• Thursday, December 07, 2023
businessday logo


‘Nigerian ports need economic regulator to check excesses of service providers’


Cost of doing business at the port

The major problem in Nigerian ports is the absence of a regulator and inadequacy of port administration. This has afforded the service providers the opportunity to siphon a lot of money from the importers. Take the collection of container deposit by shipping companies. This has been an issue that importers and their clearing agents have been contending with, and this generates billions of naira to shipping companies because most of them do not refund the container deposit to importers. About 30 percent of the container deposits collected in the port today are not refunded.

Due to the absence of commercial regulator, terminal operators increase their charges at will because no government agency has the power to regulate them. Currently, any 40-ft container that stays about two weeks at the port pays N12,000 per day and this amounts to N168,000 as demurrage on rent (storage charge), which the importer pays to the terminal operator alone; this is aside from the demurrage the importer is also expected to pay to shipping companies.

The bottlenecks importers face in the course of clearing their consignment result to delay in cargo delivery which at the end of the day translates into cost for the importer. Most times the delay may not be the fault of the importer but that of the service providers, but the government is not helping the situation as it is not doing anything to set up a regulator. When Ngozi Okonjo-Iweala, minister of finance, visited the port two years ago to set up a committee, with the responsibility of harmonising the 24-hour cargo clearance, many stakeholders came up with some suggestions and recommendations on how the committee can achieve its objectives, but none of those suggestions has been implemented.

The importers and we clearing agents on our own do not have what it takes to fight these service providers but if government sets up a regulator, the service providers will have no option but to abide by the rules. In our neighbouring Cotonou port, it takes an importer about seven days to clear a cargo and take it out of the port, but here it’s a different thing altogether.

Demurrage charges on consignments 

Nigeria has three days free storage charges for importers after which the importer is expected to pay demurrage irrespective of the number of days the cargo stays at the terminal or the days it takes the importer to clear the cargo. All these are loopholes created to siphon money from importers. Ideally, the service providers are supposed to give importers 14 to 21 demurrage-free days. Therefore, I suggest that shipping companies give importers 14 demurrage-free days while terminal operators give seven free days. This is because importers face a lot of clearing bottlenecks that cause delay, and this most times comes from terminal operator, shipping company, Customs or destination inspection service providers. They come in the form of system and server failure, public holidays, poor cargo handling equipment, etc.

In the port today, demurrage on storage comes in three phases such that after the first three days some terminals charge N5,000 per day for a 40-ft container, after which the person is charged N10,000 while the importer pays N12,000 as the days go by.

Economic implication

Nigerian port has the potential of being the highest revenue earner for the economy. If the port system is properly harmonised, the country can generate a lot of money from the port such that oil revenue will become a secondary income earner for the nation. Globally, it has become a known fact that doing business in Nigeria is very costly as importers pay over 100 percent of what they can pay in any port in Africa. This is why importers throw back such cost to the end user and to the masses as prices of goods continue to skyrocket and inflation continues to double. The World Bank report on the long cargo dwell time in African ports which blamed this on rent-seeking as against fast track cargo clearance is true. We know about this but nobody seems to be doing anything about it. And the bad thing is that many of these terminal operators do not retain these profits here but rather remit them to their parent companies abroad.

Economic regulator

The problem is that government lacks the political will to harmonise Nigerian port. The port is government property and government is very much aware of the revenue generated from the port, yet it finds it difficult to take the bull by the horn and pass the Ports and Harbour Bill as well as the Transport Commission Bill, which will institute an economic regulator in the port. The Nigerian Ports Authority (NPA) is the landlord to the terminal operators, yet it does not have the power to enforce any law or streamline the charges imposed on importers by the terminal operators. It will be the job of the economic regulator to listen to the plight of the shippers and curb the excesses of the service providers.

24-hour cargo clearance

The 24-hour port operation has not been feasible as there has been a lot of bottlenecks – security and whole lot of other issues. So, the government needs to address these bottlenecks before 24-hour port operation can be effectively realised.

Importation decline

There is serious decline in imports such that the total TEUs brought into the country last year decreased by 10 percent and we do not know what that of this year will be. There is decline in movement of ships coming into Nigerian ports. This is why we stakeholders have been saying that doing business in Nigeria is very costly. Here, it takes a longer time to clear a container out of the port and this does not encourage Nigerian importers to continue to use Nigerian ports as destination port for their imports. Over 40 percent of Nigerian-billed cargo are being diverted to ports in the neighbouring countries, which is why our importation keeps declining.

This also has a lot of impact on the clearing and forwarding business because it takes its toll on the volume of jobs that we do. Also, the late approval and implementation of annual budget does not help importers to plan their business for the year. The Customs tariff, which has expired last year, is still in use. All these deter importers from making decision to avoid the situation of importing a particular good only to be informed that the tariff regime has been changed.