• Thursday, March 28, 2024
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Nigerian economy-challenges and solutions in the maritime sector

Nigerian economy

Nigerian economy heavily relies on external trade, majorly facilitated on reliance in the maritime sector, through importation of raw materials, equipment and machinery needed by manufacturers.The sector is the backbone that facilitates trade, supply chain and economic success.

It includes enterprises engaged in designing, constructing, manufacturing, acquiring, operating, supplying, repairing and maintaining vessels. The sector activities also involve shipping lines operations, stevedoring, customs brokerage services, shipyards, dry docks, marine railways, marine repair shops, shipping, freight forwarding services and all other similar enterprises.

More than half of world merchandise trade are carried by sea, making the sector very pivotal to economic development. Without a viable maritime sector Nigeria’s economy would be very poor. The sector is the cheapest means of moving goods in large bulk, it makes landing costs of cargoes to be lower by carrying cargoes carried over long distances.

The sector is very strategic to the Nigerian economy, especially in the areas of creating job opportunities, facilitating trade, commerce, revenue generation, promotion of tourism, enhancement of industrial growth, economic development, international relations, social-political harmony, and territorial protection etc. It embraces all maritime related business activities within the nation’s maritime sector.

It’s areas of operation also include fishing, towage, underwater resources and onshore activities, which includes port activities, shipping, ship construction, repairs and maintenance activities. The sector is fundamental to our nation’s economic growth and very strategic to international trade, with seaports serving as an interface to where ships berth and anchor to load or unload cargoes.

Global ports handle over 80 percent of global merchandise trade in volume and are key nodes to global transport chains because they provide access to markets, support supply chains that help link-up consumers and producers. With this, it means we must continually innovate to make the sector flexible and competitive.

Trading Across Border, a world bank indicator that measures efficiency of ports, ranked Nigerian Ports among the poorest ports globally at 183rd position out of 185 countries in 2017, this is poor considering the potentials of Nigeria. Present times have shown that countries with modern ports are leading in economic development. It is therefore necessary for us to set politics and nepotism aside, while developing strategies and policies that corroborate with Maritime legislations and regulations that emphasise on  the upgrade of the Nigerian maritime  sector for excellence in areas such as operations, marketing and management as well as digitisation, environmental laws, shipping container dimensions, new technologies, warehousing and the use of modern handling equipment as part of its key performance indicators and competitive advantage in the industry.

With globalisation and the evolvement of logistics and supply chains functions, seaports role has been altered to integrate manufacturing and distribution. Ports globally are evolving and constantly strategising on ways of improving efficiency, institutional reforms, efficiency, marketing strategy, training, customer service, optimisation of operations, cost reduction, partnerships, trade promotions, security, safety, resource conservation, environmental protection, social inclusion, sustainability etc.

 It is interesting to state that just as COVID-19 pandemic has wreaked havoc on economies globally and also affected the sector as demand and supply continue to shrink due to countrywide border restrictions, most governments have had to introduce stimulus and palliatives to cushion the effect of the pandemic.

 

The sector is time sensitive and needs to be given priority attention by the government to create economic benefits for customers and stakeholders, for instance full privatisation is the modern strategy adopted by nations globally to boost port performance because international trade is highly dependent on waterways.

There is a need for Nigeria to partner with nations such as the Netherlands, Singapore, United Arab Emirates because these countries understand the importance of trade through waterways and they have hugely invested in building modern structures that can help channel trade as a source of income and also extend it to landlocked countries. Nigeria needs to adopt these strategies as obtained in the best ports globally to boost its port performance.

It is interesting to state that just as COVID-19 pandemic has wreaked havoc on economies globally and also affected the sector as demand and supply continue to shrink due to countrywide border restrictions, most governments have had to introduce stimulus and palliatives to cushion the effect of the pandemic. A case in point is the introduction of a $110 million freight service by the Australian Government to enable the agricultural and fisheries sector in Australia to export their high-quality produce and for them to reconnect with their international customers.

The International Freight Assistance Mechanism (IFAM) is helping Australian agricultural and fisheries producers that have been heavily impacted by pandemic containment measures, but unfortunately Nigeria a developing nation that also suffered similar loss across board cannot afford the requisite support that can help sustain businesses in the sector.

Although, Nigerian governments in the past made efforts with the private sector and its developmental partners to reposition the sector, it seems more efforts still need to be done, as there seems to be no headway and this is partly why the government’s projection to generate N2trillion from the sector cannot be achieved.

Nigerian government in the past made efforts through different interventions such as the 2007 ports reforms led by Ngozi Okonjo-Iweala attempted to resolve the challenges of infrastructure shortcomings, policy, regulatory inconsistencies, overlapping functions, duplication of roles among MDAs, high incidence of corruption among port users, operators and government officials. All these affects the ease of doing business at the ports, as well as repositioning the ports through the National Action Plan on cross border trading coordinated by the Presidential Ease of Doing Business Council (PEBEC) and other series of Presidential Executive Orders targeted at ports improvements, our ports still continue to lag behind.

With all the regular delays of imports and exports processes, unofficial charges, human interface, technical breakdown and security concerns predominant, our ports are classified among the worst ports globally and this is the main reason why importers and exporters prefer neighbouring Ports such as Cotonou, Cameroun, Togo, Ghana. Giving rise to smuggling and other corrupt practices our nation continues to lose resources due to these economic leakages in the system.

There is a need for the government to restructure the maritime sector and adopt alternative strategies that can boost growth in the sector. For instance Denmark’s strategic  investments in offshore energy activities in Ocean Wind farm is a reference project we can emulate, as the Danish government generated 407 megawatts(MW) in its energy sector that covered its yearly electricity consumption of around 425,000 Danish homes in the power sector, this is a good area that  Nigeria can partner with Denmark to boosts its sector.

Also, the need for Nigerian Ports Authority to look outside the box will make our ports competitive. Our Port has great potential to be one of the best globally based on our population, oil reserves and other natural resources. There is also a need for our seaports to diversify investments to areas outside ports activities, just like Shanghai International Port Group (SIPG) and the PSA Corporation at the Ports of Shanghai and Singapore respectively, they all have investments and businesses outside the Ports domestically and internationally.

Additionally, investments in other Ports will go a long way in transferring knowledge and growth, if we invest in equity in other efficient Ports globally. For example, the 2009 deal of China’s COSCO Pacific signing a 35-year lease contract worth $4.2 billion to take over the management of the port of Piraeus in Greece and the ICTSI bid for Portek in June 2011 was a very strategic initiative and viable economic model.

Finally, we can also adopt implementation of automated monitoring systems to block economic loopholes in our ports to improve transparency, efficiency and customer service, which in the long run would give rise to strategic marketing and port operations that would translate to improved revenue generation to our economy.