FG Stops Import Waivers to Dangote,Stallion, Redeemed, Federal Palace Hotel others.

LAGOS – THE Federal Government has stopped the import duty waiver scheme; a programme that is used to encourage some categories of importers which has also been subjected to abuse by some importers.

Some of the earlier beneficiaries of waivers and concession include Dangote Industries Limited, Vaswani, Stallion and other rice importers; the Redeemed Christian Church of God, Messrs Western Metal Product Co. Limited, International Hotels, Mandarin Hotels, Le Meridian, Grand Ikoyi Towers and Resort and Federal Palace Hotels.Others are members of the diplomatic corps; companies fronting for top government functionaries.

The decision to stop granting import waivers was reached after it was discovered that in 2011 alone, a colossal N37.2 billion was lost as a result of import waivers that were granted to importers of raw materials in that year alone. Nigeria Customs Service records have shown that the nation lost N276.9 billion between 2000 and 2008.

A new twist to the waiver saga is the discovery that beneficiaries of Federal Government Export Expansion Grant now use the proceeds of the grant which has cost the government over N300 billion to bring into the country finished products. In the last quarter of 2011 the Federal Government approved N45 billion as Export Expansion Grant (EEG) to be paid out to beneficiary companies. Among the tanneries in Kano, a single company pocketed over N35 billion in the past five years.

The major beneficiaries of the Export Expansion Grant are foreigners, who sink the benefits of the grant in other countries.
Representatives investigation in 2009 into waivers granted by federal government said that the government was yet to abate the practice of granting “illegal and indiscriminate” waivers to “totally undeserving” firms and individuals, despite repeated orders from the House that the policy be discontinued.

Currently, about 183 undertakings and individuals are beneficiaries of import waivers, exemptions and concessions running into several billions of naira accruable to the federation account, the House disclosed. Confirming the loss last week at the budget defense session at the Senate, Deputy Comptroller General, Human Resources at the Nigeria Customs Service (NCS), Alhaji Garuba Makarfi told the lawmakers that the Presidency had directed that no import waiver be granted in the 2012 fiscal year.

According to him, “We lost 7 per cent of our collection to export expansion grant which is non-negotiable, this amounted to about N37.2 billion. The grant was given to export-oriented companies and local manufacturers, to export raw materials, but instead, these local manufacturers sell their certificates to dealers who then use it to import cars into the country.”

The Import duty waivers were granted by the administration of former President Olusegun Obasanjo to about 1,843 beneficiaries in 2007 amounting to about N165 billion loss to the economy. A breakdown of this showed that the highest amount of N42.598bn was recorded in 2007. In 2006, the waivers stood at N19.379billion; N18, 394billion in 2003; N33.970billion in 2004; while it was N41.650billion in 2005. Customs report said that the government lost N9.512bn in the first three months of 2008. However, the value of imported items within a five-year period stood at N901.9billion.

The report said Dangote got “concession of five per cent for raw sugar and exemption from payment of 10 per cent of sugar levy. The exemption is still running and has no time frame.” Similarly, it secured “two years concession from payment of duties on the import (importation) of tomatoes paste.”

The five per cent sugar levy paid by all importers of sugar for the development of the sector is kept with the Central Bank of Nigeria. As at March 31, 2008, the account had hit N2.24billion.

Importers of steel were allowed to pay 20 per cent levy instead of the normal 50 per cent, the report added.