FEC Ratifies $3.1b Customs Modernization Project

September 2, 2020
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…targets $176bn revenue

The Federal Executive Council (FEC) has approved $3.1 billion for the end to end automation of the Nigeria Customs Service (NCS).

The Minister of Finance, Budget and National Planning, Zainab Ahmed made the disclosure at the end of the 14th virtual Federal Executive Council meeting, presided over by President Muhammadu Buhari.

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Ahmed, who briefed alongside her colleagues Attorney-General and Minister for Justice, Abubakar Malami; Works and Housing, Babatunde Fasola; Information and Culture, Lai Mohammed; Aviation, Hadi Sirika and Communications and Digital Economy Dr Isa Ali Pantami, said the funds will be sourced solely by the concessionaires who will be in charge of the project for 20 years.

The minister who said government is targeting $176 billion revenue generation from the project, explained that the project will enable the complete automation of the NCS processes and procedures using the application and information and technology in all aspects of Customs administration.

Ahmed said that the project was awarded in favour of a firm, E. Customs HC  Projects Nigeria Limited for concessionary period of N20 years.

She explained: “The main objective of the project is to completely automate every aspect of the customs business and to institutionalize the use of smart and emerging technologies that will enhanced the statutory function of the Nigerian Customs Service in the areas of revenue generation as well as trade facilitation and enhancement of security.”

The minister said the consortium, the PPP group approved for the project are led by Messers Y Technologies with four other members.

Ahmed noted: “The committee that led this process also looked at the National Trade Impact process that has been going on for years and confirmed that the Nigerian e-customs project is a subset of the National Trade Impact and would prefer the Nigerian Customs to play it’s led role in the national trading platform.

“The Bionica Technologies West Africa Limited, Bargain Securities and Supplies Nigeria Limited, these are lead sponsor and co-sponsor. We also have The Africa Finance Corporation (AFC) as the lead financier and Huawei Technology as a technical service provider.

“So, council today ratified Mr. President’s approval for the PPP concession for a 20-year period to Messers E. Customs HC Project Limited as a concessionaire for the delivery of customs modernization project.

“This is a project that will not have an immediate cost to the government, the investors are providing all of the financing and this revenue will be deployed in three phases and they will look over the investment in the concessionary period of 20 years.

“The key point is that it is not costing the federal government one thing, the $3.1 billion being proposed will be sourced by the sponsors and the partners.”

Responding to questions, Ahmed further explained: “The Nigerian Customs currently has some level of automation services but it’s not all of its serves that are automated.

“This is an end to end automation of all of Nigeria’s Customs Service processes and it’s going to bring huge value to the country.

“So, this investment of $3.1 billion is broken down into capital investment of $1.2 million which will be done in three phases over 36 months by these investors and $1.1 million is our projection of the operational cost over the 20-year period of the implementation of this project.

“This project has the potential to yield up to $176 billion of revenue for the project and the consortia that are providing this investment are going to be paid over time according to the schedule that is negotiated for their investments including their profits and cost.

“So, this is the best possible way for Nigeria to roll out important capital project using funds from the private sector and providing service for the use of Nigerian people and the government.”

Recall that the strategic plan for the e-Customs Project began in 2016 when 94 companies responded to a bid request by the Nigeria Customs Service (NCS.)

When implemented, the e-Customs Project will encompass among other things the deployment of e-Customs Production Applications including Production Applications include e-Clearance, e-Port System, Risk Control Centre (RCC), Logistics Management System (LMS), Electric Cargo Tracking System (ECTS), Intelligent Gate (i -Gate) and Mobile Enforcement (ME).

The memo presented to council indicated that the e-project will ensure a seamless co-ordination of all NCS operations through the development and deployment of e-Enforcement Platform with Unified Communications, Intelligence Video Surveillance (IVS) to facilitate mobile Customs operation.

It informed that the Project will introduce a robust Enterprise Network covering NCS sites (Headquarters, Zonal Headquarters, Area Commands and Border Stations) inclusive of a Centralized Data Center with Disaster Recovery that will enable the Service Interchange Intelligent Data with other departments, partner Government Agencies in the trade chain, and other Stakeholder Agencies such as the Standards Organisation of Nigeria, Central Bank of Nigeria, National Agency for Food and Drug Administration and Control, Federal Ministry of Finance and Federal Inland Revenue Sercice.

According to the memo, “To ensure that there are no interruptions of the e-Customs Project, a critical part of the Project will include the deployment of Integrated Power Supply Solutions on all NCS sites.

“This will be enhanced through the development and deployment of Cyber Security Networks for all NCS Data Centers, as well as a Monitoring and Communications Systems, which will consist of Intelligent Video Surveillance and Unified Communications Systems.

“Finally, the e-Customs Project will introduce advanced and faster X-ray scanners at the airports, seaports and land borders to assist NCS improve clearance efficiency in order to meet trade facilitation needs.”

The memo also listed the benefits of the e-Customs Project to include; to

facilitate and hasten the urgently needed optimization of the NCS Systems which will enable trade facilitation and efficient revenue collection and this will in turn enhance Nigeria’s regional and global economic competence.

Others are that, “It will contribute to improving national security through the development of systems and networks aimed at prevention and suppression of smuggling activities.

“Furthermore, the e-Customs Project will improve Customs’ clearance efficiency to facilitate trade, support end user satisfaction and foster mutually beneficial relationships between consumers and the NCS, as required to improve the confidence of all stakeholders in the NCS.

“It will minimize government spending and allocation to the NCS for tasks already contemplated such as digitization of Customs processes, integration of ICT and intelligence facilities, among others. This in turn would minimize government borrowing and spending whilst diverting funds that could have been used to facilitate this project to address other pressing needs of the government.

“Above all, it will eradicate tax and duties’ evasion towards increasing revenue generation with the introduction and interplay of the Unified Customs Management System, e-Port, Logistic Monitoring, electronic-Cargo Tracking and Mobile Enforcement Systems, which all imports and exports would go through.”

The Minister of Information and Culture, Lai Mohammed, in his remark, also emphasized that the federal government will not pay anything for the e-Customs Project.

The Council also approved the sum of N13.122 billion for the upgrade of safe towers in Lagos, Kano, Abuja and Port Harcourt airports.

Sirika said analogue systems in the airports are to be upgraded to digital just as weather reports will now be transmitted instantly as against the current hourly current practice.

Fashola said council also gave two approvals for the Gadan Zaima-Zuru-Gamji road in Kebbi state for two approvals.

He said the first was to ratify the emergency works that were undertaken over seven kilometers between and 2019 at N1.145billion, and then to approve the award by the same contractor to now complete the balance of 55 kilometers which was approved also at N10.589billion.

Patami on his part said FEC directed that all ministries, department and agencies should use Galaxy Backbone for upgrade and digitization of ICT facilities.

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