CI-NEWS

Economy/Business: Customs challenged to mobilise 859.2 billion FCFA.

2020-02-11

No: 470

Economy/Business: Customs challenged to mobilise 859.2 billion FCFA.

The 2020 state Budget has effectively been launched across the nation. But the Key challenge that kept re-emerging from all the actors is the ability to raise the needed finances. A majority of the funds is expected to be generated from oil revenue, forest products, taxes, grants, loans and from the customs department as well. Details from the Directorate of Customs reveal that the 2020 Finance Law has provided for a set of new customs measures which revolve around three major axes: broadening the tax base and reducing tax expenditure; improvement of the social climate and the business environment: and finally, fighting against commercial and customs fraud. By this, the Customs Administration is charged to mobilize more than FCFA 859.2 billion for the state. Some new provisions, such as raising more money from goods that are of higher demand in the world market, as well as reinforcing Territorial Surveillance to check smuggling in order to let the state get the needed resources from customs duties generation from the importation of goods have been implored.

In this mission to accompany the state in raising financial resources, the customs department has been braving some odds. The security situation in some parts of the country has slowed down customs activities. Officials of the Customs Directorate say the persistence of fraud and illicit trade, the increasing volume of e-commerce, the trafficking of endangered species, trafficking and smuggling of fake medication and other counterfeit goods continue to make their job an uphill task.

“We are strengthening territorial surveillance to prevent smuggling”

Edwin Fongod Nuvaga Director General of Customs

After successful implementation of the EPAs with the European Union with quite minimal losses, the Customs Directorate (DGD) is well equipped to face the exigencies of implementing of African Continental Free Trade Area (AfCFTA) which goes operational on 1st July 2020. But ahead of its implementation, DGD is concerned with mobilizing a whopping 859.2 billion FCFA as its quota for the 2020 budget. In this interview culled from Cameroon Insider, Edwin Fongod Nuvaga, Customs DG, sheds light on how they would meet the high expectation. Excerpts:

This question puts into focus the measure that the Customs Administration has taken to guarantee the mobilization of significant budgetary revenues of more than FCFA 859.2 billion which falls on it during the 2020 financial year. With specific regard to revenue mobilization, the Customs administration has taken a number of measures from the promulgation of the 2020 Finance Law to optimize the financial resources of the state, some of which are as follows:

The programming of the Custom IT system to take into account the new provisions, especially with regard to certain products such as those that have seen increase in the rate of export duties. This is case with wood in log which goes up from 30% to 35%, sawn wood from 5.65% to 10%, gold, diamond, sorghum and other high demand products from 5% to 10%. The same is true for certain goods that have been newly subjected to ad valorem excise duties, in particular hydroquinone, hair wigs, motorcycles, video games, etc.

Strengthening of the territory surveillance system at land, air and sea borders, in particular, to prevent products which have undergone an increase in the level of taxation from entering Cameroon by smuggling.

Raising the awareness of customs staff and economic operators on the new provisions.

Can you shed more light on the efforts to curb customs fraud and smuggling and also tell us what plans you have to modernize the Cameroon Customs Administration?

The Customs Administration Modernization plan is structured around four main pillars that stem from the main missions of customs: economic, fiscal, assistance to other stakeholders.

For the fiscal pillar, the action of the Customs administration revolves around four levers:

Control and automation of the handling of goods, regardless of the means of transportation;

Control of the tax base through a good understanding of the elements of the customs declaration during the assessment of duties and taxes;

The rationalization of tax expenditure through the harmonization of the incentives for investment and the systematic audit of the facilities granted;

Securing revenue through generalized automation of customs clearance procedures.

Regarding the economic mission, the Customs Administration Modernization Plan rests on two major foundations. On the one hand you have the full coverage of the territory by surveillance units to combat smuggling and all forms of trafficking. These operational units are supported in the field by the special operation codenamed HALCOMI (Halt to Illicit Trade). On the other hand, there’s the promotion of nascent national industries against unfair competition or the threats of foreign products benefiting from subsidies in their countries of manufacture, in particular through administrative measures and appropriate Customs procedures that enable the local industries to minimize their production costs and strengthen their competitiveness.

With regard to the assistance mission, the Customs Administration continues to establish mutual support platforms with public administration and even private sector stakeholders. We could cite the following in this light: the mutual assistance protocol on the surveillance of waterways signed with the Ministry of Defence; the collaboration protocol with the Public Contracts Regulatory Agency on the control of equipment and materials imported within the framework of public procurement; the memoranda of understanding signed with the maritime professions, customs brokers, banks, etc. In this regard, we can also highlight the role of Customs in the collection of fees and charges on behalf of other stakeholders such as SODECAO, FODDEC, SGS, etc.

This year, the African Continental Free Trade Area (AFCFTA) is expected to go into effect. How ready are you for this and what do you think Cameroon stands to benefit from it?

The Africa Continental Free Trade Area should not present any particular challenges for customs in terms of its implementation. We have proven experience from our successful implementation of the Economic Partnership Agreement with the European Union. In fact, the Customs Administration will have to meet three main challenges: First, taking the necessary steps to effectively verify the “African origin” of the goods to ensure that they meet the criteria defined in the Rules of Origin. The next step will be to ensure that these so called “Originating” goods meet the standards set by the competent agency (ANOR).

In terms of spinoffs, the African Continental Free Trade Area is not intended to increase customs revenue. On the contrary, in the long run it will liberalize the import duty on 97% of goods originating from African Union Member States. Its biggest long-term goal is rather African economic integration and trade facilitation between African states. If we organize ourselves to benefit from the fallout of the initiative, one can rather expect a more vibrant local industry and an increase in revenue from domestic taxes.

While much is expected from you to furnish the state budget, the AFCFTA is going into effect. How do you think the AFCFTA will affect the financial resources you can raise?

The AFCFTA is expected to go operational on 1st July 2020. But the customs tariff liberalization process will be very gradual. The draft Annex on tariff concessions envisages the adoption of a tariff dismantling scheme in 3 product categories: immediately liberalized products (90% of tariff lines), sensitive products (7% of tariff lines) and products excluded from liberalization (3% of tariff lines). As concerns the products for immediate liberalization (90%), customs duties will be eliminated over a period of 5 years for non-least developed countries (non-LDCs) and 10 years for least developed countries (LDCs). Elimination of customs duties for sensitive products shall be over a period of 10 years for non-LDCs and 13 years for LDCs. Since CEMAC countries are submitting a common schedule for liberalization and they are made up of LDCs and non-LDCs, it is expected that we will fall under the 10 and 13 years liberalization timetable, respectively for ordinary and sensitive products. Besides, liberalization of sensitive products shall begin from the sixth year of the start of implementation. The identification of sensitive products and those excluded from liberalization is made on the basis of many criteria. Judging from the above, we do not expect the impact on customs revenue to be drastic and immediate, but it will be gradually spread over a couple of years.

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Economy/Business: Customs challenged to mobilise 859.2 billion FCFA.