Posted on January 16, 2018
Punch NG
Most of Nigeria’s economic woes are self-inflicted. Rather than adopt the rational option of a private capital-led business model that is proving successful around the world, the government is entrenched in different economic sectors, most of which are poorly managed. The stunted operations of the Nigerian Ports Authority epitomise this abnormality. This operating template has not only rendered the Nigerian ports an embarrassing relic, but facilities that are about to lose further ground to their counterparts in West Africa, which are modernising and taking away Nigerian jobs and revenue.
The latest concern now is the imminent deal by Benin Republic to undercut Nigeria’s maritime trade, essentially by diverting traffic (cargoes) to its own port in Cotonou. To concretise this plan, it has inked a pact with Belgium’s Port of Antwerp International to expand and manage its port. The outsourcing will modernise the obsolete infrastructure and expand the freight volume of the Cotonou port beyond its current 12 million annual tonnes.
Benin Republic is doing nothing out of place; it is just sensibly following a global trend of government privatising public entities to boost jobs, income and development. However, Benin’s strategic step ought to be an eye-opener for the Muhammadu Buhari administration.
Established in 1955, the NPA’s largest operations – at Apapa and Tin Can Island in Lagos – are insignificant, even among the ports in Africa. Its ports in Calabar, Onne, Port Harcourt and Warri lack the requisite facilities and are thus grossly underutilised. They are a mesh of delays and inefficiency for maritime business practitioners because of shabby infrastructure, corruption, excessive charges, duplication of government agencies and absence of modern technology.
Goods contracted for export rot away at the ports; ramshackle associated roads and excruciating gridlock have annoyingly become enduring. A 2017 report by the Lagos Chamber of Commerce and Industry entitled, “Nigeria: Reforming the Maritime Ports,” estimated an annual loss of over N1 trillion to inefficient port operations. “About 71 per cent of the time spent to import and 64 per cent of the time spent to export are linked to delays at the ports,” the report lamented. Aliko Dangote, Africa’s richest investor, said that the delays cost Nigeria N20 billion daily (or N7.3 trillion annually).
As a result, none of Nigeria’s publicly run ports makes the top eight in Africa, a 2015 report by the Bremen-based Institute of Shipping Economics and Logistics stated. Economically, this is illogical. Valued at $405.08 billion by the IMF, the Nigerian economy has the highest gross domestic product in Africa. It is an anomaly not to have a maritime hub to back it up.
Since the ports are uncompetitive, Benin Republic and other ports in Togo, Ghana and Ivory Coast are creating the maritime structures to take advantage of the lacuna through private capital. Why is Nigeria not doing the same? A 2017 study conducted by the Organised Private Sector stated that cargoes meant for export spend up to eight weeks before they could be shipped. In reality, business at the ports is rudimentary. In the second quarter of 2017, Apapa processed 123,297 Twenty-Foot Equivalent Units (containers); Tin Can handled 175,714 TEUs, the NPA said. Combined, all the Nigerian ports handled 342,640 TEUs in Q2. This is very low compared with global standards.
The World Shipping Council notes that Shanghai Port (China) processed 36.5 million TEUs in 2015, closely followed by Singapore (30.92 million TEUs) and Jebel Ali, United Arab Emirates (15.60 million TEUs). Europe’s biggest port – Rotterdam, Holland – handled 12.23 million TEUs that year with Antwerp, Belgium, processing 9.65 million TEUs.
All efforts by the government to redress the chaos have failed. Trying to end the overlapping of functions, the erstwhile Goodluck Jonathan administration evicted 10 public agencies, including the Standards Organisation of Nigeria and the National Drug Law Enforcement Agency, from the ports in October 2010. The step, though right, broke down shortly thereafter because the political will to sustain the best practices was absent. Also, nothing concrete has been done about policy inconsistencies and incidence of infractions. For some time, only two scanners have been working at the ports. The manual system of vetting is in place. This is a national embarrassment.
These anomalies encourage corruption and economic losses. Dangerously, they undermine the country’s security as unscrupulous racketeers exploit the loopholes to import lethal arms. Four of such arms consignments were intercepted in Lagos in 2017. Apart from losing maritime business to its neighbours, the delay at the ports entrenches smuggling at the porous borders. A 2011 World Bank report stated that assorted goods worth $5 billion were smuggled into Nigeria through Benin Republic annually.
Port efficiency is highly correlated with handling costs. Countries with inefficient seaports have higher handling costs. To improve the performance of container ports, a World Bank report says countries should encourage private sector participation within a well-regulated and administered landlord port model; strengthen the governance of port authority boards; and promote competition between and within ports through transparent and competitive concession bidding. Through improving its ports, Nigeria could boost its exports to create a stellar economy, better jobs, and an improved standard of living.
The Muhammadu Buhari administration should wake up. As other insightful governments have done to attract maritime investments, Buhari’s team should give a serious thought to their privatisation. To enable its ports compete with the best in the world, the Indian government last November agreed to sell a 73.47 per cent stake in the state-owned Dredging Corporation of India, with international investors led by Abu Dhabi’s National Marine Dredging Company keen to seal a deal.
Similarly, Australia, which is in the midst of a 100 billion Australian dollars privatisation programme, sold the country’s busiest port in Melbourne for $7.3 billion to a global consortium backed by the China Investment Corporation in 2016. In 2013, two ports in Sydney were privatised for five billion Australian dollars. We recommend that Buhari abandon his statist, sentimental attachment to these and other assets. He should look at the massive benefits of privatisation before Nigeria runs out of options.
Source: Punch
