In April 2024, the Nigeria Customs Service (NCS) launched the pilot of the AEO programme, a trusted trader programme (TTP) that grants preferential treatment to economic operators (i.e., manufacturers, importers, exporters, transporters, customs brokers, warehouse operators etc.) that have shown a high level of compliance with customs laws and regulations. Actual implementation of the pilot commenced in September 2024 and the five pilot participants have recently reported a marked reduction in customs release and cargo clearance. 

Earlier this year, the NCS organized an AEO pre-launch stakeholder session, where stakeholders were informed of NCS’ decision to start full implementation of the AEO programme. The NCS would launch the AEO full implementation in February 2025 and intending participants are expected to indicate their interest in the scheme by lodging a formal request. Interestingly, the NCS indicated that once the AEO is launched, there would be a phased discontinuation of the Fast Track Scheme (FTS), which many economic operators deploy today to expedite cargo clearance. Why is this a key theme? Today, the requirements to access the FTS are not onerous with several manufacturers able to access the scheme by virtue of simply being a manufacturer without an outstanding assessment or record of non-compliance.

However, to access the AEO programme, economic operators must demonstrate vide robust documentation and practice (a rigorous review process that could span over six months) that they have strong internal compliance processes and can be trusted to comply with the customs laws and regulations. If the FTS is discontinued and current FTS beneficiaries have not made the transition to the AEO programme, then-current FTS beneficiaries could be left without a TTP to leverage for expedited cargo clearance. Why is the AEO accreditation process rigorous? The benefits provided by the AEO programme are significantly more than the benefits provided by the FTS, hence the need to ensure that only highly compliant businesses are rewarded. For instance, certain AEO beneficiaries will be able to pick up consignments from the ports without customs checks, inspections, and escorts. Surely, only trusted businesses should be afforded this type of benefit. For more on the AEO programme, please refer to AEO in Nigeria. 

The Nigeria Customs Service Act, of 2023, introduced formal post-clearance audits (PCAs) exercises. This means that the NCS can request to review import/export transactions and the compliance thereof for any period of up to 10 years. However, the NCS has always carried out PCAs, so what is new? At the recent AEO pre-launch stakeholder session, the NCS communicated its intention to place greater focus on the post-import and export environment. This follows the plan to adopt a more data-driven and risk-management approach to revenue collection and trade facilitation. As such, the NCS would not only adopt a transaction or sector-based PCA as is presently done but also a comprehensive PCA. 

Generally, comprehensive PCAs involve a post-entry documentation review of commercial transactions (i.e., invoices, bank statements, accounting records, customs declarations, purchase/supplier agreements, etc.) with the purpose being to ensure that economic operators were fully transparent with their declarations at the point of importation or exportation. Of course, incidents of non-compliance will be met with statutory penalties.

With the NCS looking to double its collection from last year, and tariff increases being the less likely source of a significant increase in collection, we anticipate that raising back duty assessments would be the focus of the NCS.

In March 2022, the FGN, vide the Customs, Excise Tariff, Etc. (Variation) Order, 2022, rolled out a three-year excise regime starting from June 2022 and sunsetting in May 2025. With May 2025 around the corner, we expect that a new excise regime will be rolled out in the first half of 2025. 

What does this mean? There could be increases/decreases in current excise rates; variations to the way excise is imposed on various items (e.g., specific to ad-valorem, ad-valorem to specific, or a combination of both specific and ad-valorem); and imposition of excise on new items. Recall that the previous administration attempted to introduce excise on plastic, automobiles, and telecommunication services, whilst the new administration is already attempting to introduce excise on telecommunication services, gaming/betting services and some foreign exchange gains derived through currency conversion.

In July 2024, Nigeria formally launched the implementation of the Guided Trader Initiative (GTI) under the African Continental Free Trade Area (AfCFTA). The launch was followed by the successful shipment of products from Nigeria to Kenya at preferential tariffs. 

Why is this significant? The state of the economy, especially in the consumer goods sector, has seen consumer spending decrease with rising inflation. This has necessitated several boardrooms to not only go on a cost reduction drive but also begin looking for alternative markets to fill the hole created by decreased sales. 

With the AfCFTA providing preferential tariff access to African markets, and exports providing foreign exchange earnings, which can help businesses manage their exposure to the Naira devaluation, we are convinced that more Nigerian businesses will begin exploring the African continent as an export destination. 

Nigerian businesses must also recognize that the AfCFTA is a multilateral agreement that is built on reciprocity. Hence, as they seek new markets in other African territories, other African businesses will also look to seek a new market in Nigeria. This means that Nigerian businesses must not only stay competitive relative to other Nigerian businesses but also within the African business community. 

As Nigerian businesses look to explore the AfCFTA, it is important to remember that only the GTI may be applicable in 2025. This means that trade would continue to happen only within the GTI participating countries. At the time of writing this publication, ten (10) countries are participating in the GTI i.e., Cameroon, Egypt, Ghana, Kenya, Mauritius, Nigeria, Rwanda, South Africa, Tanzania, and Tunisia with more expected during the year.