The reform in Customs has not been done…” Amieworo.
An interview with Mr. Lucky Amieworo, the Chairman of the Council of Managing Directors of Licensed Customs Clearing and Forwarding Agents.
DDH: Please kindly introduce yourself.
Amiewero: My name is Lucky Amieworo, President of the Council, and a member of Presidential Committee to reform Customs, destination inspection committee, 48-hrs Clearance and other port problems. I have served in 167 committees, nine of them presidential.
DDH: What is the origin of the problem with the customs goods clearance at the ports?
Amieworo: Nigeria beforehand was operating a system which was manual in nature and so it was cumbersome, time-sapping and exhausting. But in 2006, two systems were canvassed and developed to change the system from manual to electronic. The first was the destination inspection committee and the second was the ports reforms committee. The ports reforms committee concessioned the ports while the destination inspection committee was where I served. We brought in the scanners and the new procedures into the old system. Before then the port system was run on a manual labour, you have to bring out all the containers, bring out all your goods from the containers and view the goods physically. The NPA was the one handling everything at this time. It is not as if the NPA was wrong but the concept and the processes were wrong. Because it was manual, you had to outstretch your facilities in terms of physical examination. But as at 2003, 2004 the world had moved on and changed their examination principles from physical examination to selective principles of examination.
DDH: Are they using the result of your reforms?
Amieworo: If they don’t use the result of the reform that is why the country is like it is.
DDH: What have they left behind?
Amieworo: The reform in Customs has not been done. Reforms are not changing people. Reforms are not moving people from one place to the other. By the UNCTAD concept of reform, reforms are technical. When the first reform started in Nigeria, we were the proponents of the reform, we were one of the people who were the engine that pushed for the reforms. We looked at our procedures and they were not meeting up to standards, we decided to push government that these things must be done. The first one was done but not properly done because it was a fraudulent one. The second one was done and COTECNA was given the whole contract of taking care of the scanning and the procedures. I actually petitioned the goverment and [President] Obasanjo had to set up a new committee to look at the whole thing under Sekibo, the then minister of transport. At the end of the day it was resolved that it should be reviewed. It was reviewed to accommodate other service providers like SGS, Globalscan, Webfontaine. Webfontaine was actually involved in the platform, they provided the integrated platform that we are seeing today. COTECNA, SGS and Globalscan provided the scanners. Now when you look at the concept of what is happening in the whole port, the reform process is on the technical, looking at the tools you use to bring about trade facilitation. The tools are there and you must look at the conventions. The Customs has not complied with most of the conventions. The conventions [in use] are not in line with the international best practices. It’s not enough for you to wear uniforms and put on the ranks. It’s for you to look at the conventions because the Customs are for trade conventions. For instance when you look at the CEMA, the CEMA is a trade convention that you entered into in the 1950s, in the 1960s, in the 1970s, and some of them lately. So, you are having conventions that have not been complied with by the Customs. So when you are talking about reforms, reforms are not to talk about revenue, nobody in the world talks about revenue today because if you run your Customs well… There are three principles you must run your customs today: the Customs principles must be predictable, must be consistent and must be transparent. These three principles are hinged on WTO Article 5, 7, 8 and 10. If your principles are not based on that, you have not reformed.
Imposing Procedures…
If you look at Nigeria Customs now, they are imposing procedures, they are not treating procedures. The whole scanning machines have collapsed. And these are the tools and under that scanning machine, you have the WCO safe framework. Why? After just one year of handing over, we have these problems. So when you say reforms, reform is to comply with the conventions. They are Kyoto Conventions. They are WCO conventions on so many issues, on classification, on valuation, on origin. These conventions are there. Have they complied with it? Do the Customs know it? They are trade procedures experts. Just like the licensed customs agents. So, when you are talking about you are talking about the procedures, have you complied with them? Then the tools you are using, are they in line? What are the trade facilitation mechanisms they are using?
DDH: What are the effects of these handicaps or these failures on our country?
Amieworo: The effects are what is affecting our cargoes being moved out of the country. A customs man or a licensed customs agent is to treat, classify, interpret, then you apply. So, when you say you are a customs man, you don’t impose decisions, values, classification or rule of origin. It drives the people out of the country. It makes them to go into smuggling because your duties are not treated.
DDH: You believe this is responsible for scaring cargo-laden ships out of our ports?
Amieworo: You must scare them because you are imposing and once you impose, that is why the principles of trade were not given to Customs. The principles of trade were converted back to WTO because they noticed that the Customs used very crude opinions. Customs opinion is not what is used in the world today but Nigerian Customs are still using their own opinions which are not in the parts of the law. There is no way you can bring your cargoes in when you don’t have those three principles. They are not predictable, they are not consistent, they are not transparent. Go and ask any customs man whether they know about valuation, they don’t know. So, you bring in values and threaten people, at the end of the day, you tell them if you don’t pay you leave your cargo. But you can go in the port and do it on the basis that you want to raise revenue. You don’t raise revenue because when you are raising revenue of N1 billion you are scaring away people with revenue of more than N3 trillion. If you look at the what they call the import assessment of cargoes that have left the country, you will be shocked what we have lost. By our huge market and our throughput, we control almost 80% of the sub-regional trade. And every other sub-region relies on Nigeria for their throughput.
DDH: But now the reverse is the case, why?
Amieworo: Because, we’ve lost our transit [cargoes]. Why? The technical tools are not there. We are still using Federal Operations [Department] to guide things going on transit, we don’t even have transit. We are not a transit nation but we have a natural transit asset because Chad is close to Nigeria. Niger is close to Nigeria. Burkina Faso might be close, these are all landlocked countries that require our facilities based on Article 5, transiting through our facilities for us to make the money. But instead of using our facilities, they are using Ghana, using Cote d’Ivoire which are very far. Our own is near but because we have not been able to programme [well]. For instance, Ghana has what they call satellite tracking system for their transit. Ghana is having E-bond for their procedures. We don’t have all these things. Up till now, everything we are doing is manual. You still see us carrying guns on the road. We use gun to go and stop containers, this and that… That is in contravention of the Kyoto convention. It’s duplication of checks.
DDH: So the customs man in 2016 is not supposed to be carrying guns?
Amieworo: No. The customs is a grade. You are carrying gun on the road, dropping containers on the road, stopping motors on the road, it’s duplication of checks and contravention of the Kyoto convention.
DDH: How does the Kyoto convention see it?
Amieworo: It says you should have a one-stop shop on custom examination. That is why there is what we call selective principle of examination. There are two key areas: you have the Kyoto convention and the safe framework. Safe framework talks about our global trade system which actually focuses on security. It has two pillars: custom-to-custom and custom-to-business. Custom-to-business focuses on validation of importers and manufacturers who are under what they call the AEO, authorized economic operators. That means you are authorized by validation to operate so that your things can move faster, that is custom to business. Then custom to custom talks about scanners, you must have an in-bound and out-bound inspection. Like what happened to the USA and other countries. What they have done so far is to look at their customs and push a lot of them out their country to make sure that every iota going to the US are examined before they are loaded on board. So, you have throughput countries that lift cargoes to the US. Most of the US customs officers are there. Then they have what are called importers security filing. You file an information 24 hours before the cargo is loaded onboard the ship. Then you have the validation which is called C-PAT which is AEO to other countries. So, when you look at the gamut of all these things, we are not complying with anyone. And you don’t talk about the reforms when you don’t know about it.
DDH: What do you say in a situation when a customs man is at the border confronting smugglers, he needs a gun?
Amieworo: When you say confronting smugglers, which is at the border. That is why in the US, you have the customs at the Treasury and the customs in the Homeland Security and they call them the border agencies. They are there to secure. How many guns do you see at the border in America? It’s heavily controlled. You don’t carry guns on the highway. Trade has been harmonized, simplified. We are not running the trade of 1947 or 1970. We are running trade in 2016 whereby we are only having four bands, 0%, 5%, 10% and 20%. The 35% or anything higher you are having is just to protect the primary industries. That is what trade is all about, it is so friendly. Trade is not a criminal thing. That is why many countries in the world changed the trade process to issues that have to do with pecuniary trade penalties that have to do with money. You still have the Nigerian customs looking at section 46 and 47, all those are 1958 procedures. They have not looked at trade as it is being done by WTO and WCO. And you still have people who don’t understand the modern trends at the helm of affairs because trade has changed, it has been compressed, friendly, simplified. In the 1950s countries tried to secure their borders for duty payments, etc but today we have the common external tariff that have to do with other friendly nations. You have the EPI and all the rest where you have the global trade because now we are a global village. This is why all over the world, customs has been integrated into inland revenue, VAT, etc. In Ghana, you don’t hear much of customs but it’s under the Commissioner-General [of Inland Revenue] and same in other places like Kenya, Canada, everywhere now. Mono board does no longer exist. So Customs must change the way they are doing things. The revenue concern of Customs is being simplified and when you hit revenue hard you force out trade and what we have lost so far, the impact is in trillions of Naira.
DDH: If we want to recapture our transit trade, what do we have to do?
Amieworo: You bring experts. Customs cannot reform customs. There is nowhere in the world you use the customs to reform customs.
DDH: I was looking for facility and procedure upgrades…
Amieworo: The ICT and platforms you have might have those things because the platform by our committee’s recommendations, were supposed to have been audited and validated to know whether they met the standards. I know that in 2009, there was a man from USAID that came in and assessed the whole thing looking for the faults in the whole system. For transit trade, we have the corridor, the facilities we don’t have, we don’t have the satellite tracking system, we don’t have the E-bond system, we’ve not been able to codify and we don’t even have a transit system on ground.
DDH: Do we have enough warehouses and sheds?
Amieworo: You don’t need all those warehouses. Transit is just for you to move from the ports to the border. In Ghana, they have a dedicated berth. Warehouses and sheds, they have all those things in Nigeria. Unfortunately nobody controls them. If you look at our system in Nigeria, who controls the port system?
DDH: The concessionaire.
Amieworo: Who controls them (the concessionaires)?
DDH: The NPA and the Federal Ministry of Transport.
Amieworo: Or Shippers Council or who? When it comes to concession, there are six different management models. You have management and employee buy-out which is being practiced in Britain. Then the landlord-port model, the model we are operating. Then partial privatization, we had done that before. And full privatization. What Nigeria has developed is concession and there is component and element in concession. The component in concession represents the port regulator, the land lord and the marine. When you have independent port regulator, then you have to have the marine side has to do with dredging, channels maintenance, channels maintenance, tug boats and all the rest. The port regulator is [Nigerian] Shippers Council. Now when you talk about the port elements, they are four: labour, tariff, traffic, and infrastructure. That is why they had to drop almost 10,000 workers from NPA. NPA is just the landlord but they might not the people to regulate.
DDH: So if we are targeting transit or transshipment cargo, for instance, it means that it has to come under the auspices of the concessionaries?
Amieworo: You see in transit cargo, promotion may come from NPA or Shipper’s Council and the implementation may come from the terminal operators. That is why Ghana did not give out their ports to concessionaries. What Ghana did was to go into joint venture. The company there is Meridian Port Services. They have two concepts, 35% of the throughput was given to the Ghana Government while 65% was given to Meridian, and in Meridian the government was having a share. And in the throughput arrangement they still control the traffic and the tariff.
DDH: Is this why most of our cargoes (traffic) are going to Ghana?
Amieworo: We already lost most of our traffic even before they concessioned their ports. We simply lost our traffic because of several irregularities in the customs and other agencies whose procedures are so out dated. In Ghana they have what we call “E- bond” (electronic bond), a national bond system. But our bond here is manual. That means you have to go to the bond office, come down here, they will tell you to go here and there and this takes so much time and days. I might have a bond with customs and I have a query. I just go my bond system, click it and move, if you want to do your transit you do it. E-bond means that when you are on transit, that cargo must be bonded. Through this E-bond system, they simplify it for all the consignments that have to go through bond regime.
DDH: The E-bond is actually the interface of digital or electronic processing…
Amieworo: It’s electronics, a national guarantee bond system. They have what they call “Satellite tracking system”, their trucks are not going with any gun. There’s a device they put in the vehicle and as you are going the cargo is tracked. If you tamper with it, they know. We don’t have these things here whereas the custom is the engine of implementation in government.
DDH: What is the situation with our diverted cargoes?
Amieworo: It is madness. You see, there are three layers of diversion, the cargoes that are being diverted to countries around us is massive, because if you have the impact assessment of cargoes leaving the country … Nigeria has a huge market huge industries and huge throughput that have been distributed to every other countries within the region. Distributed to Togo, Seme, Cameroun, Tchad, Niger and every other country, there are leakages coming back. You have three layers: the transit, transshipment. Transshipment is NPA’s problem. In the world today, you have millennium ports and mega ships. Among the ships, there are classes: C-class and E-class ships. E-class ships fall under 18,000- to 20,000-teus. C-class ships fall under 8,000- to 12,000teus. There are about 250 of these ships being moved around the world by the five big shipping lines. That is why the shipping companies are merging every day. In 2015, I think they released almost 50 of these ships. Millennium ports must have a draft level of almost 19 metres. What is our own draft level, it’s political. They will tell you it’s 12, sometimes they will tell you it’s 9. How many of these container ships are coming here? Can you bring 2,000 containers here? That is where we have the problem. Now, within the sub-region, West and Central Africa, we need two hub ports. You may call them preferred ports, deepsea ports, transshipment ports. Our ports are river ports, very far from the fairway buoy and causing lots of fuel to steam. That is why our freight cost is very high. The dredging cost is also extremely high. You cannot bring a deepsea port into a river port. Our ports are river ports and if you want to really do anything, you must look for a transshipment seaport or ocean port but when you start to talk about Akwa Ibom and this and that, you don’t need five hundred ports because a millennium port is a massive investment. Nigerians are just playing politics with it. You don’t need two seaports in Nigeria, you need just one. A millennium port is where a mega ship will come in. Mega ships have fuel economy and they carry what you can carry in five years in one day. And when they berth, they offload the whole cargoes. The implication to Nigeria is this, Cote d’Ivoire has started since 2008. Togo has built their port and their draft level is almost 19 metres. That is where you see many of these ships are going, they cannot come to Nigeria. Cameroon has started their deepsea port, Limbe. They have two but one has started working. Cameroon is the one taking our cargoes. Most of the NPA people do they know about it? Do they know what is happening in Togo? If we don’t have the type of ports they want, there will be a time when nobody will come to Nigeria, they will go to Ghana. Since Nigeria finished concession, have they developed the port? Ghana gave out that port and have contributed $1.5 billion last month to the development of their port. That is the second time. And what cargo are they targeting? Nigerian cargoes.
DDH: When Nigerian cargoes are landed there, a lot of it come in through smuggling…
Amieworo: No, the freight component is going to Ghana. The cargoes come in legally through the borders, there are scanners at the border. If smuggling is going on, that is the people who want to smuggle. Most of the cargoes coming in through land borders are allowable. They have to pay their duties to come in. The problem is those cargoes, once they are transferred to another country, you are losing your freight component, those components that bring employment. Revenue is for customs but employment generation comes from the freight component. The ship that is supposed to berth in Nigeria, berths in Ghana and when they berth there the cargoes goes there, the people pay their shipping companies there, pays their licensed customs agents there, pays the freight forwarder who will transport the goods. They come to the border here and they pass. So, everything that is a contributory factor as far as employment generation is concerned, goes to Ghana. That is why when you go to these countries now, they are big because they are living on our freight component. That is on transit cargo. Then you have our domestic cargo that is supposed to be here but are moved to other countries before they come in. So, you just pay duty and say yes we have got custom revenue but employment generation is hard in the country because all the things that bring in employment are moved out to other countries and they are benefitting from it while we are waiting for the crumbs to collect.
DDH: If you are asked to proffer three quick solutions to reverse this trend, what would you say?
Amieworo: If you don’t put experts there, you cannot reverse the trend. You must put people who are seasoned in positions of power, experience is very key. You don’t bring learners to come and change a dicey system because as they continue to learn, things would continue to get worst. You have to bring people who have been in economic system before, like IMF and World Bank, people who understand the mechanism and the manipulative tendencies in the world economy, to come and run some of our economic system and structures. There is no pride in this thing. When you look at Obasanjo, for instance, he brought in the best brains. He brought in people like El-Rufai, Nuhu Ribadu, Ngozi Okonjo Iweala, Obi Ezekwesili and the rest. He brought in brains with experience, under President Olusegun Obasanjo I served in 90 committees. So, when you are talking about leadership, it is not that I give my sister work, I give my brother work.
DDH: In tracing the history of the managing directors association, how did you people come about it?
Amieworo: It was formed in 1996 under the Abacha regime to help change some policies in the maritime sector after the ANCLA crisis. We then decided to form the Association of Managing Directors of clearing and forwarding companies