Nigeria is often the architect of its own economic misfortune. It incurs huge losses in numerous areas of the economy due to corruption, inefficiency, inability to modernise and failure to restructure. One such sector is the seaports in Lagos, where a new study by Dynamar, the Netherlands-based maritime research firm, has just issued a damning indictment on the operations there. Overall, it estimates that the country is losing $55 million daily to the congestion at the Apapa ports. This is inexcusable, particularly at a time public finances are in the red because of the coronavirus-induced economic downturn, burgeoning population and other negative indices.
The maritime trade is a reliable source of income for many countries globally, with the full annual impact of the liner shipping industry calculated at $436 billion and 13.5 million jobs by the World Shipping Council. Unfortunately, multiple factors – some of them self-made -have denied the Nigerian economy the benefits of this mammoth trade. Chief among them are delays traced to the physical examination of goods, manual verification of documentation, woeful infrastructure, broken down scanners, non-installation of trackers on trucks, sea piracy, too many public agencies muddying up the process, touting and reliance on a single mode of transport (road).
There are no marks for guessing the inevitable outcome: uninhibited congestion that bogs down clearing operations for about 30 days, necessitating diversion to ports in Benin Republic, Togo, Ghana and Ivory Coast. As the absurd delays aggravate, cargo is now being diverted farther afield. “Services have been diverted from Lagos terminals at Tin Can and Apapa to ports as far as 1,500km south of Lagos, in Pointe Noire in the Republic of Congo, with transhipment back to Nigeria,” the report states. This is why Dynamar estimates that the daily financial losses now exceed $55 million. This is more than N20 billion a day; a similar amount Aliko Dangote, the business mogul, released a couple of years ago. It is an economic disaster.
The chaos has significantly multiplied the cost of doing business, as well as handing Nigeria a weak rating in the ease of doing business index. Both exporters and importers are incurring heavy losses. There is another crisis over the keeping of empty containers and the teeming tank farms dotting the Apapa landscape. Property owners have abandoned their homes to retain their sanity. Those who are willing thus divert their cargoes elsewhere. The Nigerian economy is the ultimate loser, though its neighbours taking advantage of the noxious situation might not really mind.
The shabby road infrastructure in and around Apapa has exacerbated the economic predicament. After escaping the excruciating debacle at the ports, haulage companies experience another round of logjam on the highway. Over time, this has increased inland haulage cost exponentially. Clearing a 20-foot container costs about $1,100 and a 40-foot container about $2,700, Dynamar’s report stated. It makes the cost of doing business prohibitive, and it contracts consumer demand and domestic manufacturing and jobs.
In fairness, the Federal Government has always identified the problems. Unfortunately, it lacks the will to implement the solutions. In October 2011, the then Minister of Finance, Ngozi Okonjo-Iweala, undertook preliminary reform that reduced the overbearing MDAs’ operations at the ports. The action, good as it was, worked only briefly before it broke down again.
Decrying the mess, the incumbent regime issued an executive order in 2017 to streamline operations, including 24-hour operations, end to touting and most importantly, the implementation of the Single Window clearing scheme. Sadly, that EO is merely a paper tiger. Grandstanding, the President, Major General Muhammadu Buhari (retd.), in May 2019, ordered the trucks clogging Apapa to vacate the roads in 72 hours or face the consequences. More than a year on, nothing has happened to the trucks, but some of the roads are currently being rehabilitated through a tax holiday scheme granted to willing private sector investors. For similar reasons of incompetence, it is a moot point whether the proposed $3 billion scheme (over 36 months) to modernise the operations of the Nigeria Customs Service will accomplish something.
Although Nigeria is losing precious income, others are playing the game with wisdom. A report noted that the Port of Durban (South Africa), Mombasa (Kenya) and Port of Djibouti are all ahead of the Lagos Ports in terms of operational capacity, efficiency and contributions to their countries’ economies. According to a 2018 report, China supports its economy with its booming maritime operations, being home to half of the top 10 ports in the world. It is especially strong on logistics and shipping pillars, with the current record of world’s largest container and bulk ports. Despite this, the maritime industry is also a strong pillar of Singapore’s economy, contributing 7.0 per cent to that country’s economy, 170,000 jobs and attracting 130,000 vessel calls in 2018, according to its transport and health ministry.
Although the European Union faces competition from the ambitious Middle Eastern and Asian maritime companies, it still contributed 2.3 million jobs, €145 billion of GDP and tax revenue of €41 billion in 2012. The EU stated, “For every €1 million the European shipping industry contributes to GDP itself, it creates another €1.6 million elsewhere in the European economy.” In Nigeria, the industry compounds its economic woes.
The only way to attain this lofty goal as others have is to implement radical modern solutions. In this, the transport modes available are fundamental to a seamless maritime trade. Apart from re-constructing the road infrastructure, there is a pressing need to diversify the subsisting mode into railways. This is the practice in Antwerp, Rotterdam and other major global ports. It relieves the pressure on the roads and facilitates the efficient movement of services.
The Buhari regime should review its Executive Order on the ports, swiftly implement the 24-hour customs operations, eliminate touting and reduce the MDAs there. This will cut down the cumbersome and corruption-laden manual operations.
Most critically, Nigeria should go modern by privatising the ports. This is the global trend. Chinese investments have revived Greece’s major port terminal. According to reports, China holds stakes in some major European and American ports in Le Havre, Dunkirk, Antwerp, Bruges, Miami and Huston. As of 2006, the Dubai Ports World, a United Arab Emirates company, had bought over six United States ports. Since it has been established that Nigeria is losing money on this venture, the Buhari regime should privatise them with the Nigerian Ports Authority and the Nigerian Maritime Administration and Safety Agency as the landlords (regulators).
