The Nigeria’s maritime sector has recorded many giant strides in the last few years. In this interview with TELIAT ABIODUN SULE and CHIJIOKE ONYEOGUBALU, the Group Executive Vice Chairman and Founder of SIFAX Group, DR TAIWO OLAYINKA AFOLABI, one of the nation’s leading wealth creators and employers of labour, identified the challenges of the maritime sector and also explained how SIFAX Group became a leading maritime firm in Nigeria. He further suggested ways on how the full potential of the sector could be tapped. Excerpts:
The Nigerian maritime business is governed by several laws. From your perspective as a major stakeholder, what are the laws and policies the FG needs to put in place to make the maritime business environment friendly to operators?
As a company, we have always advocated that the maritime sector can be a major earner for the country. The sector has the capacity to contribute more to the GDP in view of the dwindling oil revenue if good policies and laws are put in place. First, there should be a strict implementation of the Cabotage Law. The implementation of this law has not been detailed. If this law is well implemented, many Nigerians and indigenous companies will be involved in several businesses in the maritime sector and this will curb the problem of huge capital flight we currently experience in the industry.
The disbursement of the Cabotage Vessel Financing Fund is also key to players in the industry. As of last year, the fund was put at about N44 billion naira. These funds will encourage and help businesses in the maritime sector grow. The government should automate many processes at the ports which are still being done manually. Several agents have to run from one office to the other to sign several documents which delay clearing process and encourage corruption in the system.
The Ports & Harbour Bill also needs to be amended to accommodate modern reality. Not having the right industry legislation in place has made Nigeria to lag behind in being a competitive maritime hub in West Africa and beyond. Although the bill has scaled through the second reading at the National Assembly, it needs to be passed as soon as possible.
There is a need to deeply entrench the Public Private Partnership (PPP) policies in the sector to realize its full potential. When the government brought in the private sector to take charge of the daily running of the terminals, it has yielded great results in the last eleven years. There are still so many things that government needs to hand off. For example, the provision of scanners at the ports, the management of truck parks, the provision of infrastructures, and many more.
There should also be a deliberate step towards reducing the rising port costs and charges. At the Taiwo Afolabi Annual Maritime Conference which was organized in my honour by the Maritime Forum of the University of Lagos, it was revealed that a typical shipping company debit note in Nigeria contains about nine different charges which include – shipping line/agencies charge, container cleaning/maintenance, container deposit, MOWCA charge, NIMASA sea protection levy, MOWCA Fee, freight levy, document release, demurrage charges, NIPOST Stamp Tax and Value Added Tax (VAT), all these are some of the issues that should be worked on to make the sector more friendly and attractive.
What are the major challenges of the maritime sector and how did you overcome them?
The maritime sector is fraught with many challenges. We are helpless against most of these challenges; we have only tried to find a way around them.
The first challenge is the payment of lease fees in dollars. When we took over in 2006, exchange rate was between N121 to N136 but today exchange rate is put at N306 to the dollar. We have through the umbrella body of the terminal operators advocated for the payment of the fees in Naira but these appeals have fallen on deaf ears. So we have to keep pushing ourselves to pay these fees.
The dilapidated infrastructures are another challenge facing the sector. There are no good roads in and out of the ports. Transfer and moving of consignments out of the ports take weeks and even months. We have advocated for reconstruction and declaration of a state of emergency on these roads. What we have done to overcome this challenge is to help our numerous clients take their consignments to our off docks for a token fee where they can clear them and transport them easily. As much as possible, few of our subsidiaries also do some palliatives on some portions of roads around Apapa.
The absence of scanning machines at the port is also delaying and hindering the movement of consignments out of the ports. We cannot do anything to this challenge except the government accepts our proposal. The Nigerian Customs have to do 100 percent physical examination which takes time and have increased theft at the ports. Items taken out of the containers are never complete when loading it back. We have urged the government to make the provision of scanners for the maritime sector a public-private partnership initiative where each terminal operator provides the scanners and maintain them but those scanners will be operated by the Nigerian Customs.
There is this concern that foreign players get the largest chunk of the nation’s maritime business, how best can the FG address this?
We are happy that the government has passed the local content bill. This bill was not there when the ports were concessioned which gave some advantages to foreign players. The bill has changed the face of the nation’s maritime sector by encouraging and bringing on board Nigerians who are now participating actively in the industry.
As I said earlier, NIMASA, one of the key agencies in Nigeria, needs to make sure the Cabotage Law is strictly enforced. Like we all know that securing funding is usually very easy for the foreign players, we urge that the CVFF be released to the Nigerian maritime players to enhance their productivity. The Nigerian banks are still very reluctant in the provision of supports, especially, credit facilities to players in the industry, particularly the small ones. The industry is huge and has unlimited potential but these opportunities can only be unlocked when financial institutions understand the sector and the important roles they are expected to play in the equation.
We at SIFAX Group are a best example of an indigenous company that has grown into a big brand because we had the right investment support that has helped us grow. At first, so many people did not believe that the business will yield results but with the insightful vision of the leadership team of the company, we now compete favourably with the foreign players.
How much of the market share of the Nigeria’s maritime business does SIFAX control?
SIFAX Group controls a significant share of Nigeria’s logistics and transport sector. There are not many organizations in the country that offer a bouquet of services across the logistics value chain. From port terminal management, shipping, clearing and forwarding, warehousing, haulage, off dock services, stevedoring, aviation ground handling, passenger handling, cargo/mail handling, ramp handling, among others, SIFAX Group is positioned strategically to function as a one-stop multimodal company that delivers complimentary services to the delight of our clients.
What that means is that whatever the logistics needs of our clients, whether basic or complex, right from the point of origin to point of delivery locally, we have developed the capacity to attend to such demands.
This has given us a lot of leverage with our clients as we take the stress off them. They just signed into our comprehensive package, instead of engaging different agencies and companies to handle different services. This has entrenched our company in the logistics industry as a leading player.
To answer your question, SIFAX Group has a large share of the market and the good thing is that we are not even resting on our oars as we are currently reviewing our services and processes to deliver a better value. We are currently recalibrating our vision, mission and corporate strategy to be able to stand far above competition.
What is the future outlook for the nation’s maritime business?
The future is bright for the maritime sector. We are expecting that very soon deep water seaports will begin to spring up in Nigeria so that large vessels will begin to call at the nation’s waters. Few of them are nearing completion in Lekki and Akwa Ibom.
A key area where there is a very positive outlook is in the export business. We are beginning to see a great improvement with various policies of the present government maturing. There is a steady rise in the export of various agricultural produce and this will certainly have an impact on the maritime industry.
Investment in port infrastructure will certainly improve the fortune of the industry. There will be better revenue from the sector to the government coffers as businesses flourish again. Better infrastructure and friendly charges will attract businesses back to the industry, especially from neighbouring ports. Once adequate and good infrastructures are put in place, the Apapa and Tin Can ports will begin to surpass its revenue expectations.
The unique thing about the maritime sector is that there are so many ancillary businesses that help the sector functions. The sector provides vast windows of business opportunities in several maritime and marine-related activities that offer commensurate returns on investments to potential investors. But the infrastructure and friendly environment must be in place for these businesses to thrive.
The range of available business opportunities include, but are not limited to, port and terminal operation, shipping, stevedoring, ship brokerage services, marine insurance, ship supply and ship chandelling. Others are warehouse facility management, haulage and logistics, maritime law consultancy services (Admiralty), advertising and marketing, security and safety services, etc.
Where do you see SIFAX in the next five years?
We are currently embarking on a corporate restructuring which has culminated in an ambitious five-year strategic business plan. The restructuring code named “Quantum Leap” will focus on the entrenchment of a better work culture and aggressive expansion plan. We are also looking at how to achieve efficiency in our service delivery.
Our expansion plan includes exploring port terminal management opportunities both locally and in some African countries. Last year, the company won a competitive concession bid for a port terminal at Warri Port. The terminal was handed to us few months back and we are currently working hard to put the facility in top shape so we could open our doors for business.
Our new subsidiary, Ocean & Cargo Terminal Services Limited will operate this new business in Warri. This will certainly increase our throughput and ultimately, in the long run, our revenue base.
We have also diversified into the financial services sector. We just birthed a new subsidiary, Sky Capital and Financial Allied International Limited. It is the financial services arm of the Group. It was established as an investment and asset management firm to offer wealth creation opportunities through a unique blend of traditional investment management and alternative investment services. We have also acquired stakes in few banks in Sierra Leone and Gambia.
Our hospitality subsidiary, Mac Folly Hospitality, is currently building a 250-bed Marriott Hotel at the heart of Ikeja. It is a multi-billion naira project that will revolutionize hospitality business in the country. This will be completed by the end of 2019 or early 2020.
The aviation ground handling subsidiary, SAHCO Plc, which was listed on the Nigerian Stock Exchange few weeks ago, is also expanding to offer bespoke travel and tourism services.
With the Quantum Leap project, SIFAX Group, in the next five years, is looking at over 300% growth in revenue, more international expansion, better service delivery and more service offerings.
Taiwo Olayinka Afolabi, the Chief Executive Officer (CEO) of SIFAX Group, a multinational conglomerate, was born in Ondo to the family of Chief & Chief (Mrs.) Samson Afolabi. A native of Idokunusi Ijebu in the Ijebu East Local Government Area of Ogun State, he started his educational pursuit at Ansar Ud Deen Primary School, Ondo and thereafter, proceeded to Baptist Grammar School, Ibadan, where he obtained his West African School Certificate (WASC).
His quest to attain high level of academic excellence and leadership in advocacy led him to the University of Lagos, where he obtained the degree in Law. He became a member of the noble profession when he was called to the Nigerian Bar by the Body of Benchers on Wednesday, November 4, 2009. He later obtained a Masters degree in International Law and Diplomacy from the same university.
He began his professional career with a shipping company, Nigerian Express Agencies Limited, where he distinguished himself and rose to become the Head of Operations. With the zeal of entrepreneurship burning in him, he left the company in 1988 to establish what has now turned to a big conglomerate, SIFAX Group, a business interest with diverse investments in Maritime, Aviation, Haulage, Logistics, Oil & Gas and Hospitality, among others.
From a little beginning, the company, which started as a freight forwarding agency in Lagos, Nigeria, currently operates across the world with presence in the United States, United Kingdom, Ghana, Gambia, Sierra Leone, Djibouti, etc.
Some of the Group’s subsidiaries include Ports and Cargo Handling Services Limited, concessionaire and operator of the Terminal C, Tin Can Island Ports, Apapa Lagos; SIFAX Off Dock Limited, a bonded terminal operator; SIFAX Stevedoring Limited; SIFAX Haulage & Logistics Limited; SIFAX Marine Services Limited; Skypower Aviation Handling Company Plc, an aviation ground handling company, Sky Capital and Financial Allied International Limited, Mac Folly Hospitality Limited, among others.
With about three decades of rich entrepreneurial experience, Dr. Taiwo Afolabi, through the dint of hardwork, foresight, resilience, vision and knack for excellence, has emerged not only as one of the leading business icons in Nigeria, but also reckoned with across the world.
No doubt his wealth of experience, organizational prudence and business ingenuity have remained invaluable assets to SIFAX Group, which has become a leading player in the Nigerian economy. The company, alongside its subsidiaries, has generated both direct and indirect employment for thousands of eligible Nigerians.
Afolabi is a seasoned maritime consultant and a Fellow of many professional bodies including Nigerian Institute of Financial Management (NIFM), Institute of Freight Forwarders of Nigeria (IFFN), Institute of Directors (IOD), Certified Institute of Shipping (CIS) and the Chartered Institute of Arbitrators of Nigeria.
He has attended several maritime and aviation-related trainings both locally and internationally on port operations, aviation ground handling operations and management.
Due to his rich experience, Afolabi is a sought-after speaker and facilitator at various industry conferences and mentoring programmes.
Aside being renowned for his business acumen, Taiwo Afolabi has also established a reputation as a public-spirited individual. His philanthropic philosophy has driven him to give hope and support to many public causes. The major focus of this philanthropic initiative is education, where many schools, from primary to tertiary level have received immense support and assistance.
Few of these interventions include a 1,000 capacity lecture theatre at Ladoke Akintola University, Ogbomosho and an 18-seater Toyota Hiace bus donated to the medical students association of the Obafemi Awolowo University, Ile-Ife, Osun State.
As a mark of recognition of his outstanding achievements and invaluable contributions to nation building, he has been conferred with various honorary doctorate degrees by four universities, including Ladoke Akintola University, Ogbomosho, Oyo state, Cornerstone University and Theological Seminary, Jerusalem, Israel and USA, European-American University, Dominica and Commonwealth University, Belize.
Dr. Taiwo Afolabi is also a recipient of over thirty individual awards from diverse organizations, including the 2014 Business Person of the Year which was conferred on him by one of Nigeria’s leading newspapers, Daily Sun.
The Federal Government has also recognized the great contributions of this Ogun-state born business icon. He is a recipient of the Member of the Order of Niger (MON).
The accolades are not restricted to Nigeria alone. He is also the Honorary Consul-General of the Republic of Djibouti in Nigeria.
He is a member of the Institute of Directors Nigeria; Ikoyi Club 1938; IBB Golf Club, Abuja; the Building Committee of the Nigerian-British Chamber of Commerce and Industry, amongst many others. Dr. Taiwo Afolabi is a sports lover, who enjoys watching and playing football. He is happily married with children.
