Revitalizing Nigeria’s Economy Through Customs Modernisation
By Abdulsalam Mahmud
Facing declining revenue due to poor economic performance, the Federal Government (FG) initiated the Nigeria Customs Service Modernisation Project two years ago. This presidential initiative aims to diversify and enhance government revenue beyond the oil sector.
The Modernisation Project aims to improve the services of the Nigeria Customs Service (NCS), including boosting revenue, facilitating trade, and reducing corruption, ensuring long-term operational sustainability.
Implemented through a Public-Private Partnership (PPP), the project’s terms were formalized in a Concession Agreement (CA) signed on May 30, 2022.
The agreement involves the FG, represented by the Nigeria Customs Service Board, as the Grantor, and Trade Modernisation Project (TMP) Limited, as the Concessionaire.
In April last year, the Federal Executive Council (FEC) ratified former President Muhammadu Buhari’s anticipatory approval, leading to the execution of the Concession Agreement.
The project offers numerous benefits, primarily equipping the NCS with advanced technology infrastructure to provide efficient services to businesses and government agencies.
Additionally, the Concessionaire will offer operational support, maintenance, and training, alongside deploying Information and Communications Technology (ICT) infrastructure, from the start date until the end of the 20-year concession period.
Key Project Benefits
1. Revenue Enhancement: Optimising NCS Business Processes and automating operations to increase efficiency and prevent revenue leakages.
2. Trade Facilitation: Enhancing NCS’s ICT Systems and infrastructures to expedite trade.
3. Smuggling Prevention: Developing systems to prevent smuggling and fostering information sharing with regulatory agencies and security units.
4. Unified Systems: Introducing the Unified Customs Management System (UCMS), e-Port, Logistics Monitoring, electronic-Cargo Tracking, and Mobile Enforcement Systems for transparent import, export, and transit trade processes.
5. Automation and Compliance: Increasing automated operations, monitoring compliance, and reducing human interface to mitigate bribery, corruption, and inefficiency.
6. Capacity Building: Providing training and collaborative work opportunities for NCS personnel.
Benefits to Nigeria
1. Revenue Growth: The project is expected to generate over $250 billion for the Federal Government throughout the concession period.
2. Technological Advancement: Aligning Nigeria with global standards in technology deployment for international trade facilitation.
3. Economic Diversification: Boosting the Federal Government’s efforts to diversify the economy by easing cross-border trading.
Global Examples of Customs Modernisation
The Automated System for Customs Data (ASYCUDA), managed by the United Nations Conference on Trade and Development (UNCTAD), is used in over 80 countries. The European Union has implemented customs modernisation bloc-wide since the 1990s, significantly simplifying trade facilitation.
The United States has also developed a platform allowing traders to process clearance and pay duties online, eliminating the need for third-party agents and enhancing port efficiency.
Similarly, the UAE and China have implemented successful customs modernisation projects, with Dubai and China’s ports relying heavily on automated systems. Huawei Technologies, a key partner in China’s scheme, is also the lead technical partner for Nigeria’s project.
Impact on FG’s Revenue
Automating customs processes will increase revenue by improving trade experiences, leading to more frequent trading and better collection of duties, thus addressing revenue leakage.
The Role of Concessions
The $3.2 billion investment required for the project is substantial. A concession supports the government’s diversification efforts and frees resources for other critical economic growth areas, such as infrastructure.
Employment Impact
While disruptive technology can lead to job displacement, it also creates new jobs through the new service points required for the project’s effective functioning.
Global studies show that such projects generally lead to job creation across various industries and contribute to wealth generation and sustainable development.
Last Line
The Customs Modernisation Project is a timely initiative. The FG must ensure its successful implementation, as it holds significant potential to drive Nigeria’s economic prosperity.
Mahmud is the Deputy Editor of PRNigeria and wrote via: [email protected]
