Excessive charges, cumbersome processes fuel cargo diversion

Nigeria’s seaports have been enmeshed in an unending cargo diversion saga occasioned by high port charges and corruption-induced cumbersome cargo clearing processes nearly eight years after the completion of the port reforms. FRANCIS EZEM reports

When the Federal Government embarked upon the port reform programme, one of the core objectives was to make Nigeria a hub seaport for countries in the West and Central African subregion. The government had told the world that the programme, which stripped the Nigerian Ports Authority, NPA, of its cargo handling functions and left same with private terminal operators will bring about a measure of efficiency in cargo handling and thereby reduce cost of operation, which was believed to be high then. This development led to massive diversion of Nigeria-bound cargo to neighboring seaports, especially Republic of Benin.

About eight years down the line, though the reform has recorded a measure of success in some areas such as reduction of ship turnaround time from about 21 days to less than five days and enhancing port security, it has failed to address the issue of thriving cargo diversion to neighbouring seaports.

For instance, recent statistics show that though more than 75 percent of imported cargo into the West African market end up in Nigeria, less than 20 percent of this volume comes through her seaports, as the rest are diverted through sister West African countries’ seaports. The direct implication of this is the loss of huge to the Federal Government.

These goods having arrived at these sister countries’ seaports, duty paid on them are now moved into Nigeria through the land borders under the guise of the Economic Community of West African States, ECOWAS, Trade Liberalisation Scheme, ETLS. It was probably in anticipation of these inadequacies of Nigeria’s port system that the government of Republic of Benin some years ago decided to build a modern port facility around the country’s border with Nigeria. The target was imported goods meant for the Nigerian market.

This move by the government of the country has no doubt achieved it set objective albeit to the detriment of the Nigerian economy.

There have been reports that revenue from import duty contributes significantly to the country’s Gross Domestic Product (GDP), irrespective of her small population, which ordinarily cannot consume such amount of goods.

What this simply means is that the Republic of Benin collects duty on goods consumed in Nigeria. A major cause of this has remained the corruption-induced cumbersome cargo clearing processes in Nigeria. For instance, a Corruption Risk Assessment, CRA, report on Nigerian seaports released recently by the Independent Corrupt Practices and other Related Offences Commission, ICPC, indicated that it takes over 79 signatures to clear a consignment from Nigeria’s seaports.

This report was part of the outcome of a four-month corruption assessment study carried out by the commission in conjunction with the Technical Unit on Governance and Anti-Corruption, TUGAR and the Bureau of Public Procurement, BPP, the support of United Nations Development Programme, UNDP. The report said that an importer or clearing agent would require a minimum of 79 signatures of government officials before the release of his consignment.

Consultant to the ICPC on the CRA study, Mr. Constantine Palicarsky who presented the report to stakeholders at a validation meeting, had also identified the lack of standard operation procedure by the various government agencies as a major hindrance to port operations thus giving rise to corruption in the system.

He said: “While it takes 79 signatures to process a cargo in some ports, it takes over 100 signatures in other ports, an indication that the process is not harmonised, which breeds corruption”. Pioneer chairman of the Council for the Regulation of Freight Forwarding in Nigeria, CRFFN and a frontline freight forwarder, Mr. Tony Iju-Nwabunike, who spoke in an interview, admitted that the report of the anti-graft agency was a true reflection of goings on in the industry. Iju-Nwabunike insisted that it actually takes well over 100 signatures, especially considering the number of government agencies and other special units of the Nigeria Customs Service, NCS.

Only, founder of the National Association of Government Approved Freight Forwarders, NAGAFF, Chief Boniface Aniebonam, expressed regrets that several years after port reforms, it takes over 21 days for a consignment to clear out of the nation’s seaports.

This development, which he described as rather unfortunate, was in obvious reaction to claims by the Presidential Committee on Port Reform headed by Professor Sylvester Monye that the committee has succeeded in reducing cargo dwell time at the ports from 39 days to only five days. The reasons for this long dwell time of cargo are not far- fetched.

Investigation shows that no fewer than 20 agencies of the Federal Government participate in the signing of import documents. They include National Agency for Food, Drug Administration and Control, NAFDAC, National Drug Law Enforcement Agency, NDLEA and Standards Organisation of Nigeria, SON, State Security Service, Port Police and Port Health.

Others include Directorate of Naval Intelligence, Nigerian Plant Quarantine Services, Economic and Financial Crimes Commission, Independent Corrupt Practices and other Related Offences Commission, National Environmental Standards and Regulations Enforcement Agency and the Federal Environmental Protection Agency, among others.

This is in addition to statutory core maritime regulatory agencies such as the Nigerian Ports Authority, Customs, the Nigerian Shippers Council and the Nigerian Maritime Administration and Safety Agency. Even with a recent directive by the Minister of Finance, Dr. Ngozi Okonjo –Iweala that agencies such as NPA, Customs, NIMASA, Port Health, Port Police and the State Security Service should only be at the seaports has been utterly disregarded.

The Minister, who read the riot act had said: ‘I am here with a simple message from Mr. President and that message is that it is time for our seaports to start working”, “We must make our ports work for Nigerians who want to create jobs, that is really what Mr. President wants us to do and we need to act and that there is no longer time for talking”, she had also said.

In addition to these agences, there are scores of special units and squads of customs, most of which were deliberately created to extort money from port users. One year after this directive, the status quo has remained. Another major cause of cargo diversion is the excessive charges paid on imported goods at the ports.

This includes those imposed by the Federal Government itself, its agencies and even port terminal operators and shipping companies. For instance, apart from the statutory charges like the Import Duty, Fees, Common External Tariff Levy and the Value Added Tax, which are paid into the Federation Account of the government, importers are also made to pay several other charges under different sub-heads, classified as non-federation account charges.

They include the seven percent Port Levy, 0.5 percent ETTLS levy, which is also paid in other jurisdictions within the community, one percent Comprehensive Import Supervision Scheme, which is the Free On Board value of imports, from which the service providers under the Destination Inspection Scheme are paid and the rice levy.

Others include the Cigarette Levy, National Automotive Council Levy, Port Development Levy, Sugar Levy, Port Surcharge and other sundry charges paid to the government before an imported consignment would be allowed to leave the port. President of NAGAFF, Chief Eugene Nweke, who spoke on the development, decried the thriving diversion of Nigerian –bound cargoes to neighbouring African country.

“Whatever the government generates through the Cigarette Levy, National Automotive Council Levy, Port Development Levy, Sugar Levy, Port Surcharge etc, it loses more as a result of cargo diversion”, Nweke insisted Apart from these, the unregulated nature of the industry occasioned by the non creation of a commercial regulator has created a leeway for these terminal operators and foreign shipping firms to impose arbitrary charges.

It took the intervention of Shippers Council following a Ministerial directive to abolish some arbitrary charges imposed on port users numbering over 39.

Some of these charges include COT charges, Tally Clerk, container cleaning and security, among several others. Last year, what would have been a major crisis was averted following the decision of the terminal operators under the aegis of Seaport Terminal Operators Association of Nigeria, STOAN, to impose a 20 percent hike in port charges.

Clearing agents under the aegis of Association of Nigerian Licensed Customs Agents, ANLCA and NAGAFF had given the association a 72-hour deadline to reverse the hike or face a total closure of the seaports. The timely intervention of Minister of Transport, Mallam Idris Umar saved the situation.

It is therefore a well known fact that Nigeria operates one of the highest port tariff structures in the West and Central African Sub-region, which if not checked, might worsen cargo diversion with attendant loss to the government.

President of Council of Managing Directors of Licensed Customs Agents, CMDLCA, Mr. Lucky Amiwero, who observed that this might continue to hamper Nigeria’s hub port dream, warned that Nigeria might lose substantial volume of West African cargo traffic.

It is also a well known fact that many African governments are repositioning to take advantage of Nigeria’s inadequacies. For instance, Ghana and Cote’d Ivoire are building millennium port facilities that would berth mega ships of over 10, 000 TEUs of cargo capacity.

This will no doubt worsen this growing trend of cargo diversion if nothing was done to check it. A stitch in time saves nine.

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