The Strategic Role of Digital Infrastructure: FiBOP 2024

The Finance and Business Online Publisher (FiBOP) 2024 conference has spotlighted the critical importance of digital infrastructure in transforming global trade processes. In today’s interconnected world, digitalisation is no longer a luxury but a necessity for modernising customs operations, enhancing transparency, and optimising revenue collection. With governments worldwide adapting to the technological revolution, Nigeria is no exception, as evidenced by the Nigeria Customs Service (NCS) embracing digital innovations to improve import duty collection and accountability.

The Evolution of Digitalisation in Nigeria’s Customs Service

The Nigeria Customs Service (NCS) plays a pivotal role in the nation’s economy by generating significant revenue through the collection of import duties, taxes, and levies. However, like many other customs organisations globally, it has historically faced challenges, including manual processes and delays in customs procedures. With the surge in global trade and the need for efficiency, the NCS has embarked on several digitalisation projects to streamline its operations and boost its revenue collection.

Among the key initiatives is the e-Customs Modernisation Project, a flagship programme expected to generate over $176 billion in revenue over a 20-year concession period. This project aims to fully automate customs operations, integrating various stakeholders such as port authorities, shipping companies, and government agencies. Commenting on the programme, an NCS official noted that “upon full implementation, the project is expected to deploy e-clearance systems, e-Port Systems, and Intelligent Gate technologies, ensuring seamless and transparent customs operations.”

Key Digitalisation Projects

The NCS has undertaken numerous projects to digitise its operations, from automated customs processing systems to advanced ruling systems. One such initiative is the Automated System for Customs Data (ASYCUDA), first introduced in 1990 and subsequently upgraded to newer versions. The platform has enabled the NCS to automate customs documentation, assess duties, and monitor cargo in real-time.

In 2017, the NCS further upgraded its systems with the introduction of  Nigeria Integrated Customs Information System II (NICIS II), marking a shift from manual procedures to paperless customs operations. This migration enabled the NCS to handle larger volumes of trade data, improving overall efficiency. “NICIS II paved the way for us to manage larger volumes of data, ensuring real-time duty assessments and faster clearance processes,” a senior customs official remarked.

Another crucial development is the Authorised Economic Operator (AEO) Programme, which was launched by the NCS in 2023 under the World Customs Organization’s SAFE Framework of Standards. This programme enhances security in the supply chain while facilitating trade by providing trusted businesses with expedited clearance and reduced inspections. The reliance on digital infrastructure in the AEO programme has improved accountability, allowing for real-time verification of compliance records.

The Strategic Importance of Digital Infrastructure

Digital infrastructure, encompassing networks, software, mobile telecoms, and broadband, forms the backbone of modern customs operations. Its importance in import duty collection and accountability cannot be overstated. By automating key processes, digital infrastructure minimises manual errors, reduces time delays, and enhances overall efficiency. The integration of e-payment platforms has further streamlined the process, allowing traders to pay duties electronically, while banks remit funds to the Central Bank of Nigeria (CBN) within 24 hours.

Enhanced Transparency and Accountability
One of the primary advantages of digitalisation is its ability to enhance transparency and accountability. The NCS Modernisation Project provides a traceable and auditable record of all transactions. This ensures that once duties are logged, they cannot be altered or deleted, reducing the risk of fraud and revenue leakages. Moreover, real-time audit capabilities make it easier to detect anomalies, significantly boosting the integrity of the customs process.

Increased Revenue Collection
Digital infrastructure has also had a direct impact on revenue collection. The NCS recorded a staggering N4.29 trillion in revenue between January and September 2024, a marked improvement over the N3.21 trillion collected in the same period in 2023. This increase is largely attributed to the measures put in place by the CBN and commercial banks in adopting digital solutions. “Our digital systems have not only streamlined our operations but also improved transparency and accountability, resulting in higher revenue collection,” a spokesperson for the NCS noted.

Challenges and Opportunities

While digitalisation offers significant benefits, the NCS has faced several challenges in implementing its initiatives. One such challenge is the high initial cost of developing and maintaining digital infrastructure. Furthermore, resistance to change among personnel accustomed to manual processes has slowed down the adoption of new technologies. The risk of cybersecurity threats also looms large, with the NCS investing in robust security measures to protect its digital infrastructure from attacks.

Despite these challenges, the NCS remains committed to fully embracing digital solutions. By expanding the use of artificial intelligence and machine learning for risk management, the NCS aims to detect suspicious activities more effectively, preventing revenue losses. Additionally, through public-private partnerships, the NCS can leverage cutting-edge technologies without overburdening the national budget.

The strategic importance of digital infrastructure in import duty collection and accountability cannot be overstated. Through its modernisation efforts, the Nigeria Customs Service has revolutionised its operations, leading to enhanced revenue collection, improved transparency, and greater accountability. However, sustaining these gains will require continued investment in technology, robust cybersecurity measures, and ongoing training for personnel. As the NCS continues to embrace digitalisation, it is positioning Nigeria as a key player in the global trade ecosystem. UBA Impressive 149%Growth in Net Interest Income for Q3 2024