European Journal of Social Sciences

Volume 12 Issue 3 January, 2010

Contents
A Web-Based Multimedia Approach to Literature in Malaysian Secondary Schools: Learners' Preferences Subarna Sivapalan and Wan Fatimah bt Wan Ahmad Effects of Task Difficulty on Socioaffective Strategy Use in Listening Comprehension Nooreen Noordin, Katrin Shamshiri and Mohd Sahandarb Endogenous Unions Formation Yolanda Chica and Maria Paz Espinosa Prospects and Challenges of Open University in Nigeria Ajadi, Timothy Olugbenga Management and Planning Model for Economical Corporate Cultural and Social Responsibility (CCSR) in Iran Seyed Reza Salehi Amiri, Esmaeil Kavousy and Seyed Majid Motahar Nezhad Ethnic Diversity Management Based on Social Capital Theories Seyed Reza Salehi Amiri and Esmaeil Kavousy Future Markers in Modern Standard Arabic and Jordanian Arabic: A Contrastive Study Emad Al-Saidat and Islam AI-Momani Governance, Leadership Crisis and Underdevelopment in Africa: An Explorative Discourse E. B. J. Iheriohanma and O. Oguoma Code-Mixing in Print Advertisement and its Cultural implications in Hong Kong Chi-hong Leung An Identification of the Effects of the Promotion of Tourism transportation on the Socio-Cultural Environment: The Case Malaysia Sharon Cheuk, Janie Liew-Tsopis, Grace Phang Ing and Izyanti Awang Razli Assessing the Effectiveness of the Marketing of the Preshipment Inspection Services in Nigeria J.O. Olujide and R.A. Gbadeyan 328-335 336.346 347-361 362-370 371-386 387-396 397-408 409-619 417-429

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Sustainable Water Management: A Case Study on Saving Behaviour of Turkish Women for Domestic Water Usage 447-466 Sonigul Hablemitoglu an'd Emine Ozmete Rejuvinating Motivations and Renewing Technology: A Quest for Electronic Endeavor among Malaysian SMEs Rosmini Omar and Dowi A.Sapuan The impact of Using KWL Strategy on Grade Ten Female Students' Reading Comprehension of Religious Concepts in Maan Omar Salim Muhammad AI-Khateeb and Mohammad Wafa Khalid Idrees Critical Factors for Diffusion of Web Technologies for Supply Chain Management Functions: Malaysian Perspective Arun Kumar Tarofder, Govindap Marthandan and Ahasanul Hague The Nature of Women's Participation in the Labour Force in the Post-1989 of Iran Alihossein Hosseinzadeti, Iman Mombeni and Abdolreza Navah 457-470

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Assessing the Effectiveness of the Marketing of the Preshipment Inspection Services in Nigeria
J.O. Olujide Faculty of business and social sciences, Department of business administration University of Ilorin, P.M.B. 1515, Ilorin, Nigeria E-mail: olujack52@yahoo.com R.A. Gbadeyan Faculty of business and social sciences, Department of business administration University of Ilorin, P.M.B. 1515, Ilorin, Nigeria E-mail: timigbade@yahoo.com Abstract Preshipment inspection service is a trade facilitating service provided by the independent inspection agents to government in Africa, Asia and Latin America. The service is carried out to speed up the clearance of goods at the place of origin or shipment to verify the type, quality price and customs valuation of goods. However, there have been, in recent time's widespread malpractices in the port in Nigeria which is in the form of false declaration: under declaration and over invoicing which has made difficult the smooth operations and efficient performance of this service. This development therefore made the Federal Government .introduced the 100 percent inspection examination, in order to stop the sharp practices going on in the port. The study aimed to assess the effectiveness of the marketing of the preshipment inspection services in Nigeria and also to consider other specific objectives such as examinations of some of the government policies concerning the preshipment inspection contract, the role of the preshipment inspection company in the development of the economy. Keywords: Preshipment inspection, false declaration, customs valuation. 1. Introduction Nigerian economy in the past decade suffers serious downturn, which affects almost all its sectors. This was as a result of a lot of problems amongst which are poor management of the economy by the various stakeholders of Industries, government parastatals and corporations. Corruption, including malpractices in the Port serves as another big problem in the country (Nigeria Tribune, 2001). The importers are involved in various malpractices which have disastrous effect on the economy. Three categories of importer are identified in this respect. They are those who over invoice, those who-under value and those who engaged in concealment (Guardian, 2001). The category of importer that over invoice for example, has an over-invoice letter of credit that is greater than the actual worth of the goods. They have dealings with the inspection Agents and put the difference to the black market, thus paying the custom duties what they suppose to pay on that because they can easily afford it. In the case of those who undervalue, they are engaged in these malpractices so as to pay less on custom duties. Those that are involved in concealment bring in illegal things in the containers by hiding the actual content and pay whatever they can pay for those goods.

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For example, the importer may claim to be importing used clothes but had actually imported Lexus Jeep. All these malpractices mentioned above were seriously eating deep into the revenue being generated by the customs. This also affects Naira/Dollar relationship, interest rates, inter bank and exchanged rate which invariably affect the actual interest rate. The belief therefore was that the fall of Naira is influenced by the under valuation, over-valuation and concealment by importers. The recent 100 percent examination is one of the attempts by the government to stop these practices in the Port. This made the Federal Government ordered that goods coming into Nigeria must be fully inspected at the point of entry. There is strong indication that the introduction of the 100 percent examination might have brought about the recent appreciation of the Naira against the U.S. Dollars, as a result of the decline in demand for foreign exchange. People no longer import those goods like fried plantain, toothpick, Juice, Toilet Rolls etc. which can be locally sourced (Guardian 2001). At the same time fear have been expressed that the 100 percent inspection may have negative impart on the economy such as reduction of income to government. However, the fact remains that with the successes recorded so far, there is hope that the benefits to be derived from the policy measures will far outweigh the disadvantages. The Federal Government order of 100 percent inspection policy had led to Port congestion and a lot of other problems. -This congestion is coming as a result of the change in operating procedure. The Federal Government had to take the hard decision of 100 percent inspection, because of a lot of under table business, which had ''earlier been mentioned i.e. undervaluation, overvaluation and concealment. The 100 percent inspection made-many people, most especially importers who should come for the containers refused to come, for fear of either having their goods seized or paying an extra surcharge. There are so many containers that are trapped at the port due to this step taken by the Federal Government. The exercise does not allow speedy completion of processes for clearing goods at the port. In general the research problem focused on the dearth of research in to the effective marketing of the Preshipment inspection services in Nigeria. The Preshipment Inspection Agents (PIAs) have been accused of responsibility for most of the malpractices in the port involving both the customs and the importers. Under the Comprehensive Import Supervision Scheme j(CISS) the PIAs were expected to check fraudulent practices, which importers adopt while bringing in goods in to country. There is no doubt that if the PIAs do their job very well, government will be realizing huge sums of revenue from imports. (This Day 2001). In this study; we have specifically focused on the problems identified below: (i) Duplication of ports procedures by agencies of government. (ii) Cumbersome document and cargo delivery procedure at the ports especially inadequate Cargo handling equipment. (iii) High clearing cost of goods occasioned by multiple levies charged (iv) The general 'Corruption atmosphere in the Port and other problems affecting the quality, quantity and export market price of the goods being exported. The general objective of this research study is to assess the effectiveness of the marketing of the Preshipment inspection services in, Nigeria. Other specific objectives that are examined included explanation about why countries have recourse to Preshipment Inspection contract, highlight some of the criticism against the Preshiprnent Inspection contract and examine some government policies concerning the Preshipment Inspection contract. 2. Research Methodology The method of research, adopted in this study is essentially a descriptive survey. The source of our data are both primary and Secondary. Structured and unstructured questionnaires were used to gather data from the primary data. Interview methods are also used to complement the information obtained through questionnaire. The secondary data are in form of internal and external sources. 442

European Journal of Social 'Sciences - Volume 12, Number 3 (2010) A case study approach was used by the researchers and Cotecna Nigeria Plc. has been chosen for empirical demonstration of the services provided by independent inspection companies and the government of the importing country or user countries. Convenience sampling was adopted to distribute questionnaires to two hundred and twenty five (225) selected respondents at both Ilorin and Lagos. This representing the first group of study sample. Respondents include: Civil Servants, Business people most especially importer and Exporter, Economist, Lawyer, Chief Executive Officer, Manager amongst others. The statistical technique of stratification was also used to pick the second group of study sample of one hundred (100) staff (65 Junior and 35 Senior) from Cotecna Nigeria Plc., on which the study questionnaires were administered to collect the required data. Chi-square and sign tests were used to test the hypothesis and to provide answers for the research questions. 3. Literature Essentially, there has been little' work on the study area. A review of work on the study area have shown that majority of researches done have been on the benefits and problems of the Preshipment Inspection Contracts (Gbadeyan, 2002; Cotecna, 2001). There have been no major works carried out on the aspect of effective management of services of the Preshipment Inspection Company in Nigeria. The Preshipment Inspection Companies are more or less Multinational Companies; hence their services and activities involve effective marketing in order to be able to achieve its desired objective. There are various definitions of marketing; an attempt will be made to consider only the few ones among these: The British Institute of Marketing defines marketing as "the creative management function, which promotes trade and employment by assessing consumer needs and initiating research and development to meet then! It coordinates the resources of production and distribution of goods and services, determines and directs the nature and scale of the total effort required to sell profitably the maximum production to the ultimate user. This definition though, attempts to offer a good meaning of marketing however fails to consider .the post purchase aspect of consumer buying behaviour. .In its own definition the American Marketing Association Committee on definition of marketing define it as "the .performance of business activities that direct the flow of goods and services from the producers .to consumers or end users". The problem with this definition is that it makes marketing look largely like distribution, which is only just an element in the marketing mix. It also fails to. indicate the role of marketing in determining what goods are to be produced and does not indicate the specific activities that constitute markets. According to Modern (1991); Marketing is "the most important managerial task within the organization, it is that of understanding the needs and wants of customers in the market and of adopting the operations of the organization to deliver the right goods and services more effectively and efficiently than its competition". This definition though also considers the importance of consumer needs and wants, fails to take in to consideration all other factors that can influence consumer purchase decisions like attitude, culture, customers and other social norms. Stanton (1.984)-"define marketing as "the total system of business activities designed to plan, price, promote and distribute want satisfying products and services to present and potential customers". This definition indicates that marketing also occurs in non-business organizations. Kurfz et al (1"983) 'defined marketing as "the development and efficient distribution of goods and services for chosen consumer segments". This definition implies that marketing activities begin after goods' and services have been produced, actually marketing activities begin before production activities. There is also another definition by the marketing staff of the Ohio State University which defined it as "Marketing is the process in a society by which demand structure for economic goods and services is anticipated or enlarged and satisfied through the conception, promotion, exchange and

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physical distribution of such goods and services." The problem with this definition is that marketing deals not only with goods and services but also with ideas, issues, concepts and even people. Kotler and Armstrong (1998) defined marketing as "human activities directed at satisfying needs and wants through exchange process". The definition is generally accepted as the modem marketing definition. Marketing exists when man decides to satisfy his needs and wants through exchange process. Exchange represents one of the four means by which a man obtains product and satisfies his needs. Services - this like physical products or consumer goods has definition, Kotler (1987) defined it as "any act or performance that one party can offer to another that is essentially intangible and does not result in ownership of anything. It is unlike a product because they are consumed as they arc produced. It is also important because 'all products require service commitment, which is reflected in the purchase price. The Pre shipment Inspection Contracts are basically divided into two types: Foreign Exchange Contracts and Customs Assistance Contracts. Foreign Exchange Contracts:- The main purpose of this contract is to detect the over invoicing of goods. Customs Assistance Contracts:- The mandate of Pre shipment Inspection Agent is to establish the value of goods for customs purposes and their classification in the national tariff codes of the importing country. The main concern of the country is to detect whether the appropriate customs duties and taxes arte paid on the imported goods. However, the Preshipment contracts in practice are often a combination of foreign exchange contracts and customs assistance contracts. The detection of over invoicing apart from curbing the flight of foreign exchange could also serve to detect tax evasion. For example, multinational companies could transfer profits from one country with high corporate taxes to a country with low corporate taxes in order to reduce the company's global tax liability. This may be achieved by adjusting invoiced prices on inter company sales (See Gbadeyan 2002 for detail discussion). Good subjected to Preshipment Inspection Services are: Shipment value, which must exceeds certain amount fixed by the user country. In Indonesia the value must exceeds USA 5,000.00 F.O.S. The goods must be coveted by valid master list that provides tariff concession fixed by the user country but importer has requested for Preshipment Inspected or subjected to letter of credit requirement.' Air shipment are exempted from Preshipment Inspection, they are instead inspected at the Airport of destination by the customs authorities. The following goods are excluded from the obligation of Preshipment Inspection: Precious and Semi Precious Stones, Gold and other Semi-precious stones. Art objects, Explosives, Fire Arms, Munitions and other military articles which are not suited to use by civilians as they are imported by competent authorities and. fireworks. Antiquities Scrap metal, Electricity, Baggage, Separate items of Baggage, Parcel post, Commercial samples-, Newspapers and Magazines fruit, Legumes, Vegetables, Fish or Meat, Fresh milk,. Cheese, Yogurt, Fresh food items, Live animals and eggs in incubation, unprocessed hides, radioactive and nuclear substances. Also excluded from the obligation for Preshipment Inspection are goods imported by the following foreign institutions which are accredited to the user government, provided that they are destined for? their own use and that this is duly proved in a document handed in, along with the predeclaration governmental organizations, non-governmental organization, multilateral bodies and diplomatic missions (Mozambique 2001). Initially, when the Pre shipment Inspection Scheme was introduced, it caused confusion among importers and those selling to Nigeria, but now it have become something else the trading community has to live with; It cut out the worst abuses of Nigeria's insatiable desire for imports and basic materials, which are hot over-priced, (Paliwoda 1988). The history of Preshipment Inspection could be traced to . 1979 when the Societies Generale de Surveilliance (SGS) the world's largest trade inspection group was the sole. Inspection Agent in Nigeria, following Government decision to terminate the 444

European Journal of Social Sciences - Volume 12, Number 3 (2010) contract of SGS on the 30th September, 1984. This lead to the regime of a new Comprehensive Import Supervision Scheme (CISS) which zoned the world into three regions for Preshipment Inspection purposes (CBN, 1984). The three regions into which the world was divided are designated as Zones A, B and C. The new arrangement provides for five inspection agents from different countries. This introduces a fair degree of competition as against the total monopoly of S.G.S. Cotecna International was a new company comprised of three as from Switzerland and United Kingdom and Japan. Cotecna is based in Geneva in Switzerland. The Agent for Zone C, Swede Control/lntertek Services Limited is a Swedish Firm. Though engaged on the 1st October 1984, the new agents were expected to commence effective operation by 1st November, 1984. There was a revision of this scheme in 1999. A new zoning arrangement for the Preshipment Inspection of Imports Scheme was made. There were four zones created: Zone A,B,C and D instead of former three zones. The appointment took effect form 1 st September, 1999 !(CBN 1999). A number of reasons have been given for the change to a new inspection arrangement amongst which was to introduce competition and terminate the monopoly of Societe Generale de Surveillance (SGS). This action is believed would affect a higher degree of efficiency in performance and hence leads to the achievement of the foreign exchange saving objective of the government. It is also hoped that the new system would be cost effective and thus financially beneficial to Nigeria. The Company (Cotecna) is chosen as the case study because of its international recognition and its appointment by the Federal Government as one of the recognized Preshipment Inspection Agents in the country with effect from 1st September, 1999, (CBN, 1999). Cotecna/OMlC (a joint venture of a Prime Swiss Company and a first class Japanese Company) have been involved for long in the field of commercial inspection and concentrated principally on Preshipment Inspection Services (PIS) for foreign Governments amongst which include Nigeria. 4. Analysis and Findings The testing of hypothesis in respect to the effective marketing of services of the Preshipment Inspection Companies using the Chi-square statistic computed at 5% level of significance with 2 degree of freedom indicated that calculated ^2 value (7.7604) is greater than the tabulated value (5.991) i-e- X > ^- We therefore reject the null hypothesis H0) and accept the alternative hypothesis (H]), In respect of the general utilization of the Preshipment inspection services the sign test is used with the assumption, that the test is performed at 5% level of significance (a =0.05). We would therefore reject the null hypothesis if Z > -1.96 or Z<1.96. In this survey our P=0.74, Z=4.48 and the critical limit for P=0.6051 and 0.3949. Since the observed P of 0.74 is outside the critical limit we accept the null hypothesis (H0) and reject the alternative hypothesis (Hi). We therefore conclude from above ,test of' hypothesis that-the general utilization of the Preshipment Companies Services was considered fair despite the ineffectiveness of its marketing activities. The major findings that emerged from this research work were summarized below: the cost of services provided by the Preshipment Inspection Company/could be generally described as expensive, there is no strong support for the call for the scrapping of Preshipment Inspection Companies, the general utilization of the Pre shipment Inspection Companies Services can be rated as fair, corruption is the major problem facing the Preshipment Inspection Companies, the 100 percent Inspection Examination introduced by the Federal Government is supported by the Preshipment Inspection Company, the Pre shipment Inspection Companies are receiving adequate support from the government and the number of the Preshipment Inspection Companies operating in the country is adequate and there is no need for any increase in the number of existing ones.

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Conclusion and Recommendations There is general expression of satisfaction with the services receiving from the Preshipment Inspection Companies, despite the criticism against the scheme by some section of the industry operators. In the light of the foregoing, the following recommendations are made: There should be privatization of the ports, a complete reconstruction of the Port is also needed, with particular emphasis on the under water structures which have been damaged by corrosion as well as old age. Federal Government should continue the process of 100 percent Inspection of all imported goods and reexamined the mandate given- to the Pre shipment Inspection Companies in order to make them function better. If the government must retain the services of the Preshipment Inspection Agents, there should be a review of the Enabling Act No. 11 of 1996, with a view to making it more effective. The Preshipment Companies need to enlighten the general public and importers about their activities, for example on the procedure about how form "M" should be filled and advice Banks on proper documentation of form "M" and the importers documents. They should need to make the marketing of their services to' have more effective impact on the public and it clients or customers and proper communication medium should be put in place by the Preshipment Inspection Agents, in order to contact their affiliates abroad, Bibliography [1] American Marketing Association Committee (1960): Committee on Definitions. Marketing Definitions: A Glossary of Marketing Terms. Chicago. [2] C.B.N. (1984): Central Bank of Nigeria. Circular Ref: ECD/AD 2/11/84 of 29th September 1984. [3] C.B.N. (1999): Central Bank of Nigeria. Circular Ref: TED/AD/78/99 of August 20, 1999. [4] Cotecna (2001): About Us. E-mail message. [5] Gbadeyan,- R.A. (2002): Assessment of the Pre shipment Inspection Contract: A Case Study of Cotecna Nigeria PLc. An Unpublished M.Sc. (Management Science) Thesis submitted to Department of Business Administration, University of Ilorin. [6] Kotler, Philip (1987): Marketing Management. Analysis and Planning. Englewood Cliffs, Prentice - Hall Inc. [7] Kurtz, Dayid 1. and Louis, E. Boone (1983): Contemporary Marketing. Hinsdale Illinois Dryden Press. [8] Morden, A.R. (1991): Element of Marketing. (London, D.P. Publications Ltd.). [9] Mozambique, Republic of (-1998): Ministry of Planning and Finance. Regulation of Preshipment Inspection. [10] Nigeria Tribune (2001) 3 August P. 25. [11] Paliwoda, Stanley, J. (1998): International Marketing: Heinemann Professional Publishing, London WC IB 3 1111. [12] Stanton, Williams J. (1984): Fundamental of Marketing: New York: McGraw Hill. [13] The Guardian (200.1) June 4 pp. 46-51, June 6 pp. 32-36, June II pp 58-59, June 13 pp 37-45. June 20 pp 19-20, June 25; June 21 pp 33-39, July 2 pp 24-25. [14] This Day (2001) June 22-pp. 31-37^ June 29 pp. 18-19, pp. 35-40, July 6 22-30, pp. 36-48, July 13 pp 6-8, July 27 pp 27-34. [15] 'This Day (200 I) June 22 pp. 31-37, June 29 pp. 22-, July 1 pp. 18-19, pp. 35-40, July 6 22-30, pp; 36-48; July 13 pp 6-8, July 21 p. 5, July 27 pp. 27-34

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