ASSESSMENT OF IMPORT DUTY POLICIES IN NIGERIA: A ... · Sopon Nigeria Ltd, Aluminium Smelter company of Nigeria Oando Plc, Capital Oil and Gas Limited and host of others; and the

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

[email protected]

Sahel Analyst: Journal of Management Sciences (Vol.15, No.7 2017), University of Maiduguri


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).

Assessment of Import Duty Policies in Nigeria: A contextual analysis

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,



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



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



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)



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



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



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.



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



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,



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



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.



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



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.

References

Alaba S in Dauda (2014). Import duty waivers: In whose interest? Available

@ http://thenationonlineng.net/import-duty-waivers-in-whose-interest/

Accessed 10 April 2016.

Amaresh, B (1974) in Modebe, N,Okoyeuzu,C. & Uche, C. (2014). The (ab)

use of import duty waivers in Nigeria. African Studies Centre, Leiden,

Working Paper 113/2014

Anthony W. O. in Apekhade, I. (2014). No longer at ease with waivers.

Available @ http://thenationonlineng.net/import-duty-waivers-in-whose-

interest/ Accessed 10 April 2016.

Apekhade, I. (2014). No longer at ease with waivers. Available @

http://thenationonlineng.net/import-duty-waivers-in-whose-interest/


Ndee, B. in Apekhade (2014). No longer at ease with waivers. Available @










Boadway, R., Flatters, F. and Wen, J. (1996 ) in Modebe, N., Okoyeuzu, C. &

Uche, C. (2014). The (ab) use of import duty waivers in Nigeria. African

Studies Centre, Leiden , Working Paper 113/2014

Buba, J. G. (2007). The role of the Customs Reforms in boosting non-oil

revenue in Nigeria. Nigeria symposium, University of Jos.

Customs and Excise Management Act (CEMA)Act No.5 of 1958

Customs and Excise Tariff etc Consolidated Act No 4 of 1995

Daily Trust Newspapers (2011). Nigeria; Smashing the import duty waiver

scam. Daily Trust Newspapers September,13.

Dauda, O. (2014). Import duty waivers : In whose interest? Available@



Guardian Editorial (2016) Nigeria: On import duty waivers. Available

@http://www.guardian.ng/opinion/on-import-duty-waivers

Kumolu, C. in Vanguard Newspaper (2012).Retrieving waivers from wasteful

hands.Available @ http://www.vanguardngr.com/2012/02/import-duty-

retrieving-waivers-from -wasteful-hands/. Accessed on 20th February

2016.

Modebe, N,Okoyeuzu, C & Uche, C. (2014). The (ab) use of import duty

waivers in Nigeria.African Studies Centre, Leiden, Working Paper

113/2014.

Moukarim, H. in Dauda, O. (2014). Import duty waivers: In whose interest?



Muyiwa O in Dauda, O. (2014). Import duty waivers: In whose interest?



Nandi. U. in Apekhade (2014). No longer at ease with waivers. Available @



Nigerian Television Authority News (2012, Feb 6) quoting Vanguard

Newspapers (2012, Feb. 6) FG stops import duty waivers. Available @


http://www.vanguardngr.com/2012/02/import-duty-retrieving-waivers-from%20-wasteful-hands/









http://www.vanguardngr.com /2012/02 fg-stops-import duty-waivers/.

Accessed on 28th March 2016

Offor, A.W. in Nation Newspaper Available @ http://thenationonlineng.

net/import-duty-waivers-in-whose-interest/ Accessed on 10 April 2016.

Ogah, G (2016). Indiscriminate waivers and loss of revenue.Available @

http@//www.guardian.ng/saturday-magazine/cover/indiscriminate-

waiver-and-loss-revenue/. Accessed on 15th

February,2016.

Okonjo-Iweala in Udo, B (2014).Nigeria lost N797.8 billion to waivers, tax

exemptions in 3years, says Okonjo-Iweala. Available @ http@//www.

premiumtimesng.com/business/153493-nigeria-lost-n797.8billion-waivers

-tax-exemptions-3-years-says-okonjo-iweak=la.html. Accessed on 28th

June, 2016.

Periscope (2013). Import duty waiver: The scam of the affluent. Available at

http//www.shipsandsports.com.ng/import-duty-waiver-thescam-of-the

affluent. Accessed on 24th

May 2016

Punch Newspapers (2011) FG lost N37.2 billion to import waivers in

2011.Available @ 12TH

April, 2016.

Punch Newspapers (2014) Waiver fraud: Punch newspaper rips Okonjo-

Iweala’s Tedx Euston London Speech. Available @ saharareporter.com

/2014/01/28/waivers-fraud-punch-newspaper-rip-okonjo-iweala’s-london-

speech. Accessed on 10th

January, 2016.

Tomi A, in Apekhade (2014) No longer at ease with waivers. Available @


Accessed on 10th

April 2016.

Udo, B. (2014). Nigeria lost N797.8 billion to waivers, tax exemptions in 3

years, says Okonjo-Iweala. Available @ http@//www.premium-

timesng.com/business/153493-nigeria-lost-n797.8billion-waivers-tax-

exemptions-3-years-says-okonjo-iweak=la .html. Accessed on 28th

June

2016.

Ukaoha, K. in Apekhade (2014). No longer at ease with waivers. Available @



Umoru, H. & Eruke, J. (2016) Import duty: Federal Government loses N447

Billion through waivers. Available at http://www.vangaurdngr.com



mailto:http@//www.guardian.ng/saturday-magazine/cover/indiscriminate-waiver-and-loss-revenue/.Accessed

mailto:http@//www.guardian.ng/saturday-magazine/cover/indiscriminate-waiver-and-loss-revenue/.Accessed

mailto:http@//www.premiumtimesng.com/business/153493-nigeria-lost-n797.8billion-waivers-tax-exemptions-3-years-says-okonjo-iweak=la.html




mailto:http@//www.premiumtimesng.com/business/153493-nigeria-lost-n797.8billion-waivers-tax-exemptions-3-years-says-okonjo-iweak=la%20.html




http://www.vangaurdngr.com/2016/05/import-duty.fg-loses-n447bn-waivers-senate.Accessed



/2016/05/import-duty.fg-loses-n447bn-waivers-senate.Accessed on 12th

June 2016.

Vanguard Features in Vanguard Newspaper (2012). Retrieving waivers from

wasteful hands. Available @ http://www.vanguardngr.com/2012/02/

import-duty-retrieving-waivers-from -wasteful-hands/. Accessed on 20th

February 2016

Vanguard Newspaper (2012). Retrieving waivers from wasteful hands.

Available @ http://www.vanguardngr.com/2012/02/import-duty-retrie-

ving-waivers-from-wasteful-hands/. Accessed on 20th February 2016

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)

http://www.vangaurdngr.com/2016/05/import-duty.fg-loses-n447bn-waivers-senate.Accessed



http://www.vanguardngr.com/2012/02/import-duty-retrie-ving-waivers-from-wasteful-hands/

http://www.vanguardngr.com/2012/02/import-duty-retrie-ving-waivers-from-wasteful-hands/

ASSESSMENT OF IMPORT DUTY POLICIES IN NIGERIA: A ... · Sopon Nigeria Ltd, Aluminium Smelter company of Nigeria Oando Plc, Capital Oil and Gas Limited and host of others; and the

Documents