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Port reform imperative for maritime sector growth in 2023 – Stakeholders

By Adaku Onyenucheya
04 January 2023   |   4:05 am
As the year begins with a new government expected to come in May, stakeholders are expecting a positive, efficient and effective maritime sector in 2023.

Apapa Port, Lagos.

Operators lament multiple taxation, others in sector
As the year begins with a new government expected to come in May, stakeholders are expecting a positive, efficient and effective maritime sector in 2023.

The sector experienced challenges in 2022, which led to the country losing about N1 trillion owing to cargo diversion to neighbouring African countries as a result of bottlenecks at Nigerian ports.

Due to these bottlenecks, the country witnessed a drop in importation, while government agencies struggled to meet revenue generation targets for the year. Several investors also exited the country as businesses shut down, which affected economic growth.

This is not a good one for the country, especially as the Nigerian Economic Summit Group (NESG) had disclosed that the nation’s maritime sector could generate N7 trillion revenue yearly and create additional four million jobs in the next five years if properly harnessed.

The Director, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said the fragile growth performance in 2022 was a reflection of the diverse headwinds bedevilling the economy, which included, crippling trade facilitation issues, foreign exchange illiquidity, heightening inflationary pressures, weakening purchasing power and legacy structural constraints among others.

He said the maritime industry is crucial for the country’s economy and sectorial reforms has become urgent; especially as legacy trade facilitation issues have persisted and become intractable.

Stakeholders have, however, stressed that to reap the benefits from the maritime sector and generate the N7 trillion, government and industry players must aggressively address the bottlenecks crippling trade and the economy.

Taxation/duties
There is no doubt that multitude of taxes is crippling investment in the country, which has discouraged investments in the maritime industry.

According to Yusuf, the current tax regime is stifling investment, noting that an economy that desires job creation, economic inclusion, investment growth and poverty reduction, should have an accommodating tax regime for investors, while calling for urgent review.

Former National President, Nigeria Merchant Navy Officers & Water Transport Senior Staff Association, Matthew Alalade, said multiple taxation is discouraging importation, which has given room for smaller ports in neighbouring countries to boom.

Former National Public Relations Officer, Association of Registered Freight Forwarders (AREFFN), Taiwo Fatomilola, said customs extreme duty on imported goods is crippling trade as the effect has been felt in the decline in import and manufacturing.

“Imports are no longer coming into the country, because the customs duty is not stable and varies in the different Customs commands. The Pre-Arrival Assessment Report (PAAR) is N3 million for 1×20 containers and N5 million for 1×40 containers at Tin Can. Initially, it was N1 million for 1×40 containers, but because customs want to meet up their revenue target, they arm twist importers and their agents.

“This really made a lot of people divert their containers. This is affecting business a lot,” he said.

General Secretary, Association of Bonded Terminal Operators of Nigeria, Haruna Omolajomo, said there are too many multi-purpose taxes imposed on importers that are duplicated, which is creating lots of challenges in the industry.

He frowned at the Federal Government’s proposed increased tariff on all imported goods by 0.5 per cent to cater for deficiency in other sectors.

He warned that this would further affect every player in the industry ranging from bonded terminals, barge operators, freight forwarders and logistics operators.

Foreign Exchange Management
Forex challenge was a major predicament that investors and importers grappled with in 2022. The World Bank affirmed that Nigeria’s exchange rate policy settings are stifling business activities, investment, growth and amplifying macroeconomic risks.

Yusuf said the government must address the illiquidity in the foreign exchange market and stem the depreciation of the naira exchange rate.

Omolajomo said the fluctuating rise in dollars against the weakened naira is militating against maritime business.

He said the effect is the high cost of goods in the market, adding that what was used to import and clear 20 containers cannot do more than five containers now.

Omolajomo urged the government to come up with a conscious policy that will stabilise the naira against the dollar.

Cargo clearing processes
Cargo clearing processes in the country are cumbersome with several calls for solutions.

The CPPE boss said there is a pressing need to ease the cargo clearing processes and vessel turnaround time at the ports to ensure ease of doing business, which the government had expressed commitment.

He said the following have become priority, which include, shorter vessel turnaround time by reducing delays, curtailing bureaucracy and curbing extortions in the clearance of vessels.

Yusuf said vessel turnaround time should be reduced from the current four weeks to a maximum of one to 10 days, while shorter cargo dwell time at the sea ports should be from the current 20 days to less than one week.

Automation
Customs’ server breakdown has become more frequent and a major bottleneck in cargo clearance at the ports in Lagos, especially the Vehicle Identification Number (VIN) valuation policy on imported vehicles.

Yusuf stressed on fixing the problem of frequent breakdown of customs servers, which has caused undue delays and demurrage payments by importers.

He also called for better engagement of stakeholders in the implementation of the Vehicle identification System.

Fatomilola urged government to engage more providers of IT and telecom infrastructure for Nigeria Customs Service, adding that having one has caused more loss to the country, importers and agents.

He said the constant network fluctuation and server breakdown is making importers and agents lose billions to demurrage.

The President, Maritime Professionals Forum (MARPRO), Capt. Akanbi Oluwasegun, said Nigeria needs to learn few things from the Singapore maritime industry on the ease of doing business, especially as policies are quite ambiguous and frustrating business owners

He said the country must automate its processes on clearance, approvals and inspections, noting that corruption is a major factor that would hinder the 2023 beautiful forecast.

Single window
Yusuf called for acceleration of the implementation of single window system to minimise human interface at the ports, while also calling for reduction in the number of agencies and approvals needed for clearance of cargo at the ports.

He said there should be deployment of technology at all stages of approvals and documentation.

The Chairman/Managing Director of Lamsam Intercontinental Company Nigeria Limited, Port Harcourt, Samuel Njoku, urged government to implement friendly trade policies to streamline the multiple agencies that are cluttered in the ports and hinder trade facilitation.

“If the right people are not on board, the wrong ones will frustrate the single window implementation. Because of corruption, agencies don’t want to come together and ensure the implementation of a single window,” he said.

Port infrastructure
Fatomilola lamented that the access roads to the ports in Lagos are not in good condition.

He said rehabilitation and construction of the roads have taken a long time with the Minister of Works uncertain about the date of completion.

He said the roads need to be completed to ensure easy passage of cargoes in and out of the ports.

Alalade said the seaports need adequate security, noting that insecurity is depriving investors and importers to come and trade in the country.

He said vessels, rather than berth in Nigeria, prefer to be kept in neighbouring countries, which is yielding high revenue for them.

Yusuf stressed on the need to fix the traffic constraints on Lagos ports corridor to improve access into the ports, as well as the need for prompt decision on the renewal of port concession agreements.

Corruption and extortion
The Administration Secretary, Association of Maritime Truck Owners of Nigeria (AMATO), Mohammed Sani, said the major challenge that has taken serious toll on the ability of maritime haulage and logistics sector to deliver efficiently and profitably, is the artificial barriers of extortion within the ecosystem.

He said there are over 60 checkpoints of extortion from Ijora Olopa, Costain, Mile 2 and down to the Tin Can and Apapa ports, where state and non-state actors collect unofficial and unreceipted monies from truckers.

Sani said truckers, before accessing the ports to pick up imports or drop off export containers, pay between N5,000 and N10, 000 to officials assigned to ensure sanity at the port access roads, who are in collaboration with hoodlums.

According to him, for truckers who refuse to pay, their trucks will not be allowed passage and would be damaged.

He said the trucks in the process of being damaged, sometimes, lose control and kill people, while some containers fall off the trucks and cause ghastly accidents.

Containers at Apapa port

“We want this new year and incoming government to address this problem for us because the artificial extortion barrier is the bane of trade facilitation, port and logistics efficiencies in Nigeria maritime industry,” he said.

The CPPE boss called for review of the current call up system with a view to making the system efficient and less vulnerable to corruption and extortion.

Multimodal transport system
While other countries deploy multimodal transport systems in cargo evacuation from the ports to hinterlands, Nigeria still depends on roads through trucks, which has led to traffic congestion in the ports’ access roads.

The National President, Barge Operators Association of Nigeria (BOAN), Dr. Olubunmi Olumekun, said Nigerian ports have to return as the maritime hub of Africa as much has been lost.

He said the government must ensure utilisation of the inland waterways through barges, rather than focus on rail as means of evacuation.

Alalade said massive usage of waterways, as an alternative to navigate the city will bring more revenue to the government, noting that unfortunately the government is not looking towards that path.

He said the government is interested in rail lines, which cannot solve the problem of transportation alone.
Acquisition of vessels

Alalade said having national fleet and indigenous vessels would create jobs for the teeming youths and improve revenue generation for the country.

He said these vessels would enable cadets and seafarers to have more sea time training to compete globally, just like the Philippines that earns from its maritime sector and exportation of seafarers.

Oluwasegun said with the Lekki deep seaport to commence full commercial operations this year, with a projection of generating $201 billion and Ondo deep seaport also expected to be completed and operational in 2023, as well as African Continental Free Trade Area (AfCFTA) expected to increase Nigeria trade volume by $12 billion and reduce trade cost by 20 per cent, government must ensure the immediate Cabotage Vessel Financing fund (CVFF) disbursement to indigenous shipowners to benefit from the projects as well as to promote Cabotage trade.

Scanner installation
Yusuf also called for installation of scanners at off dock terminals and border posts across the country to aid trade efficiency and facilitation.