The preference of Lagos Port by the importers and exporters from the South-East and South-South region of the country and some policies of government as they relate to the business at the ports, have been described by stakeholders in the Maritime Industry as worrisome. They have at one forum or the other called for the termination of the services of the Inspection Agents at the ports. In this interview with the Editor-In-Chief of National Momentum Newspaper, Blaise Elumezie; Chief Sir Ernest Elochukwu, a mogul in the Freight Forwarding business, bares his mind on some of his challenges as the immediate past president, Association of Nigeria Licensed Customs Agents, ANLCA, and some policies of government, as it relates to their activities with the Nigeria Customs Service at the ports, amongst others. The excerpts:
For The Benefit Of Our Readers, Let Me Meet You Sir?
I am Chief Sir Ernest Elochukwu, Group Managing Director, Chief Executive of Nestello Gateways Group, a famous name in Freight Forwarding, as well as the immediate past President, Association of Nigeria Licensed Customs Agents (ANLCA).
As The Immediate Past President Of ANLCA, Can You Compare The Association Now And Then?
First and foremost, it’s somehow not a very easy task for one to compare a situation which he manned, and a situation that is present, because of one thing. There is always the possibility of bias and subjectivity, but I must say that the circumstances of my time as the President of ANLCA and the present circumstance are not same. First, we have to trace it, even from the point of ascendancy. When I ascended the position of the National President of ANLCA, there were a lot of issues. First, the election that brought me to that post was so fiercely contested and there were so much division along certain lines. But then, there were issues that were very much at play then, the issue of ethnic grouping wanting to have relevance, because by the time I came on board, ANLCA was almost at the throes of extinction in terms of relevance, effectiveness or impact in the industry.
It was like people were only interested in holding positions in ANLCA for what it could avail them and for their own business and to compare or look back, so to say, we find out that we had a lot to do. I had a lot of work to do, to give a direction to ANLCA, in order to make it have a strong voice in the industry, in the spirit of yester years when the stakeholders in the port system looked unto ANLCA as a strong partner in anything that they were doing. That is to say that at a particular point in time, ANLCA became like irrelevant in the scheme of things. So, that was one of the things that I set out to correct and returned ANLCA to what it was. And I think maybe from what I have heard people say, one can say that, that mission was accomplished.
Presently, it would be said that because situations differ, comparison might not be objective and to the point, because the present executive came under a sort of consensus agreement. When there was going to be this election, a lot of people who were not participating actively in the association thrust themselves forward as those who want that prime position of presidency. And some of us rallied round to say no, for one who has been there and followed the history development of the association, its gains and pains, that it would be a mistake allowing those people to take the realm of mantle of leadership of ANLCA again, and that was why we galvanized support across all interest groups to support the election of the present administration. So the present administration did not have the problem I inherited.
Therefore speaking specifically, I can say unequivocally that ANLCA then had gotten the recognition that we quested for and fought to achieve, to the extent that during the 2007 Ministerial Committee on Ports Reform, that I was given the chairmanship of the sub-committee on charges in my capacity as the president of ANLCA and ANLCA was then recognized as the voice that will represent the Freight Forwarding community, in the Ports Reform Committee and it was a massive achievement.
You Have Enumerated Some Difficulties, Let’s Have An Insight On Other Challenges Your Administration Faced?
Like I said earlier on, the present administration came on board on a sort of general acceptance and so they did not have the challenges that we had. Their challenges are different from the one I faced in my own time. But then, among these challenges, some are very clear, such as the cause of maintaining a strong voice for the practitioners in the industry, which is the crux of this matter. But I must say that there has been a sort of improvement in ANLCA administration in terms of information dissemination, in terms of where people get to know and interact with each other, and other agencies’ stakeholders within the industry.
In other words, the social side of the activities of the industry has been on the high rise. The association is visible in terms of being at various places; maybe they have some kind of conducive atmosphere that enable them to now venture getting out. They didn’t have any internal problem to contend with. I must add that during the election that brought me into office, many interest groups had to bring their candidates and insisted that they were to be elected. Some along ethnic lines, and they struggled to have them elected. Some of those people came in entirely with the agenda of the interest group that elected them. We had a running battle in our hands trying to convince all and sundry that ANLCA shouldn’t have any tribal coloration, since what made us ANLCA, which is our Customs agency license, is not been issued on the basis of tribal affiliation. Therefore, membership of ANLCA shouldn’t be on the basis of tribal affiliation.
I must also let you know that even as a run-off to our election then, when we go to campaign in some chapters, the two major groups then were: the Odua Maritime and the Igbo Maritime. They were having a very big followership and influence in the chapters and we looked at it, even when we came on board, that if we allow these ethnic affiliations to continue thriving, the spirit of ANLCA will be weakened, because there can’t be two captains or two masters on the same boat at the same time. So, we tried to change the mindsets, but those who were having advantages or control over those groups were not going to let it go easily, hence they fought back and strongly too.
So, we had battle in our hands internally, now added to the battle externally, because some interest too, that is outside ANLCA, but within the industry though, felt a little bit uncomfortable about my candidature and they tried to do all they could to support my opponent. Some tried openly and surprisingly, because of one thing, they looked at me as someone they could not manage easily. Even coming on board, we had to contend with those interests, trying to make them understand that we are not enemies, but then, you can also know that when someone has misgivings about you, it means that, it will take some time for that person to give it up and that was the scenario then.
In the present situation like I said, there was no such thing. Right now one could see the acceptance, the visibility of ANLCA in the system and the present leadership focused on the social side of ANLCA which is so good. But the problem is about the technical or real side of ANLCA. Part of what I have been saying at different fora that I have attended is that we must agree that there is the basic thing that necessitated associating, in the first place. And in all those fora, the talks I gave, focused on the fact that an association is a creation by the practitioners of a certain occupation or a group who decides to come together with the aim to protect their common interest. And I said that such interest must be common to them, as far as the practice of their profession is concerned. And so, the essence of associating is first, to protect their interest, and this interest is common that it may not be well protected; if protected individually, and so they come together as a group.
And in the case of ANLCA, it is about how the Licensed Customs Agents do their job in the field. And I will tell you without mincing words that the way things are now, is really a far cry from the way it was during my time. The agents had succor in the association. The association was focused on helping the agents in doing their jobs, and when I said this, some people count on the same word I mean and felt offended within them. If an association will now play down on its primary responsibilities, which is protecting the interest of its or her members in the conduct of their business, then it means that the reason for existence or as the French would say “Raison d’être” becomes questionable, the reason for existence of that association becomes questionable, that is what is going on in ANLCA right now.
In a situation where from one chapter to the other, it is a tale of woes. People are complaining that the association is not coming to their help, in terms of what they are encountering. There have been some issues, these issues are not new and have always been there. For instance, when you go to any forum, you will hear Customs talk about false declaration, that the agents are making false declarations. I have tried to disprove that assertion, for the simple reason that ordinarily, the agent makes declaration based on the documentation that is available to him and these documentations ought to have emanated from the importer.
If the system that for instance, allows importation to go through processes: that is opening Form M, getting shipping document, getting RAR, and the RAR is given to the agent and the agent makes declaration based on that, would it be right and justified to blame it on the agent, if at the point of physical comparison, you find that there are discrepancies?
He is not supposed to be the originator of such documents in the first place. Secondly, the system gets to the level where it is based on the side of the operators. Now, if they are able to know that this is the right thing to be done and the right thing is reasonable in their own budget, then of course, you know everybody will do the right thing. But a situation whereby the right thing is in quote; and it differs from one command to the other, from one officer to the other. You know that such right thing will be difficult to comply with and that is what is bringing the under hand practices that is going on in the sector. So, if we actually, the operators in the system, come together and say or have a kind of understanding of what is going to be the right thing, or what should be the right thing, then by all means, everybody will comply with the right thing.
But a situation whereby the right thing could be a certain amount for Mr. A and another amount for Mr. B., how do you justify it as the right thing? Sincerely speaking, blaming the agents for declarations that are wrong or for practices that are under hand is misplaced. It should be blamed squarely on those who are the major operators of the system, and in this case I mean, the Customs.
Are You Satisfied With Government Policies On Single Window/ E-Payment, RAR And PAAR?
First and foremost, the Single Window for whatever it is; is a welcome development, provided it has no hidden agenda. What actually the single window signifies is actually one stop shop. In other words, when a consignor or an agent; acting for a consignee comes to make declaration and payment, or assessment and all that. It will be done at one point, whereby he pays all payments that he needs to make at that one point, in order to make sure that all the duplications of job do not continue happening.
Again, all the essential operators are on line to view same transaction as it is on-going. I can assure you that this is just good on paper, whenever the Single Window or the one stop shop will become operational, you will see the inherent short comings. Because, like I said, there has been massive insincerity on the part of those who are driving the reforms at the port. And I can tell you that it is a little bit of a pain that even the government, for whom this reform should be a priority, appears not to know anything about what is the right thing to be done on this reform. You find a reform that is essentially driven by the very people that needed to be reformed. So, in Nigeria, it’s not peculiar to the ports though, I must tell you. There is an ugly trend, a trend of looking at government as one close entity that is on one side and the people as being on the other side. The government includes; the politician, who is in either the Legislature, the Executive or Judiciary arms of the government and the Civil Servants.
They see themselves as being on one side. Now, the people, which are the citizenry, are on the other side. So usually, whenever issues of lack of performance or inadequate performance or insufficient performance or non-performance at all comes up, rather than looking at the reform from the point of getting stakeholders from the outside to participate in driving them on a neutral ground, where it will be possible to assess progress being made on that neutral ground, we find that it has always been in fact, identified, structured and operated by the same people that needed to be reformed. So you look at the reform, the very people who are the problem at the port are the very people who are spearheading the reform.
It means that everything will always be screwed up at a point where it will still go to people that need to be favored. One of the biggest problems is about the one on personal interest of government personnel. In everything that is being done, you will always see the issue of self interest very glaring there. Now, when you talk about the issue of benchmark, I must tell you that it is a strange phenomenon that can only be heard in a place like Nigeria. Everything in Nigeria no matter how absurd has always been justified. Bench-marking in duty payment, not even in valuation is borne out of an arbitrary understanding, whereby the government, having given the Customs target on a certain amount of revenue to make in a year, do not feel concerned on how the Customs goes about making it.
Now, when you talk about benchmark, there are many assumptions, first and foremost, even some items coming from same country will likely have different values, because it all depends on the region or company. On the other hand, a situation that can be understandable, that can even depend on cost of production, and all that, differs from one country or the other, but that is even what you could consider an arguable case. But the one that is even much absurd is the idea that there must be a certain amount of duty paid on a container.
So, you now find a situation where somebody has imported an item that pays 5%, doesn’t pay VAT, and so it can come at a value that is about the same thing with another one that is paid 20% and VAT. A Customs officer will tell you that a minimum duty that is to be paid should be this. Minimum duty based on what? Duty is calculated on value and the rate of duty is applicable. Now, benchmark totally negates that, benchmark is neither scientific nor objective and the reason I said, it is an aberration.
What Is Your View On The Issue Of RAR And PAAR?
The issue of RAR and PAAR is that RAR is being presently issued by the Risk Assessment companies, whom we call the Inspection Agents, in an arrangement that was supposed to have been for a certain number of years and which just elapsed towards the end of last year. And there after the Customs made various announcements to signify the end of that agreement. Meaning that the Risk Assessors who are external to Customs, but appointed by the Ministry of Finance, will now give way, while the job will now be done totally by the Customs and part of the arrangement is to replace the existing Risk Assessment Report, which is RAR with Pre-Arrival Assessment Report (PAAR).
This is where I fault that arrangement, for the simple reason that I have always said that PAAR is not necessary, because it is when we look at it from a practical scenario, Customs have the statutory responsibility of assessing import and export cargoes. Now, at the commencement of this destination inspection, may be for one reason or the other, it was felt that the Risk Managers, previously the Inspection Agents, that were previously involved in preshipment inspection, could have input in terms of assessing imports based on documentation and contacts with their overseas counterparts to give information and based on that, they were now issuing what is now generally known as RAR. They are external and so the RAR on its own was said to be advisory, in the sense that it was to advise the Customs about the status of any importation. For instance, there may be the likely hood that importations may have been under declared or tampered with in one way or the other and that was the reason why they have to be issuing the RAR, because they are external people working in the statutorily Customs duty of assessing import and export. So, the question I have asked, and which nobody has given me a satisfactory answer is, if for any reason we now say okay, the Customs can handle their statutory responsibility, why must they go on with the issuance of PAAR again? They ought to have gone straight ahead to assess the import as is being done, ever before the advent of all appendages that were being put up. All in the name of improving the system, but it is actually bringing a lot of encumbrances into the system.
Why am I saying this? Presently, the RAR that is said to be advisory is mandatory and it is strange that an advisory document will become mandatory. Consider this scenario, someone imports a cargo, the procedure says, he should take his Proforma Invoice, open a Form M with his bank and once the bank approves the form M, by giving him BA number, (because a number from the bank is a proof of approval), he will go ahead and notify his shippers to ship for him, and that is one procedure. Now, a man opens form M with his local bank and his local bank here, understanding that he has fulfilled every documentation, gives him a number and sends the documents to their head office, to go to the Inspection Agents to register it.
And then it gets to the Inspection Agent and they query any aspect of that entire document, whether wrongly entered information on the Form M, what was found to be entirely explanatory on the invoice or any document for that matter; including even the insurance that was done, could be a reason for querying that Form M. That query means that the form M is not in the system of the Risk Assessors.
Now, listen further, the importer having received such approval from his local bank has gone ahead and asked his shipper to ship and the shipper shipped the cargo. The procedure further requires him to arrange his original documents and send through his bank to the Inspection Agents and there the agony begins. On sending this document, which is the final document, it takes a while for him to be informed that his Form M, which originally has been approved for him by his bank, was not registered by the Inspection Agents and therefore has not actually been accepted. That is now the very start of his woes, because there will now be a process of queries and counter queries for the form M to be accepted and be put into the system, without which the final document for the processing of his RAR could not be accepted.
Now, within this period, while all these are going on, the cargo has arrived or the cargo is on the way arriving. Soon enough the cargo arrived and he cannot clear the cargo because RAR has not been issued. And so the cargo is accruing demurrage for no fault of his (importer), because he has done what he is supposed to have done by filing the appropriate documents and sending out, only for him to discover that his Form M was not documented.
While all these are going on, the cargo has arrived, accruing demurrage and there is nothing anybody can do about it, he can’t clear. Now, when you move to the Customs and asked them to allow the importer to clear his goods based on indemnity, if there should be any further payment he will make in case if the RAR comes out, Customs will tell you no; go and get your RAR. So, for such a document, do we still call it advisory? It is mandatory, that is one aspect.
The second aspect is that sometimes, the Inspection Agents due to documentary error, or information or outside mistakes, appraise higher value to the cost of the goods, of course it is taken against the background that most Nigerian importers are not honest in their declarations and that is their assumption. But of course, if we want to solve something, we should be realistic. For instance if in a country or in a community, you find out that 70% of the inhabitants are all thieves, rather than say jail all of them, you should ask to know what is in this community that is making all of them to be criminals? I think that is the way a constructed mind work, it is not about sending all of them to the prison.
So, I think this is a backdrop that Nigerian importers, 75% of them are not sincere, now it becomes a big work for the Inspection Officer, and sometimes they will feel like ‘oh, this look like under declared,” they jack it up, sometimes even higher above the worth of the goods. Now, when the importer protest, and said no, I didn’t buy this much, is this supposed to be advisory?
The Customs is supposed to come in there and say okay fine, may be the people that did what they did, did it with physical eyes, they didn’t see the physical goods, we are the people seeing the physical goods, so let’s assess the physical goods. The Customs is not going to do that, they will tell you, well, this is what the RAR says. However, curious enough, when they now look at the one that appeared to be under declared to them, that the value they appraised was not as much as they expect, they want to raise a demand notice (DN).
So, you find that it is not a just system. First you say that if you don’t see the document, you are not going to clear, even when the cargo has arrived at the port and accruing demurrage. It is only in Nigeria where the interest of the citizenry is nothing, that is where this kind of thing will happen; I am saying that trying to replace RAR with the PAAR will become a disaster, because in the case of the RAR, one can make presentation to the authorities, including the Ministry of Finance and the Customs. Of course it is going to take a lot of time, may be when you insist, you pay a lot of demurrage or call them to come and assess it. But now when it happens that it is the same Customs that is going to issue PAAR, the same Customs that is going to assess the risk, it means that the Customs has become a judge and prosecutor in their own case and that will be a terrible aberration, so that is why I say that PAAR is not necessary.
What Is Your General Advice?
My advice to ANLCA people, first and foremost, is for them to be steadfast in their faith in ANLCA. They should also be up and doing in letting the leadership know where they are not doing it right. For instance, as a past president, people do bring complaints to me, and I say, have you talked to your chairman? Have you talked to our president or our executives? And I hear them say, we have talked to them and in fact they have not done anything about it. The only thing a leader will say is keep on talking, keep on pushing forward. And of course, I have an advice for the executive and leaders. It will be highly a mark of betrayal, if we mortgage the interest of our general membership on whatever alter, even if it is alter of personal gain. Posterity will judge us so badly.
And whenever we are in any leadership position, whether as a chapter executive or as a national executive in any capacity, we should know that it is an opportunity for us to come and articulate on how the general interest will be protected and anything short of that is not good enough, thank you very much.