Enhancing revenue generation with digitalised Customs service

When discussing Nigeria’s escalating debt, experts often agree that the core issue is a chronic revenue generation challenge, not the debt itself. So, the options on the table include increasing revenue generation, particularly from non-oil sources, as the shift towards cleaner energy intensifies and the craving for fossil fuels declines.

However, efforts to increase revenue and boost foreign exchange reserves are hindered by excessive bureaucracy, outdated infrastructure, and a fragmented trade facilitation system. Recognising its crucial role in trade, revenue, and security, the Nigeria Customs Service initiated the Trade Modernisation Project. This presidential initiative is a part of the Federal Government’s economic rejuvenation and diversification agenda. The TMP leverages cutting-edge technologies to automate and streamline Customs operations, thus smoothing international trade. Succinctly put, the project stands on a tripod; boosting revenue generation, deepening legitimate trade and combating corruption.

The Federal Government is eyeing $250 billion in revenue over a 20-year concession period through the TMP, which is poised to have a profound, long-term impact on the country’s social and economic development. Implemented through a Public-Private Partnership, detailed in a concession agreement signed on May 30, 2022, between the Federal Government and Trade Modernisation Project Limited, the initiative delineates responsibilities and risk allocation. Ratified by the Federal Executive Council on April 18, 2023, the agreement paves the way for the transformation of the Nigeria Customs Service into an efficient organisation equipped with the latest technology and facilities, facilitating streamlined services for businesses and government agencies. Under the agreement, the concessionaire commits to investing $3.2 billion over the concession period, with 2,500 Customs officers slated for training by the first quarter of 2025 to drive the initiative.

The project, implemented in phases, sees Phase 1 already underway, with TMP having committed over $400 million in investments by December 31, 2023. The concession expires on September 27, 2042.

Comptroller General of Customs, Mr Wale Adeniyi, prioritises trade facilitation, emphasising simplification of processes. The project’s three phases span deployment, management, and eventual handover to Customs officers. Chief Superintendent of Customs and National Public Relations Officer, Abdullahi Maiwada, at a recent interface with journalists, underscored the project’s role in facilitating trade and revenue collection, while General Manager of TMP Limited, Mr Ahmed Ogunsola, highlighted ongoing collaboration with the NCS to achieve outlined milestones, including the development and deployment of a new Customs management system.

Ogunshola said that the system’s software, described as the Unified Customs Management System, has seven layers of security designed to withstand cyber attacks. As part of this commitment, funds have been allocated to cover pre-development expenses, the creation of a new Customs platform, procurement of new scanners, initiation of geospatial activities, upgrade of ageing network infrastructure, and the establishment of a fully integrated Project Management Office, inaugurated by the Comptroller-General of Customs on June 1, 2023. Additionally, construction is underway for a Tier 3 Data Centre cum Risk Control and Command Centre at the new NCS headquarters, positioning it as one of the leading customs facilities in Africa.

These initiatives align with the asset transfer process from the NCS to TMP. TMP anticipates the transfer of additional assets, including ageing network infrastructure, the legacy Customs system, and other physical assets, as outlined in the project’s scope and provisions. The total projected expenditure for the project across the 20-year concession period is approximately $3.2 billion, encompassing both capital expenditure and operating expenditure. Each of the three phases, spanning the entirety of the concession, involves significant investment. Phase one involves a CAPEX investment of about $300 million, while phases two and three require investments of $465.4 million and $435.8 million respectively.

The CAPEX of $1.2 billion for each deployment phase includes hardware, Customs application, equipment, application implementation services, technology infrastructure, marine deployment, and special purpose vehicle costs. The estimated OPEX for the concession period amounts to $1.896 billion, covering fixed and variable costs, expenses, and charges associated with the day-to-day operations of the NCS platform.

The proposed work by the concessionaire entails developing, deploying, implementing, and ensuring timely delivery of the project across NCS locations nationwide. This will be carried out according to the specified implementation schedule, output specifications and standards, and technical requirements outlined in the agreement.

For capacity fortification, TMP has signed and is implementing nine technical agreements with its technical and financial partners. These partners are as follows: Access Bank Plc – Financial Partner; Huawei – Lead Technical Partner; CBXP Limited – Software Development; Nuctech Company Limited –Non-Intrusive Inspection (cargo scanners); Boya E-Project Limited – Independent Expert to NCS and TMP; Emi Solutions Limited – Quality Assurance Expert to NCS and TMP; Chert Solutions Limited – OEM representative for hardware and services; Sambus Global Nigeria Limited – Geospatial Services; Sandhall Global Consulting and Services Limited – Facility Management and Site Improvement.

The project is structured into three phases: Phase One – Year One to Year Three (Initial Deployment): This phase focuses on implementing core project services, including the Unified Customs Management System comprising revenue, enforcement, and office automation clusters; Trade Portal serving as a central hub for trading activities and integration with other government agencies;  Non-Intrusive Inspection System integrating 67 cargo scanners for enhanced cargo scanning and post-clearance audit; Risk Control Centre for nationwide command and control activities; Electronic Cargo Tracking System for monitoring cargo transit; Cargo Release System facilitating automated cargo release; Geospatial Services utilising GIS for enforcement and border management; telecommunication, video surveillance, and connectivity backbone; capacity building programme focusing on knowledge and skills transfer within the NCS.

This comprehensive approach ensures the modernisation and efficiency enhancement of the NCS operations across various fronts, contributing to streamlined Customs processes and enhanced trade facilitation. The concessionaire will develop, deploy, implement, and ensure the timely delivery of the project at NCS’ relevant locations nationwide, in accordance with the following implementation schedule, output specifications and standards, and technical requirements set out in the agreement. TMP is implementing the project in line with the following overall plan.

Phase one – Year one to Year three (initial deployment): This phase is broken into two segments which are Year one to Year three and Year four to Year six. Year one to Year three focuses on implementing the project’s core services which cover the Unified Customs Management System which is the core of the operational activities and underpins the decision chain and command of goods clearance for release, in line with requisite taxes and waivers of the Federal Government.

The UCMS is divided into three main clusters. The Revenue Cluster consists of modules that support the revenue generation functions of the service in line with the revenue-generating business processes of the NCS. Again, there is the Enforcement Cluster which consists of modules that support the enforcement functions of the service in line with the enforcement-related business processes of the NCS.

Thirdly, there is Office Automation Cluster which consists of modules that enhance the administrative functions, in support of frontline and operational activities of the NCS. The automation modules will be fully developed during the expanded deployment stage of this phase.

There is a trade portal: This is a central hub of all trading activities that key into the UCMS and will provide the integration interface for other government agencies. The trade hub will further simplify how the public obtains import and export licences and other non-NCS related certifications that enhance the import and export decision capacity of the NCS.

There is also the non-intrusive inspection system that integrates 67 cargo scanners of various types and capacities at seaports, airports and land borders. The system will provide anonymity in cargo scanning, coordinated release decisions and seamless post-clearance audit to ensure optimal performance of inspection image analysts.

The Risk Control Centre is where command and control activities will be undertaken to provide nationwide visibility to the NCS. The RCC will be two-tiered with each zonal command having its own mini-RCC, all of which are seamlessly integrated into the RCC at the headquarters.

Electronic Cargo Tracking System is part of the package and it allows the NCS to track all cargo transiting through the country. It covers cargo marked for re-export, either through other land borders or through Free Trade Zones, as well as excise cargo for manufacturing purposes. Cargo will be monitored through electronic seals.

As it is in foreign climes, there is the Cargo Release System that will provide physical infrastructure to manage the automated release of cargo once clearance has been obtained. The system will entail an intelligent gate system (i-Gate); a truck and driver identification and management system; an electronic seal integration system; and port traffic management integration. Geospatial Services will ensure the use of Geographic Information System to enhance the operations of the NCS, majorly through an enforcement system, which will provide an operational platform for the NCS to conduct physical inspection of goods, while gathering evidence on-the-go, to ensure transparency and preserve the integrity of operations.

There is the Border Management System that entails the monitoring of border traffic and providing tactical support for border patrol teams, as well as border traffic intelligence. This keyed into the overall national security architecture of the country through intelligence briefings. For telecommunication, video surveillance and connectivity, it provides the information and data management backbone for the NCS and covers the main and recovery data centres. Nationwide Campus Fixed and Wireless Wide Area Network; Campus Communication Management System; and Nationwide Live Video and Closed Circuit Television System.

An aspect of the TMP covers capacity building to ensure that knowledge and skills are continuously transferred to the NCS by the project technical partners. This phase will focus on developing an expansive capacity-building programme, supported with the required technology solutions, in terms of infrastructure, software and services for efficient skills development and knowledge transfer, within a train-the-trainer framework.

Year Four to Year Six is the expanded deployment phase and focuses on office automation to support the administrative and operational functions of Customs in line with business processes, finance and accounts, human resource management, document management, tariff and trade policy management, data analytics and business intelligence, continuous capacity building and knowledge transfer.

Phase Two (Year Seven to Year 12) will focus on the deployment of the first upgrade/update to the technology systems, including the deployment of marine-related technology and related equipment. The capacity-building activities will continue in this phase to enhance the skills and knowledge of the NCS for technology optimisation.

Phase Three (Year 13 to Year 20) will see the deployment of the second and continuous upgrade to the technology systems, as well as the hand back of the assets to the NCS, given the expected independence of skills and capacity of NCS personnel, based on the continuous capacity building activities of the project.

The Project Steering Committee is composed of key public and private sector stakeholders. One of the key stakeholders is the Director, Home Finance at the Federal Ministry of Finance. For the Federal Ministry of Justice, the Director of Legal Services and Legal Adviser to the NCS is involved.

At the Infrastructure Concession Regulatory Commission, the Director, PPP, is part of the initiative. At the NCS, the Comptroller-General of Customs, Deputy Comptroller-General of Customs, HRD, Deputy Comptroller-General of Customs, T&T, Assistant Comptroller-General of Customs, ICT-Modernisation are parties to it. For Trade Modernisation Project Limited, the Chairman and Managing Director, Project Implementation, are in the ecosystem.

The NCS collaborates with TMP in project implementation through the Project Implementation Committee, while TMP implements the project through its technical and financial partners, as well as technology and services vendors. To ensure that the CA is implemented within scope, the NCS and TMP have jointly appointed an independent expert to provide clarity, where necessary on project scope and responsibilities. Both the NCS and TMP have also jointly appointed a quality assurance expert to ensure that implementation standards align with the agreed global standards in the project.