By Omoh Gabriel, Business Editor
Organised private sector opera    tors have come down heavily on     government saying that it is not serious with developing the economy of Nigeria in relation to its neighbouring countries.

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A report of the private sector dialogue on Nigeria tariff harmonisation with ECOWAS berated the absolute power of the President to change or impose tariffs which makes a mockery of the rule of law. The report said:

“There is a clear indication that the Nigerian government appears to be handling the subject of Common External Tariff (CET) with laxity, with an apparent disregard for the dangerous consequences e.g. the ability to crash the entire manufacturing sector, or the entire economy. This is manifest in the lack of lucid procedure in her intervention ranging from:

the lack of evidence-based pronouncements, poor coordination among MDAs on the subject matter, inability to ensure that technical experts on tariff represent Nigeria at the regional CET meetings, passivity in holding consultations with the stakeholders, especially the private sector and civil society to generate current data on the trading environment that can help in better policy options based on the realities and aspirations of the real sector of the Nigerian economy.”

They argue that “the Customs/Excise Tariff, Etc. (Consolidation) Act; No 4, of 1995 (Part 1, section 11) provides that “… the President may, on the recommendation of the Tariff Review Board, by order impose, vary or remove any duty or levy; add to or vary any of the Schedules; delete the whole or any part of any of the Schedules; substitute a new Schedule or Schedules thereto.

” This, they said is legal backing for arbitrariness The report said “Despite the fact that Customs duties constitute a major source of revenue (second largest revenue base) for the government, the Nigerian Customs is still one of the lowest revenue earners, per staff, in Africa. This cannot be de-linked from the several hindrances to trade facilitation, including corrupt practices, and particularly, infrastructural deficiencies.

There is need for a thorough evaluation of the revenue cost of CET to Nigeria.
“Waivers and concessions may still be relevant and indeed necessary in Nigeria for as long as the present infrastructural incapacities exist.”

Participants noted that the problem of waivers and concession is actually about the process through which it is granted, in that rather than government granting waivers and concessions to individuals/individual companies, such waivers should be granted to entire identified sectors after careful evaluations based on calculated costs to that sector involved.

The OPS said that “Nigeria’s policy formulation process in general and tariff policy in particular has been characterised by a lack of strategic direction within the ECOWAS sub-region and with a minimal level of participation of the private sector and other relevant economic stakeholders. The move towards establishing a common market within the ECOWAS sub-region has occasioned the need for the adoption of a Common External Tariff which has five bands of 0 per cent, 5 per cent, 10 per cent, 20 per cent, and a maximum of 35 per cent.

“Nigeria’s current tariff book follows these five bands but the application of non-tariff barriers such as additional fees, levies and charges on various products adds an additional layer of costs to the importer and, ultimately, the consumer. There also exists a list of products, under constant revision, that are deemed to be sensitive by various stakeholders in the Nigerian economy. An iteration of this list has been provided to ECOWAS and is to form the basis of products that may be excluded from liberalization within the CET.

“All these efforts notwithstanding, the lack of a formalised approach to tariff formulation is characterised by the use of discretionary powers within government resulting in an uneven playing field for the trade community in Nigeria.

Substantively, discriminatory duties are announced and applied to various forms of goods without recourse to a tangible tariff framework published by the Government of Nigeria. Compounding this situation is the use of a process that grants waivers and tariff concessions on imported goods to various private sector operators that, again, distorts the playing field.

Vanguard gathered that participants at the workshop organised by the National Association of Nigeria Traders and sponsored by USAID took turns to comment on the critical issues raised during the presentation stating that “There is an urgent need to more clearly define the categorisation of products in the tariff book. Illustrating the implication of this submission, it was pointed out for example that the term “raw material”, which falls into the 5 per cent tariff band lacked any clear definition and resultantly, resin is considered as raw material in some sectors, and a finished product in others. This also applies to the sensitive products list at the regional level”.

Participants, it was further learnt, argued that “the manufacturing sector is not entirely to blame for continually agitating for bans and high tariffs, in a bid to protect their industry. This is because the manufacturing environment in Nigeria is far from favourable, and worsening with time. Participants were of the view that until government puts in place adequate infrastructural facilities, the use of prohibitions, high tariffs and quotas may continue to be agitated for despite the adoption of the ECOWAS CET.

According to them, “the ECOWAS CET does not recognise waivers but in the Nigeria situation, however, waivers are even statutorily recognised. In this regard, the applicability of CET in Nigeria therefore becomes suspect.

Vanguard learnt that participants agreed that “the import ban/prohibition policy of government has not worked, but rather exacerbated Customs inefficiency, entrenched smuggling and corruption. It has also increased the lobbying for waivers, which are normally gotten by political cronies.”

It therefore recommended that “Government should seek ways of reviewing the policy to give way for healthy competition among business operators in Nigeria. In addition, government should work towards providing the country a practicable Competition policy/law, especially as the ECOWAS region which is presently in the process of harmonising various trade and economic policies, has already put in place a Supplementary Competition Act, approved by the Authority of Heads of States.

Government and private sector should therefore engage in a fruitful dialogue with a view to providing suitable and holistic economic policy that would meet the laudable industrialisation objectives of the nation.”

Participants further noted that there is serious need for improvement on regular consultations with the organised private sector if policies must bear fruitful results.

Similarly, participants noted that at the ECOWAS level, while the Ministers through the February 2010 Bamako MMC had directed that private sector be fully integrated in the CET Regional Committee, this is yet to be implemented. ECOWAS should therefore take immediate steps at ensuring that accordingly, member-states’ private sector be made an integral part of the committee.

Participants it was gathered, encouraged government to seek more appropriate/legitimate ways and instruments of giving protection to local industries when and where necessary especially in a way that would not make Nigeria look odd before other ECOWAS countries and the global comity of nations. This is important given that Nigeria is a signatory to many free trade agreements and would therefore not be seen to be negating the same agreements it signed in the first instance.

They also said that government should consider the plight of the poor and their right to choice with a view to re-defining policy options that have a human face. A further analysis and healthy debate emanating either from the private sector or government on this subject would be necessary.

Participants recommended that the tariff on brown and finished rice be made the same, 30 per cent, because some importers were taking advantage of the low tariff band on brown rice, 5 per cent, to bring in finished rice disguised as brown rice.

They also urged both government and the private sector to make concerted efforts towards ensuring that these gaps and discrepancies are checked appropriately.

Essentially, the integration of CKD into the ECOWAS CET is critical and advisable, particularly given the importance and the need for job creation through value addition which CKD promotes. In this regard, Nigeria could articulate and present a proposal to ECOWAS. Government should also regularly ensure that technically qualified officials and experts on tariff are sent to represent Nigeria in the CET regional meetings.

Therefore, opinion of the private sector and other non-State Actors is critical and must always be sought at every point in the CET negotiations/harmonisation.

Government should right at the level of the Federal Executive Council, institute internal policies that ensure proper coordination between and among MDAs in a way that every ministry shall know her terms of reference and take appropriate responsibility of matters arising from their specific objective coverage. While one recognises the supervisory role of the Ministry of Foreign Affairs on international issues (which includes ECOWAS-related), it is however necessary to understand that specific technical areas of intervention such as tariff, for instance, should be handed over to the Federal Ministry of Finance. The same applies to all sectoral issues.

In the interim, participants noted that government should be very decisive over waivers and concessions. Selective granting of waivers and concessions only create overnight billionaires out of certain individuals close to the corridors of power.

It encourages monopoly which is not helpful to the Nigerian business environment. Similarly, participants again restated the negative effect of the President having the right to manipulate tariff as he deems fit. Hope was expressed that the CET would address this issue by taking that power away from the President. They also stressed the need for Nigeria to articulate a clear economic model in her vision, whether it wants to be “import-driven” like Dubai or “Production-driven” like China, as it is a clear cut vision that will determine the direction or focus of policies.

Participants unanimously  agreed and re-stated that the tariff setting system in Nigeria is deeply flawed, with no or minimal consultation with the relevant stakeholders. Furthermore, setting tariffs should not be the sole responsibility of the Tariff Technical Committee, but should be done by a consortium of government agencies and the private sector.