Addressing Vulnerabilities in Port System

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By Francis Ugwoke

At such a time of dwindling oil fortunes and resultant effect on the economy, the nation’s maritime industry is considered as key in filling some gaps.

This is even more so with the sector being adjudged as next to oil in contribution to the economy.

In the past few years, the sector has been generating at least about N3 trillion each year. And this is formally. Informally, the sector could be raking over N4 trillion every year or more. This is if all the fraudulent practices in terms of under-declarations or under-invoicing and outright concealment being perpetrated by importers, customs agents and shipping agents are addressed. Capacity of the law enforcement agents to address issues of smuggling will also lead to increase in revenue generation from the sector.

The current scenario is that what is lost by the government goes to private pockets of individual personnel working with agencies of the state.

Last year, the Customs posted a revenue generation of N1.5 trillion. This was despite all the economic difficulties suffered worldwide as a result of the ravages of coronavirus pandemic. Observers argue that the Customs could rake more revenue than it has done over the years if all the loopholes to fraudulent practices in the system are plugged.

On the other hand, there is the strong belief that if the potentials in the industry are developed, the sector could be raising as much as more than half of the nation’s annual budget.

Dirty deals at ports

The nation’s ports are haven to trade malpractices. What has been at stake is the national economy that is being shortchanged on daily basis for the past decades.

Everyone appears out to work out his/her own way of benefitting from what is seen as national cake. At some point in the past, some importers were even evading payment of duties and were allegedly ‘flying containers’. Now that era appears to be gone, but other forms of trade malpractices have remained in the system. The ugly scenario benefits the importers, their customs agents/freight forwarders and most importantly the key elements among the agencies of government, particularly some unscrupulous Customs personnel. The importer underpays, conceals or under-declares and settles it out with those who are supposed to check him. Incidentally, settling with the customs and others at the ports has never been enough to save such importers as they are again confronted some meters away from the ports gate and along the highways where their goods are intercepted over what the resident officers at the ports had ignored for obvious reasons. Like the resident customs officers, this set of operatives engage in another round of extortion which is capped with a demand notice (DN) to fulfill all righteousness as the reason for the interception.

Other issues at ports

Beyond the above scenario, the nation’s ports industry is suffering a lot of other issues. The multinational shipping agents and indeed the terminal operators are not left alone. The shipping lines and their agents are engaged in under-declaration of gross registered tonnage (GRT) of vessels in a bid to pay less duties. The nation loses so much revenue as a result. Clearing in the nation’s ports is usually a herculean task because most times some processes are done physically instead of online. Even as the importer pays his duties online and carries out other processes online, he is still confronted with queries that will force him to appear physically before the government personnel. He has to respond to several alerts, some of which are designed purposefully to extort him. There are some of the alerts he expects knowing fully he may have been involved in some trade malpractices listed above. Yet there are many that are simply frivolous and deliberately to extort him. The importers and their agents also suffer congestion and other bureaucratic bottleneck s in the system which affect easy clearance of goods. Some could be infrastructure related, including the Lagos ports gridlock that has slowed down movement of goods.

Achieving port efficiency

Apparently worried about the situation in the ports and its negative impact on trade facilitation, the federal government in the middle of December 2020 appointed the Nigerian Shippers Council (NSC) as lead agency for the implementation of the Nigerian Ports Process Manual (NPPM). The appointment places on the shoulders of the Council the responsibility of overseeing ports operations on daily basis.

Vice President, Prof Yemi Osinbajo while launching the NPPM said its implementation will improve the anti-corruption ranking of the country before the international community. Osinbajo said apart from achieving efficiency in ports operations, there was the need for an effective implementation of ideas that will change the perception and ranking of Nigeria in the Corruption Perception Index (CPI) of Transparency International. The process manual is aimed at addressing vulnerabilities in the port system with emphasis on creating an enabling environment for port users. To observers, the choice of the ports economic regulator for the job is therefore for obvious reasons. The Council has been dear to all in terms of the efforts to improve on trade facilitation at the ports. The Council had confronted shipping service providers as well as consumers of shipping services over issues affecting trade. The target has been to enthrone efficient service delivery in the nation’s seaports. This will give Nigeria a pride of place as the hub of shipping in the West African sub-region. As a government agency, the Council has been using its offices to champion the interest of shippers and other stakeholders for an enviable infrastructural development that will enhance trade. It has also been in the forefront of ensuring that service providers are well equipped with modern technology for efficient cargo handling operations. Government and indeed other stakeholders are aware of this. It was therefore in recognition that the Council was given this national assignment.
Observers believe that the statement credited to the VP clearly shows how much the Council is held in high esteem . In the maritime circle, the appointment is indeed interpreted as one of trust on the Council having shown dedication to achieving an efficient service delivery over the years.

Resolve of NSC

In the past few years, the Executive Secretary of the Council, Mr. Hassan Bello has been in the forefront of speaking out the expectations of all stakeholders for an enduring efficient port system. He had been pointing out the responsibilities of the government in infrastructure provisions. Bello had at different times pointed out the consequences of poor ports infrastructure to the national economy. He does not want Nigeria’s neighbouring countries to take advantage of this by cornering cargoes meant for Nigerian ports. Often times this had been the case as some shipping lines and importers had at critical times diverted cargoes to neighbouring ports. Some of these goods are smuggled into the country, particularly automobiles and other goods. The NSC in a bid to check this had championed for a lasting solution to the poor access roads. The Council had also called for the need to link the ports with rails, a project that the Transport Minister, Hon Rotimi Amaechi sees as imperative to smooth trade. It is for the sake of improving on trade facilitation that the Council embarked on the dry ports projects that will bring shipping services nearer to the people far away from the seaports. When these projects are fully executed by the concessionaires, it will be a major boost to all forms of international trade, including export trade. Industry stakeholders believe that what qualifies the Council for the current role of overseeing the ports is the confidence which the government and the stakeholders have on the agency. This was earned over the years in terms of determination shown in developing a roadmap to addressing all issues affecting trade. Just as the Council has been singing about improving on public infrastructure that will aid efficient ports operation, it has also engaged terminal operators on the provision of modern cargo handling equipment. It had been involved in equipment audit in the ports among the terminal operators to ensure that there is efficiency in the system. Bello at a recent stakeholders meeting explained that the idea of the ports access manual was part of the efforts of the federal government to improve on efficiency in the nation’s ports. Assuring the readiness of his Council to offer its best for national economic development, he added that the idea remains key to achieving transparency in the operations in the ports. According to him, NSC was not only interested in the ease of doing business but equally in the cost of doing business. Similarly, Amaechi had also assured that his Ministry was ready to support the Council to ensure compliance, enforcement and implementation of NPPM, adding that this will reduce corruption at all levels in the maritime industry. The minister described the NPPM as one of the key indicators for the effective implementation of Executive Order issued in 2017 for the promotion of transparency and efficiency in the business environment. He added that the successful implementation of the ports access manual would complement the modernisation of critical transport infrastructure introduced by the present administration in the ports. Stakeholders believe that the NPPM may be an opportunity for the ports economic regulator to reintroduce CTN which it believes will address issues of fraudulent practices in the areas involving shipping companies which under-declare GRT and shippers who under-declare, conceal, undervalue to evade payment of correct import duties. Observers hold the views that CTN could be the weapon with which the Council needs to end all the issues of fraud in the ports system.

*Ugwoke , Journalist, writes from Apapa.