RE: REGULATION OF LICENSED CUSTOMS AGENTS UNDER THE FEDERAL MINISTRY OF FINANCE AND THE CONFLICT OF THE DISSOLVED GOVERNING BOARD OF THE COUNCIL FOR THE REGULATION OF FREIGHT FORWARDING IN NIGERIA

 

eukemi1

March 30, 2015

 

The Honourable Minister,

Ministry of Finance,

Abuja

FCT.

 

Dear Madam,

 

RE:     REGULATION OF LICENSED CUSTOMS AGENTS UNDER THE FEDERAL MINISTRY OF FINANCE AND THE CONFLICT OF THE DISSOLVED GOVERNING BOARD OF THE COUNCIL FOR THE REGULATION OF FREIGHT FORWARDING IN NIGERIA

We have been constrained as critical stakeholders in the Logistics Supply Chain to respond to the recent letter purportedly written by Mr. Lucky Eyis Amiwero to the Area Comptroller of Apapa Port Complex Mr. Willy Egbudin on the above quoted subject. There are two reasons why our prompt intervention in this matter is important. First, is to correct the erroneous impression being peddled by the writer to perpetually hold the unsuspecting Customs Agents and the Importing Community spell bound. Second, is to expose his ignorance and lack of adequate knowledge of the subject matter.

To the first, the implication is that as the name Customs Agents applies, it is a vocation which its growth is limited to the extent the name could propel the bearer and the Importing Public who are majorly businessmen with the penchant to maximize profit by hiding under the complex circumstances of dishonest declarations often aided by the Licensed Customs Agents. It is therefore understandable that beneficiaries of the prevailing old order would always support the status quo ante.

The second involves a thorough exposure of the shallow knowledge of the writer who has sufficiently portrayed himself as not having an in-depth intellectual capacity to handle the subject, this could be seen in the lack of form, cohesion and disjointed nature of the write up. Understandably, the epistle was carefully designed to further mislead the government and the trading public in general. Suffice it to say that Mr. Lucky’s membership of the various ministerial committees on Customs reforms could have been the reason that over the years no iota of modification or review of the current licensing regulation of the Nigeria Customs Service could be said to have taken place in spite of the numerous reforms in the Service.

These glitches have culminated in portraying the Licensed Customs Agents in Nigeria as a group that lacks proper identity. International conferences meant for the networking of Logistics service providers are attended by Nigerians who hide under the name Customs Brokers who come back home to resume as clearing agents; they belong to International Federation of Customs Brokers Association (IFCBA) with the notion that the vocation of a Customs agent is international; they are aware that even the IFCBA are members of FIATA; but in their own country they are bigger than their regulatory body that represents them in FIATA; they want to become brokers but lacks the intelligence to seek for liberation and professionalism because of their limited knowledge of the industry.

While a Country like South Africa under its newly formed Federation of Clearing and Forwarding Association of March 29, 2010 recognizes the rationalization and harmonization of customs clearing procedure; the creation of opportunities for industry players to venture more into cross border business; the threat to the business of customs clearing agents with the advancement into e-clearance; the imperative of  shifting their future mindset and embarking more on diversified freight logistics activities rather than relying on processes that depend on government revenue collection, the Nigeria Customs Agents are still bent on hiding under the provisions of archaic law that tends to subjugate them into clustering under one function. Aside pointing out the knowledge deficiency of the originator of this write up this paper shall amongst other thing xray the relevance or otherwise of the Customs agent, customs broker and the freight forwatder.

  1. 1.                  THE LICENSED CUSTOMS AGENTS AS GLOBALLY RECOGNISED TRADE PROCEDURE EXPERTS

This topic would have been interesting if a definition of a Licensed Customs Agent was given. However, it is instructive to note that no trade procedure expertise is required to render the services hereunder:

  • WTO, WCO, UNCTAD etc. are International Organizations that set standards and guideline for the administration of National Customs and not Licensed Customs Agents.
  • The Harmonized Commodity Description and Coding System, (HS) code and its application in cargo classification are open to the general public and not restricted to Licensed Customs Agents.
  •  Interpretation of trade laws depends on the knowledgeability of both the Customs Officers,   and everyone engaged in international trade.
  • The Valuation units of all Customs Commands are solely responsible for issuance of value and to participate in the bi-annual meetings of the Valuation Committee of the WCO based in Brussel and not Customs Agents. GATT article V11 and rules of origin are meant to be complied by the importing public.
  • Classification of goods, interpretation of trade laws, treatment of good etc, are primary steps in cargo documentation procedure.
  • The provision of all the above services does not necessarily need a Licensed Customs Agent.
  • They are mostly rendered through advisory and consultancy services provided to the Importer/consignees by the Freight logistics experts prior to placing order or cargo importation proper.

The international trade procedure in Nigeria requires an intending importer to first open Form M. The above information is a general requirement to complete the statutory provisions on import guideline. With the knowledge of Information and Communication Technology anyone including the importer could assess all these information on Nigeria Customs Trade Hub/Portal.

  1. 2.                  GLOBAL APPLICATION OF LICENSED CUSTOMS AGENTS

DEFINITION OF LICENSED CUSTOMS AGENT

A Customs Licensed Agent is a company registered under Part C of the Company and Allied matters Decree of 1990, and licensed by the Nigeria Customs Service to carry out businesses relating to Customs formalities in the import/export transactions as provided by Customs and Excise Management Act (CEMA). Please see Chapters 153 – 156 of CEMA. The Nigeria Customs Licensing regulation recognizes: the individual, the firm and corporate bodies. Currently, all Licensed Customs Agents in Nigeria are corporate bodies. There are no global bodies that issue licenses to Customs Agents as indicated below:

  • Licensed Customs Agency vocation is not an international business and does not have any global application.
  • The operations of Customs Agents are guided by the National Customs Administration.
  • Customs Agents, Clearing Agents and Customs House Agents could be grouped together and are still dominantly applicable in third world countries which are yet to advance to Customs Brokerage; this is evident in the attached list of countries practicing Licensed Customs Agency and Customs Brokerage as contained in Mr. Lucky’s write up.
  • Licensed Customs Agents are inferior to Customs brokers.
  • They are grouped as unskilled workers.
  • Since 1958 Customs agents has remained the same, no injection of new ideas, no formal and minimum entrance requirement etc.
  • There is an urgent need to scrap Customs agents to pave way for customs brokers
  • Customs agents are outmoded and are being replaced by customs brokers.
  • In Nigeria, Licensed Customs Agents are corporate bodies only.
  • They are artificial bodies which cannot acquire skill and knowledge
  • There is no formal training or qualification for becoming a Licensed Customs Agent in Nigeria unlike in India where we have Customs House agents an applicant must abide by a minimum qualification.
  • Only interviews organized by Nigeria Customs which most times is carry out by proxy are the only known minimum qualification to become a Licensed Customs Agent.
  • Licensed Customs Agents activities ends within the confines of the Customs.
  • Their role ends in document preparation and cargo release from a proper custom officer.
  • Customs Agents only provides a fractional aspect of the Freight forwarding services.
  • They are Non assets domestic Forwarders, and therefore, are not cargo movers
  • Customs agents operate only at the downstream sector of the supply chain.
  • They aid revenue leakages and short collections in the clearance process.
  • Customs Agents are not professional
  • Non compliant to trade rules.
  • They are reasons for the rampant cases of non compliant to trade rules.

 

  1. 3.                  THE LAWS THAT ESTABLISHED THE LICENSED CUSTOMS AGENTS AND ITS FUNCTIONS IN NIGERIA

The legal powers of Licensed Customs agents as contained in sections 153-156 CEMA are not under dispute.  We must point out here that, this portion of the CEMA has only experienced partial implementation over the years. Take for instance, under section 153 sub-sections (2) as quoted by Mr. Lucky Amiwero. That subject to subsection (1) , of this section, anything required by this Act to be done by importer or exporter of  goods or excise trader may except where the board otherwise requires be done on his behalf-

A person exclusively in the employment of the importer or exporters

A person Licensed as a Customs Agent or Excise agents in accordance with regulation made under section 156 of this act.

It may be necessary for one to ask if the word “person” here represents a natural person or artificial persons and since the licensing regulation of the Nigeria Customs recognizes both the individual, firm and corporate entities, why has the NCS restricted the issuance of Licenses only to corporate bodies. The reasons often adduced to this argument which to aid the easy tracking of offenders of the Law does not hold water. This is because in all the advanced countries that practices Customs brokerage where mainly individuals/nominee are licensed brokers such issue does not occur sanctions on the individual is more punitive.

  1. 4.                  FUNCTIONS OF LICENSED CUSTOMS AGENTS AS CONTAINED IN THE CUSTOMS AND EXCISE MANAGEMENT ACT C 45 2004

The only known function of customs agents is the facilitation of customs formalities which ends with cargo release and within the confines of customs formation or periphery. All the assumed functions that customs agents arrogate themselves are voided. The use of Customs license to create what is known as shipping company and terminal authority are meddle some, as there is no known legislation that allows such practice.  CRFFN is expected to ensure that only registered individual members of the council are allowed to appear on form C30, Shipping Company/ Terminal authorities. The bypass of CRFFN by NPA, Shipping Companies, Terminals and other government agencies in the use customs licenses that are not registered should be stopped.

  1. 5.                  REGULATION OF CUSTOMS AGENTS BY MINISTER OF FINANCE CEMA SECTION 156

 

It is not always a must that operating licenses/ permits be issued by a particular establishment. In Australia CB is licensed by DIBP. It is the duty of the CRFFN to give approval for issuance of licenses to forwarders    section 19 (3) should be

 

  1. 6.                  CHALLENGES AND MISCONCEPTION OF THE ESTABLISHMENT OF THE COUNCIL FOR THE REGULATION OF FREIGHT FORWARDING IN NIGERIA

 

Sub heading no 6 to 15 in Mr. Amiwero’s petition clearly dwelt on issues concerning CRFFN. We see Mr. Amiwero as being mischievous by dabbling into issues bordering on an organization which he is not a member. This is the same council where he contested election and lost. He later took the same Council to Court and also failed. He has nothing to either gain or lose in the management of the body.He is an ordinary busy body; a meddlesome interloper; a cheap loser; and a man of no consequence. We advise he should first register with the Council before dabbling into CRFFN matters. Similarly, is it not absurd that Mr. Lucky should address such a letter to a CAC of a command instead of the Hon. Minister of Finance? This again shows his penchant at currying cheap favors and to fulfill his insatiable stomach infrastructure.

 

CUSTOMS BROKERS

The name Customs broker and Customs agent are two different nomenclatures and cannot be used interchangeably as claimed by Mr. Lucky Amiwero. The licensing procedures and the roles they perform are quiet distinct to each other. While Customs brokerage is practiced in advanced countries with modern Customs Service, Customs Agents or clearing agents operate mainly in third world countries that are yet to reform and modernize customs service operation. The list reproduced by Mr. Lucky is a good example showing advance countries who practice Customs Brokerage like the U.S. Canada, Australia, China, Thailand etc , and some third world countries like the India, Ghana, south Africa, Kenya etc that still practice as Customs agents and clearing agents. The general requirements to be eligible to become qualified as a Customs Broker are:

  • You must have attained 21years and above and a citizen of that country.
  •  You must not be a civil servant
  • You must possess good moral character.
  • You must pass the Customs License Broker examination.

All the above attributes simply indicates that only natural persons are licensed to become customs Brokers. Partnerships, Associations and Corporations wishing to transact Customs businesses must have at least one individually licensed practitioner, partner or associate to qualify the company’s license.

In Australia, Canada, Thailand, China, the United States etc., to be precise, Customs brokers are private individuals, partnerships, associations or corporate bodies licensed and empowered by the Customs Authorities or any other authorizing body to assist importers and exporters in meeting trade requirements governing imports and exports. Brokers submit necessary information and appropriate payments to Customs departments on behalf of their clients and charge them a fee for this service. Customs brokers are experts in the entry procedure, admissibility requirements, classification, valuation, rates and duty, applicable taxes and fees payable for imported merchandise.

  • The use of this nomenclature interchangeably with Customs Agents depicts the heights of ignorance by Nigerians, the like’s of the Mr. Lucky Amiwero.
  • Customs brokerage is created by law. For now, there is no known statutory provision covering the practice of Customs Brokerage in Nigeria.
  • The migration of Customs Agents to Customs Brokers has been part of Customs modernization in developed nations, essentially, fast growing economies like Nigeria.
  • Unlike Customs Agents who are not required to be trained, the requirements to become a Custom Broker is that you must be thoroughly trained, pass requisite examinations before being licensed by the Customs authority.
  • Brokerage recognizes mainly Individuals who are “persons of integrity”, than Firms and Corporate entities.
  • Firms and Corporate bodies wishing to register by National Customs as brokerage firms must employ at least one individual broker (declarant or nominee).
  • Brokers are majorly individual practitioners and are grouped amongst professionals in the world today.
  • Brokers (individual) are licensed by Customs with passwords with which to make declaration for customs purposes.
  • A broker ensures full compliance to trade laws and responsibilities for any default by the declaring entity.
  • The licensing of brokers is not restricted to customs authority in some countries. Example is Australia, where brokers are licensed by the Department of Immigration and Border Protection (DIBP).
  • Brokers are employees of corporate bodies which could be a freight forwarding firm, trading company or manufacturing companies etc.
  • Brokers are majorly seen and used by the government to ensure transparency and genuine cargo declaration for customs purposes.

FREIGHT FORWARDING AND LOGISTICS SERVICES

The internationally acceptable definition of Freight Forwarding and Logistics Services which is still current till date was the one given by the International Federation of Freight Forwarders Associations (FIATA) and The European Association for Forwarding, Transport, Logistics and Customs Service (CLECAT) Viz: Freight Forwarding and Logistics Services means services of any kind relating to the carriage (performed by single mode or multimodal transport means), consolidation, storage, handling packing or distribution of the goods as well as ancillary and advisory services in connection therewith, including but not limited to Customs and Fiscal matters, declaring the goods for official purposes, procuring insurance of the Goods and collecting or procuring payment or documents relating to the goods.

The above definition clearly captures the entire components and the different activities covered and performed by a freight forwarder. Of all the above functions, the only limiting factor to the competence of the freight forwarder not to incorporate any of the aforementioned services could be lack of integrated approach to the logistics chain. The CRFFN Act No 16 of 2007 defines a Freight forwarder as a person or company who arranges the carriage or movement of goods and associated formalities on behalf of importer or exporter along the international boundaries of seaports, cargo airports or land border station.

This definition looks concise but very elaborate.

“Who arranges the carriage or movement of goods” means the role of the Freight forwarder in the use of different modes of transport either as single or multimodal transport system to get goods to its destination from the point of origin.

“Associated formalities” captures all other activities ranging from trade enquiries to fulfillment of regulatory provision, customs official procedures, storage, consolidation, packing, handling, and distribution, to advisory and consultancy services etc.

“along the international boundaries” indicates the entry and exit points into Nigeria which include the seaport; airports; and the border stations.

The freight forwarder is an acclaimed multifaceted and interdisciplinary person who is skillful and knowledgeable in the intricacies of the movement of internationally traded goods from the point of origin to the point of destination.

For the purposes of clarity, the freight forwarding family comprises the following:

  • Consolidators and Cargo Brokers
  • Packing and Packaging Firms
  • Storage and Warehousing Operators
  • Air Freighting Companies
  • Customs Brokers
  • Courier Companies
  • Multimodal Transport Operators
  • Global Logistics Providers
  • Logistics Supply Chain
  • 3rd Party and 4th Party Logistics Service Providers etc.

Of the many services rendered by the Customs brokerage is just a segment. It is extremely difficult and rarely impossible for a customs Broker to exclusively complete the clearance process of a single consignment without plunging into one or two other aspect of freight forwarding. This is a clear proof that customs brokerage is an integral aspect of Freight Forwarding.

It is instructive to note that, the freight forwarder operates both at the upstream and the downstream sector of the logistics supply chain. He is referred to as the architect of transport because of his versatility in the use of the various modes of transport in moving goods across international frontiers and national boundaries. Freight forwarding services is so dynamic and has remained the most dynamic tool that drives the globalization policy. Regretfully, Freight forwarding has remained the most under developed sub-sector in the entire transport logistic supply chain in Nigeria.

The success of the Cargo Tracking Note being propagated by the Nigeria Shippers Council could only be guaranteed and sustained to achieve its intendment by total reformation and sanitization of the freight forwarding sector. Undoubtedly, International Security measures, regulatory compliance and the transparency of the supply chain are the dominant concern of Freight forwarders.

CONCLUSION

As a matter of urgency we would at this stage encourage the government to carefully appraise the state of the Freight logistics sub-sector. This to our conviction would go a long way to righting the numerous ills in the system, curb the excesses of characters like Mr. Lucky Amiwero whose stock in trade over the years by being a member of many ministerial committees is the use of antic to mislead the Government, the general public and indeed the unsuspecting critical stakeholders in the industry.

The recent directive by the honorable Minister of transportation is the kind the industry needs at the moment. We also expect the Hon. Minister of Finance through the CG of Nigeria Customs Service to as matter of urgency set in motion the process of reviewing the current licensing regulation of the Nigeria Customs Service. Nigeria with her population of over 170 million people cannot afford to be left behind in the face of the global insecurity by mortgaging the security of the nation into the hands of corporate bodies whose composition is made up of foreigners. With the volume of cargo coming into the country, the use of corporate bodies licensed by the Customs to secure our Logistics supply chain is outmoded.

We must quickly revamp the cargo clearance chain by borrowing a leaf from the advanced and developed countries by instituting a global standards of practice. This no doubt would go a long way to minimize the rampant cases of non compliant to trade rules, false declaration, and revenue leakages.

 

CHIEF INCREASE UCHE

Member Technical Committee

NAGAFF Headquarters

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