Manufacturers wilt in the face of strenuous import regulations

The manufacturing industries in Nigeria have trudged on in the midst of the peculiar challenges that have plagued them over the years. Key amongst the numerous challenges are; (i) Inadequate infrastructure, particularly the lack of power supply (ii). High financing costs (iii). Poor transport infrastructure.

The ever present challenge of power supply have been a major debilitating factor to the survival of manufacturing outfits. Indeed, the success of any form of enterprise in the country depends heavily on the effective provision of alternative supply of power. This capital intensive venture increases productions costs, which are inadvertently passed on to the consumer, making it difficult for Nigerian goods to compete with cheaper imports.

The parlous plight of these manufacturers who by virtue of the state of industrialisation of the nation, have to rely heavily on importation to meet most of their raw material needs, have worsened with the recent developments relating to the assessment and clearing of imported products into the country. Specifically, the decision of the Federal Government of Nigeria in December 2013 to transfer the responsibility of providing destination inspection service at the country’s ports from contracted Scanning Service Providers (SSP) to the Nigeria Customs Service (NCS) has come at a cost. The frustrations encountered by manufacturers and other importers in this new dispensation is crippling the operations of genuine manufacturers/importers and swelling the ranks of smugglers, who bypass the inefficient system by simply routing their goods through the ports of our neighboring Countries.

The new import regulations requires that all SSPs, including Cotecna, SGS and Global Scan cease to approve new Form M, issue Risk Assessment Report (RAR), or perform scanning operations for goods imported into Nigeria. The takeover of the process by the NCS has however been anything but smooth. The first platform introduced by NCS threw up so many delays in the issuance of the Pre-Arrival Assessment Report (PAAR), introduced in the place of the former RAR.

There have been instances of arbitrary upliftment of invoices on shipments, making it pointless for the importer to pay the resultant duty.  Several importers have had to abandon their consignment at the ports when their efforts to engage NCS and request for an amendment of the PAAR issued, proved abortive. In a particular instance, the importer reasoned that paying the outrageous duty necessitated by the upliftment would make the shipment unprofitable and equally set a precedent that would hurt other players. There are equally cases of use of wrong HS codes for consignments, thereby jerking up the tariff and of course boosting their revenue to the detriment of the importer.

The situation has been made even worse by the NCS’s attitude to its customers; not showing empathy to the plight of the importers and generally treating their complaints with contempt. Unlike the era of the SSPs, when every letter of contest gets an official response from the SSP, the NCS on the other hand responds routinely by email, if they choose to and most times stick to their guns and justify the upliftment.

Though the commitment of the Federal Ministry of Finance towards ensuring the success of the new process is not in doubt and has been proven by the introduction of a new platform in place of the initial one fraught with problems, the impact of the changes on the manufacturers/importers is rather extensive. Living things are created to protect themselves from threats and fight to ensure their survival in alien conditions. In the same vein, Companies being going concerns are designed to persevere and ensure their survival in hostile operating environments, whether by hook or crook. At the end of the day, it is not only the manufacturers and importers that feel the impact of our Government’s insensitive policies. The economy of the country equally takes a beating as precious revenue is lost to the thriving vice of smuggling.

Days back, I stopped over at a shop in Ikeja to buy a bag of rice. I was taken aback when a price of N9,800 was quoted to me for a 50 Kg bag of Thai Parboiled rice, by a retailer. My curiosity got the better of me and I sought to find out what had triggered the reduction in price as I recall buying directly from an importer at N11,000, some months back. It is either I had been cheated or the rice I was about to buy, was stolen. The Igbo trader however allayed my fears, explaining that his goods came in from the Republic of Benin. He went ahead to enlighten me on the magnanimity of God, explaining that our Government’s policies work in the favour of our less priviledged neighbours and earn them revenue with which they provide for their people. The high quality rice sold to me, was cleared and smuggled into Nigeria at a much lower cost than the ones that came in through our ports. Ironically, with all my patriotism, I did not feel any sense of guilt in paying for the rice, neither did my taste buds revolt when I was savouring the delicious meal.

Therein lies the challenge… if the populace would patronise the cheaper smuggled products without remorse, the alternative channel would continue to thrive and the chances of survival of our industries and other companies importing through our ports, will continue to dwindle.