Ensuring Minimum Standards for Shipping Agents


Eromosele Abiodun writes that the introduction of disbursement accounts by the Nigerian Shippers Council will have a multiplier effect on the maritime industry and the economy as a whole

The functions of the Nigerian Shippers’ Council (NSC) as port economic regulator include: the provision of guidelines on tariff setting in order to guide against arbitrariness; monitor and enforce standards of service delivery to ensure availability, accessibility, affordability, stability, predictability and adequacy of services.

Others are: to encourage competition and guard against the abuse of monopoly and dominant market positions; perform mediatory role among stakeholders; establish accessible and modern dispute resolution mechanism; regulate market entry and exit; promote efficiency in the provision of port services.

It also has the mandate to minimise high cost of doing business and prevent its inflationary effect on the Nigerian economy; encourage private sector investment in the port sector; monitor and ensure compliance by all parties with the provisions of the Port Concession Agreements.

In line with its mandate, the shippers council has over the years made effort to ensure that stakeholders in the maritime sector are not taking advantage of by shipping companies in terms of paying the appropriate price for services.

In continuation of its crusade against sharp practices in the maritime sector by shipping companies, the NSC last week announced that it was   working with the Central Bank of Nigeria (CBN) to  compel all  shipping  agencies  to  open   disbursement accounts  (DAs)  from where they  will  carry out operational costs  for  their multinational principals overseas.

The apex bank and the NSC said this was in line with Article 4 of the United Nations Conference on Trade and Development (UNCTAD) minimum standards for shipping agents all over the world.

The Executive Secretary of the NSC, Mr Hassan Bello explained during a meeting between the CBN representative and shipping industry stakeholders in Lagos  that maintenance of DAs as provided by ‘UNCTAD Minimum Standards for Shipping Agents’ stops the agent from going to the local market to source foreign exchange to settle charges incurred by the vessel locally.

This is just as some agents have disclosed that Nigeria loses $4billion (N1.44 trillion) annually for not introducing the disbursement account for all shipping agents.

Such amount, the agents stressed, could  bring about a lot of multiplier effect in the industry and the national economy.


Disbursement Account

The DA process  is the  sending of  port call and port cost data between an agency system in order to correctly assign port costs to the correct port call, vessel and voyage and import this data into the data base. However, integration between systems is required.

Explaining how the process works, a customs agent, Ogungbemi James,  said: “All active and inactive vessels of the operator are handled through the process. Users are assigned with specified vessels to simplify the task. Vessels are shared between two different operator companies using vessel sharing in the application. DA sharing feature allows other ship owner/manager to access a particular DA.

He described DA as an estimated cost for carrying out all port activities.

“Standard formats are provided for the agent to submit the proforma. Agents can raise additional payment request (APR) for added expenses even after proforma approval. Disbursements are all expenses that the agents made for the vessel in a port. Think of port duties, loading and unloading costs, tugs, provisions, etc. In ocean marine insurance policies, the term disbursements relates to all expenses of the shipping company before the start of a journey, such as the costs for bunkers, provisions, inventory, outgoing port duties, among others,” he explained.


Charges to be Covered

Bello, who was represented at the meeting   by the Director, Legal Services of the Council, Mr Samuel Vongtao, identified such charges to be covered by the DAs as those collected by the NPA; Nigerian Maritime Safety and Administration Agency (NIMASA); ship chandelling costs and other local shipping costs.

Bello said such charges were usually in foreign exchange since “it is assumed that the principal must have wired the funds to the disbursement of account of the agent in foreign exchange.”

He added that it was for the agents to make such payments in currency that was transferred to the disbursement account rather than going to the interbank market to source for foreign exchange.

He said that it was wrong that in Nigeria the practice was completely different, adding that, “shipping   agents apply to transfer all incomes to their principal while at the same time applying to CBN for foreign exchange at interbank market to service local costs.”

The CBN Deputy Director, Foreign Exchange Management, Trade & Exchange Department, Mr. A.S. Jibrin said the idea of the meeting  with the stakeholders was to ensure that the DA enjoys the support of those in the shipping industry.

Jibrin explained that what the CBN set out to do was to listen to the stakeholders on the DA, adding that the apex bank was interested in policies that will grow the shipping industry and the national economy.

He said decision on the policy could not have been taken without hearing from those in the industry.

Jibrin said he was happy about the consensus opinion expressed at the meeting  that  the DA should be introduced.

A former Director, Shipping Services of NSC, Mrs. Dabney Shall-Holma said the DA when introduced will go a long way in improving the contributions of the  shipping sector to the country’s gross domestic product (GDP).

Shall-Holma while noting that the shipping sector was nearly absent or too low in terms of GDP contribution, said it was not good that shipping operators were not contributing enough to the economy.


Stakeholders’ Views

During the meeting, stakeholders were dismayed that DA was yet to be introduced in the country considering the time that the idea came up.

Participants said the CBN and the NSC should move as fast as possible to ensure that the policy takes effect in Nigeria.

Among those who spoke in favour of having the DA in place were founder of National Association of Government Approved Freight Forwarders (NAGAFF), Dr. Boniface Aniebonam; President of Association of Nigerian Licensed Customs Agent (ANLCA), Iju Tony Nwabunike;  a member of the Nigerian Economic Group, Dr. Ikenna Nwosu; President of Nigerian Ship Chandlers Association, Dr. Martins Enebeli and  former President of NAGAFF, Dr. Eugene Nweke, among others.

The stakeholders maintained that it was wrong that the shipping agents were sourcing foreign exchange locally to settle NPA, NIMASA and other dues when they ought to have been sent such money from their foreign principals overseas.

Aniebonam said it was even sad that while this was the case, Port and Terminal Multiservices Limited (PTML) was collecting  illegal fees from customs agents   as a condition for   allowing customs agents have access into their premises for  clearance of goods  in their terminals.

He said PTML had been boasting of registering 10,000 customs agents who allegedly paid N8000 each for access cards to be allowed into their PTML terminals.

It was gathered that the NSC had last year given its position on the disbursement account to the CBN during the review of the new Forex Manual.

The CBN had April this year informed the NSC of its acceptance of its position on DA.

The meeting of Tuesday with stakeholders, it was gathered,   was   to confirm that the    council’s position on the matter   “has the buy-in of all stakeholders” so as “to mitigate the impact of the provision on businesses and attendant likely outcry of operators.”

Council officials said the latest move by the CBN appears to be the best chance to introduce the DA in line with global best practice in the operations of shipping agencies in Nigeria.

The meeting involving stakeholders and the CBN, according to the council was imperative, “to avert any possible outcry of non-inclusiveness, from the industry, when the practice is eventually enshrined in the CBN’s Forex Manual.”

It is expected that the council will hold similar meeting with stakeholders in Port Harcourt to cover shipping agents in that area.


UNCTAD Standards for Shipping

The objectives of Article 1 of the United Nations Conference on Trade and Development (UNCTAD) minimum standards for shipping agents all over the world include: to uphold a high standard of business ethics and professional conduct among shipping agents, to promote a high level of professional education and experience, essential to provide efficient services.

Others are: to encourage operation of financially sound and stable shipping agents, to contribute to combating maritime fraud by ensuring improved services by better qualified shipping agents, to provide guidelines for national authorities/professional associations in establishing and maintaining a sound shipping agency system.