Stories by Isaac Anumihe
In a bid to reduce inefficiency in the ports and boost revenue, former President Olusegun Obasanjo, initiated a reform programme which was aimed at involving the private sector in ports operation. The reform led to the concession of about 24 terminals to private operators for 25 years while Nigerian Ports Authority (NPA) acts as the landlord to provide facilities and monitor operations in the ports.
In the concession agreement, the new terminal operators in the ports of Lagos will be responsible for all investments in the quay apron (except the quay wall), stacking yard, equipment, security wall, lighting etc. The landlord (NPA) on the other hand, will be responsible for the investments in the quay wall, dredging etc. Also, the operators will carry out the cargo handling and stevedoring operations, whereas the landlord will do the mooring (in cooperation with the operators), pilotage and the overall security of the ports etc (the security within the terminal is the responsibility of the individual terminal). Most importantly, the new arrangement will substantially improve benefits from Nigerian ports to the local and national economy, both directly (as financial benefits) and indirectly (through increasing efficiency in the sector).
But investigations revealed that both the landlord (NPA/Federal Government) and the tenants (terminal operators) have not kept to the agreement. Most of the terminals are operating on shallow draft which does not allow big ships to berth. To this effect, the opertors do not have businesses. This, they claim, also made them not to keep to their agreement. All the ports (Calabar, Port Harcourt and Warri) except Lagos ports are suffering shallow draft.
Worse still, on June 23, 2015, President Mohammadu Buhari, in a bid to encourage local production of 41 items in Nigeria, excluded importers of the items from accessing foreign exchange.
Central Bank of Nigeria (CBN) Governor, Mr Godwin Emefiele, stated that it was important to exclude importers of those items accessing forex at the Nigerian foreign exchange markets in order to encourage local production of such items and make local industries more viable again.
Although, the policy prompted states and individuals to invest in the production of rice and other food and non-food items, it, however, terminated the operations of the terminals that handle those items and led to job loss.
According to the spokesman of the Seaport Terminal Operators Association of Nigeria (STOAN), Mr Bolaji Akinola, the policy came after the operators had invested a lot of money in the business.
“They did their business case and submitted their plans and invested a lot of money within the first five years. Again, in 2012, President Goodluck Jonathan administration, with one stroke of the pen, wiped out some of these importations. Just in 2014, the same administration imposed 100 per cent levy on rice importation which was one of the mainstay of those terminals. By imposing100 per cent levy, from the 30 per cent it used to be, importers of rice boycotted rice again. In Benin Republic, import duty on rice is 10 per cent. So, they don’t bother coming here. They land it there, pay 10 per cent, look for smugglers to smuggle it into Nigeria. So, you see rice all over the country – Tailand rice, parboiled rice – but they come in through the ports. Government is losing revenue, terminal operators are losing revenue.” he said..
Earlier, in 2013, Jonathan had hiked the tariff on vehicles from 20 per cent to 70 per cent – 35 per cent import duty and 35 per cent surcharge with a view to encouraging the locally-manufactured vehicles. While such local motor-manufacturing companies such as Innosson Motors, Peugeot Automobile of Nigeria (PAN) and Anambra Motor Manufacturing Company (ANAMMCO) received a new lease of life, the terminals involved in vehicle importation collapsed.
What some of the importers of vehicles did was to boycott the Nigerian ports and diverted their cargo to the port of Cotonou . They cashed in on the porous borders to smuggle the same banned items into Nigeria.
Speaking on how the ports can be revived and made more profitable, Director, Research and Advocacy, Lagos Chamber of Commerce and Industry (LCCI), Vincent Nwani, said: “There must be an urgent review of the CBN’s policy on the restriction of access to foreign exchange placed on 41 items, as about 16 of the total items on the list, serve as critical raw materials for intermediate goods produced in Nigeria, especially as the country lacks the capacity for optimal production of the items.”
LCCI and the Manufacturers Association of Nigeria (MAN) said the decision is hurting the manufacturing sector in such a way that it has led to the closure of many companies and relocation of others from Nigeria to Ghana and other neighbouring countries. It has also led to drastic reduction in the volume of cargoes handled at Nigerian ports, with affected port terminals losing about 60 per cent of their cargoes to the CBN restriction policy.
The Chairman, Senate Committee on Customs and Excise, Senator Hope Uzodinma recently said the upper legislative chamber would review some of the country’s trade policies including the contentious hike in tariff of some imported goods.
Uzodinma agreed that most of the country’s policies are anti-trade, favouring only neighbouring countries. He said 85 per cent of cargoes landed in Cotonou Port, Benin Republic, find their way into the Nigerian market.
“We have seen that some of the trade policies are skewed and they are favouring more foreigners than Nigerians. We want the opposite to be the case and in doing that, we will change some of the policies that have not helped local empowerment,” Uzodinma told stakeholders in Lagos at a recent parley.
The Director-General, Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, said the drop in imports is directly related to the CBN foreign exchange policy, which he said needs to be reviewed.
A clearing agent and member of the Association of Nigerian Licensed Customs Agents (ANLCA), Mr. Dom Obi blamed the present government for not reviewing the anti-trade policies of the past administration. He argued that until government revisits the policies, the trend will continue and the impact on the ports would become progressively worse.
President of the Save Nigeria Freight Forwarders Association of Nigeria (SNFFIEC), Mr. Patrick Osita Chukwu, believes the only way to bring cargo back to Nigerian ports is by reducing the customs duty payable on imported vehicles and rice and by lifting the foreign exchange restrictions imposed by the apex bank.
“If you reduce tariff, it will create a big incentive for importers. No importer wants to burn his fingers. A lot of them are moving to Cotonou now but if you reduce the tariff by half, they will all come back because the reduction will help them defray the heavy expenses they incur when they import here,” he said.
Reducing Nigeria’s customs duties on select import items to the level charged by other countries in the West and Central African sub-region will not only help in reducing smuggling through the land borders, it will also return the era of boom at our seaports and boost government revenue through the Nigeria Customs Service (NCS).
NSC applauds Customs, NPA over trade facilitation in ports
The Nigerian Shippers’ Council (NSC), has commended the Nigerian Customs Service, NCS, and the Nigerian Ports Authority (NPA), for their various roles in facilitating trade at the ports.
Executive Secretary and Chief Executive Officer of the Council, Barrister Hassan Bello, who described the two agencies of the federal government as ‘big brothers in partnership at the ports,’ said they have contributed immensely in facilitating trade in the country.
Bello praised the agencies during this year’s Night of Appreciation, which was a gala dinner organised by the Ports Regulator to appreciate stakeholders who have contributed in the development of the ports industry.
He said that the Council has noticed the efforts of both Customs and NPA in the introduction of various automation programmes that have brought about the ease of doing business at the ports. The automation programmes, he said, have made goods clearance at the ports easier and faster, a development, he said, has addressed the nightmare which shippers suffered in the past.
He singled out both Customs and NPA among other agencies at the ports as being responsive in addressing complaints affecting trade at the ports.
According to him, the e-payment system introduced by the NPA has made things easy for the port users.
He also applauded the various customs commands for their efforts in facilitating trade, adding that this was impacting positively in businesses at the ports.
Bello attributed this success to the leadership qualities of the Comptroller-General of the Customs, Colonel Hameed Ali and his counterpart in the NPA, Hadiza Usman.
The Council had on the ‘Night of Appreciation’ honoured seven shipping giants in Nigeria for their contributions in the development of nation’s maritime industry.
Among the companies who were given certificates of recognition at a gala night held at Oriental Hotels were Intels Nigeria Limited, Alraine Shipping Limited, PIL Shipping Ltd, Ports & Cargo Limited, Ports & Terminal Operators Ltd (PTOL), Greenview Shipping Limited and Alink Nigeria Limited.
Bello said that the award of recognition was to appreciate their contributions to the national economy as it affects the maritime industry.
Intels, Alraine, PIL, Greenview have spent more than three decades in shipping operations in Nigeria.
One of the companies, Alink, was particularly recognized for its contribution in promoting export trade through shipping activities, with ‘2016 Best Compliance Export Award’.
The former Minister of Industry and the current President of the Lagos Chamber of Commerce and Industry, Chief Mrs Nike Akande, who chaired the occasion while commending the efforts of the various stakeholders in the development of the industry expressed optimism that the industry will continue to grow with the right policies.
Commending the NSC for organising the dinner to appreciate stakeholders for moving the industry, Akande said that both the government and the private stakeholders in the industry have common objectives of creating an enabling environment for investors in moving the nation’s economy forward.
She also described the NSC as a very strategic institution in the maritime sector, adding, “I must applaud the elevation of the NSC to the status of the Economic Regulator in the maritime sector”
She added, “This is a welcome development as it would improve the quality of engagement between the service providers in the maritime sector and other players in the economy”.
The Council also honoured the Transportation Minister, Mr Chibuike Amaechi with a certificate of recognition as the ‘Most Active Advocate for Change’ in the maritime transport industry.
Amaechi who was represented by the Permanent Secretary, Alhaji Sabiu Zakari lauded the mediation and regulatory roles of the NSC.
He called for continuous synergy among the stakeholders in order to make the objectives of the maritime industry realistic.
He said the Appreciation Night was organised by the NSC as a means of interaction at social levels and networking among industry players.
“ We at the Federal Ministry of Transportation, see the organisation of this Appreciation Night as a positive initiative by the NSC, the Ports Sector Economic Regulator, to demonstrate its style of regulation rooted in the industry. Stakeholders’ engagement by the council is not only on official matters but also at social level”, he said.
Terminal operators back FG’s export drive
Members of the Seaport Terminal Operators of Nigeria (STOAN) have said that they will continue to support the export and economic diversification drive of the Federal Government.
The terminal operators said some of the steps taken by the government so far indicate that President Muhammadu Buhari is determined to reposition the economy of Nigeria and so should be given the necessary support.
STOAN Spokesman, Bolaji Akinola said the country at the moment needs strategic interventions and focussed leadership to transform the economy that has since been dependent on oil.
“There is no better way to transform the economy now than through the economic diversification drive embarked upon by the Federal Government and STOAN is poised to support the government as it embarks on this onerous but fruitful task of growing the economy.
“The government recently reiterated the determination of the administration to diversify the economy through increased local production of goods and services. This is a welcome development because with a diversified economy, Nigeria would not have to depend on a single commodity to survive as a nation,” he said.
Akinola said that this effort will not only reflate the economy but will also create the right environment for foreign direct investment because of the stability that will be engendered in the system.
“STOAN aligns with the Federal Government vision of building the economic foundation on made-in-Nigeria goods and services.
“The diversification efforts will help Nigeria move from import dependence to self-sufficiency in local production and become an export-led economy in goods and services.
“Also, this effort by the government will continue to improve the environment and make it conducive for businesses to thrive,” he noted.
He said that many of the government’s programmes had been structured to stimulate domestic production.
“There is need to support SMEs to be able to compete and create the platform to allow recommendations that will help reinvigorate local industries so as to curtail the growing demand for foreign exchange for imported end-user goods,” he said.
The STOAN spokesman said government’s desire to partner the private sector so as to leverage and catalyse resources and development capital is strategic.
He said terminal operators identify with plans by the government to create a business-friendly environment; coherence between monetary, fiscal and structural reform policies; and provision of hard and soft infrastructure for growth.
“The global perception had been that Nigeria is a tough environment to do business; therefore this is a good opportunity to change this narrative as positive perception will attract investors, capital, technology and best practices,” he said.