How fortune of Lagos, other seaports dipped

In 2006, Nigerian seaports were concessioned to private investors, an action that lifted the fortune of the ports. However, numerous factors within and outside the country have seen a decline in the fortune of the ports in recent times, writes TOLA ADENUBI.

The World Bank’s 2016 Ease of Doing Business Report ranks Nigeria 169 out of 189 countries. One of the indicators, Trading across Borders, which measures port effectiveness, ranks Nigeria 182 out of 185 countries. The efficiency of port operations is a major driver of trade and economic activities across countries. This emphasizes the need for port reforms in Nigeria, which currently adopts a management model where the port authority acts as the landlord as well as the regulatory body for port operators.

Seaports pre-recession

With the concession of ports, Nigeria’s busiest seaport, the Apapa port, witnessed an upsurge in cargo, amassing a total of 1,020,240 tonnes of cargo in 2010. In 2011, the figure increased to 1,268,758. In 2012, the figure kept increasing, this time around amassing 1,368,000 tonnes. Also in 2013, cargo throughput at the Apapa port went up to 1,396,057 tonnes of cargoes.

In 2014, just before recession and subsequent cargo diversions crept in, Apapa port saw the highest tonnage of cargoes, recording a whopping 1,551,540 tonnes.

Within a span of eight years, after the ports’ concession, terminal operators had acquired a total of 1,204 modern cargo handling equipment which was unprecedented in the nation’s maritime sector.

Across the nation’s seaports, which include Lagos Port Complex and Tin Can Island Port, Delta Port, Warri Port; Calabar Port, Rivers Port and Onne Port, both in Rivers State. Operators at the Lagos Port Complex acquired 578 cargo handling equipment, those at Tin Can Island Port acquired 383, Intels and Julius Berger, both operators of Delta Port, acquired 50 and 53 equipment, respectively, making a total of 103, while Calabar Port operators collectively acquired a total of 60 cargo handling equipment.

At Rivers Port, 48 cargo handling equipment were acquired, while the Onne Port acquired 32 equipment made up of 16 each at the Federal Ocean Terminal and Federal Lighter Terminal.

Aside from the increase in acquisition of equipment at the seaports, the ports concession saw to a reduction in the number of days vessels spend at the ports.

As against an average vessel waiting time of about 30 days before port concession, terminals such as APM, Ecomarine, PTML and Intels Calabar have successfully eliminated vessel waiting time to zero while ABTL has 28 days and ENL 14 days as against an average general cargo vessel waiting time of about 45 days prior to concession.

In the area of employment and job engagement, terminal operators were also successful in streamlining stevedore companies, establishing an acceptable manning scale to ensure high productivity, applying direct interview selection, employing dock labours with the joint effort of stevedore contractors under the supervision of the Nigerian Maritime Administration and Safety Agency (NIMASA), eliminating zoning and permanent berth ownership by dock labours, improving salary structure, other welfare packages and capacity building.

Seaport post-recession

By the close of 2014, the falling crude oil price on the international scene and the introduction of the auto policy brought about a decline in the fortunes of Nigeria’s seaports. Many of the terminal operators were forced to declare redundancy due to the economic woes and this reflected by way of drop in cargo throughput at the nation’s busiest ports as tonnage fell from 1,551,540 tonnes in 2014 to 1,317,212 in 2015.

Cargo diversion

The auto policy brought about the first wave of cargo diversion witnessed at the seaports. The policy, which was introduced to enhance the prospect of the Nigerian Automotive Industry Development Plan (NAIDP), brought about new levies on new and used vehicles at the nation’s seaports to discourage vehicle importation.

However, instead of reducing the importation of vehicles into the country, the policy led to an increase in the number of cargoes diverted to neighbouring countries on the West African plain, notably Lome and Cotonou ports. These vehicles were then smuggled into the country via its porous land borders.

Another reason importers abandoned the Nigerian seaports was the increase in the number of government agencies at the ports.

With recession biting harder, agencies of government looked for means to shore up the revenue base of the Federal Government. This led to many of them turning to the ports, thereby making Nigeria’s seaports the most expensive in Africa. “At a point, to clear a consignment, 88 signatures of different officials of government agencies were needed,” Fred Awadia, an importer, lamented.

Diversion of cargoes meant for Nigerian ports to neighbouring West African ports has constituted the major reason for the steady decline of cargoes at the nation’s seaports. Importers and shippers alike have decided to take their cargoes away from the seaports for reasons ranging from excessive charges and levies paid at the seaports and CBN forex restriction on 41 items to duplication of duties by government agencies, lack of effective intermodal means of transporting goods out of the ports and porous borders.

Massive job loss

With barely anything to do at the nation’s seaports due to the incessant diversion of cargoes to neighbouring ports, many of the hitherto thriving terminal operators were forced to declare redundancy due to inability to meet up with their overhead cost.

The terminal operators were forced to hold a series of meetings with the Maritime Workers Union of Nigeria (MWUN) to avert any labour confrontation over the incessant layoff of many of their workers.

From APM Terminal, Ports and Terminal Multi-services Ltd and a host of others in Lagos to Intels, operator of the Warri port in the eastern ports, many workers were forced to leave their jobs as the operators could not continue paying salaries without doing anything.

The dilemma     

Nigerian ports are faced with lingering challenges and bottlenecks ranging from infrastructure shortcomings and policy and regulatory inconsistencies to overlapping functions and duplication of roles among the Ministries, Departments and Agencies (MDAs). The biggest concerns of port users include numerous agencies whose functions overlap and, in some cases, are effectively the same. This duplicity occurs even among major port regulators where, for instance, half of them carry out inspections on imported and exported goods. These inspections take, on the average, five hours to complete compared to a global average of 20 minutes.

Many port users say the policy of the Central Bank of Nigeria that effectively bans importers of merchandise on a 41-item list from accessing foreign exchange in the interbank market is impacting import volumes negatively. Regulators are also faced with obsolete and deteriorating infrastructure which slow down their operations and limit their ability to enforce regulation. One of the biggest complaints of the business community is the protracted procedures involved in clearing goods at the ports. For instance, the issuance of the Pre-Arrival Assessment Report (PAAR) by Nigeria Customs Services (NCS) – designed to take less than six hours now takes over a week in most cases. The issuance precedes other cargo clearance procedures and hence constitutes a major drag in the clearance procedure.

The state of infrastructure surrounding the ports constitutes a significant drag in port operations. The deplorable state of roads, the lagging water transport system and inadequate rail system have combined to make the evacuation of cargoes from the Lagos port an unbearable task.