‘Why controversies dogging customs’ automation process should be resolved’

One of the legacies President Bola Ahmed Tinubu can leave behind after finishing his tenure as president of Nigeria is to have a Nigeria Customs’ Service (NCS) fully automated with efficient service delivery that aids trade facilitation.
   
This, to many stakeholders, who are forward looking is critical because of the impact the project would have, not only on the efficiency of Customs’ administration, but also on revenue that would be accrued to the Federal Government.
 
Nigeria is grappling with revenue generation, yet it is using a large chunk of its revenue on debt serving. So, any process that would significantly help the government to boost its income should not only be supported, controversies surrounding such process should be of interest to the government. And many are optimistic that automation of customs processes is one of the ways to end the revenue crisis.

Although the process for automating customs processes has started, but the process has been stagnated because of the crisis dogging the award of contract for the concession of the computerisation. Surprisingly, the process started almost 10 years ago. This is the reason one of the parties in the process who feels aggrieved has asked the Tinubu’s Economic Team to intervene.
   
The process started in 2015, when the Nigeria Customs Service (NCS) Tenders Board published an “Invitation for pre-qualification of contractors for the execution of 2016 capital projects”. 
  
As of December 2015, the NCS had conceived what it termed “NCS Modernisation Project” and developed a qualification evaluation based on pass-fail criteria to bidding companies. As a result, the NCS hosted presentations from 94 companies. 
 
Bionica said that it was one of the 94 companies and made a presentation in December 2015. Thereafter, it was shortlisted among 16 companies recommended for the next stage.
  
By a letter dated December 22, 2015, Bionica said it expressed an offer to partner with the NCS by direct capital investment to modernise the scanners and ICT infrastructure of the NCS”.
  
Bionica, therefore, offered at no cost to the NCS the following services:   Full automation of all NCS business process and procedures through development and implementation of a robust new all-embracing ICT platform and system integration of the current ICT with updates where applicable.
  
Development and implementation of modern new Customs Border Stations, airports and marine posts; installation of appropriate new scanners based on latest technologies adequately suitable to site-type Customs operations in a secured operation of well-maintained best-in-class, non-intrusive systems on 24/7 availability and modernization of all Customs business premises and related infrastructures.
 
It also offered to deliver full capacity building programmes with professional certification (home and abroad) to Customs officers in line with international best practices. These were among other solution values offered to NCS. 
  
Throughout 2016, Bionica said that it continued engagements with the NCS and the FGN in the quest to accomplish the mandate of wholesome modernization of NCS operations.
 
On January 19, 2017, Bionica said it made a technical presentation to the ICT technical team of the NCS to great acclaim. Representatives of Bionica’s partners namely Huawei, Smiths and First Bank of Nigeria Plc were in attendance. Further to that, the top management of the NCS requested a similar presentation which took place on February 9, 2017 at the NCS Headquarters.
   
By a letter dated April 20, 2017, the then Comptroller General of Customs indicated acceptance of the request for assessment. By a letter dated June 1, 2017 in response to Bionica’s letter dated May 23, 2017, the NCS invited Bionica for a meeting with the acting Assistant Comptroller General (ICT-MOD) in furtherance of the assessment an audit of NCS ICT, scanners, offices and marine for proper direct investment by Bionica to modernize the NCS operational infrastructure.
    
Bionica said it mobilised quality human and material resources to conduct the assessment of the NCS Non-Intrusive Inspection System and Marine Infrastructure. The objective of the assessment is to establish current infrastructure status and needs development and implementation.
   
The assessment was also intended to fully develop NCS infrastructure to meet expected service delivery in line with international best practices. 
The assessment was primed to cover Customs operational areas in the South-South, South-West and North. Each area was assessed with separate team of experts composed of one head of mission each, scanner experts, scanner site infrastructure experts and Customs officers recommended by the NCS.

   
In all, a total of 51 land borders, 11 seaports and five airports were evaluated during the field investigations. The survey/assessment of NCS existing infrastructure revealed serious challenges classified as tax evasion, lack of monitoring systems, smuggling of goods across the borders, illegal inflows of banned items, onerous manual administrative processes, lack of transparency and predictive NCS core functions etc.
    
The due diligence derivable from the survey also involved inspection visits to China, India and South Africa by representatives of the government and other stakeholders to the facilities of the following Original Equipment Manufacturers (OEMs) to affirm the capability of Bionica and its partners in implementing the project.

On technological basis, it was noted that the ASYCUDA++ and the Nigeria Integrated Customs Information System (NICIS) systems for processing of import, export and transit trade together with the collection of Customs duty and related taxes fell short of international best standards.
  
The NCS was therefore quick to realize the shortcomings as highlighted by the modernisation model proposed by Bionica and its partners involving the deployment and implementation of a robust e-Customs systems, including application and ICT infrastructure which have been adopted and proven to be effective in countries such as China, USA, Sweden, Qatar, UAE, The Philippines.   
   
With the guidance of the President and Commander-in-Chief, the NCS issued Request for Proposal (RFP) to selected companies which have demonstrated satisfactory records of expertise and experience in e-Customs deployment and implementation. The proposal and submission of Bionica and its partners including the Africa Finance Corporation, Huawei Technologies, and Bergmans Securities Consultants & Suppliers Limited, otherwise known and referred to as the Huawei Consortium, were allegedly adjudged to be “the most all-encompassing with detailed audit of NCS’s current infrastructure and Business User Requirements (BUR)”.
   
Following the birth of the Presidential Initiative on e-Customs and the attendant conduct of a comprehensive operational and infrastructural survey of all NCS sites, the President and Commander-In-Chief took the decision to adopt the full development and implementation of a comprehensive e-Customs platform which shall update and upgrade the present NCS ICT infrastructure and give effect to the deployment of robust Smart Technologies through PPP Procurement Model as enunciated in Section 1 (1) of the ICRC Act 2005 and the National Policy on PPP.

    
Accordingly, the Infrastructure Concession Regulatory Commission (ICRC) got the directive of the presidency in line with Section 33 of the ICRC Establishment Act to engage with the NCS for the undertake full diligence of the Huawei Consortium’s e-Customs Public Private Partnership proposal; and conduct full negotiation with Huawei Consortium including the preparation of a draft concession agreement and a Full Business Case for the e-Custom project for the approval of the Federal Executive Council. By a letter dated September 17, 2019, the presidency, giving express directives to the Minister of Justice as well as the Minister of Finance & Budget, approved the engagement of the Consortium comprising Bionica Technologies (WA) Limited, Bergmans Security Consultants & Suppliers Limited, African Finance Corporation and Huawei Technologies Nigeria Limited “to establish a project Special Purpose Vehicle (SPV) to enter a 20-year concession agreement with NCS and ICRC for the Customs Modernization Project (Establishment of Digital/Paperless Customs Administration)”.
    
On December 11, 2019, the SPV was incorporated under the Companies and Allied Matters Act by the Corporate Affairs Commission as “E-Customs (HC) Project Limited”.
   
In December 2019, the FEC approved the engagement of e-Customs (HC) Project Limited as the concessionaire for the delivery of the Customs Modernization Project on a 20-year concession agreement based on the negotiated terms and conditions.  

Financing And Cost Implications Of The Project
The project, according to Bionica, will be implemented in three phases over the 20-year concession period and the cost of implementing it is approximately $4.9 billion. This figure is made up of capital expenditure and operating expenditure.  The project will be financed through contributions from the promoters, equity, loan and vendor finance.   Financing will be structured at $30 million equity and $270 million debt for the first phase; debt structure for phase 2 (years 7-12) shall be $2.3 billion; and the final phase of the project shall be financed through retained earnings and excess cash flows.  The total revenue accruable to the federal government over the 20-year concession period is about $19 billion.  The first phase of the project will gulp an initial investment cost of $300 million.

Economic Benefits
It is anticipated that the project among others will increase revenue by preventing undeclared cargo and revenue losses;  better supervision and enforcement by blocking smuggling and evasion loopholes and improve clearance efficiency and reduced clearance cost. It is also expected to reduce crime, including fraud, in all aspects of the NCS service processes and procedures and provide more accurate NCS statistics for government economic planning as well as promote more investments and national economic development level.

Court Action
Both E-Customs (HC) Project Limited (the SPV) and Bionica approached the Federal High Court in Abuja to seek redress. Despite subsisting court orders, it was alleged that Trade Modernisation Project Limited (TMPL), led by the Finance Ministry, went back to obtain another approval of the Federal Executive Council to attain legitimacy. And the Court specifically ruled that the parties must preserve the “res” pending the determination of the case.

Disregard For Court Proceedings
Knowing that the former Vice President Yemi Osinbajo would preside over the FEC meeting of April 19, 2023, the SPV and Bionica wrote, through its lawyers, letters to Vice President Osinbajo and the Attorney General of Federation to discountenance the quest of Col Hammed Ali and his cohorts to drape a garb of legitimacy on TMPL to drive the E-Custom initiative. Unfortunately, at the FEC meeting of 19th April, 2023 the approval was granted where President Buhari and the Minister of Finance were absent.

Bionica said that it is not averse to seeking and accommodating partnerships that will be beneficial to the project but it is wary of underhand machinations to hijack the project.

Commenting, Executive Director, Accountable Leadership for Better Nigeria Initiative, Remi Adebayo, said that the e-Customs Project should be re-examined to help boost the operations of the Customs for improved efficiency, block loopholes and increase revenue accruing to government.
   
“It is untidy and smacks of high handedness that the Buhari Administration will override its first approval without cancelling a previous approval by the President-in-Council. 
 
“It is on record that Messrs E-customs HC Project Limited and Bionica Technologies (West Africa) Limited, the original concessionaires, have jointly challenged the alleged unlawful and fraudulent replacement of their names in the concession agreement earlier approval by President Buhari and ratified by FEC on 2 September, 2020. 
 
“The firm had raised the alarm of ‘a sinister plot’ to scheme it out as the approved concessionaire and replace it will an unknown entity registered at the Corporate Affairs Commission on 5 April, 2022, almost two years when the project was first ratified by the Federal Executive Council.
  
“It is inconceivable that the nation’s highest decision-making body which in September 2020 approved a 20-year Public Private Partnership – PPP concession, valued at $3.1billion to Messrs E. Customs HC Project Limited as initial concessionaire, will allow a few selfish government officials to convince it in approving an illegal concession. How does a company benefit from a process in which it didn’t participate?  
 
“It is disconcerting that less than five weeks to the end of the Buhari Administration, the Federal Executive Counting did close its eyes to a valid court order and allowed itself to be misguided. 
 
“The willingness to side-track due process and best practice methods by top officials of the Buhari administration on the e-Customs project through a second and hurried FEC approval was nothing but a desperate bid to empower cronies of retiring President Buhari before the end of his administration. With the recourse to litigation by the parties involved in the project, it is now coming to light that President Buhari may have been misled to override an earlier approval granted by the FEC, where he presided on September 2, 2020.

 
“President Tinubu, now wooing international investments from across the globe, must show more than a passing interest in the e-Customs project where Nigeria stands to reap huge revenue. More importantly, Nigeria cannot be a laughing stock among international investors,” he said.
 
Responding to the issues, Customs Spokespersons, Abdullahi Maiwada, said that there was never two approvals, maintaining that FEC approved one trade modernisation project.
  
“How could someone get approval from FEC and Customs, an agency of the Federal Government will refuse the right to perform that function. Is there any agency bigger than the government? Those are propaganda going around.” He maintained that it is a Federal Government project that was ratify by ICIR and all due process followed.
 
“And as far as I am concerned, the project is ongoing and very soon we would see the fruits of what has been done in the next couples of days. “The consortium, where is the FEC approval they got. All I know as the spokesperson of the Customs and I do not want to be involved in battles between two parties, but all I know is that the process is ongoing.
 
“And today (Friday) I visited the Project Management Office and there are positive developments around the project. And I know that we would deliver. Any issues between the two parties should not be what I should be concerned about.
 
“It has been approved by FEC and I do not have a counter directive to that. The project is ongoing; there are working groups that have been given mandates. There is a Project Steering Committee with a Project Implementation Committee that has five working groups. And they are working day and night to deliver within the time frame.”