Nigerian Ports: A Car Smuggler’s Paradise


Sunday, March 03, 2013 / FDC


Nigeria lost N90bn ($550m) in revenue (from tax evasion) to the grey market of the automobile industry of the country over the last 4 years.


Just imagine what a nation can do with $550m:


This is equivalent to 4.5% of the total exports of Kenya or 4% of the total exports of Ghana. This amount could fund the construction of one petroleum refinery or a modern power station with 1000MW capacity.


On a leveraged basis of 1:3, it can finance the rehabilitation of 2 seaports and 2 modern airports. With an income per capita of $1500 and infrastructure gap of $200bn, this is not chicken feed.


What is the grey market?


The grey market is a term that describes a situation in which goods are imported inappropriately into a market without the manufacturer’s consent, thereby short-changing the authorized deal-ers. Grey market products can originate from theft, unreported sale of goods, the leaking of excess inventory into the market, illegal sales across borders (playing the price arbitrage game), and multiple sales of the same product where the manufacturer receives revenue only for the sale first reported.


How is the scam organized?


The grey market importers primarily source the automobiles from the Middle East (Dubai and Abu-Dhabi). When these cars arrive at the destination ports, various schemes are carried out to either avoid duty payment or make the lowest possible payment. These schemes include false declaration of automobile data, declaring high duty vehicles as low duty vehicles, under invoicing, payment of duty on a few units of the imported vehicles and colluding with officials to pay a negotiated duty


In some cases, automobiles that are destined for land-locked nations such as Burkina Faso, Ni-ger, Chad and trans-shipped through the ports find their way to the Nigerian market and custom duty payment is avoided in the process


More to follow in the next publication…...

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