- There is need to make the process more transparent
Ordinarily, import waivers, exemptions and concessions are utilised in most successful economies as means of boosting economic growth by protecting local businesses, creating jobs and ultimately promoting exports. Unfortunately, they are known to have been widely abused in Nigeria to the detriment of the economy. This is obviously why the report that the Federal Government granted import waivers totaling N779.7 billion in 2020, through the Nigerian Customs Service (NCS), to encourage more investments in the country has been received with much skepticism and raised eyebrows. According to media reports, data from the 2022-2024 Medium-Term Expenditure Framework and Fiscal Strategy Paper, indicate that between January, 2019, and December, 2020, the NCS granted the sum of N992.9 billion as waivers on imported goods. This amount comprised of N213.1 billion recorded in 2019 and N779.7 billion waived in 2020.
The waivers granted for 2020 included N600 billion from import duties and N180 billion from Value Added Tax (VAT) on the same duties. The 2022-2024 Medium-Term Expenditure Framework and Fiscal Strategy report further stated that “two-thirds of total relief is granted on an import duty exception certificate, an additional 26% is on fuels, lubricants and similar products as approved by the minister. The relief of the Common External Tariff (CET) Levy accounts for about 42% while 26% is attributable to VAT. In 2020, waivers on import duty rose to N305.6 billion; surcharge was N21.3 billion; CET levy stood at N223 billion; Comprehensive Import Supervision Scheme (CISS) amounted to N28.9 billion; ECOWAS Trade Liberalisation Scheme waiver was N19.3 billion; Iron levy relief was N113.8 million while relief on National Automotive Council (NAC) levy rose to about N1 billion. During the period, gas oil imported into the country was granted the most relief accounting for 26.2% of total reliefs followed by other components such as dynamos, alternators, stranded wire, cables, plaited bands, copper not electronically insulated and ordinary motor spirit.
The maritime sector is one example of a sphere of the economy where the government has already announced the approval of zero import duty for the acquisition of vessels by ship owners to boost the country’s objective of owning a national fleet and drastically reduce the current foreign domination of the country’s shipping industry.
In February, 2011, the Federal Government announced the stoppage of the import duty waiver scheme because of certain gross abuses perpetrated by some categories of importers the scheme was designed to encourage and support. It was discovered at the time that in 2011 alone, a colossal sum of N37.2 billion was lost as a result of import waivers granted to importers of raw materials. Records of the NCS indicated that the nation lost N276.9 billion in this regard between 2000 and 2008. The subsequent resumption of the import duty waiver scheme was apparently predicated on the digitisation and automation of the Import Duty Exemption Certificate (IDEC), to eliminate the distortions associated with the manual process of granting import waivers. It was expected that the digitisation of the IDEC scheme would guarantee ease of doing business, ensure effective tracking of fiscal incentives granted, improve process efficiency and accountability while also blocking leakages, cutting financial losses and improving the scheme’s revenue performance profile.
It was apparently against this background that the Minister of Finance, Budget and Planning, Mrs Zainab Ahmed, claimed in December, 2020, that the about N1.024 trillion imported duties, waivers and concessions granted in the preceding three years were not based on discretionary considerations but had the objective of stimulating economic growth and development. According to her, the sectors targeted for the waivers were those with “kinetic capacity for high impact multiplier outcomes on the overall economy” such as agriculture, power, cement, solid minerals, Liquified Natural Gas and molecular refineries, among others.
However, this kind of assurance cannot simply be taken by faith or on its face value. There is certainly the need for greater transparency in the management of the import waiver process against the background of persistent allegations that the scheme is still characterised by a high degree of opacity that promotes continued malpractices.
Surely, the public must be continually kept informed as regards those who benefit from these waivers and why, with concrete data on how such beneficiaries contribute to the country’s economic growth and development. It is also critical to ascertain if the decision on who benefits is at the discretion of the minister or if there is an organisational structure and process in place to enhance transparency, accountability and objectivity in the administration and management of the process.