FG Policies as Reason for Diversion of Cargoes

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Eromosele Abiodun examines the clamour by major stakeholders in the maritime sector for government to review trade policies and tariffs in order to make Nigerian ports competitive

On May 18, this year, Vice President Yemi Osinbajo signed three executive orders giving specific instructions on a number of policy issues affecting the promotion of transparency and efficiency in the business environment designed to facilitate the ease of doing business in the country.

The other two included timely submission of annual budgetary estimates by all statutory, non-statutory agencies and companies owned by the federal government; and support for local contents in public procurement by the federal government. While government agencies in the ports have commenced moves to implement the directive, the state of the ports still leaves much to be desired.

Despite the ease of doing business initiative of the federal government, apparently to fast track operations, major Nigerian ports have been rated among the worst in sub-Saharan Africa. Stakeholders are unanimous in their submissions that the government has failed in its responsibility to position the ports among the best in Africa due to the many failed policies.
Also, Nigeria is said to have shallow waters, a situation that scares big ships away, making it difficult for shippers to attract businesses.

When compared with countries like Dubai, Singapore and Shanghai, which have world-class international ports that can handle massive containers, Nigeria has a long way to go.
Due to the poor state of the ports and inefficiency, it is estimated that the Nigerian economy lost about N250 billion to neighbouring countries in 2016 alone.
Stakeholders observed that the facilities at the ports are obsolete, begging for upgrade. They also lamented the lack of modern scanner, a situation where scanning manually at the ports had led to delays in operation.

Experts’ View
Maritime and commercial lawyer, Dr. Olisa Agbakoba, blamed institutional and operational failures, legal and administrative challenges for the situation.
He noted that previous reforms failed owing to bureaucracy in the regulatory sections of the ailing sector.
Agbakoba said: “The cost of clearing goods remains a significant hurdle with the importing and exporting sections as Nigeria’s seaports still rank as the most expensive in Africa. Presently, on the import side, costs related to yard handling fees (which include demurrage and storage), longer than-ideal border clearance times, yard handling procedures, and informal payments to Customs and other government agencies have eaten deep into the fabrics of the ports’ operations.”

He added that most ships bringing goods to Nigeria prefer to go to other ports.
“It’s like you buying a car from Liverpool; the car will go to Benin Republic ports instead of going to Lagos because the Lagos port is completely inefficient. You get Customs to inspect it, you get the terminal operators to work out the cost, which will be higher than what you get in Cotonou Benin,” he said.
Agbakoba alleged that most ports in Nigeria are obsolete saying while the Port Harcourt port was built in 1913, the Lagos port was built in 1948.

He added that the ports are so shallow that big ships cannot come into them.
“If you have shallow waters and big ships can’t come, then you won’t be able to attract business. If you look at ports in other climes like Dubai, Singapore and Shanghai, they are world-class international ports that can handle massive containers and ocean vessels that can carry about 10,000 containers in one day, while ours can only do 80 containers daily,” he said.

To this end, the Director-General, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf had called on the federal government to review some of its trade policies
He said: “Port activities generate tremendous multiplier effects for the economy especially in terms of job, revenue and incomes for people. So to the extent that we are losing so much to neighbouring countries, we are losing so many things including expertise. And ultimately, some of these products still find their way back into the country. That is the irony of it because the borders are porous. One way to address this problem is to ensure we review our trade policies. We should not set a tariff at a level that will make it more commercially expedient to make people avoid using our ports.

“Some of the reforms that we are putting in place to make our institutions more investment friendly is also very important. If we are able to drive that to a logical end and get our institutions that relate with importers at the ports, we need to change their orientations so that they can begin to see importers as customers and relate with them the way a business person will relate with a customer. Then the infrastructure too has to be there. If the infrastructure is not right, it could create bottlenecks for operators and it could make things more expensive.

“If it is taking you such a long time to discharge your vessel, to get your consignment out of the port, these are big problem that could lead some people to say rather than get stuck at the Lagos ports, it is better to go through Cotonou and come through the land border. Those are the things I think we can do to stop the diversion or reduce cargo diversion to neighbouring countries.”

Terminal Operators Decry Situation
However, the Chief Executive Officer of ENL Consortium Limited, operator of Terminals C and D of the Lagos Port Complex, Apapa, and Chairman of the Seaport Terminal Operators Association of Nigeria, Dr. Victoria Haastrup decried the situation and denied that terminal operators’ cost was responsible for cargo diversion.
According to her, “It has nothing to do with terminal operators’ cost. What is responsible is government regulation, policies and tariffs. Because of Customs tariffs, for instance, it is more attractive for people to drop their cargoes in the Republic of Benin and the same cargoes find their way back to Nigeria because it is cheaper.

“For instance, a brand-new vehicle that you would pay N15 million to clear, if it is in Republic of Benin, it will not cost more than N2 million or N1 million as the case may be. We have no role in this. Any ship going to Benin, it is because of government’s policy. For instance, rice that goes there and still finds its way into the Nigerian market, am I responsible?”
On how much terminal operators are losing to this situation, she said: “Not only terminal operators, all private sector operators are losing. We cannot quantify it. Are we going to quantify it in terms of money and in terms of time? Time is money in maritime activities because the importers of goods are paying demurrage on the ships and that is why freight and insurance cost are more expensive for ships coming to Nigeria than any other parts of the world.

“These are all the things that are responsible; so if government does not look at these factors and do the right thing and ensure that everybody is on the same page, we are in trouble. I am not in charge of logistics; my job is just to ask the NPA to park the vessels and I will discharge the ships. If the situation continues, congestion surcharge will return and Nigerians will pay because the cost will be transferred to the consumers.”

24-hour service
She added that if the problems were not addressed, 24-hour service will not work at the port, adding that the situation with the trucks not even moving has further compounded the issue.
“The terminal operators have always been operating on a 24-hour basis because port operations are 24 hours everywhere in the world. We have kept to that. We do our bit but there are challenges of trucks not coming in the morning. You have the challenges of security; there are some cargoes that will not take some cargoes out of the terminal at night until security is assured.

“We, as terminal operators, are also victims of the whole situation. If we handle more volumes, we will make more money. I told you of the ship that has been in my terminal for the past one month and now there is congestion of ships right now and it is the people that hired that ship that will pay. The ship is already in the timetable billed to go to another terminal somewhere else in the world and it is still here in Nigerian waters.”

“We have the capacity to handle as much volume as possible. A lot of the containers handling terminals have offdock terminals where they transfer those containers to. So it is not a matter of not having enough space; it is just getting in and getting out.”

On his part, the National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), Mr Lucky Amiwero said Nigeria has lost 60 per cent of its import cargo to neighbouring countries as a result of its unfriendly import policies,
Amiwero said government’s policies have led to importers shipping their goods through neighbouring ports of Benin Republic, Togo and Cameroon.

Amiwero explained: “We have lost our trans-shipment and transit cargoes to ports of Benin, Togo and Cameroon. He further said that such cargoes find their way into countries that do not have ports, like Niger Republic only to find their way back into the country.”

He frowned at the present situation where everyone gets access into the ports on the pretence of being members of the Council for the Regulation of Freight Forwarding in Nigeria (CRFFN).
He said these people who refer to themselves as freight forwarders, are causing image problem for the clearing and forwarding profession.