Nigeria turns to Korea for an end-to-end automated Customs Mgt System

Photo: Nigeria Customs Service (NCS) in operation. Credit: Naijauto

Ghana’s next-door neighbour with the biggest trade hub within the West African region, Nigeria has also turned to Korea to provide them with a full end to end automation of the Nigeria Customs Service (NCS).

This was disclosed by Nigeria’s Minister of Finance, Zainab Ahmed at the end of the Federal Executive Council (FEC) virtual meeting in Abuja.

The deal which will be funded by a private investor according to the Nigerian authorities comes at a cost US$3.1 billion for period of 20 years on Build Operate and Transfer (BOT) with the unnamed investor as the technical partner for the Nigeria Customs Service.

This affirms the fact that the developing countries, especially those in need of revenue from cross-border trade, as well as facilitate trade across their borders, ensure security and transact business in a transparent, efficient and less costly manner, are turning to the Korean Customs Management System which is certified by the World Trade Organisation WTO and the World Customs Organsiation their best ally.

Korean’s Customs Technology is used by many countries around the world and is fully operational in these countries: Ecuador, Nepal, Mongolia, Guatemala, Kazakhstan, Kyrgyzstan, Dominican Republic and Uzbekistan.

In Africa, Ghana, Tanzania and Cameroun have adopted the technology. With Ghana ensuring that the system is tailored made to fit its system which is more import-dependent.

Even COVID-19 has seen cargos through our ports of entry has dropped at all points, including transit by about 45%, the Integrated Customs Management systems ICUMS which was deployed by the government with Ghana Link Network Service as the technical partners have seen good returns in terms of revenues generated since it went live nationwide on June 1, 2020.

Data from the Customs Division of the Ghana Revenue Authority GRA shows that Customs raised total revenue of GHC 816.41 million for June 2020 with Cargo dropping sharply compared to GHC 851.27 million collected in June 2019 when there was no COVID.

If you pick the Kotoka International Airport KIA, for instance, import duty revenues for June were GHc55.4 million, going up 20 per cent over the GHc46 million generated in June 2019, when trade activities were not curtailed by travel and trade restrictions.

The data available to this paper further suggests that revenues are rising sharply by the month. For instance, revenue from the Aflao land border for June was GHC 4,718,082.8, up from just GHC 791,183.50 recorded in March when ICUMS was rollout at the Land boarders. Again, revenue generated in June 2020 from the Elubo was GHC 4,038.105.31, also up from GHC 637,462.78 in March 2020. In Accra at the Jamestown Customs office in March 2020 raised some GHC 9,523,556 in June this year.

Also, if global container trade volumes are to contract by 11% in 2020 (in line with International Monetary Fund (IMF) projections of an 11% contraction of global trade) then an all-time high container ship idling rate of 15% would not be able to bridge the gap with the reduction of demand as well. This automatically means the country which is part of the global trade echo system will also suffer a drop in cargo volumes at the ports which will, in turn, have an impact on targeted revenues.

Meanwhile,  data shows the performance of the ICUMS in June in some borders including the Kotoka International Airport very impressive.

It is also important to note that even in Tanzania, the introduction of the Korean Customs Management System (called TANCIS) in 2012 led to revenue increase from US$390 million in 2013, $495 million in 2014, and $651 million in 2015 and so forth.

Ecuador also implemented the same system model (Called it ECUPASS) IN 2011. In 2012, they collected revenue of $3.5 billion, $3.7 billion in 2014, and $3.9 billion in 2015. The ECUPASS also won a WCO Innovation award at a Technology Innovation forum in Argentina in 2013 (KCS, 2016).

The successes of the Korean Customs Management Systems in Africa and other parts of the world is what pushed the Nigerian Authorities to turn their attention there to secure the system to prevent the huge revenue leakages at the points of entry.

Finance Minister of Nigeria who disclosed this to the FEC meeting said the revenue expected from this automation pegged at $176bn, even though she fell short of giving further details on the arrangements of how the investor will recoup their investments.

Persons closer to the deal have disclosed that even though Ghana’s deal included scanning and all other activities that take place at the ports, that of Nigeria excludes Scanning which is going to be a different contract.

But it important to note that with the help of the Chairman of Ghana Link Network Services Ltd Nick Danso, Ghana got its system for the same price as the Nigerian authorities but for only 10years with the Customs Division of the Ghana Revenue Authority being the owners of the system with Ghana Link providing technical support for the 10 years contract period at 0.75 percent FOB.

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