• Saturday, July 13, 2024
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Nigerian ports require cost reduction, tariff review to gain from border closure

Nigerian ports

For the Nigerian economy to benefit from the border closure by the Federal Government, the country’s seaports must reduce the cost of doing business, review duties placed on imports like vehicles, and improve on ease of clearing cargo at the ports.

A cross section of shippers who spoke to BusinessDay said taking the above measures would help to address some of the reasons Nigerian importers divert their imports to ports in the neighbouring countries and make the nation’s ports attractive to do business.

They said automating cargo clearing processes and ensuring the use of scanners in the inspection of cargo at all the ports are essential in driving ease of cargo clearing and cost reduction for shippers.

President Muhammadu Buhari on August 21 announced the closure of Nigeria’s land borders with Republic of Benin in order, he said, to check the menace of smuggling, especially of rice.

While the policy has largely been viewed from the perspective of its negative impact, shippers say it can also benefit the nation’s economy if the right actions are taken.

Jonathan Nicol, president, Shippers Association of Lagos, said Nigeria needs to first simplify all import adjustment policies and reduce import duty on goods and services in the country.

“The cost of using Nigeria ports is excessively high due to excessive pursuit of revenue by government agencies. This should be reversed. The level of corruption in clearing of cargo is alarming and has indeed gone out of proportion.

Therefore, there is urgent need to address all aspects of human contacts in the ports,” Nicol said in a telephone interview with BusinessDay.

Describing multiple examinations of cargo by various units of the Nigeria Customs Service (NCS) as a major bureaucratic bottleneck that causes delay and adds to cost, Nicol said government is losing out on the Customs External Tariff (CET) regime as bulk cargo is being discharged at neighbouring ports as final destination. This, he said, necessitates review of the CET regime.

He said the government must begin to penalise people for organised financial crimes like encouraging smugglers, and Customs should be held liable for the porous state of the nation’s land borders.

He pointed out the need to introduce accelerated dispute resolution in Nigerian courts including the Supreme Court. The absence of this, he said, has chased away viable investors because of inability of courts to resolve disputes quickly.

“Nigeria Customs Service should perform their duties as service providers and not as military outfit that intimidates the trading public with sophisticated guns. Customs and Excise Management Act (CEMA) should also be amended to remove Customs officers from Nigerian highways,” he said.

Only recently, APM Terminals Apapa, operators of Nigeria’s busiest container port, raised alarm over danger of looming congestion in the nation’s port business due to the presence of overtime and abandoned containers.

“If these containers are not cleared by customers soon enough, the expected volume increase due to festivity and border closure could lead to high yard density which could impact on berthing of vessels resulting in vessel queues,” the terminal operator said.

Nicodemus Odolo, a trustee member of Shippers Association of Lagos, said the high cost of doing business in Nigerian ports is the reason Nigerian-billed cargoes are being diverted to neigbouring West African ports from where such goods are brought into the country through the land border.

“These ports have cheaper tariff on imports and services. This is why shippers are going there. The main problem of Nigerian port is corruption and existence of multiple checkpoints, where cargo owners are forced to pay money at each checkpoint,” he said.

If care is not taken, Odolo said, congestion may begin in Nigerian ports within the next two months because goods that usually pass through the border are now being routed through the ports.

“Currently, to go into the port to pick cargo, trucks queue on the road for close to two weeks due to the Apapa gridlock. This adds cost for the shipper that loses his or her container deposit charges to shipping companies for demurrage over delayed cargo clearing,” he said.

Tony Anakebe, managing director, Gold Link Investment Ltd, said the rise in import duty on vehicles was the major reason many Nigerian importers abandoned the nation’s ports for Cotonou and Lome ports.

“For an importer to bring in cars through the ports, he will pay 35 percent duty and 35 percent levy, amounting to a total of 70 percent. To attract more vehicular imports through the port, government needs to review the current import duty on vehicles,” he said.

Anakebe said the hiked duty was meant to discourage importation of cars and increase patronage for Nigerian-made cars as predicted in the 2013 National Automotive Policy, but this has failed to make impact on the nation’s auto industry.
“The policy drove car imports and sales business to the neighbouring Benin Republic, thus the need to announce a new vehicle import duty regime that would revert to 10 percent and retain levy on 35 percent. This would automatically increase patronage for Nigerian ports and make car smuggling across borders unattractive to Nigerians,” he said.