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Nigerian Ports And Cost Of Doing Business

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Nigerian businessmen and their foreign counterparts have unceasingly complained about the high cost of doing business in the country. For those of them in the shipping industry, that  cost is becoming unbearable for the simple reason that bringing in goods through Nigerian ports attracts the highest tariff when compared with other ports in the sub region. That may explain why smaller ports in neighbouring countries like Benin Republic and Togo attract more businesses than those in the country. Actually, some ports in the country are virtually idle almost all the year round due to lack of patronage. This is a sad situation as in some countries port activities contribute substantially to their Gross Domestic Product (GDP).

The Nigerian Shippers Council (NSC) that regulates the industry is lamenting this development. At a recent event on how to make Nigerian seaports world class, NSC presented in graphic detail how high cost can and do jeopardise the profitable operations of such an important national resource. The Executive Secretary of the council, Barrister Hassan Bello did not mince words when he asserted that performance indicators set Nigerian ports as the most expensive in the sub-region. For instance, he pointed out that the dwell time – the time cargo remains in a terminal’s in-transit storage area while awaiting shipment by clearance transportation, at Nigerian ports is 40 days while ports of neighbouring countries have a lesser dwell time. Cargo clearing time, the number of days it takes to clear cargo, at Lome port it takes three days, port of Cotonou  seven days; the Port of Durban in South Africa four days and the Port of Mombasa in Kenya six days.

As if that is not bad enough, the demurrage free period- the period of time offered by the Carrier to the Merchant free of charge, covering both demurrage period and detention period, beyond which additional charges such as, but not limited to demurrage and detention charges, will be due to the Carrier, is lowest in Nigeria when compared to other competing nations. In Nigeria it is five days, after five days you will start paying demurrage on your consignment. But the Port of Benin gives 10 days; Port of Cameroon is 10 days, Chinghai Port in China is 10 days.

As at the time Shippers Council was appointed port economic regulator in 2014, terminal handling charge in Nigeria was around N50, 000. In Cotonou Port, it used to be N24, 000; in Ghana, it’s N9, 773. Even then, Ghana has suspended it altogether. Add to the mix the disunity in the facilities  where every other person is on their own, terminal operators do whatever they like, shipping companies do the same; even the government agencies that are making revenue for the nation, are on their own in total disregard of the reality that there is only one regulator in the industry-NSC.

From the foregoing, we cannot but agree with the Council that the only way out is for the government to strengthen the regulatory framework in a manner that will remove the observed bottlenecks for cost- effective and efficient ports to emerge. This also entails that operations at the ports must be eased and government agencies must necessarily work together to ensure that things are done the proper way. Even more compelling, in our view, is the need to upgrade access roads to the ports even if it means declaring a state of emergency in those areas. Also the ongoing automation of the ports must be fully accomplished through the single window so as to reduce the dwell time from 40 days to 10 days.

The implementation of the recommendations of the council, in our opinion, deserves to be given serious consideration bearing in mind the competitive nature of the industry. However, as has been rightly pointed out, the rot of the past years cannot be cleared at the snap of a finger. Attaining world class status is a gradual process if we must get it right once and for all. The fiscal and infrastructural challenges shipping business has continued to face in the country which may result in a prolonged lack of competitiveness are real and must be addressed.

It is pertinent to emphasise that stakeholders at the Nigerian ports are business people with an eye on cost. What they want is port service availability, billing accuracy, response time in terms of bill processing, right price, customer- friendly environment, safety of cargo and availability of port user information. They will only go where these services are on ground.

 

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