CTN Levy: Another Tax Burden?

It is said that Africa’s economic development partly depends on reduction of transactions costs which are currently high. The port is a major focal point in trade facilitation having a great role to play in the reduction of trade transactions. The Cargo Tracking Note (CTN) levy required to be paid in foreign currency at Nigerian ports looks set to further aggravate the harsh operating environment. In this report Blessing Nwobodo presents the views of some industry watchers on the levy.
Not well informed of the new Cargo Tracking Note (CTN) levy introduced at the nation’s seaports, Emeka Okolo an Abuja based importer of electronics equipment says he was first intimated of the new development by his colleague. According to him, “I heard this first from my friend but he didn’t explain it well to me. Since I wasn’t ready to go to the port yet, I did not do a follow up on it. However I am shocked that the federal government could come up with such a levy when it is aware that the Nigerian ports are the most expensive in the sub-region.”
Since the announcement of the CTN levy by the Nigerian Ports Authority (NPA) in some national dailies on the 31st of December 2009, the controversial levy has generated argument from stakeholders, protesting its implementation at a time when there are pleas that the cost of doing business at the seaports be reduced to make the seaports business-friendly and encourage patronage. In the advertorial, the NPA claimed that the Federal Executive Council (FEC), at its meeting of 9th of December 2009, approved the implementation of CTN system as part of  measures to take care of cargo security and safety. Part of NPA’s statement reads:
“Consequently from 11th January 2010 every commodity loaded or unloaded (import/export), at or with Nigeria as the final destination has to, prior to shipment, obtain a Cargo Tracking Note or International Cargo Tracking document from a Nigerian Ports Authority representative at all ports around the world.
Therefore, all cargo destined for or out of Nigeria need to be accompanied by (a) Cargo Tracking Note and every bill of lading has to be accompanied by a corresponding CTN number.”
The statement continues, on requirement of shipper, “A Cargo Tracking Note is with effect from 11th January 2010, part of the documentation required for cargo clearance. Consequently, each bill of lading must correspond to a Cargo Tracking Note issued by (an) authorized representative.
The company: Transport and Ports Management System Ltd Antaser Afrique (TPMS) which is designated by the Federal Government of Nigeria is hereby confirmed as the sole representative of Nigerian Ports Authority and the only authorized agent to issue a Cargo Tracking Note.”
However, following stiff opposition from stakeholders, the NPA decided to suspend the implementation of the levy. A technical committee was set up to come up with measures that will ensure that the new levy does not add costs and bureaucracy at the ports. The decision to set up the committee was a fallout of a meeting held by NPA officials with the Manufacturers Association of Nigeria (MAN) and the National Association of Chambers of Commerce and Industries, Mines and Agriculture (NACCIMA).
Suspecting an ulterior motive on the part of NPA, MAN on the 25th of January which coincidentally was the day the technical committee was supposed to submit its report, arranged for a press briefing in protest of the implementation of the CTN levy maintaining it will overburden both importers/exporters and ultimately, the Nigerian public.
Alh. Bashir Borodo, President, MAN, submitted at the briefing “We observed that the agreement to halt the implementation of the new levy pending when the issue is properly reviewed is currently being flouted by the NPA. MAN’s position is that the levy is outrageous and unnecessary.”
A staff of NPA who declined giving his name expressed disappointment at the protesting stakeholders, claiming they are more concerned about money which according to him is minute compared to the service for which the CTN levy was introduced. In his opinion “Nigerians will always complain each time new fees are introduced, even though it is for their good. I am not surprised at the outburst of the stakeholders but I am disappointed that they are more concerned about the money they are expected to pay. The CTN levy is minute compared to the service the company is expected to render. With the CTN levy you are rest assured that your cargo is safe and secured.
We should not also forget that there are concessions on some of the goods imported and exported of which raw materials for production is one. I wonder then why MAN should be making so much noise about the issue. I agree that it will affect goods that are not on concession. However like I said before the CTN levy is in their interest.”
Reacting to the issue of concession raised by the NPA staff, Emeka Abara, National Public Relations Officer, National Council of Managing Directors of Licensed Customs Agents, says the aim of concessions is to reduce the cost of doing business in Nigerian ports. An aim he maintains will be defeated if the government insists on implementing the CTN levy. “Compared to other neighboring ports, the Nigerians ports are a lot more expensive and that was why concession was introduced to reduce costs. The CTN levy is too much and not necessary, after all, how many police reports do we have of missing cargos in a year that they expect importers/exporters to pay about 50,000 dollars per 20-feet container? CTN will defeat the aim of concession and stimulate importers or exporters to look elsewhere to do business.
Apart from the alleged outrageous cost expected to be paid, other reasons which stakeholders gave for kicking against the levy includes the fact that international business stipulates insurance cover for shipment of goods either as import or export commodities. The CTN is therefore an unnecessary financial burden that would hurt the economy and encourage further diversion of cargoes to neighboring countries with consequent challenges to the Nigeria Customs Service in terms of increase in the tempo of smuggling.
Stakeholders are also kicking against the choice of a foreign based company as consultant and sole representative of the NPA for the management of the CTN when Nigerian based consultants can effectively deliver the same service, if necessary.
Stakeholders also finger the requirement that payment be made in foreign currencies stressing the implication that it will further strain Nigeria’s dwindling foreign exchange reserves.
For these reasons, it is expected that the federal government rethinks the levy considering the implication its implementation will have on the maritime industry and the economy in general.