Trends and Challenges of Cross Border Trade

Transcription

1 Trends and Challenges of Cross Border Trade Experiences From a German Customs Adviser Presenter: Frieder Mecklenburg Date: 16 February 2017 Page 1

2 Contents of this Presentation Introduction: GIZ / GIZ in Nigeria / GIZ s Work on Trade in Nigeria 1. The Institutions 2. The Legal Framework 3. Challenges 4. Outlook & Trends 5. Practical Hints for Dealing with Customs Unfortunately Not Covered in this Presentation is Page 2

3 Introduction GIZ Germany s Development Agency Since 1971 in Nigeria Nigeria Current GIZ Offices Future GIZ Field Offices Business Development Support Unit Page 3

4 Business volume and personnel 2016 (Business vol ; Personnel as of May 2016) Business volume (in Mio. ) (est.) Total: BMZ GIZ employees Seconded Personnel National Personnel German public sector clients Co-financing by other donors, incl. EU and Bill & Melinda Gates Foundation Regional Personnel Page 4 10 CIM - Integrated experts - Returning experts 5

5 Areas of Cooperation in Nigeria Sustainable Economic Development Energy Regional Integration Health Agriculture Peace, Reconstruction & Security Social Development Page 5

6 Nigerian Energy Support Programme Duration: Client and partners: German Federal Ministry for Economic Cooperation and Development; EU; Federal Ministry of Budget and National Planning Target states: Sokoto, Niger, Plateau, Cross River and Ogun Objective: To improve conditions for investment in renewable energy, rural electrification & energy efficiency. Approach: The programme advises the Nigerian government on how best to provide reliable and sustainable electricity to its people. This is achieved through the promotion of investments in renewable energy, energy efficiency, and rural electrification. Page 6

7 Promotion of Demand Oriented Vocational Qualification in Nigeria Duration: Client and partner: German Federal Ministry for Economic Cooperation and Development; Federal Ministry of Budget and National Planning Target states: Ogun and Plateau Objective: The project supports the Federal Government of Nigeria, and the state and local governments of Ogun and Plateau States, in improving the employability of Nigerian youth and women through demand-oriented vocational qualification. Approach: The project provides demand-orientated vocational education and training in the agriculture and construction sectors for employment-seeking young persons and women. Page 7

8 Business Development Support Unit Duration: Client and partner: German Federal Ministry for Economic Cooperation and Development; Delegation of German Industry and Commerce to Nigeria (DGIC) Target states: All States of the Federal Republic of Nigeria Objective: To serve as a point of contact for German and European companies with business operations in Nigeria to promote, prepare, and implement public private development partnerships with European companies operating in Nigeria. Approach: Using the existing market intelligence of DGIC and GIZ, private sector actors are proactively approached to identify opportunities for PPPs through the GIZ developpp concept ( Page 8

9 Make IT Nigeria Duration: Client and partners: German Federal Ministry for Economic Cooperation and Development; Digital Africa Initiative Objective: Better Government performance & more ICT jobs. Approach: Accelerator Page 9

10 Pro-poor Growth and Promotion of Employment in Nigeria Duration: Client and partner: German Federal Ministry for Economic Cooperation and Development; European Union (EU); Federal Ministry of Budget and National Planning Target states: Niger, Ogun and Plateau Objective: The programme supports the Federal Government of Nigeria and the targets states in improving the framework conditions for MSMEs to increase sustained employment and income generation. Approach: The programme is pursued via four fields of intervention: financial system development; business enabling environment reforms; trade policy and facilitation; and value chain development. Page 10

11 The Trade Unit Our Partners & Stakeholders Implementing Partners GIZ Germany UNCTAD Crown Agents USAID DFID EU Delegation Political Mandate / Donors Ministry of Budet & National Planning BMZ EU Delegation Partners / Stakeholders of Implementation Ministry of Trade (FMITI) Ministry of Finance (FMF) Customs (NCS) Organised Private Sector (NANTS, MAN, NACCIMA, NEPC, NASME,...) Office of the Vice President Topics Capacity Building ECOWAS CET ETLS / Export Promotion Trade Policy (EPA, CFTA, National Trade Policy, ECOWAS Trade Policy,...) TRIMS (anticorruption mobile app) Page 11

12 Tariff & Customs Roles & Responsibilities Policy Maker Federal Ministry of Finance (FMF) Tariff Review Board informs. Tariff Review Technical Committee Beschreib ung Implementer Nigeria Customs Service (NCS) Page 12

13 Nigeria Customs Service (NCS) the Organisation Ca. 22,000 Officers, para-military organisation Head: Comptroller General Col. Hameed Ibrahim Ali Political Management: Deputy & Assistant Comptrollers General Operational Management: Customs Area Comptrollers & Comptrollers 10 Customs Areas in Zone A, 15 spread across the rest of Nigeria ~70% of Officers based in & ~90% of customs revenue collected in Zone A Check out: Page 13

14 NCS Organisational Structure Page 14

15 Federal Ministry of Finance For Customs relevant Departments are: Fiscal Policy Department: defines tariff & fiscal incentives policy Tariff Review Technical Committee: consults with stakeholders such as NCS, other MDAs, MAN, other private sector representatives on tariff policy, coordinated by Fiscal Policy Department. Tariff Review Board: decides on tariff policy. Budget Office of the Federation: revenue collection & granting duty waivers. Check out: (not up to date?) Page 15

16 The Legal Framework of Customs except Import Adjustment Tax The Tariff a Circular ECOWAS Common External Tariff (CET) except except except except National List Import Prohibition List Levies Fiscal Policy Incentives & Duty Waivers Nigeria CET Legal Basis Customs and Excise Management Act (CEMA) old CEMA new ECOWAS Customs Code Page 16

17 The ECOWAS CET Category Products Number of Tariff Lines Band 1 Essential Social Goods 85 Band 2 Basic necessities, raw materials, capital goods, specific inputs 2146 Band 3 Inputs and intermediate products 1373 Band 4 Final Consumer Goods 2165 Band 5 Specific Goods for Economic Development 130 Total 5899 Category Duty Rate Band 1 0 Band 2 5 Band 3 10 Band 4 20 Band % 1.4% 36.7% 36.4% Band 1 Band 2 Band % Band 4 Band 5 Page 17

18 The Import Levy Trick S/N Products CET Total CET* VAT Import Levy 1 Cane Sugar Sugar for Industrial use Generator set Brown rice Broken rice Table salt Wheat Tomato paste Cigarette Durum Wheat * Total inclusive of 1% ECOWAS Statistical Tax and 0. 5% ECOWAS Community Levy Page 18

19 Challenges NCS is Facing World Bank Doing Business Report, section trading Across Borders: rank 169 / 182 Coordinated & wild smuggling, mostly across Benin border. Coordinated corruption ( syndicates of NCS officers, clearing agents, banks, importers) & forced/wild corruption. High revenue targets (revenue collection & anti-corruption measure). Fight against corruption (distrust of leadership, re-posting of officers, retiring of officers, no budget approval for capacity building). Fight against fight against corruption (pressure of NCS officers & political / administrative elite against Customs Intelligence Unit). Bureaucracy, ITC illiteracy, defective scanners, lack of knowledge Work Ethics Page 19

20 Challenges FMF is Facing Revenue collection in times of recession, a declining buying power & a FOREX policy that leads to low imports (-40% imports in 2016). Phasing out of import prohibition list, national list, import adjustment tax list, of non-justifiable levies, fiscal policy measures, and duty waivers - without damaging industries. Mediation between ECOWAS CET commitments and conflicting policies of other MDAs. Page 20

21 Outlook FMF: From 2020 onwards, the ECOWAS CET is carved in stone (unless a country opts out). NCS: Young and aspiring NCS officers Slow but steady adoption of ITC systems & automation of procedures? Radical measure: dismantling NCS and merging it with FIRS to a state-ofthe-art Revenue Authority? Page 21

22 Trends The Economic Partnership Agreement (EPA) uses the ECOWAS CET as baseline, once signed, the CET cannot be changed by ECOWAS anymore. The ECOWAS jurisdiction does not cover trade disputes, Nigerian courts do not have the competence for trade & investment disputes will ECOWAS ever be mandated? The ETLS is not functional and the CET alone does not constitute a customs union will the EPA push for completing the ETLS and will the ECOWAS Customs Code create a ECOWAS customs union? And many more Page 22

23 Practical Hints for Dealing with Customs I Letters to NCS HQ: Always address: The Comptroller General of Customs Nigeria Customs Service Headquarters Abidjan Street, Wuse, P.M.B. 26, Zone 3 Abuja FCT, Nigeria Attention: XYZ Always bring an acknowledgement copy, get it stamped and store it safely, in case it is necessary to follow-up your letter. Online Portals: (import process portal) (single window portal) In development by UNCTAD: Nigeria Trade Information Portal Page 23

24 Practical Hints for Dealing with Customs II In case you want to dispute classification or valuation of goods: Letter to Comptroller Dispute Resolution & Comptroller Classification (holding both positions), NCS HQ Abuja, Tariff & Trade Department. Address letter as described in previous slide. The letter should be as detailed and comprehensive as possible. In case you suspect corruption, smuggling or any other crime: Customs Intelligence Unit Not a general Help Desk for importers, focus on fighting crime. Contact: An address is provided by NCS to importers in the importation documents an importer receives. Page 24

25 Practical Hints: How to Get a Duty Waiver In case you want to apply for a duty waiver: Definition: a duty waiver is a temporary waiver of customs duties for a certain project that has been defined as important for industrial development by Nigerian authorities. Duty & Import Prohibition: A duty waiver can be granted even for import prohibited products, turning it into an import prohibition waiver. Lifespan: Usually, duty waivers are valid for no longer than one year. This means, an application has to be submitted on a yearly basis, each year with uncertainty about timely treatment of the application and about the decision taken. Addressee/Issuing Authority: Minister of Finance, Federal Ministry of Finance, attention: Director Revenue, Revenue Office. Page 25

26 duty waivers continued (1) Application documents: no specific application requirements or an application format, specific procedures etc. exist. It is recommended to submit: 1. Cover letter by BDF covering: purpose of application, objective of investment project (description of the facility, location, employment, benefits to the Nigerian economy etc.), background information on your company. 2. Packing list /list of imports for which you wish to receive the waiver. 3. Supporting documents, e.g. by Federal Ministry of Industry, Trade and Investment and other public institutions (the more the better). Process: Firstly, the Director Revenue, secondly, the Director General of the Budget Office, thirdly, the Minister of Finance will each assess and treat the application. In case one applies for an import prohibition waiver, fourth, the President s Office will have to make a final decision. Page 26

27 duty waivers continued (2) Application timelines: timelines for the treatment of a waiver application do not exist. Meaning, after submitting it, one might immediately, months later, or never receive a response. In the case, one applies for an import prohibition waiver, the involvement of the President s Office will likely be a delaying factor. Alternatively, assess if it is more favourable to make the investment in another ECOWAS country and to import locally produced products from that country under the ETLS to Nigeria. The involvement of various government offices in an undefined process without transparency and fix application requirements and the obligation to conduct this process on a yearly basis, makes an investment that requires duty waivers very risky. Page 27

28 Thank you for your attention! I am wishing you & your business a prosperous year Yours, Frieder Mecklenburg Page 28