Hurdles before trans-border trade facilitation

July 25, 2013 — Leave a comment
Port of Lagos, Nigeria

Port of Lagos, Nigeria

The following article, allbeit long, provides a good overview of trade facilitation developments in Nigeria. I doubt that there is a single country on the African continent that cannot draw some parallel experience contained in this article.

Trade across borders is not a new phenomenon. But the World Trade Organization is now championing the concept of trade facilitation among nations, which has been defined as simplication , harmonization, standardization and modernization of trade procedures.

Trade facilitation seeks to reduce trade transaction between businesses and government. This concept is receiving unprecedented attention globally and it is at the heart of numerous initiatives within the customs world.

The United Nations Centre for Trade facilitation and Electronic business (UN/CEFACT) in its recommendation No 4 of 1974, said trade facilitation programme ought to be guided by simplication, harmonization and standardization (of trade procedures) so that transaction becomes easier, quicker and more economical than before.

According to the body, there was need to eliminate duplication in formalities, process and procedures; align all national formalities, procedures operation and documentation with international conventions, standard and practices to develop international agreed format for practices, procedures, documentation and information in international trade.

Proponent of trade facilitation believed that if transaction cost in international trade is reduced, there could be creation of wealth, especially in developing countries where red-tapism and other procedural barriers to trade tend to be pronounced.

The organization for Economic Cooperation and Development (OECD) estimated recently that even one per cent reduction in such “hidden cost” would boost the global economy by $40 billion with most of these benefits going to the developing world. Trade facilitation therefore encourages, or perhaps requires countries to adopt means such as publishing their imports and export procedures, reducing the number of forms that importers and exporters are required to complete, allowing forms to be submitted on-line, and checking corruption at border post.

Nigeria, though a signatory to Kyoto 1974 and other convention on trade facilitation, is far from embracing the ideals of the global concept.

The president of the council of Managing Directors of Customs licensed Agents, Mr. Lucky Amiwero, said that although Nigeria was yet to comply with all the provisions of trade facilitation, it has the tools to facilitate international trade, such as the scanning machines and the e-platform.

“In Nigeria, the real cost of doing business is an impediment to trade facilitation. We have no good procedure for goods on transit to Niger and Chad. That has been taken over now by our neighboring countries. One of the key component of trade facilitation is charges which must be tied to services. We have shortcoming in that area. We are still working at cross purposes when other countries are busy harmonizing their import and export procedures”, he said.

In Nigeria, there is no one stop shop process for goods clearance as we have over 10 agencies superintending goods clearing procedure at the nation’s gateways.

“This is very bad and constitute hindrance to trade. The regulatory process is supposed to have been harmonized with other agencies to have a one stop procedures. Procedures are not published and not in line with WTO article which has to do with publication, regulation and administration of procedures. Our trading regime are expensive, our procedures are cumbersome. When others are simplifying and synchronizing their process of import and exports, our import and export procedures are lengthy. We have not been able to harmonise process and procedures and that is where we have a problem. If you still have to go through 100 per cent examination when we have the scanners, that is an impediment to trade,” Amiwero said; adding that the time spent to conclude business in Nigerian ports and border post is much higher than anywhere in the West African sub-region.

The level of corruption at the port border post is high and making them the most expensive business environment in Africa; as un-receipted charges far outweigh the official charges in the process of good clearing. Importers are still submitting hard documents instead of making use of e-devices, and going through the cumbersome process of clearing and receiving of consignments.

All these and many other factors have combined to elongate the dwell time for cargoes and in most cases resulted in the payment of demurrage, contrary to the spirit of trade facilitation.

At Seme border for instance, trade between Nigeria and her neighbouring countries in the West African sub-region is to say the least, divindling due to days of delay in the process of clearing goods at the Nigeria’s end of the border.

Investigations revealed at the weekend that the delay was due largely to inefficient scanning machine deployed by destination inspection service provider in the area and the non-possession of valid import documents by importers using the boarder post as entry point for their items.

These factors have combined to cause long queue of trucks at the scanning site and at the buffer zone where truck drivers complained of a waiting without end.

Stakeholders who spoke on the long period of delay at the boarder at the weekend said their goods still have to go through physical examination by the customs even when such had gone through the process of scanning.

Tino Ezezobor, who is the General Secretary of Seme branch of National Association of Government approved freight forwarders, said government has a good intention to facilitate trade using the service providers, which he said have so far failed to key into the vision.

Also Alhaji Aliyu Sule, said the delay in goods clearing at the boarder could be attributed to the ineffective scanning machine deployed at the boarder by the service provider. He said the service from the machine was epileptic.

“The mobile scanner that is in use is inefficient. This machine should scan four trucks per hour and that means 48 trucks per day. But once this machine work for two hours, you will need to stop it for another three hours for it to cool down so that it will not pack up. The image analysis sheets form are illegible and cannot be interpreted hence the insistence by the customs on 100 per cent inspection afterwards. This is the reason for the long queue and you can wait on the queue for days and sometime up to weeks. While you are incurring demurrage. The trucks are packed at buffer zone and no country takes responsibility for whatever happens to the trucks for lack of security.

The Customs Area Controller at Seme, Mr. Othman Abdul Saleh, also attributed the epileptic services from the service provider, the need for trucks to be subjected to 100 per cent inspection and the lack of valid import document by some importer to the delay and the long waiting time at the boarder.

He said there was a time the government decided that consignments should come into the country only in containers. But the decision was reversed after a while when it was directed that truck already cut to size could be used to carry goods through the boarder.

Authoritative source at Global Scan headquarters recently said it was wicked to say its machine, the mobile scanner was ineffective. The source who pleaded anonymity said: “We cannot do anything within the fixed scanner because we are still expecting its certificate from the National Nuclear Regulatory Agency (NNRA). We have finished the installation and test run it.”

Defending allegations against his company, he said the customs has not been sending documents of trucks in the queue for scanning.

“We can only scan when the customs send us trucks document to scan. We can issue 100 Risk Assessment Report (RAR) a day, but only about 10 of them will go for scanning. We even scan ECOWAS Trade Liberalization (ETL) trucks. All these allegations are lies. Anybody can say anything. We cannot scan any truck unless the documents are sent to us from the customs,” he said, adding that 123 trucks were scanned in the months of April while 64 RARS were issued by his company at Seme during the same period.

THE international trade facilitation recommendations covers customers and regulatory bodies, control procedures applicable to import, export and transit items including general management, documentation, health and safety, financial securities and transshipment, movement of persons, management of dangerous goods, payment procedures, commercial practice and use of international standards, information, communication techniques, transport equipment including air, sea and multimedia transport.

But today, there is always conflicting interest in the process of implementation of the provisions. The customs often find it difficult to give up the assumption that every importer is a potential cheat or smuggler or lack legitimate intention during shipment, although many practical cases have proved them right. This conflict of interest is said to be responsible for diversion of traffic to the ports of neighbouring countries because of the perceived differences in the enforcement of procedures.

Goods with Nigeria as their final destination now find their way to Ghana, Cotonou ports from where they are transported with trucks into Nigeria, using the land borders. That explains the reason for this queue at Seme border and increasing rate of smuggling, using the unofficial routes.

Godwin Jakpor, an importer, who spoke with The Guardian at the border over the weekend, said trading across the border used to be very smooth until the recent order that goods should be taken through the border in containers instead of the conventional trucks. The order was later relaxed with another order that truck already cut to size could be used to transport cargoes through the borders. These two orders caused congestion at the border post as many trucks were brought in for procedural examination at the same time.

“Most of us have been trading across the border for over a decade and we have not experienced this kind of situation before. The items in these trucks came through Cotonou, some through Togo, while others came through Ghana port. We
decided to allow these items to be discharged at these ports because officials there have simplified procedures and you can get your container out of these ports in less than two days. Corruption is at minimal there hence the cost is low. There are no too many hurdles that one need to pass through to get your consignment out of those ports once you pay the appropriate charges and you cannot cut corners there. Our ports are yet to get to this level because hidden charges alone can drive you out of business. The only hurdle we have right now is at Nigeria’s end of the border. At Benin end, we don’t spend up to one hour before they are through with us, but here at Nigeria’s end, we have been waiting here for days and we are still at the buffer area where no country is responsible for our security and safety of our trucks and goods.”

If trade facilitation is related to transport and multimodal transport, then Nigeria can be scored zero in terms of its implementation. The access roads to the Lagos and other ports are in sorry states. Many of them need complete rehabilitation. That explains the reason why truck owners could spend several hours to pick up consignment from the ports and spends several other hours, if not days to get out of the port in the attempt to take the goods to their final destination. The intermodal transport mode is lacking. There is no linkage between the ports and the inland waterways and airport, hence the much reliance on road transport by stakeholders.

The customs is not the only governmental body with an interest in trade related controls. Many other government agencies have a stake in the control of national borders, especially in areas of human and goods movement.

This was the reason behind the recent claim by the Nigeria Customs Service that all stakeholders have a role to play in smooth cross border trade. “Nigerians are all victims of diversion of transit goods to the ports of neighbouring countries”, it said

A high-ranking customs official, who spoke on the matter few days ago on the ground of anonymity, said the service had since simplified procedures by automating clearing procedure and by providing facility for a one stop-shop for stakeholders.

“We have done everything possible to uphold the ideals of trade facilitation concept as being negotiated globally. We have put in place an automated clearing process in order to reduce time of goods clearing and releasing at the seaports. We have created a single window platform with other agencies and we are migrating now to NICS to make training easy. The Nigerian trading hub was designed by the Nigeria Customs Service as a tool that can help shippers to get information’s concerning classification of goods, to identify what they intend to ship into the country and determine the duty payable on them and other related charges. This platform provided is to guide importers in term of classification and duty payment. These are done pre-import so that if he make a true declaration on his form M, he spends little or no time to clear the goods on their arrival at the port. What causes delay is false declaration and false classification by importers, which usually resulted to dispute resolution. It takes time to resolve such dispute,” he said.

According to the official, the customs has also designed pre-arrival Assessment Report that will eventually replace Risk Assessment Report currently in use by service providers.

He said pre-assessment Report will help importers using the trade hub to assess their goods before their arrival so that goods meant for scanning will go straight from the ship to the scanning base from where they will be released to the consignees, while those for 100 per cent will be sent to the examination bay.

“The whole customs activities during processing can take you only three hours if right declaration on Form M is made and right payment is made. We are constantly interacting with other stakeholders: shipping companies, Terminal operators, Transporters and a handful of others to join us in the effort to facilitate trade in the country. Source: Nigerian Guardian News

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