Bello: With Coronavirus Disruptions, Economic Diversification Crucial

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Executive Secretary of the Nigerian Shippers’ Council (NSC), Hassan Bello

The Executive Secretary/Chief Executive Officer, Nigerian Shippers’ Council, Mr. Hassan Bello, in this interview on AriseTV, spoke about the devastating effects of the raging coronavirus on global shipping and its effects on the Nigerian economy. Excerpts:

Let’s start by discussing the effects of the coronavirus on the global and Nigerian shipping and the corresponding drop in government’s revenue?

It is obvious that the coronavirus has had a devastating effect on world shipping and this means less deployments of ships and the whole world supply chain is disrupted. International trade is down by 80 per cent in terms of shipping and if we have that disruption, it means revenue projections will have to be adjusted. In Nigeria for example, 50 per cent of our container trade is done with China. And one could easily see what that means – contracts signed, deliveries will be disrupted. But even more frightening is the fact that revenue projections from port operations will have to also suffer. This will be about 30 to 40 per cent, depending on how long this pandemic continues to disrupt the whole network of international trade. We may not see the effect right now, but maybe much later you will see the devastating effects on the economy.

Don’t you think there is need for us to develop new ports or start using other ports such as the Onne Port, the Bakassi Deep Seaport?

Yes, this is the time, more than ever where we need to develop deep sea port. The one in Lekki for example, will be a game changer, together with the rail, the Ibadan-Lagos and the Ibadan-Kano-Port Harcourt. These would have significant impact on Nigeria’s economy. The economies of scale could mean that Nigeria could be the hub that is needed, where we have lower vessels taking goods to other ports in the central African sub-region. So, it is important that we have this infrastructure and what the Central Bank of Nigeria (CBN) is doing is quite commendable because there must be some intervention. The hard wins must be met and the economy must be insulated from the vagaries of oil price. And diversification of the economy must be an agenda because this is the lesson we have to learn. Nigeria could easily have been an alternative to China if we have our industries right. So, I think apart from the disruption that we are having, which I hope is temporary, it is very important to look at the issue of diversification. Let’s be a productive economy, let’s look at exports rather than import, we should cut our import bills. In fact, I support export and that is what the Lekki Deep Sea Port and other ports at Bakassi, Onne, will be able to support the Nigerian economy.

The Apapa port is five times more expensive than the Durban Habour and three times more expensive than China Port. Apparently, the problem apart from shipping charges and terminal cost is the cost of local transport which is 10 times higher in certain cases. What can be done about this issue and what are the intervention that you have embarked on?

The issue of cost is very important. We have to make our ports competitive. We are competing with other ports in the central and western African sub-region. One factor the shipper looks into is cost and it is important in deciding where he wants his cargo to be dropped. So, we are looking at it globally. The issue of cost in Nigeria has to do with even the operating environment, it has to do with the infrastructure, it has to do with the ability to get the goods out of the ports as soon as they land. The port is not a storage place for cargoes. Cargo should not be left at the port. There should be off dock terminals where dry ports for example, where these goods should be examined. And so we are looking at the Lekki Port, which should be delivered in two years’ time, to see that we can make a modern port and address the issue of tariff at the same time. But the Nigeria Shippers’ Council is working assiduously to see that the cost is reduced significantly. And so, we are having negotiations with all the shipping companies. We hope in two weeks’ time we will finish that. By the time we are through with the negotiations shipping council, terminal operators and don’t forget the government agencies, they also level cost. The Nigerian Ports Authority, NIMASA, all have their costs. So, we would look at all these and come to a very scientific conclusion. But that will mean about 35 per cent reduction in the cost of doing business in Nigerian ports. That will make us competitive and we want to look at the operational efficiency of the ports, we want to look at hinterland connections and how far can these goods leave the ports and reach the final destination. So it is a whole gamut and we are having the support of the federal government to do this.

What do you think is really militating against the patronage of eastern ports like Calabar, Port Harcourt, Warri, etc?
First of all it must be understood that it is the shipper who decided where is cargo will go and it is an economic decision all the time. The shipper decides how many days his cargo would stay at the port. We have an average of 18 days duel time in Nigerian ports in Lagos. But the eastern ports are there and they should be patronised. The shippers should patronise the eastern ports. However, there are other issues like security which the federal government is handling, we have the issue of infrastructure, hinterland connection, among others. I bring my goods to Calabar, how do I get it to Maiduguri for example? What are the corridor – the rail, the road and other means of evacuating cargoes from Calabar? What are the navigational issues? For all these things, there must be a comprehensive marshal plan, and I am calling on the central bank, the same intervention it has made in other sector, such as the agric sector, should be seen in the transport sector. We have to patronise the eastern port, that will unclog Lagos, that will mean distributions, that will mean creation of jobs and growing the economy. So I think we need to look at this thing concertedly and deliberately and we have to look at intervention. Is it the area of navigation? Is it the issue of security? Is it the issue of trans- shipping goods from Lagos by smaller vessels to these ports? I think that one day will need to take deliberate action about this and I want the focus of the central bank and other intervening agencies to look at the transport sector. The sector needs coordinated linked strategy so that it can make the expected contribution to the national economy.

You said earlier that the Lekki Port will be ready in two years, I want to talk to you about Kaduna Dry Port and the strides it is making, especially in the area of export, I think that is a success story to highlight. What can be achieved if that port is maximised?

That is true. Kaduna Dry Port is an example of diversification. We have seen export rise, export of agricultural produce, and sometimes even manufactured goods from Kaduna dry port. Now, it is important that the federal government designate these dry ports as centers of exports. There are still a lot of things to do like capacity of rail, which is not so much. We are working with the Nigerian Railway Corporation to make sure that wagons are deployed specifically for Kaduna. Exporters could come and export from there. Cow horns are exported, ginger are exported and so many other varieties of things. And every day we see these rising despite the lack of other essential things. We don’t have pre-export inspection companies in Kaduna. The Federal Ministry of Finance should make sure that Kaduna is allocated pre-export inspection shipping. We are working with Nigeria Customs because goods are examined in Kaduna rather than in Lagos. We have a semblance of port community and other regulatory agencies are in Kaduna and you could see immediately that there is something happening even within the immediately premises of the dry port.
The Kano Dry Port, the Funtua Dry Port and the Isiala Ngwa Dry Port, are ports of origin which means one can accept cargoes directly there without going through the sea ports. In terms of significance, it will lower the transport cost, it will decongest the sea port and it will also bring economic prosperity. All the port economy will experience in Lagos, Port Harcourt won’t be the same when we have the dry port in Kano, Kaduna, Aba, Funtua, Jos, and other places. So, it is important that attention is given to these ports. And what is even more important is the integration of the infrastructure. There must be linkages. I have seen the central bank supporting the dry port so that we could export more from these ports. The coronavirus effect of disruption on the economy has taught us one lesson and that lesson is diversification. For example, we have to now have disruption in volatility of oil prices and so many other things. This will mean that certain very important infrastructure could have delay in delivery. Like the Ibadan-Lagos rail which is supposed to be delivered in April, now we have to push it to June. Also, the Ibadan Dry Port could be delayed. But what is more important is the production. We need to diversify the economy and so we need to think of exports. Export is very important to the life of this country, so that we can insulate ourselves from the vagaries of the external shocks. And that is why it is commendable what the central bank is doing. With the dynamics in the global economy, the interventions by the central bank to tackle the headwinds and macroeconomic interventions is quite commendable. And let me use this opportunity to also commend another sector, the health sector, that have been able to contain this virus in Nigeria. It is quite commendable and comforting. The Minister of Health, the Commissioners in the states and other stakeholders at the airports and other ports of entry. So, this means Nigeria has strong institutions and we should also leverage on that and let the people know that this is what is happening.

Let talk about the recent news that Nigeria experienced a trade deficit in the fourth quarter in 2019. What is your take on this, what kind of pressure is it putting on the ports as well?

The trade deficit has to do with our ability to produce. Manufacturing for example is very important to an economy. If we have more imports than export that means, we will have trade deficit. We have large import bills and we need to look at even our infrastructure. We have to look at our economy and make sure that we focus it on processed export. Nigeria’s ginger for example, is the best in the world and so many things here as well. For instance, beans from Nigeria is the best in the world but we need to process it and we need to export it. Now, the logistic chain has to be improved, there must be access to finance by exporters. There must be access to international market and a deliberate policy by Nigeria to make sure that we have more export than import. So, if we have that, our trade will be almost balanced, which is a balanced terms of trade, which is also very important for any country. This is important, especially now that our population is what we rely on to take our domestic production. But things are pointing to the fact that a country must export or perish and I think Nigeria should have a deliberate policy to look at that trade imbalance and correct, one of the things, which is production, manufacturing and export.

In terms of the Cabotage vessel financing fund, the Minister of Transport promised that the disbursement will soon commence and a committee has been set up to work out how it should be disbursed. Can you give us an update on that?
The committee is working with stakeholders, it is very important to understand again international trade and it is important to understand our economy. We don’t just buy ships for buying sake, we buy to tailor the modern trade route. The commodities we are dealing with, what is our international advantages in trade? So the stakeholders are sensitised on the way to go about it. Many people will think it is a government largesse for people to come and take. No, this is also a direct economic intervention. Cabotage means places reserved for indigenous ship owners or ship operators. It is a protectionist idea, but we have to do that. It is also done in America and other countries and trading within the brown waters must be indigenous ships. The ship must be manufactured in Nigeria, it must be owned by a Nigerian, and they must be owned or run by Nigeria. It is a beautiful concept but we have to give time limit and phase out to see how we could achieve that. But, that is the reality and it is also an intervention. It has to be carefully done as an economic intervention and not a political, one.

As the National Centre for Disease Control (NCDC) set up a quarantine centers at the ports, are there any preparations or things in place to test people at the ports that come in contact with goods that are coming in that may have been infected by COVID-19?
The Nigerian Ports Authority working with the authorities in the health sector have already taken measures to contain the spread at the ports. That is what we are doing at our various points of disembarkation at the sea ports, at the airport and even at the land borders. We go through all the test to see those who are likely to be affected. So, Nigeria is actually a country of strong institutions, and that we had only two cases was also an indication to show how serious we are. The health sector is doing a lot to see that these things are contained. What we are having is a pandemic as you said, which means with 180 countries, we see a whole country lockdown, Italy, and what is happening in the United States, sport activities, economic activities, social activities, markets shut. So, Nigeria is not living in isolation, Nigeria is working hard to see that these things are also done in accordance with international best practices. And that has given us comfort, that has given the internal economy as well, some comfort. We have not seen massive disruptions of our sporting events and other things. So these are temporary things, the whole coronavirus thing is going to be temporary.