Factors Impeding Exports

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Apapa Gridlock

Eromosele Abiodun enumerates factors affecting the process of exporting goods out of Nigeria’s ports and some of the remedies provided by industry stakeholders

Some of the very important role export plays in an economy include increase productivity, provides employment, improves trade balance and expands the growth of a nation’s economy.

At this time of recovery from economic recession, the diversification of the economy from oil to non-oil export is imperative. This is currently the focus of the federal government. The government wants the development of non-oil export process that is expected to play significant role in revamping the ailing economy. But to make exports to be one of the main stay of the Nigerian economy, the ports will play a vital role.

The sea is the medium through which are transported to various parts of the world. Seaports in relation to trade are major gateways to the economy of Nigeria, hence, play an important role in the development of the country. Freight types are mainly containerised cargoes, general cargoes, roll-on-roll-off cargoes and petroleum products. General cargo was handled mostly by Tin Can Island Port, dry cargo by Apapa port and liquid cargo by Okrika port. Apapa port accounts for 30 per cent of cargo throughput in the Nigerian seaports. This form of port specialisation has implications for the provision of facilities at the ports.

Between 1990 and 2005, there was an increase in the cargo throughput, container traffic, net registered and gross registered tonnage of vessels at the ports and crude oil terminals. Major problems affecting freight traffic include inadequate cargo handling plants and equipment, long turnaround time, cargo pilferage and excessive charges.

Overtime, the maritime industry has substantially changed from an industry that was always international in its character to a truly global entity with routes that spans across hemispheres, transporting raw materials, parts and finished goods. Maritime transportation plays a major role in the national and international trade and economic growth. The seaborne trade represents 90 per cent of the international trade in the world. A seaport is defined as a terminal and an area within which ships are loaded and/or unloaded with cargo and includes the usual places where ships wait for their turn or are ordered or obliged to wait for their turn no matter the distance from that area.

Seaports in relation to trade are major gateways to the economy of a country. They represent a complex structure in a country’s transportation system providing ship harbour interface services such as pilotage, dredging, provision of berths, maintenance of navigational channels, ship-port interface in terms of loading and unloading cargoes and port-land interface in delivering cargo to and from the hinterland. In general seaports have five principal roles. They include: Cargoes and passengers handling, providing services for ships such as bunkering and repair, shelter for ships in case of heavy sea and storm conditions, bases for industrial development and terminals forming part of a transport chain. Seaports, expert believe, are complex dynamic systems consisting of numerous interacting elements, influenced by random factors.

Obstacles to Export
Export process from Nigerian Ports is plagued with factors in cross border trade, which greatly affects Nigeria’s product competiveness that result to rejects in the international trading environment
In a letter to the Nigerian Export Promotion Council (NEPC), the National President of the National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), Lucky Amiwero, named factors such as: lengthy and cumbersome documentation process on export, multiplicity of regulatory/security agencies, high and duplicated terminal/ shipping company charges and process and lack of export infrastructures as the bane of export.

The inspection of containers, he stated, is conducted by the following agencies on product quality: The appointed pre-shipment inspection of export agents, the Federal Department of Forestry, the Federal Produces Inspection Service and the Plant Quarantine Service.

According to him, “The Pre-Shipment of Export Company, that issues Clean Certificate of Inspection (CCI) is expected to carry out in pursuant to Pre-Shipment Inspection of Export Act of 1996 section 4-(c) clearly states, the inspection agents is provided with necessary facilities to enable the inspection agents to carry out quality and quantity inspections, price comparison and other process as may be required in the circumstance.

“The pre-shipment Inspection of export agents appointed by the federal government is responsible for three major functions: rice comparison (value), quantity and quality (product standard). The contract covers the international requirements with regards to the quality of the product, which is the standard of the product, that should have eliminated other agency involved in terms of process and cost, so as to reduce the level of international product reject that is rampant, and in effect enhance our export capacity.”

He added: “The following federal government agencies duplicates the process of quality inspection with that of the appointed federal government Pre-shipment Inspection on Export: The Federal Department of Forestry under the Ministry of Environment is involved in Quality of Product, with documentation, operational process and Cost.
“The Federal Produce Inspection Service is involved in quality of product inspection, with documentation, operation and cost. Plant Quarantine Service, is involved in quality product inspection, documentation, operation and cost.”

Duplication of Product Quality
Amiwero, added that the duplication of product quality (standard) inspection by the four agencies constitute serious bottleneck due to lengthy and cumbersome process, procedure and cost.
This, he stated, resulted in associated delays and high cost that necessitated to the movement of our product to our neighbouring West African Ports.

He pointed out that another major factor affecting export is shipping companies’ duplicated charges and charges not tied to service on export.

He said: “The Nigerian shipping companies in line with the contract of carriage, handles import container that are loaded back to the country of origin as empty container without any charge due to the level of export activities that is still very low in the country. The shipping lines Terminal Delivery Charges (TDC) is a charge that is not tied to service, as such charge is duplicated in the charges of terminal operators.”

“The excessive terminal charge coupled with various other charges are not tied to services in line with WTO Articles VIII –(1)-(a), which stipulates, that all fees and charges of whatever character imposed by contracting parties in connection with importation and exportation shall be limited in amount to the approximate cost of service renders.

“The terminal charges are charges component that are not tied to service and it’s duplicated by the shipping company who do not perform any service in the terminal. The operational procedure of terminal/shipping activities contributes to the associated delay due to short shipment of consignment that result to late loading and reloading of exported containers.”

On the provision of weighing and application of Verified Gross Mass (VGM) by exporters, he said: “The verification of gross mass shall be verified by shipper either by weighing the packed container using calibrated and certified equipment as contained in the provision of Solas Chapter VI Part A Section 4 paragraph 1&2, which clearly states, the shipper of a container shall ensure the verified gross mass is stated in the shipping document and shall be signed by the shipper.

“The responsibility of verified gross mass is clearly the responsibility of the exporter and not that of the terminal operator, who exploit the system to charge as much as N20, 000 per container even when the container has already been weighed by the exporter in compliance to the VGM convention. Terminal operators go ahead to enforce unconventional operational practice in contravention of the SOLAS Chapter VI convention by charging N20, 000 per container with other operational complexities.”

As a way out he said: “We as organisation that has served in close to 167 Federal Government Committee, which include, Presidential Committees on Destination Inspection, Port Problem, 48-hour Clearance of Cargo, Customs Reform, request that trade procedure committee (TPC) be set up with expert, to address the obstacle and the shortfalls inherent in our system as it relate to Export and Import Trade. This would in turn, proper position Nigeria for the desired change in other to focus on export drive that will rescue the country from the dependant oil.”

Apapa Gridlock and Inefficiency
Despite the protest by stakeholders, the situation has remained the same with no hope in sight as to when a permanent solution will be found. Last week, Nigerian exporters raised the alarm over the situation calling on the federal government to come to their aid as congestion and inefficiency at Lagos’ ports affecting exports
The exporters said gridlock and inefficiency at the ports of Nigeria’s commercial hub, Lagos, delayed shipment of 50,000 tons of cashew nuts valued at $300 million and is threatening this year’s output as traders are cash-strapped.

President of Nigeria Cashew Exporters Association, Tola Fasheru, said the kidney-shaped fruits from last year’s harvest should have been exported by January, “Instead, they are still in containers on trucks waiting to enter the ports or on wharves.”

“Roads to Lagos ports are badly congested; with hundreds of Lorries queuing to enter the premises and either deliver or pick goods. In addition, inadequate capacity and infrastructure, stifling red tape and corruption are hampering export processes. There is a palpable lack of synergy among the port operators and this is affecting the business of our members,” Faseru said.

Some members of the cashew association, he added, have defaulted on contracts to the extent that foreign buyers are now walking away from them. “They are no longer willing to give us fresh contracts,” said the group’s president.
The delay is likely to affect the output target of 260,000 tons for the current season, which started in February and will end in July.

“Not one single cashew exporter is in the field now as he is owing on contracts and as a result has no money to operate with,” Fasheru said.