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Bad policies and the government’s failure to implement some policies that will boost the efficiency of the ports in the country have made Nigerian importers divert their cargoes to neighbouring ports. ANOZIE EGOLE looks at the implications this has been on the country’s revenue
Although the Nigerian maritime industry is estimated to be worth over $9trn underpinned by the high volume of cargo imported into the country as it is highly import-dependent. However, the country has failed to harness the potential of its maritime sector, which could be a major revenue source for the country that is in dire need of cash. The sector has continued to underperform due to bad policies from the government and policy somersault.
The government has made some investments in the ports in its bid to diversify the country’s main revenue source from oil. For instance, the Nigerian Ports Authority in its magazine, ‘Nigerian Ports Today’ July to September 2022 edition, said that in 2020, the agency had licensed about 58 barges. The report also stated that over N20bn has been invested in barge operations and this has created over 3000 direct jobs and 2000 indirect jobs.
The immediate past president of the Barge Operators Association of Nigeria, Edeme Kelikume, disclosed that over a million containers and about 500, 000 metric tons of general cargos are moved from the ports annually since the commencement of the inland barge services within the Lagos pilotage area.
Kelikume also said that on average, between 30 to 40 percent of containers handled at the two Lagos ports are moved by barges.
Meanwhile, the President of BOAN, Bunmi Olumekun, said that as barge operators, the sector is sitting on about $3bn business, adding that there is a huge investment in the sector.
The NPA also said that the $2.59bn Badagry Deep Seaport, when operational, will generate $53.6bn in 45 years and also create 250, 000 jobs for Nigerians.
These are the testimonies to the potential of the Nigerian ports.
More so, the potential of the country’s shipping sector has not been fully harnessed. If the $350m Cabotage Vessels Financing Fund contributed by ship owners to develop the sector is appropriately disbursed, the sector could be a major source of non-oil revenue. However, the sector seems to be stagnant as the government has failed to disburse the fund, starving indigenous vessel owners the finance they need to be able to compete with their foreign counterparts.
Despite the proximity of Nigerian ports to their warehouses and factories, many local importers still ship their cargo to neighbouring ports because of the bottlenecks inconsistent government policies have created in the local ports.
Their travails
Standing at the entrance gate of the Ports and Terminal Multipurpose Limited port was Toochukwu Nwaigbo, a clearing agent in his late 30s. He was having a serious challenge clearing a 2008 Mercedez Benz that just arrived in the country through the terminal for one of his clients.
He had budgeted a certain amount to clear the car before its arrival a few months ago but he was disappointed when his budget couldn’t get his car out of the port because the cost went up by 200 per cent. His case was further compounded because he would pay demurrages if he failed to clear the car on time. He blamed the newly introduced Vehicles Identification Number for the valuation of imported vehicles for his travail.
Toochukwu said he was confused, not knowing whether to return to the importer of the car to inform him of the over N1m change in the duty for the car.
He claimed that the inconsistency in government policies has made the clearing and forwarding trade frustrating.
“My brother, as I am talking to you, I am confused about what to do. What I budgeted for this car when I collected the job from the importer is different from what the customs are telling me now. I just do not know what to do,” he lamented, “I do not know what to tell the importer who has given me the job. My reputation is at stake.”
He argued, “There are so many issues with this VIN valuation. European cars like Mercedes Benz, BMW, Chevrolet, among others are not captured in the app. When you bring such cars, you have to go to Customs to get the valuation. But when you bring these Japanese cars like Toyota, Honda, etc., they are easily captured. And this has made the cost of cars very expensive. A car you can easily get for say N1m is now well above N3m. So, that is the challenge we are facing now.”
Lucky Amiwero, the founder of the National Council of Managing Directors of Licensed Customs Agents, maintained that transparency, consistency and predictability which are the three components that make up an efficient port system, are lacking in Nigerian ports.
“If you look at our system it is unpredictable, inconsistent and untransparent. So, you have a system where these three components are missing. A man cannot just bring his container to the port and forecast that the container will leave the port in the next three days. You may end up spending three weeks in the port. If the Customs do not delay the container, one agency or the other will delay. There is no one-stop shot which is what is obtained all over the world,” he complained.
According to him, Nigerian ports are run by people who are unprofessional, who do not understand the procedure, but just occupy government positions. and they don’t understand the procedure.
He noted that importers who patronise Nigerian ports are doing so because they have no alternative, adding that importers do not want to use Nigerian ports, because the ports are not predictable and the systems are untransparent and inconsistent.
“You may project that you are clearing this container for N,5000 and the next day it might have increased. So, you have a system that is not controlled. Nobody controls the system. It is controlled by the private sector.
“So, people just make money and go away. they will finish the industry and the country and then go away. All the agencies in the ports are involved in it. The problem is that procedurally, are we following the law? The exchange rate is terrible. They just introduced VIN and they want to increase the duty without looking at the law. You see, there are so many complexities. And the government is there sitting down and the economy is bleeding. The ports are empty now. Cargoes are no longer coming and I am surprised,” he lamented.
The Chief Executive Officer, Lagos Free Zone, Dineshi Rathi, was quoted to have said that until the country develops its ports infrastructure and develop barging facilities to help decongest existing ports, cargoes meant for Nigeria would be finding their way to neighboring countries.
He said that Nigerian ports are currently handling 1.1 million containers as against the ports in Egypt and South Africa which handle around 5 million containers.
According to him, “There is no reason why cargo that is ultimately consumed in Nigeria should be diverted to Lome or Cotonou. The potential of Nigerian ports and coastlines is not fully exploited.“
The Secretary General of the African Shipowners Association, Funmilayo Folorunsho, in a recent panel discussion, said that the government should intensify efforts to provide the much-needed infrastructure that would enhance the efficiency of the ports.
“What cargo owners need is to be able to take their cargo to the port. We need to utilise the barges as a way of evacuating cargoes. First of all, we need to transport the cargo. If it is by road or barge, it is an investment opportunity because it creates a lot of employment. I see more opportunities than problems. A lot of cargoes meant for Nigeria are being diverted to neighbouring countries like Togo because our ports are not efficient,” Folorunsho said.
For a member of the Shippers Association Lagos State, Jonathan Nicol, there were no infrastructures in Nigerian ports today, unlike when the terminals were still under the management of the Nigerian Ports Authority.
He said that when facilities were under the management of NPA, there was harmony between the service providers and users, adding that the major issue was the government’s inability to equip the agency with modern facilities.
“NPA was a problem solver and this attitude trickled down to other service providers, including the Nigeria Customs Service,” he argued.
Nicol said that the economic structures started collapsing in 1984 when politicians began to care more about wealth acquisition than infrastructure-building.
“Laws are not created as part of life. They are designed to check excesses. Somehow, from 1984, our economic structures began to collapse with the coming of politicians, whose main concern was to amass wealth. The systemic collapse of human interactions tied to monetary conditions or what is termed ‘bribery’ took centre stage in our maritime sector,” he explained.
According to him, to revert to human decency, the old culture of doing business with less monetary exchange must be eliminated, adding that government interventions have not helped much.
“Some service providers hide under the collapsed economic conditions to survive. And it is unfortunate. The maritime sector is known as the second largest revenue earner in Nigeria. The secret of this enormous wealth is the cargo. The owners of cargoes have minimal protection for them.
“Clearing cost is abnormal; transportation costs are abnormal and invasion of government agencies operating in the ports is abnormal. They would always increase the costs of doing business. At the moment, the relationships between the users of facilities and service providers have been broken due to government regulations,” he stated.
He urged the government to remove all the blockages so that shippers or cargo providers will be able to determine how much it will cost to clear cargoes.
He also called on the government to stabilise the exchange rates and the devaluation of the local currency must be controlled, claiming that the economic stability of a country is often judged by the stability of its currency.
A ship owner, Dada Labinjo, said that the sector deserved its own ministry as obtained in the aviation industry.
“Nigeria generates a lot of revenue from maritime activities. But what do we have to show for it? Nigeria generates 21 times more income from maritime than the aviation industry, yet the aviation industry has an exclusive ministry but maritime does not,” he argued.
He said the sector has not got any intervention from the government in the last 20 years, despite generating huge revenue for the country.
“In the last 20 years, the government has given interventions to the aviation industry and the operators in the aviation industry no fewer than six times that I can recall. You can find out the amount given to them as interventions. The last one was N4 billion given to them all because Jet A1 costs between N700 and N800.
“The government, to the best of my knowledge, has never given one kobo as an intervention to shipping. But that is the sector that generates the greatest revenue. We have been buying diesel, which we use to run our ships, at more than this amount for years now and nobody has thought about it.
“Nigerian ship owners have been contributing towards the Cabotage Vessel Financing Fund and we have done that for 18 years. Yet we have not been given one kobo. There is no similar contribution by aviation operators. The implementation of the Cabotage Act was not done to promote business in Nigeria; it was done to spoil business in Nigeria. The activities of maritime government agencies stifle shipping businesses,” he maintained.
According to Labinjo, Nigeria does not understand shipping as it should be, which has slowed down the growth of the sector.
He asserted that the country has not been doing enough to protect local shipping lines, despite having a vast coastal area and maritime frontage.
“What have we benefited from being a member of the International Maritime Organisation in the past? Nothing, It has not brought anything to us and we have not been able to influence anything inside the governance of IMO. Yes, it is about maritime governance, but what have we been able to gain?” he asked.
What the country may be losing
Meanwhile, the Head of Research, Sea Empowerment and Research Center, Eugene Nweke, believes that the investment in the maritime sector if properly harnessed is well over $9trn.
He said that the poor policies of the government have made the country lose its trans-shipment hub status to other neighbouring countries.
“The fiscal policy you should look at are the policy on the closure of the borders and the high cost of clearing goods. And in the process of that, the country lost its trans-shipment status. They reopened the borders a few months ago and that particular policy really affected Nigeria’s trade to other ports such as Togo, Lome, Abidjan, among others. These are the places where Nigerian cargoes are now diverted and from there they are shipped back to Nigeria. But the country has lost its status as a trans-shipment hub and it is a key issue because when they get into these countries, some of the consignments will be ferried into the country through smaller vessels,” he explained.
On what the country has lost, he said, “Now for instance, if the revenue from Apapa alone is over N700bn this year, calculate if there were more tranship-shipment cargoes that visited Apapa and no cargo was lost, the money would have been more than that and that is for Apapa alone. Calculate other ports.”
Meanwhile, the management of the NPA has recently put some measures in place to ensure efficiency at the ports including the introduction of an Electronic Call-Up System for trucks, which has helped in addressing the traffic issues at the ports.
A member of the National Association of Government Approved Freight Forwarders, Stanley Ezenga, stated that there should be ease of doing business in the maritime sector, noting that too many bottlenecks were scaring shippers away from the sector.
“What is scaring prospective shippers away from the Nigerian maritime space is too many bottlenecks in clearance processes. The ease of doing business should be allowed to work so as to encourage shippers’ confidence. Another thing is that the various terminal operators should be urged to sit up because our ports should be competitive and if it is competitive, people will now have a choice to choose whether to come to Nigeria or to go to any of the neighbouring West African ports.
“If our ports are competitive, people will naturally come to where they think they have an edge. The Nigerian Maritime Administration and Safety Agency is saddled with security while the Nigerian Shippers Council is saddled with the regulation of shippers. Also, the Council for the Regulation of Freight Forwarders in Nigeria is saddled with the regulation of freight forwarders. All these three agencies that have an interface with people that work in the maritime space should equally be urged to work according to the Act establishing them,” Ezenga advised.
Also, a former director at NIMASA, Olayemi Abass, advised the country to change its terms of trade from the Free-on-Board to Cost, Insurance and Freight.
He stressed the need to review and harmonise different charges and levies by government agencies.
“We need to metamorphose the NSC to the National Transport Commission immediately, complete and activate all inland dry ports, complete and activate all freight stations, enhance and modernise cargo inspections, and implement the single window trade platform,” he further noted.
Recently, the Mohammed Bello Koko-led NPA administration was quoted to have said that the agency would be giving a 30 per cent rebate to importers in order to boost activities at the eastern ports.
Koko disclosed, “Discussions have started. It might be lower or higher than 30 per cent, and we will also adopt a timeline. For instance, we might say this relief is for a year and let’s see the impact. We would not want to give a tariff discount to a terminal operator, who, for instance, brings in four vessels in a month and even with the rebate, he still brings in the same four or even fewer vessels. That is not what we want. We want to see increased activities at the ports and we want to encourage more cargoes to come into the eastern ports.
“Some of the terminals are now involved in the processing of exports, which is very key and important for us as an authority. It is also necessary for Nigeria to export more agro-products and locally produced goods. These are part of the things that will guide the amount of tariff relief we give to our terminal operators.”
He said NPA was looking into the challenge of the draught of the channel which is peculiar to most of the ports in the east.
“It is not just to reconstruct the quays; we also need to dredge deeper so that bigger vessels can come in and the economy of scale will set in, and then you will be able to attract more cargo volumes,” Bello-Koko said.
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