‘AfCFTA offers crucial trade-off between revenue collection, trade facilitation’

• Stakeholders say rise in transport cost impacts regional trade volumes

The Comptroller General of Nigeria Customs Service (NCS), Bashir Adewale Adeniyi, said the objectives of Africa Continental Free Trade Area (AfCFTA) presented beacon of hope for Africa’s economic transformation, ranging from the promotion of intra-African trade to sustainable economic growth.

He stated this at the 18th Roundtable of Managing Directors/Exhibition of the Port Management Association of West and Central Africa (PMAWCA) hosted by the Nigerian Ports Authority (NPA) in Lagos.

Adeniyi spoke on the topic: “What does the AfCFTA offer to African Ports after three years of implementation.”

He said unfortunately, the free trade area is poised to usher in significant changes that will have a profound impact on customs operations, which is the shift in customs’ focus, moving from the import side to the export side of trade facilitation.

Adeniyi said this adjustment presents a crucial trade-off between revenue collection and trade facilitation, adding that Customs will need to strategically allocate resources to enhance export procedures and ensure that exporters can thrive in a streamlined environment that ultimately benefits the government through increased foreign exchange earnings.

“While this shift is poised to bolster exports, it may lead to a trade-off in terms of lower revenue from the import side. Port preferences favoring the most efficient and infrastructurally sound ports may lead to lower import volumes and consequently reduce revenue for customs.

“In this regard, the service has implemented a number of adjustments to cope with these implications. These measures include efforts to mitigate some non-tariff barriers as we delve into customs’ strategic response to these multifaceted challenges. It is clear that a delicate balance between revenue generation and facilitation of trade is at the forefront of our efforts,” he said.

The customs boss also stated that the implications of AfCFTA are multifaceted, encompassing the shift of origin control, separation of certification from regular procedures and the creation of an African continental free trade portal.

“Let me quickly jump to some of the implications of free trade area, customs, and the maritime industry. These implications include the following: After we prompt the need to shift origin control from the import side to the export side, verification of origin status before export operations, we enhance predictability for business and customs while ensuring that only qualifying groups participate in the agreement.

“Secondly, after we prompt the separation of certification from regular procedure, certifications and associated verifications should now occur before export clearance, streamlining processes, and ensuring that only eligible goods receive necessary documentation. Third, the agreement entails the creation of an African continental free trade portal that should serve as a central source of information for tariff and origin certification. This portal will be crucial in providing real-time accessible information to customs, the maritime industry, and traders. There are a couple of other implications,” he said.

The Customs boss said in response to a number of the challenges, the NCS has adopted a combination of operational and procedural adjustments, administrative collaborations, technological advancement and measures to mitigate the long tariff barrier.

He said notably among the initiatives include transforming Nigeria into Africa’s most efficient trading nation, addressing the longstanding issue of port congestion and enforcing the presidential directive for the 48-hour clearance of goods at sea ports in accordance with Executive Order 001.

He said customs is redefining performance measures for key government agencies to emphasise trade facilitation, implement the National Single Window Trading Platform, and launching a comprehensive transformational programme to support exports development.

The Chief Executive Officer of the Namibia Port Authority, Andrew Kanime, said a 10 per cent increase in transport cost reduces volumes of trade by as much as 20 per cent and the competitiveness of Africa on the global market.

He stressed on the harmonisation of activities and policies, which relate to transportation, logistics, operational corridors, ports, and harbors.

Kanime said Africa’s core competitiveness globally is often better attributed to the quality of institutions, infrastructure, macroeconomic policies, education and technological innovation.

He said the persistent infrastructure deficits and trade barriers are a failure of production, regionalisation and facilitation of the smooth movement and interchange of goods across networks.

He said this obviously calls for the development of suitable and efficient infrastructure systems, as well as harmonisation of trade policies to eliminate these barriers and catalyse intra-Africa trade and growth.

The Executive Secretary, National Action Committee on AfCFTA, Olusegun Awolowo, said AfCFTA represents a good opportunity to harness and leverage the vast potential of the blue economy within the ports and maritime sector.

Awolowo said the AfCFTA is the biggest thing the African Union and leaders have come up with for the continent with zero tariffs on imports from Africa into Nigeria.

He said it is a market of 1.2 billion people and has a combined Gross Domestic Product (GDP) of some $3 trillion, adding that the NCS has realised that revenue is going to fall short when the continent starts full implementation with no duty payment.

Awolowo said 16 per cent of Africa participates in global trade, which is the lowest trading bloc in the world, adding that this is why the trade facilitation process is very important for the customs service, especially with borderless trade through e-commerce.

He said the Afreximbank is introducing the Pan-African Payment and Settlement System that will allow countries to pay for goods in their currency wherever country they export to.

He said over the next three years, AfCFTA can further boost the blue economy by promoting sustainable practices, in fishing, aquaculture, maritime transport and resource management for the overall development of African nations.

Awolowo recommended that for the positioning of the West and Central Africa as a hub, there must be investment in infrastructure, including terminal modernisation, closer collaboration among the countries to align their standards and regulations.

He said this is to minimize non-trade barriers and ensure a consistent and smooth operational environment for businesses in the maritime sector.