tariff and Trade) for the Comptroller of customs,
addressed to the Customs Area Comptroller Apapa Port and Tincan Island
Port. According to Ndee, factional Secretary of National Council of Managing
Directors of Licensed Customs Agent in Apekhade (2014) notes that import
duty waivers in Nigeria only serve as a tool to enrich the politicians and it
speaks volumes of a high degree of profligacy in the country.
Ukaoha in Apekhade (2014) decry the Federal government N150
billion rice and palm oil import waivers to 10 firms in 10 months to Small
Scale Farmers and Rural Livelihoods as scandalous and indiscriminate. One
of the firms secured a duty write-off 164 times within the year 2013.
According to the boss of National Association of Nigerian Traders (NANTS)
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from January 2011, the federal government waived import duties, levies and
other taxes associated with the importation of rice and palm oil to over 100
private companies, out of which 10 companies alone got N150 billion
questionable waivers (Apekhade, 2014).
Offor in Nation Newspaper avers that an importer because of his or her
connections with some politicians in the corridor of power secured a
fraudulent import waiver for a cargo that would have fetched the Federal
government up to a billion naira. Such development has happened many times
over the years and that a closer look at some of the waiver documents suggests
that they are fake. Moreover, those that got import duty waivers in the country
would import one thing and declare another even when such cargo has a pre-
shipment inspection report. Table 1 (see Appendix I) shows the companies
that benefitted from some of the questionable waivers and the value associated
according to Udo (2014).
Beneficiaries of indiscriminate Waivers, Concessions and Exemptions in
Nigeria
The account of how import duty waivers are granted in Nigeria no
doubt raises serious suspicion that certain persons and firms definitely
benefited given the secrecy that shrouded it which is a negation of the spirit of
transparency as entrenched in the legal instruments backing the granting of
waivers. Ukaoha in Apekhade (2014) recounts that Connotation Concept
Limited is one beneficiary of indiscriminate waivers. That apart from its
registered line of business as a bookshop and stationery stores; it secured
waivers to import refined palm oil worth billions of naira over a given period
of 10 months. Within the same period, the firm got four waivers to import
palm oil amounted to N233 million, N233million, N21 million and
N67.4million.Noting further, Ukaoha reveals that the same company received
waiver approval to import palm oil worth of N337 million, N136 million,
N114 million, N141 million and N110 million four days later after the first
waiver was granted. In addition, the company was further granted seven
import permission totalling N1.2 billion.
Energy Resources Management Limited is another beneficiary is and
according to Apekhade (2014), the firm got rice import waivers approvals for
34 times between February and July 2011. The beneficiaries of fraudulent
import waivers in 2012 and 2013 according to Ogah (2016) include Shell
Petroleum Development Company Nigeria Limited, Netcoo Diets Man
Company Limited and Guinness Nigeria ltd amongst others benefited from
waivers which ran into trillions of naira. Other in the iron and steel sector are
Federal Ministry of Mines and Steel Development, Messrs, Koch Nigeria Ltd,
Messrs Xath Resources, Zuma Coal Ltd, Mangrove Tech Construction &
Engineering Ltd, Royal salt, Strong Tower Infrastructure and Development
Ltd. These organisations got waivers of not less than N1.5 billion between
2012 and 2013.In the agriculture sector are PZ Cussons Nigeria Ltd, Rivers
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State Government, Messrs System Trade Services Ltd, Tripple Vision Ltd,
Enugu State Government, Olam Nigeria Ltd, National Poverty Eradication
Programme (NAPEP), Cocoa Association of Nigeria Akure, Federal Ministry
of Agriculture and Rural Development. Nigerian Petroleum Development
Company Benin City, Gas and Power NNPC, Abuja Gas and Power Ltd,
Abuja HMF, Ministry of Power and Energy, Rivers State Ministry of Power
and Delta Power Holding Company were the beneficiaries of questionable
waivers in the gas and power sector.
According to Punch Newspapers (2014), Gombe Central Mosque was
granted waivers to import 13 cartons of the Koran and carpets and Catholic
Church Makurdi to import children’s Bibles in 2011. Akwa Ibom State
Government got a waiver of N271.2 million for a private aircraft, Taraba State
Government got N13.06 million waivers for a helicopter and Maiduguri
Central Mosque got N5.9 million waivers in 2012. Rivers State Government
got waivers that worth N2.18 billion for a Bombardier aircraft and two Bell
412 helicopters; Delta State Government got N141.2 million for importing
furniture; Watchtower Society of Jehovah’s Witnesses got N14 million
waivers to import building materials and cabinet parts for kitchen door
drawers and N450.7 million waivers granted to the First Lady’s NGO to host
the African Women Peace Mission in 2013.The newspaper questioned’ what
is the economic trade-off in all these waivers granted’?
Do We Actually Need Import Duty Waivers, Concessions and Exemptions?
From an economic perspective, the need for import duty waiver in a
country arises when protection of local industries, employment creation and
revenue generation is at the behest the government. In Nigeria, these supposed
objectives are contemplated but the administration of import duty waiver is
marred by abuses that undermine its lofty goals. No wonder, Apekhade (2014)
noted the observation of Ndee who opined that waivers in Nigeria are used to
enrich politicians and should be stopped to enhance revenue generation and
boost the economy. Aloba, the Chairman of Association of Nigerian Licensed
Customs Agents, Ikorodu Chapter in Apekhade (2014) opine that duty-free
imports are sold in the market at expensive prices like those with duty
payable; as such the benefits derivable on import duty waivers are lost and as
such needless. Nnadi a chieftain of the National Association of Government
Approved Freight Forwarders (NAGAFF) argues that import duty waivers
have been abused and are of no use and should be scrapped (Apekhade, 2014).
Between January and May 2015, the government granted about N19.6 billion
waivers and exemption to energy firms in the country yet the effect of such
waivers is not even visible as darkness still covers the nation (Ogah, 2016).
Effects of Import Duty Waivers, Concession and Exemptions on
Consumables and industries in Nigeria
The effects of import waivers on consumables in Nigeria can at best be
described as negative given the high level of abuses that characterise it.
Waivers granted to some persons for something else were used to import
Assessment of Import Duty Policies in Nigeria: A contextual analysis
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refined vegetable oil, soya bean meal and related products. This, of course,
has a negative effect on local vegetable oil producers in the country were put
on the verge of total extinction. A case in point is the oil mills in Kano -
Nigeria Oil mills, Kano Oil mills and PS Mandrid located in Bompai
Industrial Estate have all closed shops leading to loss of over 20,000 direct as
well as indirect jobs (Dauda, 2014). Even in Lagos and Port Harcourt
according to Salau in Dauda (2014), the oil mills operating in these cities are
at a disadvantage because they are not finding it easy competing with
imported vegetable oils that have enjoyed duty waivers. A few of the oil mills
in the country are merely surviving while others are making arrangement to
close down and start importation. Moukarin in Dauda (2014) argues that when
finished goods are brought into the country duty-free, the country is directly
creating employment for workers of foreign companies to the detriment of the
country. Such goods imported with waivers invariably become cheaper than
locally produced goods as such their demand and sales get increased to the
benefit of the foreign manufacturers. This, of course, imposes threat on the
survival of local companies which waivers were fashioned in the first instance
to protect
Did Nigeria lose revenue due to granting of Waivers, Exemptions and
Concessions?
Kumolu in Vanguard Newspaper (2012) bemoan how startling
revelations show that Nigeria lost N37.2 billion due to import waivers granted
to importers of raw materials in 2011 and beneficiaries of Export Expansion
Grant who used the proceeds of such grants to import finished goods into the
country. Records of Nigeria Customs Service indicate that the nation lost
N276.9 billion between the year 2000 and 2008. According to Customs report
2008, the Obasanjo administration granted about 1843 import waivers which
amounted to about N165 billion losses to the economy. The breakdown shows
that in 2003 the losses was N18.394 billion, 2004 it was N33.970, in 2005 it
was N41.65,2006 it was N19.379, in 2007 it was N42.598 billion and in the
first three months of 2008, the losses were N9.512 billion (Ogah, 2016). Daily
Trust (2011) notes that N488 billion waiver was granted to WEMPCO a
Chinese Firm in order for the company to set up $250 million cold Rolled
Steel Plant which was thoroughly abused not to mention Tens of billions lost
to waivers for sugar, cement and rice imports. The losses by every stretch of
the imagination are colossal, to say the least.
Buba (2007) expressed worry about the revenue loss by Nigerian
Customs Services from 2004 to 2006 which is particularly huge as shown in
Table 2.
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Table 2: Revenue losses by Nigerian Customs Services from 2004 to 2006 Waivers/exemptions/ concession 2006
(N’Million)
2005
(N’Million)
2004
(N’Million)
1. Revenue loss due to exemption/waivers 18,237 41,636 33,970
2.Revenue loss due to ETLS 1,494 2,548 2,104
3. Revenue loss due to concessionary duty rate
granted bonafide manufacture/assemblies
565 10,001 6,982
4. Revenue loss due to export processing/excise
factory
256 248 146
5.Revenue loss due to concession to
Manufacture-in-Bond Scheme
3 820 1,115
6.NDDC 34,365 15,989 11,478
Source: Buba, 2007
Vanguard Features (2012) also notes the comments of a Comptroller
of Nigeria Customs Service in one of the Lagos commands who remarked that
in 2010 alone N71.8billion was lost as revenue as a result of waivers,
exemptions and concessions granted some organisations by Apapa Customs
Command. Between 2012 and 2013 according to Ogah (2016), the country
lost over N7trillion due to import duty granted an oil company. Udo (2014)
quoting Okonjo-Iweala opines that the federal government lost about N170.74
billion to waivers and tax concessions granted to government agencies and
private businesses within 2011 and 2013.The breakdown is shown in Table 3:
Table 3: Federal government lost about N170.74 billion to waivers and tax
concessions granted to government agencies and private businesses
within 2011 and 2013
Year Import duty
exemptions lost
Import duty waivers
lost
Total import duty exemptions
and waivers lost
2011 N23.422billion N33.543 billion N55.97 billion
2012 N46.789 billion N8.556 billion N55.34billion
2013 N33.319 billion N26.097 billion N59.417 billion
Total N170.74billion
Source: Okonjo-Iweala in Udo (2014)
According to Okonjo-Iweala in Udo (2014), waivers and exemptions
no doubt significantly affected the performance of the Nigeria Customs
Service in revenue generation for the same period (2011-2013). The statistics
are shown in Table 4 below
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Table 4: Performance of Nigeria Customs Service in revenue generation from 2011
to 2013
Year Budgeted revenue
targets
Actual revenue
realised
The difference
2011 N450 billion N429.13 Billion N20.87Billion
2012 N600.58billion N475.15Billion N125.43Billion
2013 N914.36 Billion N433.59Billion N480.77 Billion
N 627.07 Billion
Source: Okonjo-Iweala in Udo (2014)
According to Umoru and Eruke (2016), the position of the Nigeria
Senate on the submission of its Ad Hoc Committee on import duty waivers
was particularly revealing. The Senate said Federal government from 2011 to
2015 lost revenue totalling N447,451,296,687.87 billion through waivers,
concessions and grants The breakdown according to the Senate is as presented
in Table 5. Table 5: Federal government lost N447, 451,296,687.87 billion through waivers,
concessions and grants from 2011 to 2015
Year Revenue lost due to waivers, concessions and grants
2011 N46,056,265,355
2012 N128,538,453,758.99
2013 N46,056,265,355.78
2014 N87,654,744,360.22
2015 N106,711,892,098.14
Total N447,451,296,687.87
Source: Umoru and Eruke (2016)
Given the mind-blowing figures of revenue lost in table 5 above, made the
Nigerian Senate ask the federal government to go after the beneficiaries of
indiscriminate waivers during the period to make recoveries in particular,
Dangote Group and five other companies were mentioned to pay back
N10,304,458,203 billion as beneficiaries of the 2014 rice import quota .
Ordinarily according to the Senate these companies did not meet the criteria
for granting such waivers. The breakdown of the amount to be recovered from
the companies are as follows: N1,031,038,848.00 from Dangote Group,
N1,927,800,000 from Kersuk; N1,927,800,000 from Bua Group,
N3,704,126,328 from Elephant Group; N1,501,627,680 from Golden Penny;
N284,602,399.20 and N1,855,263,312 from Milan Group.
Methodology
The study is an exploratory research anchored on literature
methodology which basically a secondary data source. The method was
chosen in preference to other data gathering methods because of the secrecy
that surrounds the implementation of the waiver policy. More importantly,
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primary source of data may not provide greater details and genuineness of
information required to achieve the objectives set out in this study. The data
obtained were primarily from books, journal publications periodicals and
newspapers on the subject matter. Relevant information gathered from these
sources obviously provided the contextual basis for addressing the set-out
objectives upon which extensive discussions were made and recommendations
proffered.
Discussion
It is particularly interesting to note the existence of the legal
instruments that backed presidential actions to grant waivers, exemptions and
concessions in the country. Although the instruments clearly stipulate the
procedures to follow and ensure transparency and fairness. Evidence obtained
from the literature suggests a flagrant undermining of the transparency
provisions. In the literature, there was nowhere approvals in respect of
waivers, exemptions and concession granted to persons and organisations
were published in any official gazette as expected in the Acts The
transparency clause contained in the legal instruments was brazenly subverted
providing ample opportunities leading to granting of indiscriminate waivers
by the Presidency under different guise which is true to detrimental to the
country .Given the manner the waivers were granted it became another form
of corruption that was recklessly displayed with some impunity. Alarming as
it was basic economic consideration was side-lined but political interest,
patronages and favour were promoted. No wonder the abuse got an official
mention in 2015 at the Nigeria Senate following a passionate submission
made by Senator Ibrahim Gubir (Periscope, 2013)
It is noteworthy that available evidence in the literature reveals that a
number of waivers were granted to some organisations within some days or
weeks which ordinarily do not have business with importation or have no line
of business that relates to importation. It is bizarre that persons or
organisations that do not ordinarily deserve to benefit from waiver policy
became beneficiaries not on account of economic standpoint but on account of
political, personal or family relationships. The list of beneficiaries and the
naira values of waivers is shocking which shows the extent of naivety the
federal government has shown in downplaying economic consideration upon
which waivers was initially designed to promote on the altar of politics,
corruption and selfishness. It is equally disturbing to learn that, Aluminium
Smelter Company of Nigeria (ALSCON, Ikot Abasi was granted waivers of
N47.789 million and N13.715 million respectively in 2011 when in fact the
company has not been producing since the year 2007. Another is Sopon
Nigeria Limited one of the biggest beneficiaries that got a waiver of N32.774
billion when there was no knowledge or indication about its line of business.
Others are Asora Nigeria Limited given concession to import kola nuts, a
product which is grown in commercial quantity in the country. Ndianaefo
Assessment of Import Duty Policies in Nigeria: A contextual analysis
Sahel Analyst: ISSN 1117- 4668 Page 67
Ifeanyi Emmanuel was granted concessions to import table, kitchen and
household articles of the iron cast (Udo, 2014).
The action of the federal government in granting these waivers is at
best described as preposterous, a disservice and uneconomic when these items
ordinarily can be produced in the country to save hard earned foreign
exchange. It is particularly noteworthy that waivers granted to some
organisations in the country have given them opportunities in the industry not
only to become market leaders as their products become cheaper but as
monopolies. In the light of the truth discovered about the recklessness and
abuses that characterise waiver policy made the Nigeria Senate in adopting the
report of Senator Adamu Aliero to urge the federal government to direct the
relevant agencies to recover all outstanding revenues from companies that
abused the import duty waivers, concessions, pioneer incentives and grants
before the end of the fiscal year (Umoru & Erunke, 2016)
It is particularly discomfiting to discover waivers abuses by
beneficiaries. Certain waivers granted by the presidency were used to import
different items instead of the items which the waivers were granted in the first
instance. In addition, imported goods with waivers enjoy lesser cost and by
extension sold at lower prices compared to locally produced goods. This is
one reason adduced why Nigerians consumption is skewed in preference for
foreign goods at the expense of our locally made goods. It is the greatest
undoing that has inflicted impediments on the growth of the Nigerian
economy. The attendant negative effect no doubt is responsible for the
increase in unsold locally made good, exportation of jobs, gradual extinction
of local industries, and contraction of job opportunities and escalation of sales
of foreign goods in the country. The resultant effect is his perennial comatose
situation imposed on the Nigerian economy which has continued to undermine
its capacity to grow and develop. As a consequence, the Nigeria Senate while
adopting the Senator Adamu Aliero report on the import duty waiver policy
made bold to ask the federal government to henceforth stop granting waivers
for concessionary imports as this has oftentimes led to unfair competition and
denied local companies the opportunity to improve local capacity and
contribute meaningfully to gross domestic product (Umoru & Erunke, 2016)
The manner in which waivers, exemption and concessions were
granted in Nigeria by the presidency leaves one to wonder in whose interest
the government was protecting. As it stands, with the mass of evidence from
the extant literature no inkling of national interest could be seen in the policy.
The policy from the rational economic assessment is prejudicial to the
national interest, denying the nation of its capacity to create jobs, expand
existing industries and raise immense revenue that could be harnessed and
deployed in an efficient manner to support, maintain and resuscitate decaying
public infrastructure that drives growth and development.
Sahel Analyst: Journal of Management Sciences (Vol.15, No.7 2017), University of Maiduguri
Sahel Analyst: ISSN 1117-4668 Page 68
Conclusion and Recommendations
The paper established from the review of extant literature the existence
of legal instruments backing the policy of import waivers, indiscriminate
granting and abuses of waiver policy, the beneficiaries, and the losses in value
to the entire economy. On this basis, the paper notes that the manner waiver,
exemptions and concessions policy were implemented from the very onset
was set on a wrong footing. The policy has been abused with reckless abandon
to the detriment of the economy. This position underscores the views of
Senator Mohammed Makarfi, the chairman of Senate Committee in the 7th
Senate on waivers, who opine that his committee found from an investigation
that waivers, exemptions and concessions were granted for goods that had no
benefit to Nigeria (Punch Newspapers, 2014).In tandem was the findings of
the House of Representative House Committee on Finance in 2009 that
prompted a motion co-sponsored by 15 lawmakers urging the Federal
government to revoke all waivers, exemptions and concessions currently
existing but not backed by extant laws or international protocols.
A careful summation of the total naira values of indiscriminate
waivers, exemptions and concessions granted for the period as enumerated in
the paper shows that trillions of naira had been lost on the altar of political
consideration and corrupt tendencies. If these funds as staggering as they are,
were actually realised as tax revenue by the federal government and harnessed
properly, most of the ailing infrastructures would have been re-furbished like
power, telecommunication, roads, schools, hospitals, railways, airports etc.
while new infrastructures built. The questionable waivers are another form of
sleaze that is condemnable in every sense of it and should not be allowed to
continue but stopped immediately. The Presidency must recognise that
Nigeria is not an extension of their personal estate but a collectivism of
destiny of people from various backgrounds and interests which should be
protected. The Nigerian project with regard to import duty waivers,
concessions and exemptions should find expressions in the procedures,
processes contained in the respective laws enacted in consonant with
constitutional provisions. The whims and caprices displayed by the Presidency
from 1999 to 2015 in granting import duty waivers, concessions and
exemptions, clearly breached the provisions of the Acts governing the
administration of waivers, concessions and exemptions.
To this end, the paper recommends that the country needs to review all
relevant laws; Customs and Excise Management Act, Nigeria Export
Promotion Council Act, Export (Incentives and Miscellaneous Provisions) Act
CAP 118 of 1986 as amended by Act No 65 of 1992 and others. The waiver
clause should be reviewed in such a manner that should limit the President,
the Finance Minister and Customs Department of the powers to grant waivers
particularly to those issues which are not contrary to international conventions
but inimical to the health of the economy. Secondly, every application for
waivers must be investigated thoroughly by both Ministry of Finance and
Assessment of Import Duty Policies in Nigeria: A contextual analysis
Sahel Analyst: ISSN 1117- 4668 Page 69
Ministry of Trade & Investment to determine the genuineness and authenticity
of the items the applicants want to import into the country for which duty-free
or waiver is been sought and must be gazetted for transparency sake. Thirdly,
for goods that can be sourced locally, waivers should not even be
contemplated let alone granted to import them. The Nigerian Customs should
be motivated to brace up to their billing and demonstrate authority
constitutionally granted it to seize goods that were not granted waivers but
were imported with approved waivers for other goods. The National
Assembly, as a matter of fact, has an important role to play. It should be
awake to its constitutional responsibility not only in lawmaking but ensuring
checks and balances on approved public spending. It should also engage in the
scrutiny of policies relating to revenue generation. Finally, the National
Assembly should amend the Custom and Excise Management Act, in such a
manner that restricts the President in granting waivers. More importantly, it
should continually and responsively draw the attention of the Presidency to
infringement on the Acts governing administration with particular emphasis
on the misuse of import duty waivers, concessions and exemptions.
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Appendix I
Table 1. List of Beneficiaries and Value of Waivers Granted from 2011 to 2013
Year Company Value of Waiver
2011 Sopon Nigeria Limited N32.774 billion
Aluminium Smelter Company of Nigeria (ALSCON N61.504 million
Oando Plc N82.767 billion
Capital Oil and Gas Industries Limited N49.688 billion
Integrated Oil & Gas Limited N20.262 billion
Folawiyo Energy Limited N17.517 Billion
Sahara Energy Resources Limited N13.962 billion
Master Energy Oil & Gas Company N11.503 billion
Nigerian National Petroleum (NNPC) N77.979 billion
Netcodutsmann Maintaining Energy N42.079 billion
Asora Nigeria Limited N12.26 billion
McSally Investments Limited N10.337 billion
2012
Chibuzor Onyema N1.87 million
Oduola Anugbau Henry N20.75 million
Jude Ogbini N3.389 million
Oduneye Adeniyi N4.357 million
Mughalu Maduakonam Madubugwu N142.679 million
Newsstand Agencies Limited N1.138 billion
Mikano International Limited N2.945 million
2013
Dangote Group N26.77 billion
Asora Nigeria Limited N8.588 billion
Ndianaefo Emmanuel N5.643 million
Ayotunde Adereju N2.035 million
Asimiyu Mohammed Salawudeed N4.148 Million
Cosharis Motors Limited N698.177 million
Source: Udo (2014)
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