The maritime industry offers huge potential for the federal government’s quest to diversify the economy, writes John Iwori
The federal government is looking at several other sectors outside the oil and gas industry in a bid to ensure that its ambition of diversifying the economy was achieved. These sectors include agriculture, solid minerals and tourism. However, analysts have said one sector the government must not ignore is maritime. According to them, the maritime industry remains a goldmine and if properly harnessed, has enormous potential. This explains why not a few stakeholders have averred that the maritime industry has what it takes to generate the needed revenue to finance the 2016 budget, among other needs of the citizenry.
For instance, a maritime lawyer and former President of the Nigerian Bar Association (NBA), Mr. Olisa Agbakoba, SAN, said the maritime industry has the capacity to generate N7 trillion annually. The lawyer also posited that besides boosting the economy, the maritime industry could also provide avenues for job creation, especially for the youths, who are roaming the streets for non-existent jobs in the urban centres.
It is an indubitable fact that the nation’s seaports situated in Lagos, Koko, Calabar, Onne, Port Harcourt, Sapele and Warri have a strategic role to play in the President Muhammadu Buhari’s administration economic diversification agenda.
The diversification of the economy has become imperative and urgent given the dwindling price of crude oil in the international market. Unlike before when it used to be mere talks, the dwindling fortune of the economy has made it imperative for the federal government to take its desire to diversify the economy with all seriousness. Many have opined that Nigeria’s development and revenue generation agenda as promised by the Buhari’s administration would be a mirage if the federal government under his watch did not match words with action.
Industry players have used every avenue to make push for the nation’s seaports to serve as a veritable alternative source of income to the central till. According to them, the maritime industry is key to the nation’s survival in view of the present challenges. The calls have become strident in the face of low income accruing into the federation account from the oil and gas industry.
Desire for foreign goods
That Nigerians love foreign goods is an understatement. They import so many goods into the country to the detriment of the economy. In many cases, they prefer goods of inferior quality as long it is produced overseas. A typical example in this regard is the locally produced rice popularly called ‘ofada’ or ‘Abakiliki’. It has been scientifically proven that the locally produced ones are not only sweeter but also are more nutritious.
Yet, millions of Nigerians prefer the foreign polish ones imported from Thailand or Indonesia. There are many instances these foreign produced rice have been found to have expired before they are brought to Nigeria. The high desire for foreign products and huge population, among other factors, have made Nigeria to remain a large market for foreign goods.
It is against this backdrop that many few stakeholders have stated that the maritime industry holds the key to the nation’s growth and development in the years ahead. Presently, Nigeria has what it takes to be a hub in the shipping sector of the economy, given its strategic location on the Africa continent.
In spite of her enormous potential, Nigeria is presently not in a position to reap the numerous benefits in the shipping sector. Some factors are responsible for this unfortunate position. These include poor policy implementation, high capital flight, sharp practices, negative policies and lack of adequate manpower and infrastructural facilities. Other challenges include: inconsistencies in decisions; lack of political will to implement the right policies; domination of the shipping sector of the economy by foreign ship owners; and the inability of the government agencies such as the Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigerian Ports Authority (NPA) to live up to expectations.
Already, these ills have started taking toll on the fortunes of the nation’s seaports, especially those ones situated in Nigeria’s busiest ports, Lagos Ports Complex (LPC), and Tin Can Island Port (TCIP), Apapa. These ports used to be a beehive of activities with vessels taking days, if not weeks to get berthing space. The waiting is not only for vessels. Trucks also wait for days to get their cargo out of the ports. This often lead to long queues, making the port city one of the most difficult places for motorists to get access or exit, especially on a working day. This is no longer the case.
Activities at the Lagos ports have reduced considerably as the foreign exchange restrictions announced last year by the federal government takes a heavy toll on the nation’s economy. This situation has left many, who depend on Africa’s hitherto busiest ports for living, to remain idle.
The Nigerian Ports Authority (NPA) recently released a report of its performance, with the Managing Director, Alhaji Habib Abdullahi, saying the number of ocean-going vessels that called at the ports had declined by 8.1 per cent.
His words: “A total of 5,090 vessels called at the ports in 2015, which is a decrease of 8.1 per cent when compared to the 5,541 recorded in 2014.”
This drop has also affected the NPA’s revenue as it generated N11.9 billion in 2015, indicating a drop of 1.7 per cent from the N12.1billion generated in the previous year.
Similarly, the National Bureau of Statistics (NBS), in its latest report, said that Nigeria’s imports decreased by 24.7 per cent in December 2015. The report- ‘Nigeria Imports from 1981 to 2016’- noted that in the last quarter of 2015, purchases declined by 22.4 per cent. Imports in Nigeria averaged N164.26 billion from 1981 until 2015, reaching an all-time high of N1.5 trillion in March of 2011.
While introducing the forex restrictions, the federal government had said the policy was aimed at boosting local manufacturing industries and agriculture, besides providing employment opportunities. Nevertheless, the restrictions have forced local manufacturers to cut operations and lay off workers due to their inability to import raw materials.
Several port users, especially licensed customs agents, have decried the lull in port activities occasioned by the continued decline in imports since the beginning of the year.
The President, National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), Mr. Lucky Amiwero, said many of his colleagues had remained idle since last quarter.
He told THISDAY that many of them had lost their jobs and were trying their hands on other things, some have relocated to their communities to reduce their expenses.
“Many offices have closed down. Those who have not relocated cannot even afford the transport fares to come down to the ports anymore. This is an import-dependent country. So, the restriction on forex for the importation of 41 items by the Central Bank of Nigeria (CBN) has really affected port activities. We hope the government eventually reviews the restriction. This quarter has not been impressive,” he said.
The Chairman, Shipping Association of Nigeria (SAN), Mr. Val Usifo, was quoted in a report saying that members of the group were feeling the pressure of low imports.
“All aspects of the economy are interrelated and these heavy restrictions are causing more uncertainty,” he said.
SAN represents the international companies handling container trade in Nigeria. These include the Danish shipping giant, Maersk and France’s CMA CGM.
NPA sources told THISDAY that arrival of vessels importing steel was down by about 60 per cent. According to the source, who preferred anonymity, the ports are nearly empty and Customs revenue is nowhere close to where it should be. Only last month, the Tin Can Island Command of NCS reported a shortfall in revenue of N2.7 billion for the first quarter of 2016.
The Public Relations Officer (PRO), TCIP Command, Mr. Christopher Osunkwo, said about N58.9 billion was generated in the first quarter of 2016, compared to N61.6 billion that was generated for the same period last year.
The Nigeria Customs Service (NCS) had in January this year set for itself N1trillion revenue target. With the end of the first quarter, however, it is clear that this may be a mere wishful thinking.
Already, the Comptroller General of NCS, Colonel Hameed Ali (rtd) had expressed dismay over the significant drop in the service revenue projections as shown by its first quarter revenue generation vis-a-vis what the service recorded in the same period in 2015. Among other reasons, Ali cited the negative impact of the Central Bank of Nigeria (CBN) forex policy on 41 imported items.
To improve on revenue generation, they called on the federal government to review some of the policies considered as having negative impact on the economy. Particularly, the policy on forex restriction. Stakeholders have also said that the government should also stop the fraudulent sharp practices in the nation’s seaports such as concealment and under-declarations; reduce cargo dwell time (CDT); build infrastructural facilities; and restructure NPA and NIMASA for optimum performance.
Those who spoke to THISDAY made it clear that until the MDAs in the maritime industry are made to deliver on the primary purpose for which they were established, it may be difficult for them to perform well. For instance, the Minister of Transportation, Mr. Rotimi Chibuike Amaechi had at a stakeholders’ forum in Lagos, said all the maritime agencies can generate as much as N500 billion monthly. To ensure that this is achieved, Amaechi has directed the MDAs under his watch to put measures in place to generate more revenue this year.
However, not a few must have wondered how they can achieve that when they lack the requisite manpower and tools to work with.
On his part, Agbakoba argued that in order to tap revenue from the maritime industry, there is the need to overhaul existing policies, institutions, regulatory and legal framework.
He maintained that it is when this is done that Nigeria would begin to derive the numerous benefits in the maritime industry. In spite of the recent rationalisation of MDAs which led to the merging of several ministries, Agbakoba is of the view that a separate ministry should be created specifically to cater for the needs of the maritime industry. While maintaining that the maritime industry is too vital to be merged with others, he pointed out that in the present arrangement and organisational structure, set goals and objectives would be difficult to attain.
With the result of the performance audit report on the MDAs presently awaiting Amaechi’s action, stakeholders are expecting the Buhari’s administration to use it to achieve the desired results in the maritime industry.