Ending Diversion of Cargos

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Eromosele Abiodun examines call on the federal government by stakeholders in the maritime sector to address trade policies, tariffs and decaying port infrastructure that make seaports in neighbouring countries more attractive

A few months ago, 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 executive others included timely submission of annual budgetary estimates by all statutory and non-statutory agencies, including companies owned by the federal government; and support for local contents in public procurement by the federal government. While government agencies in the port have commenced moves to implement the directive, the state of the ports still leaves much to be desired.

Despite 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, following the series of failed policies.

Also, Nigeria is said to have shallow waters, a situation that scar big ships away, making it difficult for shippers to attract business. When compared with other climes like Dubai, Singapore and Shanghai, which have world-class international ports that can handle massive containers, Nigeria’s is a joke.

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.

Ports and EGRP
Speaking on the matter, the Managing Director of Nigerian Ports Authority (NPA) Hadiza Bala-Usman has said that the country’s Economic Recovery Growth Plan (EGRP) would not succeed unless the inherent decay in port infrastructures were addressed.
Bala-Usman stated this while addressing maritime stakeholders at the quarterly meeting of the Port Consultative Council (PCC) held in Lagos.

She pleaded support from stakeholders in the port industry for greater operational efficiency, saying that it is the desire of the federal government to make Nigerian Ports the leading Port in Africa.
She commended the PCC under its Chairman, Otunba Kunle Folarin for impacting positively on the maritime sector over the years.

She assured stakeholders that the NPA management was equally committed to tackling critical challenges slowing down optimal performance at the ports in areas of maritime safety and security, port access roads and multimodal transportation of cargo despite the rich potentials at the country’s disposal.

According to her, “Indeed analysing the overriding objectives of the federal government, ERGP depends largely on how swiftly we can correct the inherent deficits in our port infrastructure especially the Port Access Roads.”
She said the NPA had taken critical steps aimed at ameliorating the challenges of doing business within the port environment.

She said some of the steps taken by her administration includes: palliatives at ending the gridlocks at Apapa Port axis, conversion of Lillypond Container Terminal into a holding bay for trucks, innovation with the automation of the Call-Up System for trucks and other incentives given for the transfer of cargo through barges from Ikorodu, Epe and Ijegun amongst others.

She further solicited for improved synergy by all stakeholders towards making the best use of the opportunities in the maritime sector to improve the nation’s gross domestic product (GDP).

Also speaking, the Chairman of PCC, Folarin appreciated and commended Bala-Usman, stressing that her vast accomplishments had indeed impacted positively on the sector.
“We have continued to score a lot of mileage and we need the support of all agencies to move the council to the next level,” he stated.

Folarin explained that the PCC had been able to collaborate with stakeholders in the transport sector to bring required developmental progress to the industry, even as he called for more partnership and corporation from stakeholders.

Experts’ Views
Maritime and commercial lawyer, Olisa Agbakoba, had while speaking at a forum in Lagos recently blamed institutional, operational failures, legal and administrative challenges for the situation.
He noted that previous reforms had 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, “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.” Agbakoba said that most ports in Nigeria were obsolete.

“For example, while the Port Harcourt Port was built in 1913, the Lagos port was built in 1948. They 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.”

To this end, the Director-General, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf called on the federal government to review some of its trade policies
“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,” he said.

Terminal Operators Decry Situation
On her part, 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 N15m 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 policy. For instance, rice that goes there and still finds its way into the Nigerian market, am I responsible?”

On how much are terminal operators are losing to this situation, she added: “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 noted that if the problems were not addressed, 24-hour service would not work at the port, adding that the situation with the trucks not even moving have further compounded the situation.
“The terminal operators have always been operating on 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 off-dock 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 had lost 60 per cent of its import cargo to neighbouring countries as a result of its unfriendly import policies,
Amiwero said government’s policies had led to importers shipping their goods through neighbouring ports of Benin Republic, Togo and Cameroon.

Amiwero said:”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 refers to themselves as freight forwarders, were causing image problem for clearing and forwarding profession.