Last week, the Senate adopted the report of its ad hoc committee on import duty waivers, concessions and grants. It was, in every respect, a confirmation of what Nigerians already know of the grand bazaar that the Jonathan administration turned the import duty waivers scheme. Among its key findings was that the nation lost N447.45 billion to import duty waivers and concessions between 2011 and 2015. Notably, the waivers were said to have been flagrantly granted by ministries, departments and agencies of the Federal Government to six companies in disregard of extant rules between 2013 and 2015.
Another 27 companies were said to have benefited from the import quota granted to rice importers, with total allocation of 1,434,658 metric tonnes, of which four were yet to remit N23.603 billion to the Federal Government, being the duties on rice that they imported.
In the sugar sector, N17.41 billion waivers, concessions and grants were granted between 2011 and 2012, just as Minister of Industries, Trade and Investment, Olusegun Aganga, reportedly granted waivers to Coscharis Motors to import 897 vehicles and Globe Motors 714 vehicles in 2015.
Describing the granting of the waivers to select companies as “an unconscionable trade practice, which creates unfair competition and robs the Nigerian economy of badly needed funds”, the committee specifically charged the Budget Office of the Federation of using the import duty waiver scheme to entrench “a very destructive patronage system” in which very few operators in the economy were singled out for favours.
The committee recommended, among others, severe sanctions against companies found to have benefited from import duty waivers, concessions and grants, particularly those said to ‘engage in acts of economic sabotage by diverting some vessels to neighbouring countries of Benin and Niger Republics for the commodities to be smuggled into Nigeria through land borders”; recovery of N10.3 billion from six companies that benefited from rice importation quota in 2014 – the latter for not meeting the criteria for granting the waivers.
Considering that the lower house, the House of Representatives only last week similarly mandated its committees on public account and finance to investigate the incentives being granted to foreign investors said to cost the nation $2.9billion yearly, it seems to us that the Federal Government will need to take a holistic view of the nation’s business incentives. Just like its Senate counterpart, the worry of the House is that tax incentives granted to foreign investors, designed to stimulate the country’s economic growth have failed to achieve their intended purposes.
At this stage, we can only urge the Federal Government to take the findings and recommendations very seriously. Clearly, those found to have exploited the privilege of their connections to highly placed officials to abuse public trust should be made to pay back every kobo into the treasury. At this time of severe economic crisis, the nation must recover every dime of public fund illegally held under whatever guise.
Beyond that is the need to ensure that such abuses are prevented in the future. Again, we must say that the problem is not necessarily duty waivers and tax incentives per se. As we have argued before, they are sometimes needed to attract investment and hence stimulate the economy. The real challenge is to ensure that they are not abused.
Should the Federal Government deem it fit to continue with the waiver policy, it should make the rules transparent and the application even-handed as to leave officials with limited discretions. A monitoring mechanism to ensure that the beneficiaries deliver on key objectives has, in the circumstance, become a sine qua non.
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