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Curtailing revenue leakages in maritime sector

By Moses Ebosele
27 April 2016   |   1:03 am
The maritime sector is adjudged next to oil in terms of revenue generation coupled with its ability to create thousands of jobs on a sustainable basis.


The dwindling fortunes of crude oil and its negative effects have continued to ravage various segments of the Nigerian economy.  Already, the development, which is expected to continue for ‘some time’, has compelled the federal government to beam its searchlight on other sources of revenue such as the maritime sector. Moses Ebosele reports.

The maritime sector is adjudged next to oil in terms of revenue generation coupled with its ability to create thousands of jobs on a sustainable basis.

However, the Nigerian government, according to experts, is presently not adequately positioned to reap benefits available in the maritime sector due to numerous challenges such as alleged huge revenue leakages, capital flight to the tune of N2 trillion annually, inadequate infrastructure, policy inconsistencies and dearth of human capital among others.

According to experts, the Nigerian maritime sector if adequately harnessed and structured can generate N7trillion to the national coffers and create numerous jobs for Nigerians.

Indeed, some stakeholders who spoke with The Guardian, on Monday expressed a common opinion on how Nigeria is losing “several billions of Naira” on a regular basis to revenue leakages, capital flight and policy inconsistencies in the sector.

The loss in terms of monetary and employment terms according to observers are unquantifiable, a development, which they say, is depriving the nation of much-needed revenue for development.

To reverse the trend, they called on the federal government to review all ‘bad policies’, such as Central Bank of Nigeria (CBN) FOREX restriction on certain items, investigate thoroughly alleged malpractices in shipping operations such as alleged under-valuation of imports, under-declaration of goods, concealment, fraudulent transactions on Gross Registered Tonnage (GRT) of vessels by shipping lines, among others.

They are also of the opinion that Nigeria’s inability to operate a national shipping line has put the nation at a serious disadvantage in terms of revenue generation and capacity building in the sector.

In a chat with The Guardian on Monday, an economist who monitors activities in the sector closely, Matthew R. Otoide, accused previous administrations of not doing enough to harness available huge resources in the sector.

He said: “The maritime sector is ‘bleeding’. The revenue loss in that sector is huge. We must block the leakages. We don’t have any other option”.

Explaining further, he said: “In the first place, how much is the federal government generating from the maritime sector? Is the amount commensurate with what the sector has to offer? To get a different result, we need to do things differently. Other nations are generating huge resources from the maritime and transport sector. How come Nigeria is not?

Between 2009 and June 2015, the Nigerian Maritime Administration and Safety Agency (NIMASA) generated $1.99billion from the three per cent levy on freight.

Breakdown of the figure revealed that the highest collection of $335.7 million and $287.3million was recorded in 2014 and 2013 respectively.

Indeed, seasoned maritime lawyer and Senior Advocate of Nigeria (SAN), Olisa Agbakoba is of the opinion that Nigeria’s maritime sector has huge untapped revenue estimated at N7 trillion per annum.

Agbakoba explained recently that in order to tap revenue from the maritime sector, there is
a need to overhaul existing policies, institutions, regulatory and legal framework in the sector.

Otoide described the maritime sector as the “solution to the revenue challenges” facing the country.

Dakuku Peterside, NIMASA Boss

Dakuku Peterside, NIMASA Boss

He explained that Nigerian Ports Authority (NPA), NIMASA, and other agencies in the sector should be encouraged to block leakages and contribute more to the federation account.

Minister of Transport, Rotimi Amaechi had while at an interactive session with stakeholders in Lagos challenged Chief Executive Officers of agencies in the sector to generate N500billion or risk removal from office.

But, senior personnel in one of the agencies who spoke with The Guardian on Monday accused the minister of putting the cart before the horse.

The personnel who preferred to remain anonymous said: “The first thing I expect the minister to do is study the situation on ground before giving orders”.

He added: “The minister should fix infrastructure, review unprofitable policies in partnership with the CBN, the ministry of finance and the Customs before setting revenue targets”.

Meanwhile, The Guardian gathered that barring any unforeseen circumstances; NPA is to generate N201.32billion revenue between January and December, this year.

According to the proposed 2016 budget, N50.42billion representing 25 percent will be transferred to the consolidated revenue fund.

Details of the proposed budget revealed that NPA is to spend a total of N69.17billion for personnel and overhead expenses and N81.77billion for capital expenditure.

According to NPA, the proposed revenue is based on ship & cargo traffic expectation within the period while “the operating expense budget is essentially driven by the need to maintain and upgrade existing assets, improve monitoring roles and advance human capital development”.

In the proposed budget document, Managing Director of NPA, Habib Abdullahi explained that the projected revenues and expenditure were prepared based on the assumptions that the official exchange rate shall be maintained around N197 to a dollar.

In a related development, NPA has predicted that its operations in 2016 would be impacted by the increase in tariff for imported automobile, reduction in service boat operations “as oil  companies scale down investment due to the global crash in oil price.”

Explaining further, NPA explained that: “The inflation rate in the economy shall remain at a single digit throughout the year.

“The ongoing reforms initiated by the Federal Government to stimulate growth and plug leakages in the various sectors of the economy that are positively impacting maritime activities would be sustained”.

Besides, Abdullahi said the budget was put together based on the assumption that the following programme expected to transform the maritime sector and the national economy would be maintained throughout the period:

*Dredging of the channels and removal of wrecks for safe navigation of vessels;
*Completion and full deployment of functional information and communication technology to drive the operations at all locations and
*Collaboration with all stakeholders, especially relevant security agencies and host communities to engender safe and customer friendly operating environment.

Explaining further, NPA said its operations might also be impeded by slow-down in economic activities “as businesses struggle with sourcing of foreign exchange”.

Specifically, the thrust of the proposed budget, according to NPA is centered on deepening the regular maintenance of channels and waterways.

Others include the development of Lekki Deep Sea Port, deployment of Information and Communication Technology (ICT), human capital development, health, safety and security within the port environment and effective regulatory and monitoring roles, among others.

Making reference to operational outlook and underlying assumptions, NPA said: “Today, most of the world trade is being moved Ocean-going vessels and with the growing integration of the World economies the seaport is becoming a powerful driving force and a vitally important link between nations.

“In line with the Landlord model of port operations, Nigerian Ports Authority is responsible for the provision of port infrastructure facilities some of which include channel dredging and maintenance, provision of tug boats, pilot cutters, marine speed boats, wreck removal, provision and installation of buoys for safe navigation among others”.

The Nigeria Customs Service (NCS) had in the first quarter of this year set for itself N1trillion revenue targets.

However, citing revenue shortfall to the tune of N230 billion, the NCS Comptroller General, Col Hameed Ali (rtd) has forwarded a request to the Vice President, Prof Yemi Osibanjo, seeking review of CBN FOREX policy.

Otoide also used the opportunity to appeal to the minister to in collaboration with experts study closely the policies on cargo tracking note and cabotage and chart the best way forward for the nation.

He explained that while the policy on cabotage has failed to develop local capacity since it was introduced in 2003, “that of tracking note still is being challenged vigorously by interested parties”.

Amaechi, who did not rule out the possibilities of national shipping line said private sector’s involvement is critical to the proposed agenda.

Speaking at a maritime technical summit organised by the Association of Marine Engineers and Surveyors (AMES) in Lagos, the Minister assured maritime stakeholders that he would not  use the Cabotage Vessel Financing Fund (CVFF) to float a national carrier.

The Minister emphasised the need for a performance audit of agencies in the sector to ascertain what the challenges are with a view to addressing them with input from relevant experts.