Addressing maritime woes to improve global ranking

Despite Nigeria’s rise to 88th in the World Bank 2023 Logistics Performance Index (LPI), up from 91st in 2022, substantial challenges persist, costing Nigeria its maritime hub status and potential revenue, ADAKU ONYENUCHEYA reports.

In the 2023 World Bank Logistics Performance Index, Nigeria ranked 88th out of 140 countries, trailing behind several smaller African and landlocked countries, despite her abundant maritime resources.

South Africa ranked 19th; Egypt, 57th; Benin Republic, 66th; Rwanda, 73rd, and Botswana 57th. The two landlocked countries in the roll call achieved better rankings due to efficient logistics infrastructure and streamlined customs procedures.

Rwanda’s strategic investments in infrastructure and regional trade facilitation highlight systemic issues in Nigeria that need urgent attention to enhance trade competitiveness.

The LPI ranking evaluates countries based on six key parameters: customs performance, infrastructure quality, timeliness of shipments, quality of logistics services, tracking and tracing consignments and ease of arranging shipment prices.

The indicators provide a comprehensive overview of the efficiency and quality of a country’s logistics and trade environment.

But with the current situation in Nigeria, such as poor infrastructure, slow clearing processes, poor logistics services and track and tracing as well as lack of transparency that hinders trade facilitation, Nigeria may still remain below global average performance while its-bound cargoes are diverted to neighbouring countries.

In customs efficiency parameters, Nigeria scored 2.4, falling short of South Africa’s 3.3 and Egypt’s 2.8, Botswana’s 3, Benin Republic’s 2.7 and Rwanda’s 2.5.

This indicates that streamlined customs procedures are essential for reducing delays and costs in the logistics chain and Nigeria’s lower score exemplifies the cumbersome clearing process at the country’s ports, necessitating significant reforms in this sector.

The challenging clearing process is also compounded by the presence of multiple agencies at the ports.

The Comptroller-General of the Nigeria Customs Service (NCS), Bashir Adeniyi, acknowledged the challenges in customs processes, which have contributed to a decline in trade facilitation.

He stated that the NCS has implemented several key initiatives to simplify and expedite customs processes, enhancing clearance efficiency, adding that these efforts are crucial for improving Nigeria’s trade competitiveness and supporting economic growth.

Principal Partner at Akabogu & Associates, Emeka Akabogu, outlined key drivers of inefficiency within the nation’s ports, including complicated processes involving multiple regulatory agencies, high taxation, border closures, ineffective tools, and a negative culture marked by corruption and false declarations.

Akabogu also cited the involvement of numerous regulatory agencies and the resulting multiple government approvals and unfair charges as primary hurdles.

He pointed out that these factors contribute significantly to delays and increased costs for importers and exporters.

Akabogu stated that 77 per cent of the total cost of imports into Nigeria is driven by lengthy border clearance times, cumbersome cargo handling procedures, and informal payments to customs and other government agencies.

He said 43 per cent of the total cost to export is attributed to similar inefficiencies, noting that on average, clearing cargo in Nigeria takes 33 days, which is 81 per cent longer than in Latin American countries.

Akabogu referenced the port of Tangier in Morocco, which has achieved remarkable success by automating processes, leading to rapid cargo turnover and high volumes.

He said this port serves as a benchmark for efficiency and effectiveness in Africa, emphasising the need for Nigeria to adopt effective tools and technologies, such as radio frequency identification (RFID) systems and blockchain technology, to streamline cargo clearance, reduce inspection times, and enhance transparency.

Akabogu also emphasised the importance of transparency and simplification in trade procedures, urging for the publication and availability of information, advanced rulings, and the implementation of single window systems.

He said these measures, aligned with the Trade Facilitation Agreement (TFA) ratified by Nigeria in 2017, could lead to substantial improvements in trade efficiency.

On the infrastructure parameter ranking, Nigeria scored 2.4 compared to South Africa’s 3.6, supported by its well-developed road, port, and rail infrastructure and Egypt’s 3.

This emphasises the need for Nigeria to invest in modernising its infrastructure to facilitate more efficient trade.

An Assistant General Manager at the Nigerian Ports Authority (NPA), Issa Mukhtar, confirmed the infrastructural deterioration in the eastern ports, with the Escravos Breakwater, constructed in the 1960s, being completely submerged.

He said this has led to sediment deposition in the main navigation channel, costing the NPA millions of Naira yearly to address.

Mukhtar noted the urgent need for the rehabilitation of Apapa and Tin Can ports, along with upgrading the eastern ports, including Calabar, Warri, Onne, and Rivers Ports, and the reconstruction of the Escravos Breakwater, projected to take approximately three and a half years.

Meanwhile, Nigeria scored 2.5 in the ‘international shipments’ parameter, lower than South Africa’s 3.6 and Egypt’s 3.2.

In the ‘competence and quality of logistics services’ parameter, ranging from trucking, forwarding, and customs brokerage, Nigeria scored 2.3 compared to South Africa’s 3.8 and Egypt’s 2.9.

However, in ‘timeliness’, which assesses the punctuality of shipments in reaching their destination, Nigeria performed relatively better, with a score of 3.1, still below South Africa’s 3.8.

The General Secretary of the Association of Maritime Truck Owners (AMATO) expressed concerns over the infrastructural and operational inefficiencies plaguing Nigerian ports, crucial to the country’s economic stability and international trade standing.

Bala pointed out that the ports urgently need upgrades, including improvements in anchorage and berthing facilities, ship turnaround time, throughput time, clearance processes, yard handling, equipment renewal, port automation and dredging of port channels.

He emphasised that these enhancements are necessary to attract larger vessels and adopt a multimodal cargo evacuation system, significantly boosting efficiency and trade facilitation, positioning Nigerian ports as a leading hub for international freight in West Africa.

Bala noted that operational inefficiencies at port terminals result in trucks spending up to three weeks accessing terminals from pre-gates, causing importers and agents to withdraw jobs from truck owners.

He lamented that the financial burden of mobilising trucks to load from the port, often amounting to over N150,000, becomes a waste due to these delays.

On his part, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, highlighted the pressing need for infrastructure investment to address Nigeria’s logistics challenges.

He said the lack of domestic connectivity and an intermodal transport system is critical, noting that in many countries, once a vessel docks, it can easily connect to rail transport.

Yusuf said that unfortunately, Nigeria is 95 per cent dependent on road transport, which is inefficient and costly due to poor conditions.

Director General of the African Centre for Supply Chain and President of the Association of Outsourcing Professionals (AOPN), Dr Obiora Madu, said a critical examination of the indices and pillars considered by the World Bank might score Nigeria even lower than 95th place.

He said although there has been some improvement in port access, much work remains, adding that the country lags in trade logistics infrastructure and the quality of logistics services, crucial for efficient operations.

Under the ‘tracking and tracing’ parameter, essential for transparency and efficiency in the supply chain, Nigeria scored 2.7, lower than South Africa’s 3.8 and Egypt’s 2.9.

Enhancing tracking systems can provide better visibility and control over shipments, reducing uncertainties and improving overall logistics performance.

Bala highlighted the detrimental impact of multiple extortion checkpoints and the activities of governmental and non-governmental extortionists along port corridors on trucking operations, the supply chain value system, and the gross domestic product (GDP).

He detailed how these extortion practices negatively affect trucking operations, with drivers facing physical abuse and trucks being damaged, compromising safety standards.

“They compromise the safety of our trucks by dragging steering with drivers, cutting container brake hoses, and unlocking container twists, causing the container and trucks to fall on the roads,” he explained.

He said this leads to significant financial losses for importers and life-threatening injuries for drivers.

Speaking further, Bala said the absence of an e-tag, truck scheduler system, and terminal access barrier has led to rampant shunting, call-up racketeering, and identity theft.

He said it has also encouraged the bypass of ETO Standard Operating Procedures (SOP), criss-crossing of trucks from one terminal to another and the use of black market call-ups by third parties to access the ports.

Bala urged policymakers and stakeholders to collaborate on effective solutions to improve port efficiency, enhance safety and facilitate seamless cargo evacuation for Nigeria’s economic well-being and international trade competitiveness.