Shipping: How stalled dry port projects hobble decentralisation plan

While the creation of inland dry ports (IDPs) represents a significant step toward decentralising Nigeria’s trade infrastructure and enhancing the country’s position in regional and global trade, realising their full potential depends on overcoming the myriad challenges that currently impede their progress, ADAKU ONYENUCHEYA reports.

About six years ago, the Nigerian Shippers Council (NSC) facilitated the development of inland dry ports (IDPs) to decentralise shipping activities from congested seaports, enhance transborder trade, and boost the nation’s export potential, particularly to hinterlands and landlocked neighbouring countries.

However, the path to full implementation has continued to be fraught with challenges. The IDPs are designed as extensions of seaports situated inland across the country, serving as logistical hubs to handle cargo, particularly containerised goods for import and export, received via rail or road for customs examination, clearance, storage and transportation.

This setup plays a vital role in bringing shipping and port services closer to shippers and businesses, reducing the overall costs of cargo transportation to inland locations and landlocked countries, and stimulating economic activities by enhancing export capabilities in regions far from areas with seaports.

However, the establishment of dry ports in cities like Kano, Kaduna, Katsina, Ibadan, Isiala Ngwa, Borno and Jos, which aimed to decentralise trade, enhance accessibility, ensure efficient participation in international trade without logistical hurdles, and reduce the strain on overburdened seaports like Lagos, has encountered significant obstacles.

These challenges have hindered strategic investments needed to unlock the full potential of these facilities and position Nigeria as a leading maritime trade hub in Africa.

The IDPs, designed under a public-private partnership (PPP) framework, are also intended to revive and modernise the country’s railway system, which is essential for long-distance cargo haulage.

However, despite the ambitious plans, only the Kaduna IDP is currently operational, while other gazetted IDPs, located in Funtua, Katsina State; Heipang, Plateau State; Isiala Ngwa, Abia State; Erunmu, Oyo State and Maiduguri, Borno State, remain incomplete, with some trapped at five to 10 per cent completion rate.

The Shippers’ Council also facilitated proposals for the development of additional solicited and unsolicited IDPs in Dagbolu, Osun State; Onitsha, Anambra State; Lolo, Kebbi State; Ogwashi-Uku, Delta State and Benin, Edo State, which are currently at various stages of completion.

The delay in their completion is not just a setback for regional trade but also a significant barrier to Nigeria’s broader economic goals.

Current status and challenges
Despite the strategic importance of these projects, progress across the different IDP sites varies significantly.The Kaduna IDP, commissioned by former President Muhammadu Buhari in 2018, remains the only fully operational facility with a capacity of 5,000 twenty-foot equivalent units (TEUs), although setbacks have limited its operational efficiency.

Meanwhile, the Dala IDP, declared a port of origin and final destination in 2022 and commissioned in early 2023 with a capacity of 20,000 TEUs, has been completed.

Similarly, the Funtua IDP, with a capacity of 10,000 TEUs, was also designated a port of origin and final destination in February 2023 and is at 93.5 per cent completion.

Others, like the Erunmu IDP with a capacity of 50,000 TEUs, is at 10 per cent completion, while the Isiala Ngwa facility with a capacity of 50,000 TEUs is at five per cent, the Jos IDP with a capacity of 20,000 TEUs is at 48.4 per cent, and the Maiduguri facility with a capacity of 10,000 TEUs is at five per cent.

The Maiduguri IDP, in particular, has faced delays due to security challenges, though the Borno State Government has committed to its completion, seeing it as vital for regional trade and economic development.

The slow pace of these facilities has raised concerns among stakeholders about the viability of these projects and their ability to meet the growing demands of international trade, particularly under the African Continental Free Trade Area (AfCFTA) agreement.

During a recent visit to the Kaduna IDP, the Executive Secretary of the NSC, Pius Akutah, identified several challenges impeding the full realisation of the project.

The primary concerns, he noted, include issues related to rail infrastructure and documentation processes. These challenges, as highlighted by the Kaduna State Shippers Association (KSSA), not only hinder the efficient operation of the dry ports but also inflate the cost of trade for businesses relying on this crucial infrastructure.

The President of the National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), Lucky Amiwero, pointed out that a critical factor in the success of these dry ports is the integration of a robust rail system, which will enhance their functionality.

According to him, the absence of efficient rail connections to these dry ports means that goods must be transported by road, which is less efficient and more costly.

The Director/Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, emphasised that without a robust rail infrastructure, the intended benefits of the IDPs, such as reducing congestion at seaports and facilitating smoother cargo movement, cannot be fully realised.

Yusuf argued that investment in rail should even precede the development of these dry ports for them to be effective, underscoring the need for a holistic approach to infrastructure development. He said without this rail network, the entire concept of inland dry ports would be undermined, as road transport alone cannot efficiently handle the volume of cargo required to make these ports viable.

Legislative hurdles
Beyond the physical infrastructure, there are also legislative and logistical challenges. The President of the NCMDLCA noted that the current legal framework governing the IDPs is inadequate. He argued that the absence of a specific law to regulate IDPs, coupled with the lack of a liability framework and through bills of lading, hampers their functionality.

“These dry ports are still treated as bonded warehouses under customs control, which limits their effectiveness,” Amiwero explained. He emphasised that these legislative and logistical hurdles must be overcome, including the establishment of clear liability processes and the implementation of true bills of lading to ensure seamless operations.

The representative of the KSSA, Mr Omotayo Dada, emphasised the need for a seamless transition to dry port operations, where documentation and customs clearance processes are streamlined. He noted that legislative interventions are currently underway to address these concerns, with the hope of facilitating smoother operations.

Economic costs of neglect
The incomplete status of these IDPs has significant implications for Nigeria’s trade and economy. The CPPE boss stated that without functional IDPs, the efficiency of Nigeria’s international trade is compromised. He said the primary goal of these dry ports is to ease international trade by allowing quicker clearance and movement of goods to and from hinterland regions.

According to him, delays in their completion contribute to congestion at seaports and increased costs for shippers, especially those in distant regions.
On export drive and regional trade, Amiwero said the incomplete dry ports hinder Nigeria’s ability to fully leverage the African Continental Free Trade Agreement (AfCFTA), which aims to boost trade across African nations.

According to him, functional IDPs would facilitate smoother trade routes and reduce costs, making Nigerian exports more competitive, especially in landlocked neighbouring countries like Chad, Niger, and Cameroon.

Despite these challenges, the potential economic benefits of fully operational IDPs are significant. The Governor of Borno State, Babagana Zulum, during his engagement with the NSC, highlighted the transformative impact that an IDP in Maiduguri could have on the region.

He underscored the potential economic benefits, including employment generation and enhanced transborder trade, which would contribute to the state’s development and Nigeria’s Gross Domestic Product (GDP).

“Establishing the inland dry port in Maiduguri will bring a lot of opportunities to the government and people of Borno State, particularly in terms of employment and boosting the economy through increased trade with neighbouring countries,” Zulum noted.

While acknowledging the challenges posed by the current state of rail infrastructure, Zulum expressed confidence in the ongoing efforts to rehabilitate road networks as a viable alternative for the IDP’s operations until rail services are fully rehabilitated.

On his part, the NSC boss stated that with the stage set for renewed efforts to bring these critical infrastructure projects to fruition, as well as the right interventions and a strong commitment from both public and private stakeholders, Nigeria could unlock the full potential of its inland dry ports, driving economic growth and facilitating trade across the region.

Akutah stressed that while the government provides the necessary political will and initial infrastructure, the day-to-day operations of the dry port should be driven by the private sector.

This is business, and the initiative is not for the government to drive the day-to-day running of this inland dry port. It is a public-private dimension and therefore, private sector-driven,” he explained.