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The New Import and Export Guidelines: Any Respite for the Trader?

Doing Business in Nigeria	5966 VIEWS
Doing Business in Nigeria
5966 VIEWS

Monday, January 22, 2018 04:38PM / Deloitte

Monday, 1 January 2018, did not only mark the celebration of New Year in Nigeria, it also heralded the effectiveness of the revised import and export guidelines (the Guidelines) issued by the Federal Government of Nigeria (FGN). While the Guidelines are not entirely new, the impact of its changes are significant and traders must pay particular attention to the specific changes to avoid potential financial and reputational risks.

The changes could be classified into two broad categories ranging from establishment of newer requirements and introduction of weightier sanctions for noncompliance. Highlights of these changes are set out below:

Establishment of new requirements

• Palletization: The most significant change is the requirement to palletize imported goods. All containerized goods, except those specifically exempted (as documented in FGN’’s Circular) are required to be stacked on pallets. Expectedly, this directive received criticism by traders who consider palletization an onerous obligation – as pallets occupy space, add extra weight and come with a fee. Traders already operating on tight margins may not be able to survive within the boundaries of the current business environment. It is however imperative to note that palletization is not a novel concept in global trade. It is seen as best practice as it enhances efficient supply chain operations. Specifically, palletization facilitates easy handling by forklifts which results in improved timeline to store, load and unload goods which have been stacked on pallets. From FGN’s standpoint, palletization would help accelerate operations at the ports, aiding the ease of doing business in Nigeria

• Transmission of cargo manifest prior to arrival: Carriers are obliged to transmit cargo manifests to the Nigeria Customs Service (NCS) and Nigeria Ports Authority (NPA) prior to arrival. This is meant to reduce associated delays with risk profiling, cargo placement and ultimately clearance of goods. While this requirement is not entirely new, we assume the drive for compliance will be more effective under the new regime.

• Joint examination of cargo: The NCS is now required to coordinate joint physical inspection of cargo to reduce duplication of physical inspection by several government agencies as this creates avenue for illicit business and impacts the turnaround time for clearance of goods.

• Reduction in required documentation: Documents required for imports have been reduced from 14 to 8 and for exports, from 10 to 7. However, there is no clarity on the actual documents retired, as documents usually required during an import or export under the old guidelines, still feature in the Guidelines. To avoid ambiguity, it would be useful to have communication from FGN stating clearly the expunged documentation.

• Obligation to improve service delivery: There are enhanced timelines to execute essential services. These include weekend inspection services by NCS, strict compliance with timelines by authorised banks. Further, preshipment inspection agents (PIAs) must schedule inspection of exports within 48 hours and issue a clean certificate of inspection (CCI) within 72 hours of inspection.

• Extension of the validity period of Form M: The initial validity period for Form M has been extended to 360 days for general merchandise and 720 days for capital goods. Authorised banks could further extend the validity period by 180 days and 360 days for general merchandise and capital goods respectively. Any further extension must be with the approval of the Central Bank of Nigeria (CBN).

Introduction of weightier sanctions
These have been categorized according to the stakeholder/players in the industry.

• Authorised banks: Exclusion from doing business with the NCS for issuing multiple Form M’s on the same import transaction.

• Importers and exporters: 1% charge on export proceeds not repatriated within 180 days from export and 25% charge on free on board value of unapproved unpalletized cargo.

• Carriers: Refusal of berthing rights to carriers who fail to transmit cargo manifests prior to arriving Nigeria.

• PIAs: 25% charge on service fees for failure to issue a CCI within 72 hours of inspection and potential withdrawal of inspection mandate for failure to make prompt returns, attend inspections timely, and identify non-compliant exports.

The 2018 edition of the World Bank’s ease of doing business survey ranked Nigeria at 145 out of the 190 economies assessed (previous year survey ranked Nigeria at 169). Based on the country’s antecedents, a 24 place gain is commendable but inadequate, in light of the current economic realities.

Further review of the rankings shows that of the10 underpinning drivers for the rankings, Nigeria is mostly inadequate in trading across borders. Specifically, compared to the previous rankings, the country fell 2 places from 181 to 183 (out of 190 economies evaluated) on the aspect of trading across borders. From a competitive standpoint, this cannot be the narrative if the country is seeking to attract investment and promote more efficient manufacturing supply chains for production of locally consumed and exported goods.

The Guidelines appear to be a deliberate strategy by FGN to curb the gridlock at the ports and in my view should prima facie improve the turnaround time for cargo clearance. Nonetheless, framework documentation without actual implementation is futile and implementation without mechanisms for gauging effectiveness amounts to sailing a ship without the rudder. It should no longer be business as usual for the movement of tangible goods across the border. The success of the country’s economic recovery and growth plan, hinges on her ability to efficiently create global supply chains originating or terminating within her boundaries.