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Why Nigeria’s losing N3.1tr annually to port crises

Why Nigeria’s losing N3.1tr annually to port crises

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Steve Agbota

The Nigerian Ports, have been facing unpalatable challenges and bottlenecks, that have eaten deep into revenue generation across the ports.

Notable challenges causing hindrance in Nigerian ports include policy and regulatory inconsistencies, infrastructure shortcomings, overlapping functions and duplicity of roles among government agencies operating within ports.

It is estimated that Presently, the Nigerian economy is losing annual revenue of over N3.1 trillion as a result of the current crises of poor infrastructure, poor policy implementation and corruption at the ports.

Today, cost of operation has increased by almost 400 per cent at the ports despite that Nigerian seaports were concession to private terminal operators in 2006.

This rising cost and charges were due to lack of regulation of charges of Federal Government agencies involved in cargo clearance as contributors to rising cost and charges in the nation’s seaports.

However, it was revealed that about 70 per cent of the cargoes coming to West Africa are destined for Nigeria but only 30 per cent of the cargoes are discharged in Nigeria because of high import charges, bad port roads and rarity of port infrastructure to facility trade.

This makes Nigeria to be losing over N3.5 trillions in revenue annually within the ports and business community due to inefficiencies and inherent shortcomings.

The importers said that the cost of clearing cargo in Nigerian ports had increased by 500 percent in the last 12 years of port reform embarked on by the Federal Government to reduce cost.

They have blamed service providers and government agencies’ tariff regime and billing system for the woes experienced by shippers.

As result of the rising cost and charges, importers are abandoning Nigerian ports for neighboring ports in Benin, Togo and Ghana over high charges and cumbersome clearance process fueled by proliferation of government agencies at the port because it was cheaper to do business in these neighbouring countries.

From all indications, lack of clear legislation, ports governance remains prone to inefficiency and corruption where companies in the Nigerian ports have to deal with bureaucratic red tape, constant delays, harassment, and demands for illegal charges.

Though, Federal Government cited these bottlenecks as reasons for introducing the port reform policy, where Nigerian seaports were concessioned to private terminal operators to address some of the challenges facing the ports and boost revenue, the problem has perisisted

Prior to the concessioning, ships typically had to queue for more than 30 days before they could berth. However, the situation is totally different under private operators. Ships no longer have to queue; they sail straight to the berth and promptly discharge their cargoes.

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Terminal operators collectively expended more than $2 billion to modernise the port terminals, acquire modern cargo handling equipment, carry out expansion and other civil engineering work, provide perimeter fencing, cutting edge technology and develop skilled manpower for the port.

Nigerian ports have witnessed tremendous improvement in a very short period of time.

Considering the role of transport and ports in modern economic growth and development, the government decided to undertake the reform to bring the sector in line with international standards of best practices.

The exercise was to boost the efficiency of port operations, decrease port services costs for users, reduce costs to government of supporting a viable port sector, boost economic activities and accelerate development, while making Nigeria the hub for international freight and trade in West Africa.

Despite efforts for government to address the imbalance at the ports, there are a lot of hindrances causing setback and a factor largely responsible for the high cost of doing business and loss of revenue in Nigerian ports.

In a recent report by the Organised Private Sector (OPS), entitled ‘Maritime Ports Reform In Nigeria: Feedback from the Organised Private Sector’ (OPS),” revealed that Nigerian economy is losing an estimated annual revenue of N3.1 trillion as a result of the current crises of poor infrastructure, poor policy implementation and corruption at the ports

The report explained that N600 billion was lost in Customs revenue, and about N2.5 trillion in corporate earnings across the various sectors of the economy. In the report, the OPS complained about security agencies operating at the seaports are working at cross-purposes.

“Multiple security agencies working at cross purposes. There is a need for security agencies to synergies their operational strategies to remove duplicated procedures, which breed inefficiency and corruption. Full automation with minimal human interface is also recommended.

The report added: “About 5,000 trucks seek access to Lagos ports on a daily basis along an access road designed to take only about 1,500 trucks daily. Also, about 60 tank farms are located around the ports, most of which were located without recourse to the original design of the ports, traffic consideration or the volatility of the products in the tanks.

“Due to the persistent traffic gridlock in the Apapa area, industrial capacity utilisation presently stands at 38 to 40 per cent, while 40 per cent of businesses located around the port communities had either relocated to other areas or shutdown.

While unveiling the report recently in Lagos, the President, Lagos Chamber of Commerce and Industry (LCCI), Mr Babatunde Ruwase, lamented that these developments have very huge unfavorable implications for job creation, tax revenue and real economic activities, with estimated downside effect of about three per cent on the country’s Gross Domestic Product.

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He added that these efforts notwithstanding, operators and users if the Nigerian Ports are increasingly faced with bureaucratic red tape, limited access to the port due to traffic congestion, constant delays, illegal charges technical and security breakdown which had led to high cost of operation and competitiveness

In the report, the LCCI president cited a worrisome level of deliberate resistance by some Ministries, Departments and Agencies of government to implement enabling regulations, including the 2017 Presidential Executive Orders relating to the ports.

He said the report also noted that fights for supremacy, conflicts of interest and revenue ambitions that conflicted with trade facilitation objectives were common issues among the MDAs.

Said he:

“The report underscored the fact that only 10 per cent of cargoes are cleared within the set timeline of 48 hours, while majority of the cargoes take between five to 14 days, and some take as long as 20 days; deliberate delays induced by MDA officials currently account for approximately 65 per cent and 80 per cent of import clearance and export processing time, respectively.”

The report, however concluded that the success of the port reform is largely predicated on the buy-in of all stakeholders, political will of the presidency and PEBEC through active and sustained enforcement, monitoring and sanctions where necessary.

The post Why Nigeria’s losing N3.1tr annually to port crises appeared first on The Sun Nigeria.

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