In recent times, Nigeria’s Automotive Industry Development Plan (NAIDP) has been facing a lot of criticisms. ANTHONY AWUNOR, in this piece writes that activities of some officials of the Nigeria Customs Services (NCS) are part of the challenges.
Four years ago, the federal government established Nigeria’s Automotive Industry Development Plan (NAIDP) otherwise known as the new auto policy, so as to encourage local manufacturing of vehicles in the country.
To enable the policy work, the federal government made it compulsory that importation of a new vehicle attracts 35 per cent duties and 35 per cent levy. This was to encourage local manufacture of vehicles against importation.
The 35 percent for duties and 35 percent for levy means that if you buy a vehicle for $100, 000 you pay $70,000 for clearing it. After the dealer has paid this amount of money, calculated on the cost of the vehicle, a dealer is free to take his vehicle to his shop and sell. But despite the fact that there is evidence of the cost of every vehicle brand on the Internet, Customs officials are alleged to have their own vehicle prices which are computer generated and which they call benchmark.
Unfortunately for vehicle dealers and those who buy new cars, there is no defined criteria that guides Customs benchmark; it is computer generated at whim and despite the fact that you can verify how much a car is bought from the suppliers and manufacturers on website, Customs are alleged to always stick to their computer generated prices, which are usually far higher than the actual prices the vehicles were purchased.
This means that even if you buy a vehicle for $100, 000 and calculated your 35 per cent duty and 35 per cent levy on that cost, which is $70,000, some Customs officials will stop you on the way and tell you that the car you bought for $100, 000 is $170,000, according to computer generated prices, so the duty and levy you have paid are below what you ought to pay. This payments run into millions of Naira.
LEADERSHIP however, gathered that this reprehensible activities are giving the Comptroller General of Nigerian Customs, Colonel Hameed Ibrahim Ali (retd) concern and that the no-nonsense Customs boss had sent the word round that anyone who is able to bring evidence of the actions of these Customs officials would be doing the organisation a favour, as those involved in the extortion would not only be sacked but they would also be prosecuted.
Further investigations show that these Customs officials will make you to negotiate and if you fail to pay the amount they asked you to pay, they will seize the vehicle and it would take you at least three weeks to get it back. This would also cost you about N4 million, which would include the extra money you ought to pay on their arbitrarily generated vehicle price and the cost of visiting relevant Customs offices and personnel that would give you approval to take back your vehicle after the new payment.
As revenue generating agency, which is aggressively striving to meet target set for it by government, there is strong suspicion that Customs management is indifferent to the arbitrary price benchmark, which its officials generate as cost of vehicles, but some of these officials are using it to make huge monies for themselves.
A car dealer who spoke to LEADERSHIP said that some of the brazen Customs officials would raid car shops and using their own computer generated prices as benchmark, charge the car dealer extra millions of naira as official cost of duty and levy or “the dealer will settle the people and this will cost less and they will boldly give you account number. Our enquiries reveal that almost all the account numbers they give are accounts of Bureau de Change.”
“Very serious car dealers have stopped their work. There are no service centres and no more importation by many of these businessmen because they cannot cope with the harsh environment. Example, Toyota Prado is about $30, 000 to $33, 000, including cost and freight and depending on the facilities in the vehicle, but Customs use $58,000 to calculate duties and levy,” a car dealer stated.
But a Customs official who spoke on the matter, on condition of anonymity confirmed the obnoxious activities of some of the Customs officials, but said the management of Customs is desperately looking for them and anyone that is caught would not only be expelled but would also be persecuted.
“Customs management is aware of all these but they are waiting for the person they will catch. If those who pay the money to these officials can get the teller of the payment to the authority, it will be instant dismissal for those involved and possible persecution. The Comptroller General is a no-nonsense man. They are doing this with impunity.
“Tell those people (car dealers and others) to get three or four bank accounts those Customs officials give and use them to write a petition to the Comptroller General and also send it to the Economic and Financial Crime Commission (EFCC),” the Customs official advised.
It is even believed by the car dealers who lamented the ongoing treatment, that there is tacit support these Customs officials are getting from “high quarters” because there are different groups of these Customs officials “who come at different intervals and the management of Customs cannot say that they are not aware that these things have been going on. The ones who arrived recently from other parts of the country are laws unto themselves.”
“Customs is all about money. No matter the document you give them as evidence that you followed due process to clear your vehicles, they just want more money. The more money we are talking about is not small money. It is about N2 million; otherwise they will take your car and it will take you about three weeks to get it back. You will be forced to shuttle from one of their offices to another and this will cost you extra N2 million.
Recently as part of the ease of doing business policy, the federal government ordered Customs to leave the highways but sooner was the directive given than the number of Customs officials multiplied on the highways, thus repudiating the directive. This, many say, is a direct affront to the authority that issued that directive.
Car dealers who spoke on the issue expressed shock in the way the Customs officials who literally raid the dealers’ shops and the highways defied the rules, as if “they know that no authority can do anything to them.”
“The impunity is too much,” the car dealer quipped.
The Customs official who spoke on the matter also lamented about this defiance, which “makes some of us feel that they are above the law, but I know and I am convinced that anyone caught by the Comptroller General will pay dearly for it.”
Car dealers who spoke to LEADERSHIP are of the view that many more of their members would close shop and thousands of people who are engaged in one way or another in the auto industry will also lose their jobs, “and you can agree with me that this won’t be good for this country now.”
“Travelers are the ones who are suffering the high handed ness of Customs officials on the highways. When you take your papers and show them in their office they will tell you the papers are okay but when you are traveling they will stop you on the way and tell you your papers are not right and you must part with heavy money before they will allow you to go. The most notorious areas are Benin, Ibadan and Lokoja; although they are in other areas. If you don’t part with money they will seize your car and it will take about a month before you will get it back. Any relatively new from 2010 is not safe from them”, the auto dealer lamented.
The car dealers have urged the federal government to remove the 35 percent levy, saying that people should be guided properly because “this policy has given Customs officials an opportunity for extortion. Government needs to look at this in order to stem the thousands of people who are losing their jobs on daily basis, especially as Nigeria is not yet ripe to manufacture vehicles in such commercial quantity to meet local demand.”
Four years after the introduction of the auto policy by the federal government, the policy has been roundly criticised by industry stakeholders.
Speaking recently in Lagos at the Nigeria Auto Journalists Association (NAJA) monthly industry forum, Dr. Oscar Odiboh, who is senior lecturer, Covenant University, Otta, Ogun state, expressed worry over the state of the industry, lamenting that the industry may collapse unless government and stakeholders in the sector chart a leeway.
According to him, economic downturn, uncertainties and government inactions have crippled the growth of the industry despite concerted effort to turn the country to a vehicle manufacturing nation.
Odiboh, who spoke on ‘Implementation of Nigeria’s Auto Policy: The way Forward’; insisted that industry is divided and may not thrive until the stakeholders collaborate.
He observed that almost mid-term into the 10- year plan, most of the assembly plants set up in the country lack the standard to compete globally, and can hardly be called assembly plants,
He said: “What we have at the moment are not real assembly plants, they are glorified joineries. Average 65 per cent of our assembly operations are manual, while 70 per cent of employees are casual.”
It would be recalled that the National Automotive Design and Development Council (NADDC), the federal government agency saddled with the responsibility of implementing the auto policy, has repeatedly claimed that there are over 50 auto assembly plants in the country, hence alluding to the success of the policy.
Odiboh, who noted that Players in the sector were frustrated through importation rules, added that more than 60 per cent of tools in the sector are manual.
Calling for budget cars, Odiboh stressed that the sector’s inability to offer affordable vehicles for mass market would keep used market growing to the detriment of the sector.
He said lack of patronage threatens the survival of the sector as brand new vehicles remained unaffordable for an average middle class citizen.
Odiboh called on the federal government to provide a finance that would enable acquire brand new vehicles, noting that projected objectives may remain elusive unless there is market for brand new cars.
He said poor power supply, bad roads lack of processed raw materials, lack of long term financial investment and others were bane of the industry.
Similarly, Corruption, deceptive data from the stakeholder, profit diversion, mutual suspicion, porous borders as well as poor positioning could eventually run down the policy, Odiboh said.
It would be recalled that a former Chairman of the Auto and Allied sectoral group of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Oseme Oigiagbe, has expressed regret significant achievements have not been recorded.
Oigiagbe, who is an Executive Director of Truck Masters automobile company, expressed this recently when he presented a paper at the 5th Nigeria Transport Awards and Lecture (NTA &L), held in Lagos.
Explaining that implementation of the policy has been more of ‘motion without movement’, he said the “Vehicle finance scheme programme with consortium finance group led by Rank bank –would have spark up the consumer demand and ease the vehicle acquisition opportunities”, but it is yet to take off.
He also blamed the slow implementation of the policy on poor infrastructure, high interest rate, as well as poor regulatory concern. Oigiagbe added that the local component manufacturers seems to be in a dilemma and not able to “to rise up to the occasion”.
On their own part, the Director General of the National Automotive Design and Development Council (NADDC, Mr Jelani Aliyu has said that the Council is focussed on Auto Policy Implementation-NADDC.
According to Aliyu, he has identified some important components of the new National Automotive Industry Development Plan (NAIDP) that the Council is working on to improve the goals of the policy.
In a paper he delivered as the guest of honour at the first Kaduna automotive fair and exhibition/stakeholders conference organised by Routes and Roads transport company, the DG said , aside the fiscal regime which places a tariff of 35% plus a levy of 35% on Fully Built Cars and 35% tariff on Fully built up commercial vehicles, other pillars of the NAIDP that which will make it sustainable are the marketing programme, standard, human capital development and local content.
On the marketing programme, the DG stated that “under this programme, a fund is to be established to be offered to Nigerians at low cost to finance their commercial fleets and cars.
“The programme is being re-deigned to involve more Nigerian banks. It is expected that once this is launched, more Nigerians can afford more new cars and the provision in NAIDP to restrain import of used vehicles will be applied”.
Aliyu added that “the development of automotive laboratories as provided for in the plant for safety tests in now at 70% completion stage. There is the material test lab in Zaria, the component test lab in Enugu and the emission test lab in Lagos”.
Also speaking on human capital, the DG said “a significant level of achievements has also been recorded in this aspect as NADDC continue to roll out programmes independently and with partners including the Presidency”.
The NADDC boss also explained that “with the level of achievement in assembly capacity, council has increased focus on developing capacity to produce components locally. To this end, it has commenced engagement with various state governments”. Implementation of the NAIDP started in October 2013, and is expected to be a ten year programme.