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Business News of Wednesday, 29 December 2021


Maritime Review 2021: High exchange rate, coronavirus, policy inconsistency stunt sector growth

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It was a year of flip-flops for Nigeria’s maritime sector in 2021, as various economic turbulence triggered by the coronavirus pandemic adversely hampered growth of the industry.

The high points of these trends included rising exchange rate, dollar scarcity, incessant increase in Customs duty, policy inconsistency and sloppy implementation which combined with other exogenous factors to hamper the actualisation of its huge potential in 2021.

Like every other year, lack of enforcement of maritime related policies posed a huge setback for the nation’s maritime sector, in addition to myriads of other factors ranging from poor seaport access roads, lack of holding bays and quay, inadequate truck parks, and ineffective traffic management around the ports, especially within the country’s two busiest ports in Lagos.

Likewise, the multiplicity of Customs units and extortion of importers by security agents also contributed to the downside of narratives that constrained trade facilitation in Nigeria.

Aside the above listed, other known factor that impeded growth of the industry is the emergence of coronavirus with its different variants.

In the year 2021, the Lagos seaports became transit routes for smuggling of hard drugs and importation of live arms and ammunition. The security agencies including Nigeria Customs Service (NCS) and the National Drug Law Enforcement Agency (NDLEA) had at different joint operations intercepted various hard drugs imported into the country.

For instance, the agencies intercepted 32.9 kilograms of cocaine worth over N9.5 billion imported through the Apapa seaport. The NDLEA also intercepted hard drugs worth N6 billion meant for insurgents has at the Apapa port in Lagos.

Customs also intercepted various firearms and lives ammunitions and illicit drugs on different occasions at the two Lagos seaports and land borders.

In spite of these unpalatable events, the maritime sector recorded some achievements in the years under review.

For instance, in February 2021, the Nigerian Ports Authority (NPA) launched an electronic truck call-up system popularly known as “ETO” to deal a mortal blow on the perennial gridlock responsible for delays along the access roads leading to the country’s two busiest ports.

The system also recorded some achievements in taming traffic build up along port access roads amid corruption and human interface, that made truck owners recently call for the review of the system.

Also in June 2021, the Integrated National Security and Waterways Protection Infrastructure, also known as the Deep Blue Project of the Nigerian Maritime Administration and Safety Agency (NIMASA) was launched by President Muhammadu Buhari, to reduced piracy on the nation’s waters. This earned Nigeria international commendations from International Maritime Bureau (IMB) among other agencies.

In spite of all these, stakeholders in the course of the year accused the Federal Government of not paying enough attention to the sector despite its huge potential. They argued that the government was only interested in the revenue coming from the industry but had consistently failed to fix the obsolete infrastructure and tackle other challenges facing the sector.

The President of African Association of Professional Freight Forwarders and Logistics in Nigeria (APFFLON), Mr. Frank Ogunojemite, said looking at the industry from the national or global economic perspective, the year cannot be said to be palatable because of the effects of coronavirus all over the world, which has brought about increment in shipping and port operations around Europe, North America.

“If we want to look at how it actually affected the Nigerian economy, that’s a different thing because in most of these places I’m talking about, governments introduced palliative for the businesses over there.

Meanwhile, in Nigeria, there wasn’t any palliative introduced whatsoever to show that government actually associates with businesses in the country,” he said.

According to him, the effects of coronavirus in Nigeria are peculiar because most businesses closed down drastically, as the effect was so much for the owners to carry and as such government keeps increasing cost.

“Government keeps increasing duty all the time. There is a controversy in the benchmark on the Customs side and those things that International Monetary Fund (IMF) complains about such the factors affecting the port operations have not been actually achieved.

“So, the effects on the individual and the government on the national economy are both on different perspectives. So, in effect from my perspective it was a seriously scourge in the country.

For instance, we have been talking about the single window, that is taken for granted in the port operations. But we have not actually been able to achieve it in Nigeria”.

He said instead of government talking about the single window, they are talking about increasing duty when the citizens are suffering the effects of coronavirus and Nigeria is gradually moving into a recession.

According to him, things are getting hard, inflation is high and there is no help from any quarters, as both the importers and the citizens are suffering the effects of the coronavirus and the government has failed on their part to put measures in place to address the situation.

He stated that infrastructure and rail in the maritime industry have not actually been achieved while the shipping companies are taking advantage of all these things.

Ogunojemite said the effects of coronavirus on the general economy and the response of the government to businesses are not too good.

Meanwhile, a former member of Presidential Taskforce on the Reform of Nigeria Customs Service; Presidential Committee on Destination Inspection, and Ministerial Committee on Fiscal Policy and Import Clearance Procedure, Lucky Amiwero, said year 2021 has been a disaster for the maritime sector.

“Disaster in the sense that we have a system that is not working. It is a big challenge because Nigeria is losing out in so many ways, the nation’s port procedure is too cumbersome, expensive and it is not coordinated. Nobody controls it. The government agencies behave the way they feel like to the detriment of the importers and agents in the industry. The importers and agents in the maritime sector are bleeding from the excessive cost of doing business in the country.

“Nigeria port is one of the most expensive ports in the whole world, because our port is not predictable, not consistent and not transparent. The nation’s port systems are not internally backed. There is nothing we are doing that is in line with the international best practice.

“So you have a port that is growing under serious burden of cost. The cost implication is in trillions of Naira and just because people are forced to use the port. If there is an alternative, people would have left Nigerian ports completely. I was discussing with a retired Controller, he said it is easier to bring in a container from China than bringing it out of port. I’m happy he has been in the port, he’s now a retired Controller and he’s facing the system. When you are in the system, you believe that you’re working for the government. No, you’re working for the nation and you must put in your best so that the country doesn’t cripple,” he said.

He said the maritime industry doesn’t have basis, no foundation and it is being run like a parlour entity while the industry is nothing to write home about. He said Customs is doing what they like; they don’t obey the law and follow procedures.

According to him, shipping companies too are doing what they like and many of their costs are not recorded and all these are not helping the economy.

“When you are talking about the maritime sector for the year 2021, is a bleeding sector where people are grumbling under very serious burden of cost. The Central Bank of Nigeria (CBN) is multiplying exchange rate and tomorrow you will see Customs saying, they have made trillions. No, it is the multiplication of exchange rate, is not that Customs is being effective. When an exchange rate increases, it increases the value of the cost of goods. These are the issues we have to put into consideration.

“Ports access roads are bad and is taking over 15 years to fix the road that is not up to five miles. You collect a seven per cent surcharge, duty, and all the rates at the ports; above all, there is nothing to write home about. The port development system level is being collected, what are they using it for?

“There will be time people will no longer use the Nigerian port. The consignments coming into the country are the ones that are being compelled to come in. Many people are already leaving Nigerian ports because they feel nobody is in charge of the port systems. It is difficult to go to Apapa,” he lamented.