NIGERIA Country Profile

Customs Administration

Individual Corruption

The Nigeria Customs Service (NCS) is a notoriously corrupt public institution, according to the Transparency International Global Corruption Barometer 2005. Various customs laws and regulations are applied arbitrarily in order to solicit bribes.

Business Corruption

According to Global Integrity 2008, due to corruption, customs and excise laws are not always enforced uniformly or without discrimination. The process of clearing goods through Nigerian ports is very bureaucratic and prone to corruption. According to the US Department of State 2009, companies are known to attempt to undervalue their goods to evade duties. Furthermore, due to the high number of companies operating in the informal sector that are not formally taxed, many companies resort to smuggling instead of legal trade.

As a response to the high levels of duty evasion, the government has instituted a 100% inspection requirement in the Port of Lagos, which has resulted in massive congestion and delays. However, according to the US Department of State 2009, shippers now report that the efforts to modernise and professionalise the process have reduced the resulting clearance times caused by the congestion and delays.

Political Corruption

The borders of Nigeria are porous, and smuggling through Nigeria's seaports and land borders is common. In particular, the smuggling of subsidised Nigerian petrol is widespread and lucrative. Due to the high levels of smuggling, the Nigeria Customs Service (NCS), a paramilitary organisation, has an armed paramilitary unit. According to the US Department of State 2009, the smuggling is facilitated by the high frequency of corruption amongst customs and port officials.

Many government agencies are allowed to operate in Nigeria's harbours and airports, but only the NCS and the Nigeria Ports Authority (NPA) are empowered to assess and collect duties through an authorised procedure. Trade is frequently diverted through Benin and Togo and conducted informally to avoid the high risks of fraud and corruption in Nigerian customs.

Some observers suggest that the complexity of regulations and insufficient training of customs officials result in mismanagement, misinterpretation and corruption by NCS staff. Nigeria is known as one of the most uncertain customs environments in the world, and the NCS has been involved in several corruption scandals in which NCS officials have received USD millions in bribes. Tariffs are above world average, which is thought to contribute to smuggling. A tariff reform in 1995-2001 was not consistently implemented. Recent attempts have been made to improve the customs service.

In 2007, three subsidiaries of the oil service company Vetco pleaded guilty to US authorities for authorising a Swiss based freight company, Panalpina, to make a series of illegal payments amounting in total to USD 2.1 million to the Nigerian Customs Service officials between 2002 and 2005 in exchange for preferential treatment.

Frequency

The World Bank & IFC: Doing Business 2010:
- It takes an average of 25 days and 10 documents to export a standard container from Nigeria, at a cost of USD 1,263.

- It takes an average of 41 days and 9 documents to import a standard container to Nigeria, at a cost of USD 1,440.

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the efficiency of customs procedures (formalities regulating the entry and exit of merchandise) in Nigeria a score of 2.7 on a 7-point scale (1 being 'extremely inefficient' and 7 'extremely efficient').

Transparency International: Bribe Payers Index 2008:
- Business executives give the customs a score of 3.7 on a 5- point scale (1 'not at all corrupt' and 5 'extremely corrupt').

The World Bank & IFC: Enterprise Surveys 2007:
- More than 33% of companies expect to give gifts in order to obtain an import licence.