Cigarettes Still Flooding to Nigeria Despite de facto Ban on Imports

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In the first part of this investigative series, The New Diplomat had exposed the surplus patterns often deployed in trafficking contraband cigarettes into Nigeria from neighbours. This concluding part reveals how operators in the tobacco industry undermine various local and international tobacco regulations to illegally ship products into Nigeria, denying government the accruable income and putting smokers in the harm’s way.”

 

Tobacco smuggling in West Africa appears big, but the undermining of regulations by transnational tobacco companies and front entities to ship products into Nigeria is even more of a behemoth – contributing to the nation’s illicit financial flows and harming smokers.

While it has not been proven that tobacco companies in Nigeria are directly involved in smuggling of contraband products, their intricate links to unlicensed front companies engaging in tobacco importation can be tracked through paperwork.

Many of the front companies are not registered for tobacco importation, but documents show they ship in products, benefitting from government import waivers.

Court papers obtained for this investigation revealed that Julius Berger Nigeria Limited, an international construction giant, brought in thousands of kilograms of cigarettes between 2009 and 2015 despite not being registered to trade in tobacco.

“Julius Berger is not a tobacco company, we’re a construction company and our staff don’t smoke. Please discountenance the report. Maybe the Nigeria Customs Service should provide explanations to that,” Mr. Moses Duku, Head, Media Relations, Julius Berger Nigeria PLC said when asked whether the company got any approval to import cigarettes.

In spite of this response, documents produced in court by the Nigeria Customs Service in 2017 showed that the construction company imported 13,343 kilograms of cigarettes in 2012 and 2,588 kilograms in 2015.

Reacting to the revelation, Dr. Mangai Malau, Head, Tobacco Control Unit, Nigeria’s Health Ministry noted that since 2015, it became “a criminal offence” for any person or organisation to import tobacco without the ministry’s license. He stressed that the importation as documented for Julius Berger in 2015 is in breach of section 29 of the National Tobacco Control (NTC) Act 2015 seeking to regulate tobacco consumption, trade and importation.

The section had stated that “no person shall manufacture, import or distribute tobacco or tobacco products except the person has obtained a license or authorized in writing by the (Health) Minister.”

This section of the tobacco legislation notwithstanding, Mr. Olu’Seun Esan, National Coordinator, Nigeria Tobacco Control Alliance (NTCA) lamented that the Nigerian government has not done enough to enforce the letters of the NTC Act and its accompanying approved regulations, hence the many infractions.

“Government should not just sit and say this thing is criminal without stamping its foot on the ground to say this must stop,” Esan said.

PMI’s Unregulated Cigarettes

Also, in 2015, a petition delivered to President Muhammadu Buhari and seen by The New Diplomat revealed that in August 2015, Philip Morris International’s Nigerian subsidiary, PMINT’L Nigeria Limited, applied for and secured approval to import five of its brands into Nigeria: Marlboro, Marlboro Gold, Chesterfield Blue, Chesterfield Mint Burst and Bond Street Blue without paying import duty.

The import approval was to last for one year, enabling the company to import 122 million units of cigarettes between 2015 and 2016. The cigarettes produced by PMI’s subsidiary in Senegal—Philip Morris Manufacturing Senegal Sarl were to come into Nigeria, following Senegalese government approval for PMI to benefit from ECOWAS Trade Liberalisation Scheme. The petition was sent to the President by Environmental Rights Action/Friends of the Earth Nigeria (ERA/FoEN).

The approval given to PMI by the Nigerian government had since elapsed and the Health Ministry confirmed to The New Diplomat that no approval was granted to any company or individual to import tobacco into Nigeria since 2016. (Tobacco imports are not technically banned, but since no licenses have been issued by the Health ministry, all imports are effectively illegal at present — a de facto ban of some sorts.)

Repeated efforts to hear from PMI subsidiary in Nigeria came to a nought as the company couldn’t be contacted directly. Though the company has been incorporated in Nigeria since 2014, sources familiar with covert tobacco deals disclosed that it usually engages the service of proxies while dealing with the Nigerian open market. This makes it difficult to specifically trace the tobacco manufacturer to official contacts domiciled in the country, as well as its alleged infractions. However, PMI’s International Press Office in Neuchatel, Switzerland did respond to The New Diplomat’s enquiries sent in an email to Mr. Ryan Sparrow (in charge of global communications at PMI’s corporate headquarters). Specific questions put to the company include how its products have been entering the Nigerian market since 2016, following the expiration of the import license issued to it by the health ministry.

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Responding, PMI claimed that its subsidiary has obtained all necessary permits and authorization to run its business in the country and has been paying customs duties ‘whenever necessary.’

“We would like to start by stating that PMI is operating in more than 180 countries in the world and the company always strives to conduct its business in the most stringent respect of laws and regulations in any given market. Nigeria is not an exception and since the inception of our affiliate in the country, we have secured all necessary permits and authorization to distribute our products.

“The company has been using legally available means to source the Nigerian market whether through importation or local manufacturing and inquiries at Customs, SON (Standard Organization of Nigeria) and other regulatory bodies would have this information confirmed. Also, please note that whenever necessary, the company has faced all its legal and fiscal obligations including the payment of due customs duties for importation of products,” PMI’s International Press Office said.

PMI’s claims on securing the necessary permits to import products into the country were disputed by Dr. Malau, the Health Ministry’s top official overseeing the Tobacco Control Unit, who insisted that no license has been issued for such since 2016. He disclosed that even if companies had imported tobacco with duties paid to the Nigeria Customs Service, without obtaining the Health ministry’s license, all such importations would have amounted to an act of illegality since 2015 when the NTC Act came into effect.

On its own, the lack of synergy between the Health ministry and other agencies that ought to regulate the tobacco industry in Nigeria including the Customs is something that the recently gazetted Tobacco Regulations accompanying the NTC Act seeks to address. The Regulations were gazetted barely a week after the first part of this investigation exposing illicit tobacco trade in West Africa was published, following months of stalling and back-to-back advocacy by Nigeria’s Tobacco Control advocates.

When asked further whether PMI has erred in any way, the Health Ministry’s Malau said: “Yes, there’s no approval granted yet. And before you can import (tobacco) products, you need to get license from the ministry. Without license it means any importation that’s being carried out as of now is illegal.”

Despite this, PMI’s unlicensed cigarettes have been flooding the Nigerian market since 2016 with no taxes paid on them according to ERA/FoEN. About 13 million Nigerian smokers (WHO 2012) are being exposed to unregulated contraband cigarettes daily, which adds to the health risks of tobacco products.

No import approval has been granted to PMI and reportedly, the tobacco manufacturer, globally known for its popular cigarette–Marlboro hasn’t commenced production in Nigeria despite partly acquiring a cigarette factory from the International Tobacco Company in 2017.

“This could also suggest that they’re trying to engage some front companies to import tobacco into the country denying government of the adequate tax,” said Dr. Akindele Adebiyi, Director, Nigeria Tobacco Control Research Group.

“There are many tobacco front companies that are not registered for tobacco importation but are linked to certain tobacco companies in the countries. As at the last count we documented over 30 companies that were not registered to import tobacco into the country but are actively trading in tobacco.

“For instance, we found a company that was registered to trade in plastic products, now trading in tobacco,” he noted.

Adebiyi lamented that the absence of a ‘track and trace’ mechanism in Nigeria has made it difficult for the government to control illicit products in the country. “If the government can put it in place, you can know which one is produced locally or smuggled and government can go ahead to confiscate them.”

This, he says undermines tobacco control efforts. It aids the sales of cigarettes in single sticks which makes products readily available and cheaper, especially for the ballooning youth population in Africa, who are now the target of Big Tobacco, as anti-smoking legislation in Western countries drives them in search of new markets.

Due to increasing watertight measures in countries, “the cost of doing business with tobacco corporations is actually increasing,” said Mr. Michél Legendre, Associate Campaign Director, Corporate Accountability. “Think about the health care cost associated with cancer. Think about the diseases.” He added that the tobacco industry “has externalized the cost of its business on an average smoker” and on governments especially in the global South where poverty level is high.

“What has happened in the global north (western countries) is that there was a benefit of the increase liability of the tobacco industry. It also forced what we’re seeing now which is that the global South is seen as an expansion market,” Legendre noted.

Following the expansionist agenda through illicit trade, the proliferation of products becomes the norm “because taxes are not paid and you can’t track and trace them,” Adebiyi added.

Meanwhile, in its response to The New Diplomat while commenting on the booming illicit tobacco trade in West Africa and across Africa’s Sahel region, PMI claimed it is committed to fighting illicit tobacco trade alongside relevant stakeholders “and has committed considerable resources to do so.” “We are also deploying sound and effective tracking and tracing system of tobacco products which are based on open standards implemented and used by all relevant stakeholders in the supply chain to prevent product diversion.” The tobacco manufacturer stated.

But Ms. Taylor Billings, Press Secretary, Corporate Accountability based in the U.S noted that the claim by PMI on helping countries to curb illicit tobacco trade is not uncommon with tobacco companies. According to her, they cannot be taken seriously because of the false solutions they have been promoting overtime.

“Big Tobacco sells product that if used as intended kills its users. This is an industry that for a generation or more has done everything in its power to block or delay policy making processes that save lives. For the tobacco company to attempt to turn a new leaf and present itself as the solution to illicit trade, we’ve to look at the history. Why would it take the matter forward now?” Billings asked while speaking with The New Diplomat.

Tobacco Control advocates calling for stringent measures to reduce tobacco-related deaths and stop Big Tobacco’s infractions during a protest rally in Nigeria’s Capital, Abuja (Photo: NTCA)

Double Jeopardy

Mr. Akinbode Oluwafemi, Deputy Director, ERA/FoEN explained that the thriving illicit trade in the West African Sub-region means double jeopardy for public health, citizens and government.

“First, tobacco is bad, whether counterfeited, illicit or licit. Aside from denying government the revenue, some illicit tobacco products don’t come with appropriate warnings or the content regulation that the country should enforce.”

Oluwafemi said he was concerned about the diversion of duty-free tobacco products into illicit trade, a phenomenon that’s hurting Nigeria’s tobacco revenue. He said “the success of international campaign seeking the removal of tobacco from the list of duty-free products is important to the curbing of illicit tobacco trade.”

The diversion has made untaxed products meant for sales at the international transit points like airports available for sale within the country. Usually, it’s with little or no restraint coming from law enforcement agencies as evidenced by the heavy sales of duty-free tobacco products in Wuse Zone 4, in the heart of Nigeria’s capital, Abuja.

“In 1999, the European Community banned duty-free sales to individuals travelling in its borders and contraband related to duty-free declined, noting that for every 10 container loads of cigarettes marked for duty-free, nine would be diverted into illicit trade,” Legendre said.

 

This story was produced by The New Diplomat. It was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation in collaboration with the Institute for the Advancement of Journalism. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher.

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