HARNESSING NIGERIA’S TRADE TARIFF SYSTEM FOR ECONOMIC GROWTH
By Professor Bamidele Badejo, Chair, LASG
Professorial Endowment on Transport and Logistics Studies, School of Transport and Logistics, Lagos State University (LASU), Ojo, Lagos.bamidelebadejo@gmail.com. Being a Paper Presented as Guest Lecturer at the 19th TransQuest Anniversary/Transport Development Symposium and Awards (2024) held at Lagos Airport Hotel, Obafemi Awolowo Way, Ikeja, Lagos State. Saturday, 9th November, 2024.
1.0 INTRODUCTION
The desire for economic development and sustainable growth is the major focus of good governance. This is to ensure that all the factors and fabrics that are responsible or that are harnessed for economic transformation is a major goal of nations worldwide, and as a country, Nigeria is no exemption. One of the major factors for economic development all over the world is in the exchange of goods, services and human resources. Of all the observed determinants of economic growth, trade or the art of trading is a major contributor. It is therefore not surprising that the trade policy of government all over the world is about promoting and providing economic policies and regulations that can support economic growth.
This paper is an attempt at harnessing Nigeria’s trade tariff system for economic growth. It also focuses on how to mitigate fraudulent practices associated with import activities through the Nigerian port system. These indeed are double barrel issues affecting the economic development of the country. Hence, this lecture is coming up at a very right and appropriate period of the country’s economic turbulence and summersault. It is also necessary and desirable for overall public engagement, education and enlightenment.
I hereby congratulate the organiser TRANSQUEST for putting this together as their contribution towards nation building and economic development of the country, given this period that of national economic down-turn.
2.0 TRADE IN CONTEXT?
To understand and appreciate the harnessing of Nigeria Trade tariff system is for us to understand what is meant by “trade”. Trade is the action of buying and selling of goods and services. It is also similar to commerce i.e an exchange of something for something else. In the case of Nigeria, trading can be classified into two (2): International trade that involves business relationship between two or more countries e.g Nigeria and the United State.
Local Trade i.e trading activities taking place within a country and it does not cut across any international boundaries e.g Lagos and Kano or Abuja and Port Harcourt. One important distinction is in their tariff system. International trade tariff system is pre-dominantly governed by import and custom duties (for imports and exports) while the local trades tariff system is determined by excise duties. These tariff systems vary from goods to goods as well as the policy of government over international and local trades. Within the context of international trade, the Nigeria port systems play formidable role by providing transit services for export and import of goods involving international trade.
The air transport through cargo – movement also play significant role in trade both internationally and locally. In the European countries, where the rail transport system extend to other countries, it has played an important role also in the movement of goods for promoting economic growth.
Trading therefore is a cornerstone and bedrock for economic development to take place. It is important to note that the fundamental role of government in economic growth and in its transformation is to provide the enabling environment, formulate policies that can lead to economic growth and provide regulations/standardization. It is the government policy in place that is essential for economic development. A major role of government therefore is to encourage trade in such a way that it supports. It is probably by appreciating the benefit of trade that government policy can help to assist.
3.0 BENEFIT OF TRADE
Be it international or national trade, there are fundament benefit attributed to trading. Economic growth and development: This is because it fosters economic growth by making countries specialize within the context of specialization. It leads to increased competition thereby promoting efficiency, greater consumer choice and lowering of prices. In addition, access to export financing and funding opportunity, access to resources and efficient resource allocation. Employment and jurisdiction. Revenue generation.
These are some of the benefits accruable from trade, other general benefits include employment opportunities, infrastructure development to support trade such as the ports, revenue generation to government in the form of import and export duties as well as other financial obligations of importers and exporters as desirable to provide sustainable polices and tariffs system for businesses especially the internationally related wars.
4.0 WHAT IS TARIFF?
Tariff is a tax or duty to be paid on a particular class of import or exports. It may also be in the reduction of trade barriers and import tariff. Tariff therefore is about rateables fixed amount by government over different types of goods at a particular time or period in and out of the country passing through its sea ports, air ports and train stations.
5.0 WHY TARRIF???
Tariff have historically been a tool for government to collect revenue. Also, they are a way for government to try to protect domestic producers. Thereby using the tariff as a protectionist’s tool. Generally, applying tariffs increases the prices of imports. Tariffs are imposed by government, no individual or organization that can determine tariff rates or duties. In today’s global economy, many products bought by consumers have parts from other countries as a result, it can also affect product made in the home country. There is huge conflicts between economist and other disciplines, they argue that tariffs when imposed creates market distortions that can actually harm domestic consumers overtime.
Tariff as could also be used for retaliation between countries because of their political differences. Nevertheless, the process of determining tariff rates involves a combination of economic, political, international and strategic considerations. In the overall, governments impose tariffs based on the what is need to protect domestic industries, address trade imbalances or respond to unfair trade practices. Tariff in addition, could be used as political tool to manage relationships.
Tariff setting therefore involves complex negotiation and considerations of possible retaliation with trading partners. In other words, tariffs are used to restrict imports by increasing the price of goods and services purchased from another country by making them less attractive to domestic consumers.
5.1 TYPES OF TARIFFS
There are two types of tariffs. A specific tariff that is levy as a fixed based on the type of item e.g tariff on a car. Ad valorem tariff: this is levy based on the items value such as 10% of the value of the vehicle. The Nigeria customs in the Agency of government to enforce and collect duties and tariffs for government.
6.0 THE NIGERIAN PORT SYSTEM
Over 80% of Nigerian imports and exports of international trade goes through the port systems. Nigeria, being a coastal state has direct international trade through its port systems especially the Lagos Port and Rivers Port in Port Harcourt. The Nigerian Port are known to play major roles and attributes to support the economic development agenda of government. As a port, it supports the movement of goods from land to sea or sea to land. The transit role performed by the port constitutes the bedrock, through which the position of tariff or trades can be moderated.
The Nigerian Port now provide regulator services and space for many agencies of government, shipping conveyances, importers and exporters as well as port concessionaries. Principal agencies of government in the ports include the Nigeria Port Authority, Nigerian Customs Services, NAFDAC, Immigration, port security and so on. Their presence is often determined by the roles and duties of the agencies and ports. In addition, the port provides sheds, stacking areas, containers terminals and general cargo facility.
Recently, the Nigerian Port System has undergone series of infrastructure and technology modernization in other to improve the process and efficiency in the discharge and release of goods at the port terminals.
7.0 INFLUX OF FRAUDULENT IMPORTS THROUGH THE NIGERIAN PORTS.
Being fraudulent implies something that is obtained, done by deceit and lying or involving deception i.e fraudulent dealing. It also involves unjustifiable claiming or been credited with particular accomplishments or qualities. Fraudulence simply means dishonesty. In the port system, all this clarification about fraudulence are common occurrences in the importation of goods. Importers, shipping companies and freight forwarders as well as government agencies operating in the port are victims of fraudulent activities.
The prevalence of fraudulent activities in the port and its continuous influx is to avoid custom duties by under declaration of imports. Hence, fraudulence is the action or quality of cheating, lying, deception or deceiving someone or Institution of government. Fraudulence therefore is about telling lies through false declaration, forgery and faking. In the port system, it is observed that with high tariff rates, unfriendly import policy, corruption across the whole organization have given room for the continuous influx of fraudulent import through the Nigerian ports.
It is therefore an act and art of pervading in the shipping business in Nigeria. The Nigerian port system is very vulnerable to many challenges. These challenges are often caused by many factors which include quality and competence of person, deplorable and obsolete use of mechanical handling equipment and absent of detectable use of technology.
Again, connive between all stakeholders in the port system to deliberately allow influx of fraudulent import into the country. Furthermore, quality assurance, standardization of goods imported are often ignored or overlooked, and finally, corruption as well as false declaration. It is important to note that the regulations and extant laws of the destination of export often guides the extent to which fraudulent activities could be tolerated or allowed to persist.
The general influx of fraudulent import is therefore a function of government policy, agencies responsible for ensuring compliance and in maintenance of standards that are required for imports. Another observation is the misinterpretation of government laws and regulations and policies to favour fraudulent importation or activities. Causes of Influx of Fraudulent Import. The following are the major factors that seems to encourage and support the growth and continuous rise in the fraudulence import, these are: Nature of Service Poor Management/Administration Poor Security Management Poor Salaries/Emolument and Staff Welfare Frustration Unemployment and high rate of poverty in Nigeria Fear of negative publicity from financial institutions such as Banks by not reporting frauds perpetrated through their banks. Social value. All these factors combined together to trigger the prevalence of fraudulent import through the Nigerian port.
The implications of continuous influx of fraudulent import are quite enormous. They have Economic Implications Financial Implications Political Implications Information Management and Data Quality International/global Implications National Image of the Country. These implications no doubt have made the cost of international business through the ports to be uncertain, unpredictable and volatile.
8.0 CURBING THE INFLUX OF FRAUDULENT IMPORTS
Fraudulent import in port activities is as old as the history of maritime and therefore it seemed to have demonstrated increased complexity. There is therefore the need to seek avenues through which the increasing sophistication in fraudulent imports can be curbed or mitigated.
Principally, measures through which curbing of fraudulent imports are Introducing cargo tracking and monitoring instruments Removal of all forms of delays in the cleaning and release of cargo. Government should review from time to time its trade policy and tariff system within the economic reality of the country and global best practices.
Proactive disciplinary measures especially in the area of tax and custom duty avoidance or evasion to serve as deterrent. Again, agencies of government should complement each other through cooperation, collaboration and coordination especially information sharing and handshake.
9.0 CONCLUSION
For economic growth and stability of the country, there is need to improve on the trade tariff system and to checkmate incessant of fraudulence in the nation’s port.