ECONOMISTS say that the Nigerian lawmakers’ constant increase in revenue targets causes issues for the Nigerian Customs Service (NCS), leading it to compromise its core focus on trade facilitation.
The Nigerian lawmakers had in June increased Customs revenue targets, which economists say could fuel pressure on the business and trade sector.
This is not the first time the lawmakers and even the Federal Government have increased the revenue target for one of Nigeria’s foremost revenue-generating agencies. In January, the Nigerian government set a revenue target of N6.8 trillion for the organisation.
Specifically, the Senate Committee on Customs on Monday, June 23, raised the Nigeria Customs Service’s 2025 revenue target from N6.584 trillion to N10 trillion, after it surpassed its 2024 revenue expectations.
The directive came during a budget defence session where the NCS, represented by Deputy Comptroller General Jibo Bello, presented its 2024 performance and laid out projections for 2025.
The Chairman of the Committee, Senator Isah Jibrin (Kogi East), commended the agency for exceeding its 2024 revenue target of N5.079 trillion by over a trillion naira.
However, he charged the Service to aim higher in the new fiscal year, setting a new revenue benchmark of N10 trillion.
“We must challenge ourselves to do better. You have shown capacity by exceeding your previous target, and now we believe you can raise even more”, Jibrin declared.
Economic watchers are worried that this could pile up pressure for import-dependent businesses, which rely on raw materials imports for their production and could lead to higher costs of commodities and an inflation rise.
Commenting on this development, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, told The ICIR that the National Assembly must create a seamless balance between trade facilitation and revenue increase.
He stressed that such a balance in promoting trade facilitation for businesses would ensure that government economic reforms impact on businesses.
“The National Assembly doesn’t talk about trade facilitation. They talk more about revenue increases. If they keep raising the targets for Customs this way, it could lead to a compromise due to pressure on businesses.
“The consciousness has to be there to create a balance in trade facilitation and revenue target,” he stressed.
Yusuf emphasised the inflationary impact of the policy, as businesses would pass on the additional costs to consumers, who are already grappling with economic hardships.
He also noted that many importers were diverting goods to neighbouring countries with lower import costs, posing risks to Nigeria’s maritime sector. He warned that declining cargo volumes would significantly impact terminal operators, bonded terminal operators, clearing agents, and the Nigerian Ports Authority (NPA), resulting in financial losses for investors.
Notably, the core duties of the Customs include revenue collection, specifically import and excise duties, and anti-smuggling activities.
They are also responsible for implementing government fiscal policies, generating statistical data, and facilitating trade.
Trade facilitation is often neglected by the Service.
Commenting on this development, the Head of the Customs and Trade Facilitation Committee at the Importers Association of Nigeria (IMAN), Ajanonwu Vincent, expressed disappointment over the lack of attention to Nigeria’s declining international trade.
He criticised the National Assembly for prioritising revenue generation over economic realities.
“The National Assembly members are not importers, who feel the blunt effects. They are not part of the masses, who bear the pains of high tariffs and over-taxation. Their focus seems to be on perpetuating squandermania,” Vincent stated.
He highlighted the cascading effects of high tariffs, which discourage trade, stifle local industries, and push importers out of business. Vincent lamented that shipping companies were downsizing, agents were jobless, and many importers had shut down, while the masses were starving to death.
The ICIR reports that Nigeria’s total merchandise trade stood at N31,892.46 billion in the second quarter Q2, 2024, representing a decrease of 3.76 per cent over the value recorded in the preceding quarter, and a rise of 150.39 per cent compared to the value recorded in the corresponding period of 2023.
In the quarter under review, exports accounted for 60.89 per cent of total trade with a value of N19,418.93 billion, showing a marginal increase of 1.31 per cent compared to the value recorded in first quarter Q1 2024 (N19,167.36) and a 201.76 per cent rise over the value recorded in the second quarter of 2023 (N6,435.13).
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.