Editorial: Suspension of Concessions and Import Waivers

As Nigerians bemoan the high level of corruption in governments’ finances, it is pertinent to admit that the so-called waivers, exemptions and concessionary permits to importers, issued by the Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, are some of those practices that breed corruption, expand the avenues of rent-seeking and cronyism and must be stopped immediately. There is nothing wrong, under normal circumstances, in granting import waivers, but against the backdrop of a bleeding of the national treasury, that lost a whooping N1.435 trillion through import duty waivers and concessions since 2011, the policy is certainly not in the public interest. The policy is an embarrassment, to say the least. The drain pipe is not only inconsistent with economic best practices; it is a fundamental breach of Nigeria’s constitution.

Expectedly, the House of Representatives has ordered Okonjo-Iweala, to stop further granting of waivers, exemptions and concessions not backed by protocol, pending the outcome of its ongoing probe on the matter. The Sabo Nakudu-led Committee on Customs and Excise has summoned 500 companies suspected of alleged racketeering in the controversial waivers. The order by the lawmakers was sequel to an earlier resolution of the House mandating the Committee to carry out a comprehensive investigation into waivers and exemptions granted from 2009 to date.

In the letter entitled, “Urgent need to put a stop to processing and or granting of waivers, exemptions and concession not backed by protocol”, the lawmakers reminded Okonjo-Iweala that: “waiving, exempting, and concessioning future earning by government amounts to “Executive Appropriation,” contrary to section 80 and 162 of the 1999 Constitution of the Federal Republic of Nigeria as amended. We also make bold to add that no authority, including the President, has the constitutional powers to impose or increase tax, duty or fees or any reduction, or withdrawal or cancellation thereof without first introducing a Bill before the National Assembly as clearly stipulated in section 59 (1)(b) of the 1999 Constitution as amended. The net implication of the section of the Constitution we have referred you to is that the current practice of indiscriminate granting of waivers, exemptions and concessions by government is, to say the least, patently and manifestly unconstitutional to the extent that no Bill was introduced before the National Assembly for such purposes.”

Documents from the Customs and Excise show that N1.435 trillion was lost through import duty waivers and concessions since 2011. In 2011, about N480 billion was lost, through waiving N389 billion under the fuel, lubricants and similar products category for 149 beneficiaries, and N91 billion through other concessions to 290 companies. The same amount was lost in 2012, with N288 billion going to companies trading in oil and similar products, and the remaining N191 billion being lost through other concessions. Another N474 billion was lost in 2013. The breakdown shows N359 billion went to 80 oil firms while N114 billion was lost through concessions to 287 other companies. The documents indicate that about 65% of beneficiaries received waiver/concessions for goods not approved by the government, which ordinarily should be limited to raw materials, machinery and spare parts.

Customs records show that concessions in 2011 and 2013 were granted mostly to fuel dealers, with Conoil being the biggest beneficiary in 2013, with N53 billion. Oando was next with N22 billion, followed by NIPCO Plc (N19 billion), Sahara Energy (N14 billion) and Folawiyo Energy (N12billion).  In 2011, the oil firm that benefited most was still Oando with N83 billion, followed by Capital Oil and Gas (N47 billion), Integrated Oil and Gas (N20 billion), Folawiyo Energy (N18 billion) and Sahara Energy (N14 billion). The documents show that in 2012, the Nigerian National Petroleum Corporation (NNPC) was the biggest beneficiary, getting N80 billion in concessions, and Sopon Nigeria Ltd was the highest non-oil beneficiary in 2011, netting about N33 billion. Coscharis Motors, which supplied Aviation Minister Stella Oduah’s controversial bulletproof cars and supplied 200 cars to the African First Ladies summit in 2012, received waivers of N400 million in 2011 and N698 million in 2013. Other beneficiaries of import tax concessions include the African First Ladies Peace Mission (AFLPM), Inspector General of Police, Chief of Army Staff, Central Bank of Nigeria, Bayelsa State Government, Minister of Police Affairs, Nigerian Police Force, Sokoto State Government, Akwa Ibom State Government and the Watchtower Society.

This is a typical Nigerian story – one of gross irresponsibility and self-interest over and above the interest of the country and its people. Preliminary investigations by the House committee has, so far, revealed that some of the 500 summoned companies had engaged in cases of round-tripping of the waivers they were granted. Any time a company obtains a waiver from the President, it is photocopied and used multiple times instead of just once. In some instances, it is even used to import other items that were not approved in the waivers. The inclusion by the Finance Ministry of “other goods” in the categories eligible for concessions, according to the Customs, enabled finished goods that add no economic value to the country to be imported. These include fish, bulletproof vehicles, kola nuts and palm oil. This is reprehensible, and calls for a fundamental review of the policy. The interrogation of the subversion of government policies by agents of government who ought to play by the rule of law is necessary.

It is not surprising that the National Assembly is investigating the propriety of the waivers. It is also not unexpected that they have reminded the executive branch of government that such waivers violate the provisions of section 59(1)(b) of the 1999 constitution as amended. One thing is certain: If not in the short term, Nigeria would be hurt in the long term because in its current parlous state, the economy cannot afford any such drains. So the need to end these obnoxious policies cannot be over-emphasized. While businesses are bound to pay legally sanctioned taxes or tariffs, it is inconceivable and it makes no economic sense for the government to deprive itself of revenue, through granting of import waivers. This is inexcusable and betrays the penchant for nibbling at full-blown symptoms rather than focusing on the root cause of Nigeria’s economic problem.

The conduct of public affairs calls for horizontal accountability, the capacity to check the illegality of other state institutions in situations of corruption. Needless to say, waivers in an environment rife with corruption, is mainly an expansion of corruption avenues for the officials involved and therefore should be discontinued. It is a sad commentary on the decorum and conduct of the Finance Minister, who allegedly issued these waivers in her capacity as chairperson of the Customs Board. Government would help itself by looking at more effective ways of closing leakages in the system. It takes a certain depth, breadth and length of vision as well as unequalled patriotism, all of which are essential ingredients of statesmanship, the minimum quality of an ideal leader, to realize that the a good policy is more significant than any political ambition.

The President should direct the Finance Minister to abide by the law and immediately halt the issuance of these waivers that has been wrongly implemented for all tiers of government. That will bring about immense benefits. For the Federal Government and the other tiers, revenue will expand multifold; external trade deficits will drop and yield spin-offs of internally generated revenue for critical public investments among other benefits. And the economy will at last experience sustainable growth and development. It goes without saying that ending this obnoxious policy would certainly boost President Jonathan’s public profile and, more importantly, give him everlasting political and historical relevance.