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Country Commercial Guides for FY 2000: Nigeria Report prepared by U.S. Embassy Abuja, released July 1999 Note*

CHAPTER VI: TRADE REGULATIONS AND STANDARDS

TARIFFS AND IMPORT TAXES

Nigeria established a new tariff structure on March 1, 1995. Under the new structure, import taxes ranging from 5-60 percent are levied on imported goods. This new tariff structure is expected to be reviewed after seven years.

The Nigerian 1996 budget stipulated that payment for import duties must be collected by the Nigerian Customs Service in association with government-appointed accounting/auditing firms and be paid to the federal treasury through the some selected banks listed below:

-- First Bank Of Nigeria Plc
-- Afribank
-- Union Bank Of Nigeria Plc
-- Universal Trust Bank
-- United Bank For Africa Plc
-- FSB International Bank
-- Diamond Bank

For information on taxes on specific goods contact:

-- Federal Ministry of Finance
-- Federal Secretariat
-- Phase I
-- Abuja
Tel: (234-9) 234-0932, 234-0936, 234-0903

The list of banned items has been reviewed (See Prohibited Imports below.)

CUSTOMS VALUATION

The Nigerian Customs and Excise Tariff uses the Customs Cooperation Council Nomenclature (CCCN). Duties are either specific or ad valorem, depending on the commodity, and are payable in Naira upon entry. Import tariff is non-preferential and applies equally to all countries. In addition, all imported goods must be insured by a local insurance company.

A special duty may be imposed on imported goods if the government feels that such goods are being dumped or unfairly subsidized, thus threatening established or potential domestic industries.

Duties previously paid on abandoned, reexported, damaged, or destroyed goods may be refunded. However a claim must be made before the goods leave customs custody. A destruction certificate must be obtained from a customs officer to obtain a refund of duties paid for goods that were subsequently destroyed.

Upon presentation of a customs certificate attesting to the landing of goods in another country, duties paid on such goods in Nigeria will be refunded.

Overpaid duties may be refunded upon application to customs within 12 months of importation. Nigeria is a signatory to the United Nations International Convention to Facilitate the Importation of Commercial Samples and Advertising Material. Samples of commercial value may be imported duty free under the bond. In practice, however, customs officials exercise considerable discretion in rejecting requests for duty free admission even in cases involving samples or patterns.

The 1996 budget restated that "Patterns and Samples, cut, mutilated, spoiled or otherwise rendered unmerchantable" shall now attract import duties under Schedule 2 Decree No. 1 of 1988.

IMPORT LICENSES

Nigeria ceased issuing import licenses for importation of goods in 1986 when the Structural Adjustment Program was established. Importers are now required to open an irrevocable letter of credit after receipt of an approved revised Form "M" processed through their banks. EXPORT CONTROL

The Nigerian Government prohibits the exportation of the following items:

1. Raw hides and skin.
2. Timber (whether processed or not) and wood in the rough excluding furniture component, gmelina, railway slippers, floor and ceiling tiles, doors, windows and pallets.
3. Raw palm kernels.
4. Unprocessed rubber and rubber lumps.

IMPORT/EXPORT DOCUMENTATION

According to a 23-point "Guidelines for Imports into Nigeria," effective April 1, 1996 all imports into Nigeria must carry a clean report of finding (CRF) and an Import Duty Report (IDR) to be cleared through customs. Previously, imports valued less than USD 1,000 and imports classified as personal effects were exempted from reshipment inspections. Designated accounting firms and banks will work with customs as duty collection agents.

The new guidelines stipulate that all imports regardless of value, whether containerized or not, including accompanied personal effects, shall be subject to reshipment inspection. However, personal effects will be imported under zero duty as certified by the reshipment inspection agents. Consequently, from April 1, 1996, any good imported without an IDR will be confiscated and the importer prosecuted while the shipping line will be liable to a fine not exceeding the value of the import.

Note: The provision regarding pre-inspection for personal, accompanied items, seen as unworkable, has since been rescinded.

Among other relevant points contained in the guidelines for importers:

-- Form "A" will continue to be used with respect to import service (Invisible Trade).

-- Modified Form "M" in sextuplicate should be used for all imports into Nigeria. The form is obtainable from all offices of the inspection agents, Nigerian embassies, local banks branches of Nigerian banks overseas and their correspondent banks. Three copies are to be sent to the reshipment inspection agents and one each to the importer's bank, the Nigerian Customs Service and the National Maritime Authority (NMA).

-- Letters of credit or cash payments remain mandatory for imports into Nigeria. Checks from customer's bank must be cleared before the original IDR and shipment documents are released to the importer.

The guidelines' key provision is that all goods imported into Nigeria must be accompanied by an IDR issued by the reshipment inspection agents. Goods without IDRs will not be released by the Nigerian Customs. Shippers/Carriers should ensure that cargoes/containers carried by them are pasted with a hologram or mark issued by the reshipment inspection agents. Once the guidelines' conditions are met, Nigerian Customs is supposed to release goods to importers within 48 hours.

Observers have noted little success to date in reducing red tape and corruption. To try to cut delays in the import clearing process, a central clearing system (CCS) has been introduced to replace the "long-room" method which most importers associate with corrupt practices. CCS is a computerized system which enables clearing agents and importers to process their papers at one spot with minimum delay.

Imports from the U.S. are inspected by:

Intertek Services International
3741 Red Bluff Road
Houston, Texas 77503
Attn: Ms. Susan Finchum

Tel: (713)-475-2082
Fax: (713)-475-2083

To claim any goods at Nigerian ports, the following documents must be presented to officials of the Customs and Excise Department:

1. Bill of lading.
2. Bill of entry
3. Approved revised Form "M"
4. Marine insurance policy (issued by a Nigerian insurance firm.)
5. Certificate of quality from the exporting country for (food and drugs.)
6. Evidence of payment of VAT.
7. Approved product quality and release certificate from the Standard Organization of Nigeria (SON).

Following is a detailed list of current regulations and paperwork requirements governing imports into Nigeria, effective April 1, 1996. They apply for all imports and collection of import duties in Nigeria:

1. Modified form "M" shall be used for all imports into Nigeria, and shall be in sextuplicate of which three copies shall be sent to the Reshipment Inspection Agents and one each to the importer's bank, the Nigeria Customs Service and NMA.

2. Form 'A' shall continue to be used for imports of services invisible trade).

3. Modified Form 'M' is obtainable from all the offices of the inspection Agents, Nigerian embassies, local banks, branches of Nigerian banks overseas and their correspondent banks

4. The completed Modified Form M originating from abroad will be returned through the appropriate Reshipment Inspection Agents abroad to any of the designated banks or any bank of importer's choice in Nigeria.

5. Letters of Credit or Cash Payments, will be made mandatory for imports into Nigeria.

6. All containerized and non-containerized goods, irrespective of value, are subject to reshipment inspection.

7. Issuance of Clean Report of Finding (CFR) and Import Duty Report (IDR) is mandatory for all imports, including accompanied personal effects.

8. All imports into Nigeria must be accompanied with the relevant IDRs. Imports for which IDRs are not produced will be confiscated, the importer prosecuted and the shipping lines/carriers will be liable to a fine not exceeding the value of the goods.

9. All personal effects shall be subject to reshipment inspection, but will be imported under zero duty as certified by the Reshipment Inspection Agents. (This regulation has since been rescinded).

10. Pre-shipment Inspection Agents (PIAs) must forward a copy of the Import Duty Report (IDR) directly to the importer's local bank or the bank to which the form 'M' was originally sent, another copy to the designated bank, and a third copy to the Nigeria Customs Service.

11. It should be the duty of the importer's bank or the bank to which the form 'M' was sent to issue a certified check for the amount stated on the IDR to the customer who shall pay such check to any of the designated banks.

12. Carriers of cargoes in excess of the declaration on the manifest will continue to be penalized.

13. Goods imported through neighboring countries must be accompanied by relevant IDRs.

14. Importers shall pay a CISS Administrative charge of one percent of FOB value of all imports assessed based on the average autonomous rate of exchange at the previous week as submitted by the Central Bank of Nigeria.

15. All imports are assessed for duty at the average autonomous rate of exchange of the previous week as submitted to the agents by the Central Bank of Nigeria.

16. Payments for Customs Duties and CISS Administration charge shall be based on the Import Duty Report (IDR) without any amendment. However, the Nigerian Customs Service (NCS) may, with the permission of the Minister of Finance, assess additional duties if it is found that the duty on the IDR is not correct. In no circumstances must the duty assessed by the Nigeria Customs Service be less than what is on the IDR.

17. The issuance of the check by the customer's bank and the payment thereof into the designated bank must be done and cleared before the original IDR and shipping documents are released to the importer.

18. The checks for import duties must be paid to the designated banks and customs must ensure that the checks are cleared before goods are released to the importers.

19. All the designated banks must open branch offices at the ports where custom duties should be paid.

20. Where country checks are used for payment of customs duty, such checks must be deposited with the Central Bank of Nigeria nearest to the importer and must be cleared before goods are released.

21. It must be stressed that all goods imported into Nigeria must be accompanied by IDR issued by the Reshipment Inspection Agents. The Nigeria Customs Service or any other body shall not issue IDRs, and must not release any good without IDR.

22. Shippers/Carriers should ensure that cargoes/containers carried by them are pasted with a Hologram or Mark issued by the Reshipment Inspection Agents.

23. Where the guidelines are satisfactorily implemented by importers, the Nigeria Customs Service must release the goods to such importers within 48 hours.

TEMPORARY ENTRY

Duties are not waived for "temporarily imported" goods.

LABELING AND MARKING REQUIREMENTS

Shippers must ensure that Import Duty Report (IDR) numbers are always quoted on the shipping manifests for all import shipments into the country before such manifests are submitted to the Nigeria Customs Service. For air cargo, the airline must ensure that the IDR number for the relevant goods being carried is always stated on the air-way bill.

All imports of food, drugs, cosmetics and items such as pesticides must be accompanied by a Certificate of Analysis from the manufacturer and country where the goods were manufactured.

Certain animal products, plants, seeds, and soils imported into the country must be accompanied by Sanitation Certificates from the exporters. The U.S. Department of Agriculture may issue these certificates for American exporters.

All items entering the country must be labeled in metric terms exclusively. Products with dual or multi-markings will be confiscated or refused entry.

PROHIBITED IMPORTS

- Live or day-old chicks
- Maize, sorghum, millet and wheat flour.
- Vegetable oils, excluding linseed and castor oils used as industrial raw materials.
- Gypsum
- Mosquito repellant coils
- Domestic articles and wares made of plastic materials
- Retreaded/used tires
- Matches made with white phosphorous
- Pistols disguised in any form
- Gaming machines.
- Weapons of any description

STANDARDS

The Nigerian Standard Organization (NSO) has now been changed to Standards Organization of Nigeria (SON). SON was established by Decree No. 56 of 1971 with the following principal functions:

To organize tests and do everything necessary to ensure compliance with Standards designated and approved by the Standards Council.

To undertake investigations as necessary into the quality of facilities, materials and products in Nigeria, and establish quality assurance system including certification of factories, products and laboratories.

To ensure reference Standards for calibration and verification of measures and measuring instruments.

To compile an inventory of products requiring Standardization.

To compile Nigerian Standards Specifications.

To foster interests in the recommendation and maintenance of acceptable standards by industry and the public.

To develop methods for testing of materials, supplies, and equipment.

To register and regulate standards marks and specifications.

To undertake preparation and distribution of Standards samples.

To establish and maintain such number of laboratories or other institutions as may be necessary for the performance of its functions under the Decree.

To complete and publish general scientific or other data:

(1) Resulting from the performance of its functions under this Decree or from other sources when such data are of importance to scientific or manufacturing interests or to the general public and are not available elsewhere. To advise departments of the Government of the Federation or a State on specific problems relative to Standards specifications.

(2) To coordinate all activities relative to its functions throughout Nigeria and to cooperate with corresponding national or international organizations in such fields of activity as it considers necessary with a view to securing uniformity in Standards specifications, etc.

SON is also charged with the responsibility of issuing patents, trademarks and copyrights. Another standard body is the National Agency for Food and Drugs Administration and Control NAFDAC). NAFDAC provides testing and certification of imported and domestically produced food, drug, cosmetic, medical, water and chemical products.

FREE TRADE ZONES/WAREHOUSES

The Federal Government is planning a new Export Processing Zone (EPZ) for Port Harcourt in the Rivers States of Eastern Nigeria to attract foreign investments, increase exports and subsequent foreign exchange earnings. Nigeria's premier EPZ, in Calabar, is in its final stages of completion. Many international companies are interested in operating in the EPZ. Nigerian businessmen are urged to encourage their foreign counterparts to invest in business and industrial ventures, particularly the Calabar EPZ, to make the country's exports cheaper and more competitive in the international market.

Investors in the Calabar Export Processing Zone (EPZ) have to pay $500,000 (about N42,500 million) as minimum capital investment before commencing business in the zone. The EPZ presently awaits final work on structures like a 10.5 megawatt power plant, fire station, police post, factories, water plant, road network, 7.5 km fencing and the administrative buildings.

The Federal Government has approved two private refineries to process 300,000 barrels of crude per day: Messrs Brass Refinery Limited, granted 200,000 barrels of stream per day (bpsd), and Messrs Qua Petroleum Refinery Limited, to process the balance of 100,000 bpsd.

Messrs Brass was granted the right to have its processing plant at Brass, Rivers State, and Messrs Qua at Ibeno, Akwa Ibom State. The approval is in line with the Federal Government policy to encourage Nigerians to participate actively in the various aspects of the petroleum industry. Also approved is a package of incentives to encourage investment in the oil and gas downstream sector of the economy.

The four publicly owned refineries are located in Onne, Port Harcourt, Warri and Kaduna. They have been down for much of the last three years for sundry problems. Due to the refineries' inability to meet domestic demand fully, the government has had to import refined petroleum products.

SPECIAL IMPORT PROVISIONS

All imports to Nigeria must be accompanied by Import Duty Report (IDR). Importers must ensure that the correct duties specified in the IDRs are paid through the banks selected by government. The Nigerian Customs Service (NCS) has ordered its national network to impound all containerized cargoes or imports valued at more than USD 1,000 which enter Nigeria without an Import Duty Report (IDR). IDR, a requirement to clear imports through customs, is issued by government-selected inspection agents for all imports valued at more than USD 1,000 and all containerized imports regardless of their origin. An IDR is used to determine

the value of an import duty to be paid on an import based on its Custom Insurance Freight (CIF) value.

All unaccompanied goods, irrespective of value except personal effects and imports by diplomatic, consular and international organizations, are subject to reshipment inspection and must be accompanied by Inspection Duty Report (IDR).

The duty on used vehicles is based on current market value as ascertained at the port of export and not based on ex-factory price of new vehicles. Such cars must be covered by IDR.

There are no restrictions on imports except for those included in the import prohibition list. Importers no longer are required to attach certificate of incorporation and tax clearance certificate to the Modified Form 'M'.

For names and addresses of selected, authorized Reshipment Inspection Agents worldwide, see Chapter IV.

MEMBERSHIP IN WORLD BODIES

Nigeria is a member of the British Commonwealth, the United Nations and several of its affiliated organizations, the World Bank, and the African Development Bank. It is party to several international commodity arrangements, including the Organization of Petroleum Exporting Countries (OPEC), the International Cocoa Organization, the International Cotton Advisory Committee, the International Institute for Cotton, the West African Groundnut Council, and the International Tin Council.

Treaties and agreements in force between the United States and Nigeria relating to consular matters, aviation, mutual security, economic and technical cooperation, extradition, property, and trademarks, were concluded originally between the United States and the United Kingdom, and were recognized by Nigeria following independence in 1960.

Nigeria is a signatory to the Lome Convention, which provides certain exports duty-free entry into the European Union (EU), and is also a member of the General Agreement on Tariffs and Trade (GATT), requiring a nondiscriminatory import tariff. There have been frequent complaints, however, that Nigeria does not fully meet its obligations under such agreements.

Nigeria is a member of the Economic Community of West African States (ECOWAS), allowing free movement of people, goods and services within the region.