NCS’s import duty revenue targets

Nigeria Customs Service (NCS) operates in a strange world that borders on a fool’s paradise. Revenue crunch has pushed Nigeria perilously close to bankruptcy, yet NCS is rolling out the drums to celebrate overshooting of a dubious import duty revenue target.

The truth is that no one in the federal government has a clear picture of Nigeria’s import duty generation capability. That explains the decades of grossly under-estimated import duty targets repeatedly set for the NCS.

On December 20, the NCS gleefully announced that it has exceeded the 2021 revenue target by a record 37 per cent. The target was N1.6 trillion but as at December 20, 2021, the NCS had grudgingly paid N2.3 trillion into the federation account.

That sounds tremendous, but it is a tiny fraction of what should accrue to the federal government as import duty revenue. Nigeria should be earning N8 trillion annually from import duties if the NCS was appropriately monitored and given realistic annual revenue targets.

In the last three years the NCS had repeatedly rolled out the drums to celebrate reprehensible claims about exceeding revenue targets, but the reality shows the reverse.

NCS was given a paltry import duty revenue target of N1.6 trillion for 2021 with a budget reference exchange rate of N379 to the dollar.

The NCS was working with that exchange rate when the Central Bank of Nigeria (CBN) shifted the goal post while the ball was still in flight. As crippling foreign exchange scarcity plagued the foreign exchange market, the naira came under tremendous pressure especially in the parallel market.

The CBN responded to the pressure on the naira by devaluing the currency in the first quarter of 2021 to N412 to the dollar in the official window. NCS which had been given a revenue target of N1.6 trillion for 2021 based on the budget reference exchange rate of N379 to the dollar was automatically calculating import duties on N415 to the dollar.

No one in the federal government remembered to review the revenue target of the NCS in relation to the devaluation of the naira by CBN. That unplanned devaluation is largely responsible for the exceeding of revenue target celebrated by NCS.

Nigeria is tottering on the brink of bankruptcy. NCS is primarily responsible for the poverty plaguing the land. The cumulative income of NCS officers in any given year is higher than what accrues to the federal government from import duties. Their weird opulence testifies to that.

NCS officials build plazas and luxury villas all over Nigeria. Many of the villas built with import duty loots are unoccupied. Their merciless diversion of import duty revenue pushes millions of Nigerians below poverty line while a huge chunk of the stolen money remains useless to the looters and the society.

Corrupt NCS officials make their loots from bribes paid by perfidious importers seeking to circumvent prescribed import duty tariff. The rest come from smugglers who pay nothing at all to government for what is smuggled into the country.

On one frenzied day during the period that Nigeria’s land borders were closed, an accomplished monetary economist who was upset by the deluge of smuggled goods from the “closed borders”, challenged me to spend a night in a particular hotel on the Badagry-Lagos highway, wake up by 1am and take a count of the articulated trucks heading into Nigeria from the “closed border” and therefore determine the economic logic behind the closure.

I ignored the challenge because I knew that the economist had solid evidence that NCS officials were the ones reaping from the border closure.

Nothing has changed even after the borders were thrown open. NCS officials dine and wine with smugglers and collaborate with treacherous importers to circumvent stipulated import duty tariff.

Revenue crunch is behind the federal government plan to raise an additional N12 trillion debt in 2022. That would take Nigeria’s debt profile perilously close to N50 trillion. With a debt profile of N50 trillion and annual revenue base of less than N10 trillion, debt service would consume 80 per cent of Nigeria’s miserable income, while NCS rolls out the drums to celebrate the exceeding of parsimonious import duty revenue target.

In fact, the annual celebration by the NCS of exceeded revenue target is more about the ease with which NCS officials divert public funds into their pockets without anyone in the federal government lifting a finger in protest. That is just what the NCS celebrates.

Nigeria is just being looted mercilessly by the NCS. Import duty revenue alone is enough to fund 80 per cent of federal budget if the real value of the nation’s annual import duty revenue was paid into the federation account.

Nigeria is an import dependent nation. Import duty revenue can run the country effectively. Between 2018 and 2021, Nigeria’s volume of trade with China alone amounted to N19 trillion. Of that huge sum, Nigeria’s exports to China accounted for a miserable N2 trillion. The remaining N17 trillion was Nigeria’s imports from China.

If Nigeria’s annual imports from China alone amounts to almost N6 trillion, one wonders how the NCS would explain an import duty revenue of N1.6 trillion in a whole year at a time when the naira wobbles at an exchange rate of N415 to the dollar at the official window. It is a classic case of a nation being plundered by the men entrusted with its treasury.

NCS has swindled Nigeria long enough to be called to order. If the unprecedented diversion of import duty revenue was ignored in the years when Nigeria was raking in something close to $50 billion per annum from crude oil exports, now that oil revenue has dried up, the federal government should plug the leakages in import duty revenue and set meaningful targets for NCS.

The new target should be anything from N5 trillion per annum. NCS should be allowed to spend 15 per cent of that as cost of collecting the revenue. That would enable the service to pay living wages to its workers.

If NCS officials are given oil industry pay package, no one would begrudge them because of the high risk involved in their job. But they must be compelled to deliver.

The poverty knocking at the door step of the federal government can be fended off if the NCS is compelled to deliver at least 80 per cent of the revenue accruing from import duties at any given year. That is the only way we can avert the impending disaster of servicing debts with 80 per cent of our miserable revenue.