ANALYSIS: Nigeria Customs surpasses 2024 revenue target but faces tougher 2025

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In 2024, the Nigeria Customs Service (NCS) was assigned the responsibility of generating N5.1 trillion to contribute to the projected revenue target of N18.2 trillion.

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On 15 November, the Comptroller-General (C-G) of Customs, Adewale Adeniyi, proudly announced that the service had already achieved this target, with over a month still remaining in the fiscal year.

Mr Adeniyi further stated that, based on the current performance, the NCS was on course to exceed its target by 10 per cent by the end of 2024, potentially reaching a revenue of N6 trillion.

On 14 January, he confirmed that the NCS had surpassed its target, collecting N6.1 trillion, a surplus of N1.03 trillion, and a remarkable 90.4 per cent increase from the previous year’s collection of N3.2 trillion.

It is well recognised that the NCS is one of the principal contributors to Nigeria’s Internally Generated Revenue (IGR), a role that is pivotal to the successful implementation of the nation’s budget.

Analysts argue that, in addition to its contribution to funding the budget, the NCS plays a crucial part in reducing Nigeria’s debt burden, a necessary step for spurring development and addressing the country’s numerous challenges.

Given the NCS’s major role in revenue generation, it is imperative that the service continually evolves to meet its core responsibilities, which include revenue generation, trade facilitation, and anti-smuggling operations.

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Consequently, the NCS embarked on modernisation initiatives in 2024 aimed at improving its efficiency.

Stakeholders contend that these efforts are crucial to strengthening the NCS’s role in revenue generation and ensuring adherence to best practices.

To this end, the NCS launched several programmes to enhance its operations.

One such initiative was the pilot scheme of the Authorised Economic Operators (AEO) programme.

This programme aims to improve trade facilitation, boost customs efficiency, and enhance supply chain security.

The C-G emphasised that this programme would improve the ease of doing business at Nigeria’s ports. Its formal inauguration is scheduled for 14 February 2025.

Additionally, the NCS introduced the Advance Ruling System, a vital mechanism that enables traders to obtain binding decisions from customs administration regarding the classification, origin, and valuation of goods before importation.

This initiative is designed to promote a more transparent and predictable business environment, providing certainty in tariff classification, which is crucial for facilitating trade.

In 2024, the NCS also unveiled the Time Release Study, which has helped provide empirical data to assess and improve the efficiency of its operations.

The NCS also made significant progress in its enforcement activities, recording 3,555 seizures in 2024, including wildlife items, arms and ammunition, narcotics, and pharmaceutical products.

The total value of these seizures, based on the Cost, Insurance, and Freight (CIF) value, amounted to N28.46 billion, with a total duty of N6.83 billion.

Moreover, the NCS, in collaboration with its concessionaire, the Trade Modernisation Project Ltd, delivered on its promise to introduce the home-grown Unified Customs Management System software, named B’Odogwu.

This software aims to automate trade operations and align the NCS with international standards.

However, despite these achievements, the NCS faced challenges in meeting its revenue target.

A notable issue was the fluctuation of the duty Foreign Exchange (FX) rates, which disrupted trade operations.

The NCS’s chief reported that, in the first half of the year alone, the duty FX rates were altered 70 times, causing uncertainty, reducing importation, and sparking a price surge.

Analysts contend that for Nigeria to emerge from its current economic challenges and for the government to build on its progress, stabilising the naira exchange rate and restoring economic stability should be priorities.

Such efforts would enable the NCS to meet its 2025 revenue target of N6.58 trillion.

The 2025 budget proposal, tagged the ‘Budget of Restoration: Securing Peace, Rebuilding Prosperity’, amounts to N49.7 trillion and sets a revenue target of N36.35 trillion.

Stakeholders, such as the Nigerian Institute of Social and Economic Research, have described this goal as ambitious.

The budget is expected to build on key reforms, including duty-free food imports and tax updates, which are central to the mandate of the NCS.

The NCS, along with other key agencies such as the Federal Inland Revenue Service (FIRS) and the Nigerian National Petroleum Corporation Limited (NNPCL), will play a major role in achieving this revenue target.

Economic expert David Ambi expressed concern that the NCS’s new target of N6.58 trillion may stretch its capabilities.

He noted that such rapid growth expectations could be unrealistic if trade volumes or compliance levels do not increase proportionally.

Furthermore, Mr Ambi pointed out that smuggling continues to undermine customs revenue, and corruption within the system leads to significant revenue leakages that require more stringent enforcement.

He further explained that a substantial portion of the NCS’s revenue comes from import duties.

However, fluctuations in import levels; caused by foreign exchange volatility, declining purchasing power, or restrictive trade policies – could negatively impact revenue.

Similarly, Hassan Nezifi of the Economics Department at Nasarawa State University, Keffi, argued that meeting the revenue target will require a focused and practical approach.

He stressed the urgent need for the NCS to fast-track the full implementation of its Trade Modernisation Project, which could reduce leakages and enhance transparency.

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Nezifi also suggested that the NCS should collaborate more closely with traders and stakeholders to streamline procedures and improve compliance.

Open communication and education campaigns, he added, would help build trust and ensure that businesses feel supported, rather than overwhelmed, in their interactions with the NCS.

While the 2025 target of N6.58 trillion is ambitious, Nezifi believes it is achievable if the NCS continues to modernise its operations, tackle smuggling, engage stakeholders, diversify its revenue base, and maintain transparency.

These efforts, he concluded, will not only help achieve the target but also contribute to the strengthening of Nigeria’s economy and the overall success of the 2025 budget.

As Nigerians await the appropriation of the budget proposal, public analyst Bulus Dabit cautioned that the government must approach the matter of revenue generation with caution.

He suggested that the NCS should avoid imposing excessively high taxes on individuals and businesses, as this could discourage investment; an essential factor in stimulating the country’s economic growth.

(NAN)