This Ban Needs a Grace Period

It was widely reported by the newspapers last week that ten thousand mostly used vehicles destined for Nigeria, which were brought through the Cotonou port in Benin Republic, are now trapped at the Seme and Idiroko border posts and are unable to come into this country. Many others are lying at various parks in Cotonou […]

It was widely reported by the newspapers last week that ten thousand mostly used vehicles destined for Nigeria, which were brought through the Cotonou port in Benin Republic, are now trapped at the Seme and Idiroko border posts and are unable to come into this country. Many others are lying at various parks in Cotonou while thousands of others are seaborne, destined for Cotonou port on their way to Nigeria. This huge traffic of Nigeria-bound used vehicles through our land borders was brought to a screeching halt by the Federal Government’s new policy of banning vehicle as well as rice imports through the land borders. New and used vehicles as well as rice can still come into Nigeria, but they must come through our own ports. 

There are many obvious national benefits to this policy. No country in this world will be happy that such a huge volume of goods meant for consumption within its borders are brought in through the ports of neighbouring countries even though it has its own seaports. Cotonou port in particular has achieved great success and prosperity as the main landing port for used vehicles destined for Nigeria. This did not happen overnight; the process had been on since the advent of Tokunbo vehicles in the 1980s when the combined effects of the Structural Adjustment Program [SAP] and Second-tier Foreign Exchange Market [SFEM] placed new vehicles beyond the reach of most Nigerians. Millions of used vehicles poured into Nigeria via Cotonou and the land borders all the way from Seme and Idiroko to Kamba in Kebbi State and Jibia in Katsina State, not to mention the dozens of illegal smuggling routes.

For decades the Federal Government looked the other way because Nigeria’s seaports were busy with other imports and they did not miss the used cars very much. In the last two years however the sharp drop in imports through our seaports occasioned by forex scarcity and the steep depreciation in the naira’s value has attracted government’s attention. It reckoned that the ports will have more business if used car imports are forced to come through them. Besides, the land borders are a veritable revenue sieve; a lot of the duty they are supposed to collect is lost through smuggling, with the active connivance of Customs officials and other security agents manning them. By redirecting the traffic through the ports, government is certain to collect more import duties and other taxes, apart from the benefits to the ports and to the economy around the ports. 

It is worth asking at this point why the used car importers for three decades now found the Cotonou port to be much friendlier to their business than our own ports.  President of the National Council of Managing Directors of Licensed Customs Agents Mr. Lucky Amiwero listed many of the problems of Nigerian ports, from the used car importers’ point of view. He said large ships carrying vehicle cargoes cannot sail easily into Nigerian ports and discharge their cargoes; and that shipping costs, terminal operators’ handling costs and other costs make the importation of vehicles into Nigerian ports expensive and uncompetitive compared to other ports in the sub-region. He also said the procedures for clearance are cumbersome, despite all the reforms done over the decades, including concessioning the ports to private operators. As long as these challenges are not addressed, the incentive will be there for importers to land their cargoes at other ports and try to smuggle them into Nigeria.

Government’s policy has other intentions. For one, there is the need to assist local vehicle manufacturers. That must be the way to go because this country should not continue to depend on used European vehicles. Government probably intends also to reduce Nigerians’ insatiable appetite for used vehicles, which are clogging our roads, increasing accidents, increasing fuel consumption as well as increasing imports of spare parts.

All of which are very good intentions but there is a flip to it. The policy is unpopular because millions of Nigerians want to buy used vehicles as cheaply as possible. Probably a million or more Nigerians are dependent on the used vehicle trade and it is necessary to give them time to adjust. There were also problems with the new policy’s operation. The period between its announcement and its coming into effect was rather short. Vehicle importers rushed to the Customs posts to pay import duties for the vehicles already on ground but, according to them, the Customs server closed at 5pm on December 30, thus trapping 10,000 vehicles. Customs now say that those vehicles should be taken back to Cotonou port and reshipped to Lagos, which will greatly increase their costs.

Everything considered, we urge the Federal Government to grant the vehicle importers the three months’ grace period they have asked for before the new policy fully takes off. The vehicles already on the ground as well as those already seaborne should be allowed to enter the country through the land borders after the payment of appropriate duties. A three month grace period will entail revenue losses to Customs and the seaports but it is not too much to ask for considering the number of Nigerians involved in the business. After that, the policy should be vigorously enforced but at the same time, government should move very fast to solve the perennial problems of the ports including their unfriendly, costly and uncompetitive character. If our seaports remain this way, unscrupulous business men will always try to land goods at neighbours’ seaports and smuggle them into Nigeria. Nigeria Customs Service will not be able to stop all of them.