Poor infrastructure threatens 2017 non-oil export revenue target
• Over 2,000 containers waiting to access ports
• Transportation cost rises by 150%
• Commodities wasting in warehouses
• Ministry plans infrastructure roundtable
For operators in the nation’s non-oil export sector, the parlous state of infrastructure at the various gateways may be costing the economy more than it hopes to realize from the sector if the concerns linger further.
The unease in doing business around the nation’s ports has led to situations where operators’ loans are going bad as they consequently backtrack on up-scaling their production capacity for agricultural produce designated for export.
For instance, findings by The Guardian shows that an exporter, having sealed a contractual agreement worth $100,000 or N30.6 million with an international partner for an agricultural produce and committed resources to fulfill such obligation both in timeline and quality, risks losing his equity to the poor state of infrastructure leading to the nation’s gateways.
This is because, such an exporter has to contend with a longer transaction cycle and increase in shipment days from an ideal 15 days to about 50 days or more, an interest rate of over 25 per cent for facilities secured from the banks, risk in losing the value for the product as a result of low quality arising from failure of preservatives after the ideal number of days among other challenges.
The fallout also extends to the non-realisation of government’s diversification agenda, rise in non-performing loans in the banking sector and loss of jobs in the sector.Relatively, the $30 billion revenue target of the Federal Government within the next 10 years is being also being undermined as many operators seek alternative sources of revenue.
According to the operators, inefficiency at the Apapa ports in Lagos and bad state of infrastructure, especially roads leading to the nation’s major gateway, have undermined the export business and increased the mortality rate of organisations involved in the export of agricultural products.
They noted that the Apapa gridlock has led to a rise in the level of corruption, as uniformed men now allegedly collect a N25,000 bribe on every container, while the cost of transporting containers to the port has increased by 150 per cent.According to the operators, over 2,000 containers are waiting to access the ports, while export commodities are getting wasted in warehouses as a result of longer transaction cycle and increase in shipment days, with the attendant negative consequences on the economy, and perception of Nigeria by foreign investors and partners.
The President of the National Cashew Association of Nigeria, Tola Faseru, decried the state of infrastructure devoted to export, saying the travel time, waiting time, and transaction time have led to the wastage of agricultural commodities with huge economic losses for the operators.In June this year, the Federal Government announced that a section of the Apapa Wharf Road would be shut down for one year to enable its reconstruction.
The Minister of Power, Works and Housing, Babatunde Fashola, at the signing of a Memorandum of Understanding (MoU) and handover of the project to the sponsors said the N4.34billion job was jointly sponsored by Dangote, Flour Mills companies, and the Federal Government.Faseru urged the government to expedite action on the rehabilitation of the road and also give priority to exportable commodities to facilitate export business.
“An exporter that could ship 1,700 tonnes of commodities per day under normal circumstance when the Apapa road was in good condition now manages to ship between 100 and 250 tonnes of commodities, and this is bad for business.
“Bank customers that have taken loans to finance their exports now find it difficult to meet their financial obligations and their ability to pay is hampered by cost overrun as a result of this delay. Export warehouses are filled with commodities instead of being promptly shipped, and they are rotting away,” he added.
He urged the Federal Government to revisit the concession agreement it has with terminal operators in order to address issues of inefficiency and high handling charges.The Chief Executive Officer, Starlink Global Ideal Limited, Adeyemi Adeniji, warned that the situation may lead to a further loss of business to neighbouring countries as well as a loss of the competitive advantage recorded in the last 16 years.
According to Adeniji, while commodities should not take more than 15 days to reach their destination, it takes almost 50 days to get our commodities to their target markets after which they might have lost their quality and get rejected by the foreign partners.
“If these issues are not addressed, we may be out of business in the next six months. Over 2,000 containers are waiting to enter the ports. Serious palliatives are needed at the moment,” he cautioned.The National Publicity Secretary of the group, Sotonye Anga, noted that while operators have increased their production capacity, there is no market for the products if they are unable to export them to the destination markets. “If the trend continues, the banking industry may witness another round of non-performing loans while unemployment is also expected to rise,” he said.
Meanwhile, the Federal Ministry of Transportation has disclosed plans to hold a breakfast meeting to find ways of bridging the infrastructure gap in the nation’s transport sector.Participants at the roundtable to be held in Lagos on November 9 would brainstorm on ways of addressing the infrastructure deficit in the transport sector, decongesting the seaports and ensuring a smooth takeoff of the Inland Container Depots (ICDs).
An initiative of the Nigerian Shippers’ Council (NSC), the forum is also aimed at fine-tuning arrangements for the establishment of Truck Transit Parks (TTP) to provide short-term resting place for truck drivers on long distance travels and reduce the loss of life and cargo caused by accidents arising from fatigue.
Among those expected at the roundtable are stakeholders in the transportation sector, captains of industry, the ECOWAS Bank for Investment and Development (EBID), AFRICEXIM Bank, and top government functionaries.
A statement by the Head of Special Duties of NSC, Mr. Ignatius Nweke said the Minister of Transportation, Chibuike Amaechi, would be the chief host and would lead discussions with the aim to deal with issues of funding for the Inland Container Depots (ICDs) and the TTP, both public–private partnership projects targeted at decongesting the sea ports and providing public rest areas designed to provide temporary rest location for truck drivers.
The roundtable will parade key transport industry stakeholders and captains of industry. Notable among them are President of the Dangote Group, Aliku Dangote and AbdulSalam Rabiu of the BUA Group. Nobel Laureate, Prof. Wole Soyinka; Chief Executive Officer of the Nigerian Stock Exchange (NSE), Mr. Oscar Onyema; and the Director General of the Infrastructure Concession Regulatory Commission (ICRC), Chidi Izuwah, will be keynote speakers at the event.
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