Concessioning Of E-Customs Modernisation: NAGAFF Clarifies Position On Matters Arising

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The National Association of Government Approved Freight Forwarders (NAGAFF) has clarified positions on matters arising from the association’s earlier letter to the Minister of Finance, Budget and National Planning, Zainab Ahmed.

According a press statement sent to Platform Reporters on Friday entitled RE: NAGAFF OFFICIAL LETTER OF CLARIFICATION ADDRESSED TO THE HONORABLE MINISTER OF FINANCE, BUDGET AND PLANNING – MATTERS ARISING, the group maintained that as a professional freight forwarding association involved international trade and security supply chain, especially in the freights & logistics chain, it owe its professionals, the trading public and the consuming populace a prompt and unbiased public policy advocacy drives aimed to impact positively.

In its lengthy statement, NAGAFF clarified things as follows:

Gentlemen of the Press, this press release is aimed at responding to the series of questions posited on our website and discuss on our social platforms, especially those emanating from desk or the stakeholders, who expressed their concerns that, the government will  not act on nor respond to our letter of clarifications, having subtly concessioned the  Nigeria Customs Service via e-customs modernization. 

Firstly, we wish to place it on record that, hence, the concession process was shielded in secrecy, Nagaff has a clear understanding of the subject matter under reference and the associated business implications thereof.

As a professional freight forwarding associations involved international trade and security supply chain, especially in the freights & logistics chain, we owe our profession, professionals, to the trading public and the consuming populace a prompt and unbiased public policy advocacy drives aimed to impact positively.

We have a duty to support the government in its quest to promote good governance to the citizenry and in the other hand  ensuring that the citizens quest and rights to good governance via fairness, transparency and accountability is not blatantly denied. 

Secondly, our position is always informed and not influenced by past experiences in policy formulations processes and the adverse effects of such unpopular policies on the Maritime cum port industry supply chain.

Here again, our understanding of the emerging trends or the dynamics of the ever changing international trading and maritime environment, this is in addition to oir passion for setting straight the  records, also informed our strong position.

Indeed, We don’t have powers to alter government decided decisions, but we have the power to offer professional knowledge enrich advise to the government, which may guide against future occurrence or possibly prompt a possible moderation if not a reversal of its earlier decisions.  

Thirdly, we don’t and have never compromised our stance on the noticeable lax regulatory capacity on the path of regulatory agencies of the government, and the activities of the insider trading promoting zero tolerance to corruption amongst government functionaries, in relation to concession processes.

From our international collaboration, it is evidently clear that, most of the present day opportunists who parade themselves as Foreign Investors actually belong to the plunge a nation into debt crisis with their investment ideology: “We are for free market when we are out to make buck and believe in the state when we are about to lose our buck”.

The Nagaff, strongly believe that, it is the duty of government to resort in concessioning or privatizing any worst performing public enterprises, especially where it has become politically impossible to restructure a public enterprises, but must take adequate due diligence and commitment when embarking on such exercise, in other to avoid a collosal damage. 

Our beliefs on this subject is informed over time by our findings that, most private sectors investors are not too keen or willing to genuinely finance a venture despite its long term contract viability, for the fear  and thought of “taking risks”.

This is because the investors believe that money can move around quickly, capital markets have an inherent bias towards short terms gains and do not like undertaking risky, large scale projects with long gestation periods, hence, investing into the Greenfield enterprise does not attract,  excerpt for the brownfield enterprise like port concession and now e-customs modernization concession. 

The Nagaff took a critical look at the stages or several electronic or information technological advancements made so far in the Nigeria Customs Service within this period of 2010 to date and strongly disagrees nor allude to the propaganda that, the Nigeria Customs Service is a worst performing public agencies of the government, and refuse also to the categorization of the Nigeria Customs Service as an enterprises, other than an extended part a security apparatus of the government, due to its security and safety relevance in the face of international and national terrorists threat’s. 

The Nagaff, considered the the lopsidedness and defects that trailed the port concession processes of 2003 to 2006, which lacked many of the following concession indicators ( aka the Seven – 7 Rights of Concession ):

a. Concession the ripe/right enterprises.

b. Concession at the right price

.c. Concession at the right scale.

d. Concession at the right timing.

e. Concession to the right operator

.f. Concession with the right sets of tariffs.

g. Concession with the right regulatory régime. 

The summary and emphasis of this seven concession indicators is that: Government must take adequate care to ensure that the right public enterprise is concessioned to the concessionaire at the right price, subjected to the right regulatory régime with the right competitive tariff, else the essence of concession may be defeated, as it will never achieve 100% performance in the long run. 

Suffice it to state that, fair competitive services and operational tariffs will be eroded leaving room for private sectors monopoly which is more dangerous than public sector monopoly, thereby promoting inflation and capital  via cash repatriation to foreign origin.

Our bitter experiences with the Pre-shipment Inspection and Destination Inspection Agents easily comes to mind, just like the prevailing unhealthy situations in our port operations. 

We make bold to also state that, from our practical experience with the port concession; lack of competition and ineffective regulations ( due to non firm support of the government) under a private port sector regime breeds conformism, bureaucratic red tapes( operational delays, haggling, high-handedness, etc), inflation, corruption ( extortion and exploitations). Under the Pre-shipment Inspection and Destination Inspection Agents regime, the use of the term:

“In line with our opinion, the FOB has been increased by USD$ served as an  instrument of  increasing their 1% CISS which is tagged to thier means of profitization  and recoupment , whereby exploitating and extorting the Nigeria Shippers and promoting inflation to the economy.   

From the above explanation, it is not overstatement, to add up that, the seven concession indicators  (7 rights ) is also evidently absent from the e-customs modernization concession processes, as portrayed by the wise counsel of the attorney general of the Federation to the Honorable Minister of Finance and the report of the joint Committees of the House of Representatives, warning against  a possible payment of a $2.8billion claims in an ongoing  litigation between the government and rival group of investors, all hunting for Nigeria Customs Service functions, for commercial purposes.   

Take note, that Nagaff is not saying that concession doesn’t work well at all, but that if the right indicators are not deployed, concession can be a recipe for disaster, especially in developing countries like ours, that lacks the necessary regulatory capabilities.

Even, when concession is the right solution to redeeming a worst performing public enterprise, it may be difficult to get it right in practice.

Starting with the port concession program, we have seen where the brownfield investors propounded a sophisticated and over bloated revenue generation proposal and far reaching objectives to the government pursuance to luring the government to grant approval their concession or contract quests, for example, in the port concession arrangement, the aims and objectives scenario painted to the government, included and not ! limited to: 

a. To achieve the highest possible level of efficiency at the major Seaports of Nigeria.

b. To monitor carefully, international maritime developments in order to make adjustments necessary to maintain and improve the competitive position of Nigeria ports.

In attaining to this aims, other sub-objectives were articulated as follows: 

a. Enhance Competition and raise performance standards of the ports. 

b. Ensure greater investment in up to date cargo handling equipments and information technology. 

c. Simplify tariffs and operational processes to enhance transparency.  π. Free Port system from politics, bureaucracy and make them friendly and responsive to customer needs. Etc.

Subsequently, the government opted for the landlord port model due to the propounded benefits, setting the following objectives:

a. To achieve quick clearance of cargo at the ports.

b. To enhance quick turn around time of vessels.

c. To reduce ports charges by 20 – 30% .

d. To eliminate the flow of funds from limited government resources.

e. To boost economic activity and accelerate development.

f. To make Nigeria the hub for international freight and trade in West and Central Africa.

g. To reduce port operating cost by 65 to 80% million yearly or about 20 – 25%.

h. To reduce  cost of imports by 5 to 13% yearly.

i. To reduce the high incidences of cargo diversion to neighboring countries, thereby saving the government $100 million yearly. Etc.     

From 2006 to 2020, with the realities on ground, the Nagaff really can reconcile the performance of the port concessionaires  and the level of actualization to this set objectives. Even the Nigeria Ports Authority projections on the port concession now calls for proper re-forecast and projections reconciliation . 

However, we trust that, the technical committee set up to reevaluate the performances of the APM Terminals  in line with operational efficiency  will do justice to their assignment pursuance to their Terms of Reference (TOR), as their reports of finding  is key to our public policy advocacy objectives.

And of course, their assignment is inquiries and fact finding in nature.    We want to conclude by stating that, with the present intrigues surrounding the Interested  parties involved in the e-customs modernization concession , the Nagaff will likely set up an independent fact finding investigative and technical committee to undertake a historical, operational background checks and pedigree of the listed firms, with the aims of ascertaining their operational experiences and capacities. 

At the end, the report of findings shall be communicated to the government with a corresponding advise. On this note, we want to say thank you, for your attention and continuous cooperation.

Yours in Public Policy Advocacy,

Fwdr. Dr Eugene Nweke Ksm Rff.

Former National President/Head of Nagaff Research/Policy Group.


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