Nigeria’s seaport industry: Two decades of motion without movement
Nigeria’s maritime industry has in the last two decades, gone through several reforms, which are yet to reflect on its key performance indicators KPI, report our Correspondents.
The events that culminated in Nigeria’s return to democratic governance on May 29, 1999 after several decades of military regimes came with very high expectations. This was given the nature of military governments, which have little or no regard for due process or following governance systems and structures in getting things done or thinking policies through before their introduction. It was probably in anticipation of these high expectations that the government of Olusegun Obasanjo then came up with several reforms not only in the port industry but also across other sectors including financial, telecommunications and power, among others. The port industry has had a fair share of these reforms.
For instance, conscious of the overriding importance of the human capital, the government began with the reform of the labour unit of the port industry. This was also in reaction to the increasing cases of lockout and other forms labour unrest. Thus, the government created the Joint Dock Labour Industry Council JODLIC to regulate and stem rising cases of unrest. This was later renamed Joint Maritime Labour Industrial Council JOMALIC, which later merged with the defunct National Maritime Authority NMA, created by the National Shipping Act 1987. Before this merger, the primary duty of the NMA was to protect indigenous shipping companies by strictly enforcing the 60-40 sharing formula between indigenous and foreign shipping lines for all government cargo and also disbursement of the Ship Acquisition and Ship Building Fund SASBF, a revolving loan, both of which were designed to develop indigenous capacity. In line with this, the government enacted the Coastal and Inland Shipping Cabotage Act, 2003, which provides among several others that vessels to be deployed in all inland and coastal trade in the country must be built in Nigeria, owned and manned by Nigerians. The Act created the Cabotage Vessel Financing Fund CVVF, derived from two per cent of all the contracts awarded to vessels within the coastal and inland shipping trade.
Port state control and flag regulations
Another major reform was the merger between NMA and JOMALIC in 2007 to form the Nigerian Maritime Administration and Safety Agency NIMASA, which was designed to check proliferation of government agencies, sometimes with over-lapping functions. Thus, the NIMASA Act 2007, which gave legal backing to this merger, also expanded to functions of the new agency to include enhancing shipping development, maritime safety and security, regulating all labour-related issues and enforcing the Cabotage Act. As the nation’s maritime administration, NIMASA also carries out port state control and flag regulation functions as well as protecting the interest of the indigenous shipping firms, who lack what it takes to compete with more established foreign liners.
No doubt, these reforms have to a large extent, have helped to place the country on the global shipping map, having improved on maritime regulation, especially in terms of ensuring compliance with global shipping regulations, domestication of international laws, conventions and protocols. The issue of lockouts and recurring labour unrest have become a thing of the past, as NIMASA has over the years set regulatory standards that ensured that the welfare of the port workers were placed on first line charge.
The government over the period undertook to reform the operational structure of the ports. Thus between 2003 and 2006, the country embarked on a holistic reform that led to the sack of over 5,000 members of staff of the Nigerian Ports Authority NPA. Under the reform, which stakeholders still believe was hastily done, NPA, which before then doubled as a regulator and sole terminal operator was stripped of its cargo handling functions. In its place, private terminal operators were licensed for various years of concession periods-10, 15, 20 and 25 years. For this purpose, the nation’s eight major seaports were structured into 25 terminals taken over by the 25 concessionaires. Then Minister of Transport, the late Ojo Maduekwe in trying to please ‘his masters’ jettisoned World Bank report on the reform, which recommended a 25-year phased period of reform, using the Apapa Port as a pilot scheme and within three years, the reform was haphazardly concluded under the supervision of Bureau for Public Enterprise BPE, headed by Nasir el-Rufai, current governor of Kaduna State. The Minister had told stakeholders that the major reasons for the reform was to attract private investment to the industry, relieve government of huge amounts of money spent to acquire and maintain plants and equipment, which processes were riddled with corruption. Other aims and objectives of the exercise, according to him was to enhance efficiency, reduce the very high cost of doing business at the ports and pave way for Nigeria’s emergence as hub port of destination for West and Central African sub-region. To achieve these, the landlord port model of the Port of Antwerp, Belgium was adopted. Founding chairman of Nigerian Shipowners’ Association NISA, Chief Isaac Jolapamo, while commenting on the reform, described it as “mere a sharing of Nigeria’s port terminals among friends, fronts and cronies of people in government”. So many stakeholders believe that the report has brought more hardship than it was meant to address as show by all key performance indicators KPI. For instance, prior to the reform, cargo dwell time was between 24 and 30 days. Today, it is in excess of 50 days. Then, turnaround time of vessels was about 10 -14 days, now it is more than 25 days due to congestions. This prompted some foreign shipping lines to impose congestion surcharge on all Nigeria-designated cargo. The reform also failed to reduce cost of operation as the nation’s seaports are touted as the most expensive in the world. There has also been the problem of perennial gridlock on port access roads, which makes a herculean task for trucks to go in and out of the ports to drop and lift cargo. This has been attributed to the sale of common user areas inside the port, including truck and container holding bays, thus forcing the trucks to park on the roads. However, in addition to attracting private investments to the industry, the reform has helped to modernise the ports as many of the concessionaires have procured state-of the –art cargo handling equipment such as reach stackers, terminal tractors, rubber tyre gantry and shore cranes, among several others. It also enhanced security at the port, thus minimising thefts and enhancing crowd control. This to a large extent helped the country to comply with the International Ships and Ports Facility Security ISPS Code set by the International Maritime Organisation IMO.
Customs/cargo clearance reforms
The Nigeria Customs Service has over the years gone through reforms, but it does appear that the more it is reformed, the less efficient it becomes and this accounts for why the cargo clearing processes are still very cumbersome and synonymous with delays. It was in line with this that the government introduced various reforms to change this narrative. For instance, in 2006, the government reversed the Pre-Shipment Inspection PSI scheme introduced since 1977, under which all imports were pre-inspected before shipment. The problem with this system was that the Clean Report of Inspection CRI, issued by the various inspection agents without which the cargo cannot be cleared, does not arrive early. Most of the time, the cargo arrives before the document. In 2006, the government returned to Destination Inspection DI scheme. Under this policy, the country signed a five-year Build, Own, Operate and Transfer BOOT contract with three inspection companies comprising Cotecna Destination Inspection Nigeria Limited, SGS and Global Scan System Limited, who inspect and issue Risk Assessment Reports RAR with which the importer or his agents undertakes the clearing with Customs. Part of the contract was the installation of scanners at designated port locations as well as training Customs officers, who took over the scheme. While the contract, which elapsed sometime in January 2013 or thereabout lasted, the inspection agents were able to achieve about 80 per cent scanning of imports while cargo dwell time reduced to less than seven. About seven years after Customs took over scheme, cargo dwell time is currently over 50 days, and none of the scanners is functional while Customs does 100 per cent physical examination on all imports into the country with the attendant delays and corrupt practices. In Nigeria’s seaports today, it takes over 75 signatures to clear a consignment as against about five in Ports of Cotonou and Lome, two West African neighbours and just one signature in Singapore ports.
Economic regulatory reforms
Due to the hasty and shoddy nature of the port reform, a port economic regulator was not created, which is a major feature of landlord port systems. The private terminal operators and shipping companies took undue advantage of this by imposing all manners of arbitrary fees and levies. The situation was so bad that they introduced what they called COT, container cleaning, Tally clerk charges, among several others. In response to public outcry, President Goodluck Jonathan in 2014 expanded the functions of the Nigerian Shippers Council to include port economic regulator and gazetted same. The council promptly reversed all those illegal charges, which led to some court cases to challenge its powers to do that, which it won up to the Court of Appeal. Recently thee have also been efforts by President Muhammadu Buhari to improve operations of the seaports through the issuance of Executive Orders on the Ease of Doing Business. So far, given Nigeria’s strategic position and market in the continent, the ports have what it takes to be hub. But this can only come with a mix of the right policies and appointment of professionals and experts to strategic positions. Unfortunately, appointment into strategic agencies are still characterised by square pegs in round holes, as they are always politically induced. As to when this trend will be reversed, only time will tell.