New Customs tariffs may lead to diversion of goods to neighbouring countries

THE Shippers’ Association of Lagos State (SALS) has warned the Federal Government that importers and exporters are likely to abandon goods at the ports as a result of the increase in tariffs and duty by the Nigeria Customs Service (NCS).

President of the Association, Jonathan Nicol stated recently in Lagos that the exchange rate was moved up from N197 to N282 to the dollar thereby effectively increasing the duty payable on cargoes at the port by 42 per cent.

“Importers are then made to source for additional funds to meet the costs of clearance. When the costs of clearing goods go up, it will be passed.

He therefore, observed that more goods would be sent to ports in neighbouring countries where they have almost stable cost regimes. Smuggling will increase, Nicol warn the nation and the effect of Customs new tarrif.

The National Association of Government Approved Freight Forwarders (NAGAFF) also described the hike in Customs duly as “hasty”. The Publicity Secretary of NAGAFF said the increase in import duties would increase the cost of doing business as well as prices of imported goods to the final consumers which in itself is a big challenge to the shipper and he warned that goods caught in the regime will be grossly affected.

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Nicol warned the Federal Government that goods may be abandoned in the ports for lack of funds and observed that the Nigeria Customs Service, NCS, is also handicapped due to the envisaged revenue target they must generate for the government.

According to the General Manager, Public Affairs Department of NPA, Capt Iheanacho Ebukeogu, in the first quarter of 2016, 1,131 ocean going vessels and crude oil tankers with 50.4million gross tonnage (gt) called at the ports.

NPA’s data revealed that 5,139 oceans going vessels with 61.99million gt were handled in the corresponding period of 2015.

The commodity analysis revealed that though all cargo types declined during the period under review; however, containers and general cargo traffic contributed significantly to the overall drop in cargo throughput.

The Shippers’ President Nicol said the exchange rate on the contract document, should be used in payment of Customs duties. He said: “Any distortion of that figure, obviously will add to the clearing costs and the market prices of goods.” “Importers are then made to source for additional funds to meet the costs of clearance. When the costs of clearing goods go up it will be passed to the final consumers. Some goods will be abandoned in the ports for lack of funds. He however, observed that the Nigeria Customs is handicapped due to the envisaged revenue target they must generate for government.

Concluding, Nicol warned that when you add the new terminal charges just increased by the operators, they are killing the hen that lays the Golden Egg “and also warned that inflation in the country would increase.”