In more ways than one, the gridlock and congestion in Apapa, which have worsened in the last six months, are not only making life miserable for residents and business owners in the port city but also hurting and squeezing the real sector and the economy as a whole.
Besides loss of rental income and property value depreciation which are the cross residents have been forced to bear, the Apapa gridlock is the sole reason for the meteoric rise in haulage cost which importers and exporters are contending with, leading to increases in their production costs.
Apapa is home to Nigeria’s two busiest ports – Apapa and Tin Can Island – which together account for about 75 percent of the total export and import activities in Nigeria.
On account of the gridlock, travel time to Apapa from other parts of Nigeria has graduated from days to weeks on a single trip and this is impacting negatively and significantly on businesses, increasing costs, eroding importers’ margins, squeezing consumers and ultimately slowing economic growth.
“Export cargoes are either trapped in traffic jams or stored in transit warehouses in Lagos,” said Pius Ayodele, president, Cocoa Exporters Association of Nigeria.
Akin Olusuyi, president, Cocoa Processors Association of Nigeria, agrees, noting that “shipment delays are making it difficult for exporters to get credit from banks to finance their operations”. He recalled that about 1,760 tons of cocoa butter and cake were held up in the Apapa gridlock some time ago.
For importers, rising haulage cost, which some estimates reckon is higher than the cost of bringing goods from China, is a major concern because of the heavy impact it has on their overall costs.
“In the last 24 months, we have seen over 600 percent increase in haulage cost alone, no thanks to the gridlock and congestion in Apapa,” lamented a business owner whose company is located not too far away from the Tin Can Island Port.
The business owner who craved anonymity explained to BusinessDay that to move their consignment in a 40-footer container from Tin Can Island Port to their office within the same Apapa recently, they had to pay N690,000, up from N80,000 they paid for same size container two years ago.
“We are talking about movement within Apapa; from that you can get a sense of what other importers are going through moving their consignment from here to other parts of Lagos and other parts of the country, especially the Eastern and Northern parts,” the business owner said.
Jon Kachikwu, CEO of Jon Tudy Enterprises, an exporter to the United States, said he used to pay N55,000 to N65,000 for a 40-foot container from his Yaba factory to Tin Can Island Port four years ago, but now pays N350,000. He said agency fees have also risen from N350,000 to N650,000 as a result of the mess in Apapa and Tin Can ports.
A manufacturer who prefers anonymity said he paid N1 million to bring in his container in December 2019, which included N400,000 for transport to his Ojota/Mile 12 factory.
“The commissioner of police has to sign before you move in or move out your container. And this involves money. You have to ‘settle’ the police, the Navy and the Army, otherwise your container will be there for three weeks. But once you pay, your container will be free in one week,” the manufacturer said.
Ede Dafinone, chairman, Manufacturers Association of Nigeria (MAN) Export Group, told BusinessDay that transport per container from his factory in Sapele to Lagos port in 2018 was N195,000, but the cost has gone up to N340,000 as of December 2019.
However, total port cost per container (Grimaldi shipping line, forwarding agent, and government agencies) was N183,500 in 2016, but rose slightly to N189,500 in 2019.
An Ikeja-based manufacturer said he used to pay N60,000 to N70,000 for a 40-footer container to Apapa Port in 2015, but he paid N520,000 in November 2019. He lamented that this has raised his production cost and hit his margins significantly.
In a related case, a truck driver who introduced himself simply as Afis told BusinessDay he came into Lagos from Warri, Delta State, and was yet to enter Tin Can Port after three weeks on the road. That was before paying a bribe.
“I am sure to enter the port tomorrow because I have just paid N170,000 to somebody I was told could help me to move my truck. I will still pay N25,000 when I reach the port gate before I can enter finally,” Afis said, anger and frustration in his tone.
Asked if the man who assisted him was a police officer, a soldier or a member of the presidential task team (PTT), Afis said, “He is not a soldier or policeman, but I don’t know if he is a member of the task team; in short, I do not want to know who or what he is.”
Kayode Opeifa, executive vice chairman of PTT, had told BusinessDay in an interview that the Apapa gridlock has persisted despite all efforts because “corruption is fighting back”. He explained that those who feed fat on the Apapa mess would do everything to frustrate efforts at making it work.
Emma Ameke, a port operator confirmed the haulage increases.
“It has been a big problem these days and the experience in getting to Apapa has become a nightmare. Businesses continue to slide to their lowest level. It takes us almost two weeks to get our containers loaded after finishing with the Customs,” Ameke said.
“Transportation costs have gone up so high because trucks’ turnaround has dropped significantly as a result of the congestion and gridlock. Before now, a truck driver could go on two to three trips a day within Lagos; now he can only do one trip. Outside Lagos, he could do two trips in a week; today he can only do once in a month,” he said.
All these increases are putting pressure on businesses but, according to Ameke, at the receiving end is the economy, which continues to suffer, and the consumer to whom the importer passes on the additional costs.
“Until all these anomalies are addressed, Nigeria will continue to be too expensive a market for foreign direct investment which the economy needs badly at the moment,” he noted. “Ease of doing business, especially at the ports, must be seen as an economic necessity and not political tool for winning elections.”
