By Eberechukwu Ezike.
On February 14, the Business Facilitation (Miscellaneous Provision), Act 2022 (“BFA”) was signed into law. The BFA is a legislative action by the Presidential Enabling Business Environment Council (PEBEC) to increase the ease of doing business in Nigeria, which was ranked 131 out of 190 economies compared by the World Bank. By amending 21 business-related laws and institutionalising all relevant reforms to ensure seamless implementation, the BFA aims to tackle the various bottlenecks and bureaucratic barriers that impede the ease of doing business in Nigeria.
A significant part of the amendments introduced by the BFA cuts across border procedures and customs operations in Nigeria. This is a noteworthy development considering that trading across Nigeria's borders has long been impeded by bureaucratic delays and "red tapes". To top it all off, Nigeria had the lowest score in the area of cross-border trading in the 2020 World Bank Doing Business ranking, underscoring the severity of the challenges facing the country in this regard. This article examines the significant amendments and innovations introduced by the BFA that affects cross-border trading activities in Nigeria, and their potential to enhance trade facilitation.
What is Trade facilitation?
Trade facilitation means the simplification, modernisation, and harmonisation of import and export procedures. It refers to measures that simplify the process of goods entering and leaving countries. This includes border procedures, electronic exchange of data about shipments, harmonisation of trade documents, publication of trade-related information on the internet, cooperation of border agencies, electronic payment of duties and charges, and a single window for submission of import, export, and transit documentation amongst others. The core of trade facilitation is the elimination of inefficiencies arising from border procedures. This includes but is not limited to excessive and repetitive paperwork, long queues at government offices responsible for processing paperwork, long checks at the borders, inaccessibility of border rules and procedures, etc. All these make it time and cost-consuming to trade across borders.
Trade facilitation is a crucial aspect of trade because of the interconnectedness of our world. The existence of global value chains has made production process fragmented. As a result, raw materials can be sourced from Country A, additional materials from Country B and manufacturing can take place in Country C. Shipment costs, which inexorably include the cost of adhering to trade and customs processes, play a significant role in a company's ability to integrate efficiently into such global value chains. The more inefficient these processes are, the more challenging it is for businesses all across the world to take advantage of these global value chains.
Ease of doing business and Trade Facilitation in Nigeria
Ease of doing business is an index developed by the World Bank to measure how simple or complicated it is to do business in a country. Through key indicators, the index examines the regulations that support and restrict business activities. One of the indicators is the ease or unease in trading across borders. This measures the time and cost (excluding tariffs) associated with the logistical process of exporting and importing goods. In measuring this, it covers key areas like documentary compliance (obtaining, preparing, and submitting documents required during transport, clearance, port or border handling in origin, destination, and transit economies), border compliance (customs clearance and inspections, inspections by other agencies etc.), and domestic transport in importing and exporting (loading or unloading of shipment at the warehouse, port/border, transport between warehouse and border, and delays while shipment is en route).
According to this index, Nigeria was placed 179th out of 190 nations for how easy it is to transact across borders, with more than 35 sub-Saharan African nations ranking higher. The report further reveals that it takes almost 9 days to ensure border and document compliance when exporting from Nigeria and about 15 days when importing. The cost associated with the document and border compliance when exporting was about 1036 US dollars while importing was about 1641 US dollars.
Ineffective border management, which results from general mismanagement, poor transport infrastructure, and corruption, is the main cause of delays at Nigeria's borders and related costs. A significant problem is the overwhelming number of government agencies and unlicensed clearing personnel who parade themselves as "agents" and frequently make corrupt and inappropriate demands for fees during port calls. This poses a burden for moving goods across Nigeria's borders. Not only does this increase the cost of production, but it also reduces business profits, affects the competitiveness of goods, and limits business opportunities for micro, small, and medium-sized enterprises (MSMEs).
Amendments to trade facilitation and border procedures in the BFA
With its objective to increase the ease of doing business in Nigeria, the BFA amends key legislation on border customs procedures and border clearance in Nigeria, and provides requirements on Port Operations. The amendments are examined in detail below:
1. Customs and Excise Management Act, Cap. C45, LFN, 2004 (“CEMA”):
The BFA amended CEMA by introducing a new S. 18A which mandates the Board of Customs and Excise to establish and maintain a single window to enable traders and businesses to submit documentation or data requirements required by government departments, authorities, or agencies through a single-entry point interface to fulfil all import, export, transit-related and other regulatory requirements, and to utilise information and communications technology ("ICT”) to support the single window (S. 26, BFA). Further, the documentation or data requirements maintained in the single window shall be made available to the relevant authorities or agencies for examination, the result of which, shall be communicated to the applicant via the single window within a period, as may be prescribed in a regulation. S. 18A (4) goes further to state that documentation or data requirement that has been submitted through the single window shall not be requested by any other authority or agency except in urgent circumstances and other limited exceptions which are made public.
This is a laudable amendment by the BFA as the automation introduced by the single window will reduce the problem of having to interface with too many authorities and “agents” at the port which is one of the major causes of the constant delays and massive costs of documentary and border compliance at the ports. It is worthy of note that the single window tool was introduced by the World Trade Organisation Trade Facilitation Agreement 2017, an agreement Nigeria has ratified. By amending the CEMA to reflect this innovation, the BFA gives legislative backing to the Trade Facilitation Agreement.
S. 18B provides for the coordination of any officer and relevant authorities in carrying out inspections or examinations of goods to facilitate trade. This will prevent the issue of having to come back to the Port several times for different inspections. Other important amendments by the BFA was amending S. 31 (1), CEMA to shorten the length of time from 15 days to 5 days within which the proper officer in charge can deliver uncleared or missing goods after the discharge of the importing vehicle (S. 27, BFA). Likewise, S. 31(4) has been amended to reduce the period from 14 days to 4 days within which such goods may be moved to a Government warehouse or such other place as the proper officer may approve. Curiously, the fifty naira fine which was imposed on any erring officer under this section stayed the same.
2. Nigerian Ports Authority Act Cap. N126, LFN, 2004 (the “NPA Act”):
The BFA amended the functions of the Nigerian Ports Authority (the "Ports Authority") by introducing after S. 7(e) (iv) of the NPA Act, a new subparagraph (v) that mandates the ports authority to provide facilities for the use of ICT for operations within the ports (S.59, BFA). The Ports Authority is also obligated to remove all unauthorised personnel from the ports, provide facilities for the establishment and maintenance of a single window, and ensure that the operations required by law of all government agencies in any port in Nigeria are harmonised through the single window domiciled within the ports. Here again, we see the BFA amending the NPA Act to comply with international best practices in customs operations and to address the issue of too many “agents” at the ports. The Ports Authority is also empowered to make bye-laws for the exclusion and removal of unauthorised personnel from their premises (S. 60, BFA).
3. Nigerian Customs Service Board Act, Cap. N100, LFN, 2004 (“NCSB Act”):
The Nigerian Customs Service Board (the “Board") was established on June 1, 1972, to administer the Customs and Excise Management Act. The Board is made up of the Minister of Finance who is the chairman, the Comptroller-General of Customs, all deputy Comptrollers-General, one nominee each from the Ministry of Finance, Commerce, Industry and Transport, legal adviser to the Board amongst others (S. 2, NCSB Act). By The BFA amendment in S. 3 of the NCSB Act, in administering the CEMA, the Board shall adopt modern means of operationalisation and develop regulations for the carrying out of the activities of the Nigerian Customs Service. While the BFA did not define what the term modern is, reading this in conjunction with the amendments in the CEMA and the NPA Act suggests a reference to the single window and use of ICT in port operations. Modern can also be interpreted to mean international best practices in customs operations and the Board can take a cue from the recommendations in the WTO Trade Facilitation Agreement such as the publication of information relating to trade rules and procedures on the Internet, advance ruling on tariff classification and origin, limiting charges relating to imports and exports to the approximate costs of services rendered, coordination of relevant agencies at the border, transparency and non-discrimination etc.
4. Specific provisions:
S. 7 of the BFA provides specific provisions that improve border procedures and facilitate trade. The section prohibits touting in any port in Nigeria and insists on the mandatory identification of staff on duty by uniform and official identity cards. Members of staff that are off-duty are not allowed to the ports except with the express approval of the head of the MDA (S.7(5), BFA). Further, an official who solicits or receives bribes from a passenger or other users of the port shall be removed from his duty post, subject to disciplinary measures, and liable to a criminal proceeding per extant laws and regulations (S.7(8), BFA).
All relevant Ministries, Departments, and Agencies ("MDAs") at the airports are required to merge their respective departure and arrival interfaces into a single customer interface within 30 days of the commencement of the Act (S.7(9), BFA). Agencies within Nigerian ports are obligated to harmonise their operations into one single interface station domiciled in one location in the port and implemented by a single joint task force at all times within 60 days from the commencement of the Act (S.7(10), BFA). The single interface station at each Nigerian port shall be responsible for capturing, tracking, and recording information on all goods arriving and departing from Nigeria and transmitting the same to the head of the relevant offices and the head of the National Bureau of Statistics weekly (S.7(11), BFA). Each port in Nigeria is also required to assign an existing export terminal dedicated to the exportation of agricultural produce and maintain a 24-hour operation or such other periods of operation to be determined by the relevant MDA within 30 days of commencement of this Act (S.7(12)(13), BFA). The BFA also provides for penalties, fines, and terms of imprisonment for persons who violate certain provisions of the section.
Conclusion and Recommendation
The BFA is a very audacious Act. The innovations are admirable and could enhance cross-border trade in Nigeria. It is also important to note that Nigeria is a party to the African Continental Free Trade Area (AfCFTA) Agreement, which aims to increase intra-African trade by establishing a single market through the gradual elimination of tariff and non-tariff barriers. Cooperation on customs issues and the implementation of trade facilitation measures is one of the goals of State Parties, and the BFA is a step in the right direction.
Notwithstanding the potential benefits of the BFA, there are other critical steps that must be taken to ensure its effective implementation. A significant part of the examined amendments are centered around various MDAs, and as such, it is essential that PEBEC undertakes sensitisation programmes to educate the concerned MDAs and other relevant stakeholders on these amendments. It is also recommended that PEBEC should take on the role of an Ombudsman, allowing it to receive and investigate complaints related to the breach of the Act or other implementation issues. This would further enhance accountability and help to promote compliance with the provisions of the Act.
Second, some of the amendments introduced by the BFA requires MDAs to make regulations for their operations e.g. the single window tool. The concerned MDAs must therefore cooperate to develop an implementation framework that allows for the smooth operation of the single window and other amendments. This framework must be well-defined and clearly communicated to all stakeholders to promote accountability and minimise confusion. In addition, there must be a commitment to ongoing collaboration and communication among the various MDAs to address any issues or challenges that may arise during the implementation process.
Third, in adopting modern means of operationalisation in carrying out the activities of the Nigerian Customs Service, the Board can take a cue from the WTO Trade Facilitation Agreement and other international best practices in customs operations. The Board must be willing and open to embracing new technologies and other innovations that support paperless trade, automation, and reduce manual procedures.
In conclusion, while the BFA is a commendable measure towards improving trade facilitation in Nigeria, its success ultimately depends on the cooperation of the respective MDAs in ensuring that these reforms are implemented. Businesses and the private sector must keep MDAs accountable in this regard.
About the author
Eberechukwu specialises in cross-border transactions, trade facilitation, trade finance, and the African Continental Free Trade Area (AfCFTA). She possesses certifications in international trade law and policy from the African Export-Import Bank, Trade Law Center South Africa, and the International Trade Centre Geneva. She is also an alumnus of the Future Females Business School, South Africa, and an Associate Member of the Institute of Chartered Mediators and Conciliators. Currently, she works as an Associate in a top-tier Law firm where she applies her skill and knowledge to providing legal solutions to complex transactions for both local and international clients. You can connect with her on LinkedIn and other social media platforms.
Originally published by Ezike Eberechukwu on LinkedIn
Reach Ezike Eberechukwu on LinkedIn.