Why Nigerian ports are not competitive


The maritime sector is very huge in terms of capacity – human capacity, trade facilitation, income generation and job creation. It is indeed very huge. This sector is actually better than the oil and gas sector because it is here to stay forever. There will always be export and import trade facilitation, but I tell you one thing: oil will disappear one day, but the maritime sector will remain for as long as the world exists; as long as Nigeria exist, there will be the maritime sector.

If you look at the volume of people, I’m talking about human capacity operating within this sector, it is not just limited to port operations alone. When we talk about port operation, we are talking about shipping, shipping agencies, transportation, banking, insurance. It entails all facets of human endeavours. That is why it is important for the government to pay a lot of attention to this sector and explore all the advantages and the goodness that is in this sector.

The Federal Government is actually benefitting from this sector in terms of generation of revenue by the Customs Service, which is under the Ministry of Finance. The Finance Minister will be in the position to tell you how much the Federal Government has been able to generate in terms of income from this sector.

That’s not the only aspect. There is also NIMASA, which is generating such a huge income, both in foreign and in our local currency. You have the Nigerian Ports Authority; the Shippers’ Council and they are generating one income or the other in this industry. All of these incomes should be going to the TSA account. If you add all of them together, it’s something that is worth paying a lot of attention to.

How can the sector be positioned, will you say the government is doing enough?

I believe the maritime industry  has not been given enough attention. The port is the gateway to  the economy. If the economy is buoyant, you will see by the activities in the ports, if it’s not, you will see. When you come to Apapa, or Tin Can Island, you will know how well our economy is doing in terms of imports and export. So, I don’t know why enough attention is not given to this sector; why we have such a decayed infrastructure. The access road to the  port is impassable. The Nigerian Ports Authority, with the support of Nigerian Navy and the Lagos State government, have been able to manage the traffic gridlock. But getting to the port is still a nightmare. It could take you four to five hours to even have access to the port operation.

If port operation is not smooth, if there is no enabling environment, of course you can’t discharge the ships and if you don’t discharge ships, it doesn’t only affect Nigeria, it affects all the ports of the world. Those ships that come to our parts are already scheduled to go to other parts of the world, like Rotterdam or Liverpool or even in America or Asia. So, if there is a delay in Nigerian ports, it will definitely affect other scheduling assigned to that particular ship and, of course, because of that, you’ll see that the cost of freighting to Nigeria is actually more expensive than other ports in West Africa because we are not sure when the ship will return.

Since trucks do not have access to the ports, definitely, we can’t discharge the ships. There will be congestion in the ports. Sometimes even when we are discharging ships, the trucks that we are to discharge on, are not readily available. So, what happens? The ship is idle.

There are lots of times in ENL that I have had to stop operations of the ships just because the trucks do not have access to the port. There is a little improvement now and we hope it will get better. The government should continue to support the port industry, because easy access to the port is really the key to the discharge of ships. The road is being filled. We hope it will be quickly finished because that is very important.

In the absence of these necessary infrastructure, how much has it cost the government in terms of revenue?

That’s difficult to quantify because it’s more than a figure in terms of naira and Kobo. You are talking about human capacity. How do you quantify that? We are talking of generating employment. I do not want to quantify that in terms of money, but in terms of loss as a whole because when the ships were not coming, I couldn’t pay my bills. It was difficult because the income we were generating could not support our expenses, and what do we do? It’s unquantifiable.

Why is port operations very challenging in Nigeria compared to those of our neighbouring countries?

When we talk about increase in cost of port business, everybody at one time shouted – terminal operators, but we have been proved right, that it was not terminal operators. You have NPA, NIMASA, freight forwarders, Customs Service, etc.  How many times has Customs Service increased charges? There is a wide gap between the Customs duty paid here and that in Benin Republic. Maybe we also need to see the Customs duty in Benin Republic and look at Customs duty in Nigeria. I’m not condemning the Nigerian government. I’m just trying to tell you that it’s not about terminal operators’’tariff. In Nigeria the duty on cars goes as high as 70 percent tariff, whereas the in Republic of Benin, it is like 10 per cent. That’s why you see a lot of smuggling because it is more convenient and far cheaper for people to go to the Republic of Benin and try to smuggle.

That’s why smugglers are mounting pressures on Customs Service because of that disparity and wide margin in Customs duty.

Then let’s go to NIMASA. How much is NIMASA charging in terms of their levy, compared to other people in other agencies of such nature in Africa and in other parts of the world. So, we need to be realistic when we are trying to talk about this thing. We need to compare apple for apple and orange for orange. So, we need to compare how much the terminal operators are charging compared to other terminal operators in the world.

The conversion rate of the dollar when we took over the management of the port was about N120 to a dollar. Now naira is about N363 to a dollar. We have been depreciated in our income in dollar value, not helped by inflation. If we have to buy equipment, it is in dollars. We pay lease fees in dollars, royalty in dollars. So what’s left. We have not implemented that increase to match the inflationary cost. If we do that, it will definitely kill Nigeria. So, for me, I think we’ve been able to be considerate in what we charge.

What are the challenges facing the sector  and how would you want the government to address them?

The number one challenge that I think the government should address is infrastructure. It should be addressed completely, not just half way.

They are doing the rough roads. There are other roads that lead to the ports. I don’t know if it’s possible to add another bridge to create another access road because the ports in Lagos are the major ports. Seventy to 80 percent of cargo coming to Nigeria come through the Lagos ports; until people have other alternatives. I can understand why there has been argument on ports and usage and why people can’t go to the eastern port.

People have the right of choice and they look at where is convenient for them to bring in their cargo through other ports; the eastern ports can also be encouraged. They need to get as much cargo as Lagos ports to be effective ports too. Other ports have the capacity to handle as much cargo as we have in Lagos, only maybe not as much cargoes. So, the infrastructural decay is a major problem. The government needs to continue to repair or construct roads to the port.

Another key challenge that I see is that of enabling environment in the port. The enabling environment has to be right. In terms of workers’ agitation, God has been able to help us address that and from time to time we talk to them and we have good leadership. Incessant stoppage of operations is not good for the sector and that has become a thing of the past. Terminal operators should be commended for ensuring that that has become a thing of the past in the ports. Terminal operators, particularly, need more assurances because we have a contract. We have the concession agreement, which is about to be reviewed and I think that’s long overdue.

So, we are asking for quick renewal of this contract, because the terms on which we operate is in concession agreement. That is why we need an agreement that everyone will actually direct how port is run in Nigeria. For example, you know because of government policy summersault, change in policy, terminals like ENL has been seriously affected by the volume of cargo we should have handling.You know change in government policy of rice for example, rice is not coming to Nigeria anymore and ENL was doing about 1.3-1.4 million tons of rice yearly before this policy changed. That had indeed affected the business because we have what we call guarantee minimum tonnage (GMT). Whether your volume increase or is gone down it does not concern the government. You still have to pay your agreed lease fee and that has been the challenge for us because our income also does not support such dwindling cargo volume. So we really need to look at that.

What about the issue of government agencies at the ports?

Exactly. That is another bottleneck. We are still talking about numbers of agencies in the port. Now the government has increased it to eight. That’s not done anywhere in the world. I don’t know why NAFDAC is back. What is NAFDAC coming to do in the port? I don’t understand. They do not have to be present in the port unless they are called as the need arises. If it doesn’t arise, what are they coming? Things like this, ultimately, adds to the delay in cargo clearance in the ports because everybody wants to feel important. Everybody wants to exert their authority. That’s how it’s been happening. We’re talking about ease of doing business.

The government needs to see to it that importers of cargo are not frustrated when they bring in their cargo, in the process of clearance their goods from  the ports and that’s also adding to congestion because some of these cargos are in the port. We need to turn over the staking areas. The cargo is there and it is becoming very difficult for the clearing agent to clear the goods that are already there in the staking agent.

We are indirectly or directly losing money. So everybody is losing money. So, I think having eight agencies in the port is one way too much; it does not help ease of doing business in Nigeria. It’s not done anywhere in the world; so, why is Nigeria an isolated case? I think they can streamline some of those things and make life easy for importers. There has to be a way where things are done properly so that people don’t bleed unnecessarily because all those processes are opened to corruption. That’s why when you asked me is there corruption in the ports, I said Yes and No. These are some of the things that create corruption.

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