Import duty waivers, exemptions and concessions are used by governments in various parts of the world to protect local businesses and jobs but they have typically been serially abused here in Nigeria and have become a major drain on the national economy.
Minus the abuse which they have been subjected to in Nigeria, import duty waivers are useful devices carefully used by sovereign nations to meet specific economic goals, especially in protecting local industries, creating jobs and promoting exports.
An import duty waiver means excluding a firm from paying import duty on certain goods for a fixed period. Countries like Japan, China, Malaysia and India, at various times, had used import duty waivers, concessions and exemptions to protect and build up their local textile, vehicle, agricultural and manufacturing industries. Today, all four have become economic power houses with export-led economies.
When Nigerian policymakers latched on to import duty waivers, the advertised objectives were to boost certain local industries, make some much needed raw materials or goods available in the short term and boost employment. In three decades of reckless granting of import duty waivers, however, it is obvious that none of these lofty goals have been met. Import duty waivers, which were started in the 1980s by the Shagari administration, have been shamelessly abused by successive governments to the detriment of taxpayers.
Comptroller General of the Nigeria Customs Service, Dikko Abdullahi, told members of the Senate Joint Committees on Finance and Appropriation recently that Nigeria lost a whopping N603.2billion to waivers and concessions in the first eight months of this year.
“If not for government policies of waivers, import duty exemption etc on some imported goods and free trade zones that are largely being abused by traders involved, the Nigeria Customs Service would have collected more than N600 billion more of the N530 billion it remitted as at the end of September this year”, Dikko said.
The amount lost by the country in the first eight months of 2013 more than doubled the amount lost through the same means in eight years. It had been estimated that N276.9 billion was lost to import duty waivers and concessions from 2000 to 2008.
Federal lawmakers have observed in the past that the waivers were not only “illegal and indiscriminate”, but were granted to “totally undeserving firms and individuals”.
Some of the beneficiaries of the duty waivers are purely business enterprises that did not pass the benefit to Nigerians. They include The Redeemed Christian Church of God, Messrs Western Metal Products, International Hotels, Mandarin Hotels, Le Meridian, Grand Ikoyi Towers & Resort, Federal Palace Hotels, Dangote Industries, Vaswani, Coscharis Group and Stallion Group, among several others.
Dangote Group has been described as a major beneficiary of duty waiver due to the closeness of its President, Alhaji Aliko Dangote, to the seat of power.
There are unconfirmed reports that Dangote allegedly got a concession of five per cent for raw sugar and exemption from payment of the ten per cent sugar levy. The exemption is said to be ongoing and has no expiration date. Dangote is also alleged to have a two-year concession from payment of duties on the importation of tomato paste.
There have also been reports that the Presidency waived over N100 billion worth of import duties to the Vaswani Brothers sometimes last year. The Vaswani Brothers is a purely business concern engaged in importation of consumer goods and there is no record anywhere to indicate that it passed this huge savings to the Nigerian consumer.
Politicians, businessmen and religious leaders have continued to collude to undermine the nation’s economy through the issuance of fraudulent waivers.
Duty is a tax levied on imports by the customs authorities to generate revenue and to protect domestic industries from more efficient or predatory competitors from abroad. Such duty is charged generally on the value of goods or upon the weight, dimensions or some other criteria of the item. Waiving such duties to well-connected businessmen and political loyalists automatically leads to loss of billions of naira in revenue; money that could have accrued to the public coffers and used for the common good.
Indiscriminate granting of import duty waivers is not only a drain on the nation’s resources; it is undermining local manufacturing and concentrating the commonwealth in the hands of a privileged few.
We are now at the point where President Goodluck Jonathan will do well to heed the advice of the Speaker of the House of Representatives, Aminu Waziri Tambuwal, who recently called for scrapping of the duty waivers and review of the policy that allows indiscriminate import of goods into Nigeria.