Outdated policies ground maritime growth, trigger job, revenue losses




Anozie Egole reports that bad policies and failure on the part of the government to implement the good ones have retarded the development of Nigerian ports and caused the nation huge revenue loss over the years.

Mr Johnpaul Ejiogu, a clearing agent in his late 30s, stood at the entrance gate of the Ports and Terminal Multipurpose Limited Port with confusion written over his face, on a sunny Monday.

His headache was how to clear a 2008 Mercedez Benz that just arrived in the country through the terminal for one of his clients.

Before the arrival of the car, Ejiogu had budgeted a certain amount for clearance of the car but he was disappointed that that same budget couldn’t get his car out of the port because the cost of clearing had gone up by a whopping 200 per cent.



















Ejiogu lamented, “I am confused right now, I don’t know where to start, I had already charged the client to clear the car and now the duty is higher than what I bargained for. Now, I don’t know how to convince him to add to the money.”

His case is further compounded by the demurrage he will have to pay if he fails to clear the car on schedule. Ejiogu would then blame his misfortune on the weakening power of the naira against the dollar, which has significantly impacted the cost of clearing goods in the ports.

His case is not peculiar to him as many other freight forwarders and licensed customs agents operating in the nation’s maritime domain are struggling to survive under the forex unification and other stringent policies that have redefined the landscape.




A document obtained by The PUNCH from the Council for the Regulation of Freight Forwarding in Nigeria, an umbrella body for all the freight forwarders and licensed customs agents in Nigeria, showed that as of 31st December 2012, there were 1,924 registered agents, 516 registered corporate bodies and five registered associations with CRFFN.

Meanwhile, recent findings by The PUNCH, including information obtained from practising custom licensed agents showed that as of December 2023, the number of licensed agents and freight forwarders has reduced to about 7,000.

The challenges

The Nigerian maritime industry is estimated to be worth about $8trn, according to information from the nation’s Ministry of Transport. This is largely due to the high volume of cargo imported into the country, Nigeria being an import-dependent economy.

However, the country has failed to harness the potential of its maritime sector, which could be a major revenue source for the country that is in dire need of foreign exchange. Experts say the sector has continued to underperform due to unfavourable policies on the part of the government.

Despite the proximity of ports to their warehouses and factories, many local importers still ship their cargo to neighbouring ports to bypass bottlenecks created by some policies of the government at ports, reducing the revenue accruable to the nation.

The Head of research, of the Sea Empowerment Research Centre, Eugene Nweke, blamed inadequate physical development in the Nigerian Ports as the reason they are not attracting the needed revenues and cargoes.


He said, “You see, it is not as if the NPA is the one causing the problem. The problem is that we have not considered any physical development plans. Ports are not what you would build and abandon, it is what comes with changes. As far as shipbuilding comes with changes, ports also come with changes the same way product manufacturers repackage. That is why if you go to other parts of the world, they have what we call a clean port, that is a port that has not been developed, waiting for expansion.’’

A shipowner who doesn’t want his name in print believed that the potential of the country’s shipping sector has not been fully harnessed.

He said, “If the over $350m Cabotage Vessels Financing Fund contributed by ship owners to develop the sector is appropriately disbursed, the sector could be a major source of non-oil revenue.”

‘’However, the sector seems to be stagnant as the government has failed to disburse the funds, starving indigenous vessel owners the finance they need to be able to compete with their foreign counterparts.’’

Practitioners who are familiar with the operations in the nation’s maritime domain would attest to the fact that there has been a constant and steady drop in importation into the country occasioned by these challenges.

The immediate past president of the Shipowners Association of Nigeria, MkGeorge Onyung, said, “The maritime industry is all about talk and no action, everybody just wants to talk. Do you ask any question about IMO, you know that they met this year and nobody is talking about it. Nigeria is still not on the white list of IMO and no one is talking about it.’’

For some agents, these challenges could be traced back to the concession era where a lot of things like holding bays among others were not considered by the government before the concession agreements were signed with the concessionaires.




‘’This is the reason the issue of traffic gridlock on the port axis seems to have defiled all measures taken by the government to stem the ugly tide,’’ the concerned agents noted.

A licensed customs agent, Mr Decland Dinaobi, said, “We concessioned without taking into consideration the pitfalls of port concession. So, with that, the people are only money-conscious, they are less concerned about the developmental objectives of the ports. So, because of that, we see a situation where we have a port where you see only the structures but no efficiency and effectiveness. Any port that has not achieved effectiveness and efficiency is not moving forward.”

Dinaobi disclosed that a major cause of the low importation of vehicles through the nation’s ports to the introduction of the Vehicle Identification Number for the valuation of imported used vehicles in 2022.

“This move intended to ensure uniformity in duty payment especially for the clearance of imported cars of the same model, year, and make irrespective of the port it came in through. But sadly, the platform didn’t turn out the way it was expected as many imported vehicles were left un-cleared at the port due to a hike in duty occasioned by the platform,” he explained.

Importers of used vehicles were asked to pay a minimum duty for a 2013 model even when the vehicle was older than that, and the duty should be cheaper.

A resultant effect of the policy was the abandonment of imported vehicles by importers. On June 23rd 2023, when the Permanent Secretary, Federal Ministry of Transportation, Dr. Magdalene Ajani, led an inter-agency team comprising the Nigerian Ports Authority, Nigerian Customs and the Nigerian Shippers’ Council on an assessment tour of overtime cargoes littering the Ports, it was reported that there were about 7, 451 abandoned cargoes at Apapa, Tincan Ports and other terminals within the state and eastern port.

Data obtained by our correspondent showed that as of the reviewed period, there were 3,200 units of overtime cars and about 3,295 units of overtime containers respectively, while the eastern ports had a total of 956 overtime containers.
Sponsored Stories



Now, aside from the fact that these cargoes were trapped at the ports and may eventually be forfeited if the importers fail to meet the conditions attached, the country lost revenue as duties that were supposed to be paid were not paid.

In May 2023, the Nigerian Shippers Council, which is the ports’ economic regulator, said that the sum of N2.7bn was saved in demurrages between 2020 and 2022.

The council in its newsletter called ‘Complaint Newsletter’, a periodic publication, said the fund could have been lost to shipping companies and terminal operators through demurrages, among others.

The NSC in the publication, said during the period under review, it recorded a total of 1,727 complaints.

Giving a breakdown of the figures, NSC said that 2021 had the highest figure of complaints by shippers with 666 cases handled and N2.5bn recovered on behalf of the trading public in the year.

“Similarly, a total of 648 cases of complaints were recorded in the year 2020 despite the coronavirus pandemic, with N57m recovered. In 2022, a total of 413 cases was recorded, which was a clear indication of a sharp drop in complaints by the trading public, with a sum of N204m recovered on behalf of shippers and freight forwarders. Some of them are excessive charges while some are demurrage or container deposit refunds among others. Some are also on damages of cargo,” the report stated.

In 2022, precisely, the first quarter, the National Bureau of Statistics, said that Nigeria witnessed a decline in total capital importation, dropping to $1.03bn from $1.5bn in Q2 2022, marking a 32.90 per cent decrease.




The NBS report obtained by The PUNCH also revealed a 9.04 per cent decrease from the $1.13 billion recorded in Q1.

Capital importation means all the money or investment from foreign countries into Nigeria’s economy. It involves the inflow of funds for investment, trade or business expansion.

According to the Bureau, investment ranked top, accounting for 81.28 per cent ($837.34m) of total capital importation in Q2 2023, followed by portfolio investment with 10.37 per cent ($106.85m) and foreign direct investment with 8.35 per cent ($86.03m).

These among others were some of the challenges which had led to a steady and continuous drop in importation in the country.

The country, due to some of these challenges, has continued to witness not only a drop in importation but also a drop in revenue earlier this year. It was reported by The PUNCH that there was a 70 per cent drop in vehicle importation which had led to a drop in revenue for the Nigeria Customs Service.

The report showed that the flotation of the exchange rate, and other factors led to a 4.5 per cent drop in revenue collection by the Nigeria Customs Service in the first half of 2023.

Now, aside from these policy issues, there are also challenges with infrastructure at Nigerian Ports which have hindered a lot of investments.


One of the major challenges is the depth of the ports in the country, especially the two main ports of Apapa and Tincan which have prevented bigger vessels from berthing at the ports.

Aside from this challenge, these two ports and other ports around the country are also faced with the issue of infrastructure challenges including poor access roads and port infrastructure itself.

As a way of addressing the issue of port infrastructure, the Managing Director of the Nigeria Ports Authority, Mohammed Bello-Koko in a recent event in Lagos, said that $1bn would be set out to address the issue of port infrastructures in the country.

Bello-Koko said that the project would kick off in the first quarter of 2024.

To show how serious the issue is, the Minister of Marine and Blue Economy, Mr Adegboyega Oyetola, in a recent event, lamented that dilapidated access roads are making importers and exporters experience high transportation costs, prolonged transit times and heightened risk of accidents. “All these issues cumulatively impede our national economic growth, discourage foreign investment, and hinder our international trade competencies,” he said.

These among others necessitated the coming on board of the $1.5bn Lekki Deep Seaport.

A World Bank Report sighted by our correspondent fingered the absence of a functional Port Community System as one of the challenges facing African Ports, including Nigeria. The Bank said that the use of a PCS has increased the speed of ports’ operations.




For instance, in Port of Cotonou, the World Bank, said, PCS implementation led to a jaw-dropping reduction in dwell time for large trucks, from 269 hours to a mere three hours, back in 2012.

‘’Time, as they say, is money, and nowhere is this truer than in international trade. Imagine waiting for days just to get cargo cleared while your perishable cargo is being ruined and your clients complaining. Paperwork delays can be a nightmare, but a PCS virtually erases this problem. With this, it is safe to say that in a port where there is a functional PCS, the port is likely going to be more effective than where there is no functional PCS,’’ a source close to the matter said.

Unfortunately, Nigeria has yet to fully inculcate this PCS into its port operations.

Government efforts

No doubt, the government has made some investments in the ports in its bid to diversify the country’s main revenue source from oil.

The Nigerian Ports Authority in its magazine, ‘Nigerian Ports Today’ July to September 2022 edition, said that in 2020, the agency had licensed about 58 barges. The report also stated that over N20bn has been invested in barge operations, and this has created over 3,000 direct jobs and 2,000 indirect jobs.

A former president of the Barge Operators Association of Nigeria, Edeme Kelikume, in a chat with The PUNCH in 2022, disclosed that over a million containers and about 500,000 metric tons of general cargo are moved from the ports annually since the commencement of the inland barge services within the Lagos pilotage area.




Kelikume also said that on average, between 30 to 40 per cent of containers handled at the two Lagos ports are moved by barges.

Meanwhile, the President of BOAN, Bunmi Olumekun, said that as barge operators, the sector is sitting on about $3bn business, adding that there is a huge investment in the sector.

The NPA also said that the $2.59bn Badagry Deep Seaport, when operational, will generate $53.6bn in 45 years and also create 250, 000 jobs for Nigerians.

The coming on board of the Lekki Deep Seaport was also an effort by the government to tackle some of these challenges.

The port was projected to create 169,972 jobs and generate $201bn revenue for the state and the Federal Government.

These are the testimonies to the potential of the Nigerian ports.

The government through the NPA, had gone further to introduce the electronic call-up system code named Eto, managed by the Truck Transit Park Limited, for easy movement of trucks in and out of the ports.




Even though the platform has not fully addressed the challenges with the movement of trucks as some black marketers have hijacked it, the platform has moderately reduced the traffic gridlock on the axis.

Also on May 17, 2023, at a Federal Executive Council Meeting presided over by former President Muhammad Buhari, the government approved the operating license for the port and the construction of $1bn Ondo Deep Seaport.

A memo on the project, which was approved at the meeting, was presented by the Minister for Transportation, Mu’azu Sambo.

A statement released by the Chief Press Secretary to Ondo State Governor, Olatunde Richard, described the approval of the project as a momentous achievement for the state as it comes after years of persistent efforts by the state government to establish a deep seaport.

“The efforts were renewed by Oluwarotimi Akeredolu, former governor of the State, upon his assumption of office as governor in 2017 and became intensified upon the appointment of an indigene of Ondo state, Prince Ademola Adegoroye, as minister of state in the federal ministry of transportation in July 2022, just about 10 months ago,” the statement said.

Meanwhile, The PUNCH reported that the Ondo State Development and Investment Promotion Agency commended the state government and other stakeholders who have worked towards the Federal Government’s approval of the deep seaport to be sited in the state.

ONDIPA, in a statement by its Chief Executive Officer, Mr Gbenga Badejo, described the approval of the port project as the biggest breakthrough that has come to Ondo State since its creation.




Also in December 2020, the Federal Government approved the commencement of Ibom Deep Seaport at Ibaka, in Oron Local Government Area of Akwa Ibom State. The then state information commissioner, Ini EmemObong, in a statement he issued in Uyo, said the approval was given during the Federal Executive Council meeting held in Abuja.

He said the approval was facilitated by the vigorous push by the then state governor; Udom Emmanuel-led administration, adding it would signal the full commencement of business in the port.

Recommendations

Some stakeholders have over time, advocated for the proper utilisation of other ports in the country and the diversion of attention off Lagos Ports as a means of reducing the traffic gridlock on the axis and attracting revenue to other regions.

A former General Manager, Western Ports of NPA, Mr Biodun Gbadamosi, called on the need for the designation of ports and also the government’s efforts to ensure rail connectivity to ports for easy cargo evacuation.

“Calabar Port has its virtues as a lighter terminal and should be designated as such. However, its upgrade is limited by nature. Any undue investment would probably result in a negative return on investment. The strategy ought to be to increase the category of shipping activities in terms of size, volume, and perhaps limited incentive period. There is also the need to consider the cargo throughput. In this case government’s seriousness towards railway transportation in and out of such ports along with a standard road network is important.

“Lastly and very importantly, there is a need to take cognisance of the attitude of the locals in terms of safety and security such as piracy and kidnapping along with multiple agencies of government who ambush cargo within the ports and along the roads. Then, of course, this brings to mind a question that has been bugging me for a while. How do you set up a customs or police checkpoint on the rails for cargo already cleared at the ports on its way? Perhaps railway transportation needs to become the main priority,” he said.




Some opined that the country is losing some revenue to countries like Cameroon as some cargoes passing through Douala are causing revenue leakage to the country.

Also speaking, the Managing Director of ECM Terminals, Mr Dayo Balogun, admitted that the dredging of Calabar Ports holds immense benefits for the nation’s economy.

He reiterated the urgent need for the dredging of Calabar Ports to be able to properly feed importers from the southeast and other regions in the country.

“Economically, dredging the Calabar Channel holds immense potential. Calabar is currently the closest port to the Northeast, making it strategically positioned for economic activities. It is unfortunate that Douala, in Cameroon, has as its primary market the northeastern Part of Nigeria. Consequently, cargo passing through Douala results in revenue leakage from Nigeria to Cameroon. Calabar, besides its proximity to the northeast, is also close to commercial hubs like Aba and Onitsha. The pertinent question is, what percentage of Nigeria’s cargo is directed toward the northeast, northwest, and southeast primary and secondary markets for eastern ports? The cost and inconvenience endured by importers in these regions to retrieve containers from Lagos underscore the potential gains of investing in Calabar’s dredging,” Balogun said.

However, Nweke opined that there is a need for steady changing of port operations to be able to meet the international standard.

“The fact that things are changing, port operations are also changing. Today, most people package their manufacturing raw material into containers, so container standard is a key operation. All these changes also affect port development, planning, and projection. So, these are the areas we expected our port managers to have worked adequately on. The government is not yet fully connected to the Port Community System, they are only trying to launch it, we don’t have the PCS before now. The NCS is pushing for a single window platform, another way of having a single window is by having one central compact system of doing things, which is called one one-stop shop, a central warehouse housing all the port activities and operations, that is what you are talking about,”

Toochukwu Nwaigbo, a freight forwarder, believe there is a need for the port administrators to reduce human contacts at the port.




“The port administrators must see to reduced human contacts at the ports. The idea of allowing vehicles to move without proper control should not be tolerated. Most countries are doing very well in managing their system. So, we can’t talk about effectiveness and efficiency when we are still having issues with channels. The channels are the issue. If at the end of the day, we are grappling with drought, it is also an issue because bigger vessels will find it difficult to berth at shallow droughts. Then, if at the end of the day, we don’t have enough equipment to handle cargo at the quay aprons, they are also big problems. So, the financing, incorporation, and the administration are the key issues. So, for ports to be effective and efficient, the old ports are foot, so the government has to put a lot of things in place,” he concluded.

Post a Comment

0 Comments

Ondo poll: INEC records 72% PVC collection, candidates sign peace accord