Nigerian ports’ poor performance during IMF inspection
After an abysmal outing by Nigerian seaports during an IMF inspection recently, SAMSON ECHENIM writes that genuine and clear-cut trade facilitation programmes must be entrenched at the country’s ports to ensure reduced cargo dwell time and general smooth trading.
The International Monetary Fund (IMF) team that visited the seaports in Lagos had come and gone and the port authorities and other agencies, as well as private investors responsible for port infrastructural development had also forgotten about the visit and had moved on with business as usual.
However, a responsible port authority and investor should be bothered about the very poor performance of the Lagos ports inspected by the IMF team.
During the visit to West Africa’s largest container terminal, APM Terminals, Dangote Group’s Greedview Development Terminal (GDNL) in Apapa Port and PTML Terminal in Tin Can Port on February 1, 2020, the IMF identified absence of a national single window platform, absence of scanning machines for Customs operations and poor port access roads. This was worsened by congestion inside the ports, occasioned by inadequate port infrastructure and poor management of empty containers.
Amine Mati, IMF mission chief and senior resident, representative for Nigeria African Department revealed that the delegation from IMF were on the visit to inspect the port activities and determine the challenges, the priorities and policies put in place by the federal government.
“We have seen the port congestion and noted that the clearance time still remains challenging. We are trying to determine the different policies and priorities put in place, particularly the scanners, national single window is very important to accelerate the process and the condition of roads outside the port is also important for efficiency increase,” he said.
“The Nigerian port is challenging as the stakeholders and agencies are recognising, some of the challenges remain logistics, the scanners, the single window clearance process, all needs to be accelerated so that goods can be discharged quickly. This is part of our field visit, we carry out annual check up of the economy to determine the performance and challenges. We are also meeting with the government, private sectors and so on. Our report would be published after March 30th” he added.
Indeed, Nigeria should be concerned about what goes into the IMF report concerning the country’s business environment, especially now that the country is working to attract more foreign direct investments.
According to Hassan Bello, executive secreatry/CEO, Nigerian Shippers’ Council, Nigerian ports attract 40-60 percent of all cargoes coming to the Central and West African sub-region.
He however lamented that twelve years after the ports were concessioned to private operators, there is still lack of efficiency at the ports.
Bello could not have agreed less with the IMF team, which he hosted and took round the ports. He bemoaned a customs system, where 100 percent of importations undergo physical examination.
“As we move to through the ports, you see that we lack efficiency at the ports. The ports are private sector driven, having been concessioned to private investors about 12 years ago because we believe that the private sector should lead. However there are logistics problems, one of which is infrastructure,” Bello admitted.
“What we are doing now is about 18-20 days cargo dwell time, but we want to reduce it to seven. The ship turn around time also is 4.1, but we also want to reduce it further; we want to attract more cargoes here, not only for imports but also for exports and that is the whole issue,” he told the IMF.
Ease of doing business at the ports planned to fail
On May 18, 2017, Vice President Yemi Osinbajo signed three executive orders giving specific instructions on a number of policy issues affecting the promotion of transparency and efficiency in the business environment designed to facilitate the ease of doing business in the country and other two, which included timely submission of annual budgetary estimates by all statutory and non-statutory agencies, including companies owned by the Federal Government; and support for local contents in public procurement by the Federal Government.
The ease of doping business policy took a core concern for the ports, where the vice president moved the NPA and the Nigeria Customs Service to take certain decisions targeted at making trading easier at the ports, but the major issues such as lack of scanners and inadequate cargo handling equipment remained.
In line with the ease of doing business policy, Hadiza had directed agencies such as the Standards Organisation of Nigeria (SON), Port Quarantine Services, National Agency for Food and Drug Administration and Control (NAFDAC) and the National Drug Law Enforcement Agency (NDLEA) to leave the port and only to be called in by Customs Service when their services are needed.
As important as the cutting down of agencies in the port appears, it is germane to recall that this move taken in 2011 did not bring about the needed improvement in trade facilitation and ease of doing business in the port. Instead, what played out was a gradual return of the agencies, with some of them resorting to legislative means to maintain presence in the port.
Granted that too many agencies domiciling in the port has been an age-long cause of the widespread corruption and bureaucratic bottleneck in the port. However, merely eliminating the agencies without exploring areas of automation and digitalisation of trade processes by all port stakeholders will yield little or no results in easing up the country’s trade processes.
Scanners must work
Experts believe that critical port stakeholders have taken the issue of absence of scanners at the ports quite lightly and therefore, the Nigeria Customs Service has not adequately challenged to fix the scanners which it inherited from the destination inspection (DI) service providers.
“Nigeria is possibly the only port doing physical examination of cargoes. There is nowhere else in the world that I know where physical examination of imports and exports are done. It is sad that for a container that could be scanned within five minutes, Customs officers spend hours to perform physical examination. With what the IMF team saw at the ports, I will not expect a good report for Nigeria,” said Ade Thompson, a customs broker.
According to Bello, CEO, NSC, the way imports are processed at the port, with Customs doing physical examination of containers remained a potential source of corruption at the port, insisting that automation of port processes remained the way to go.
“It takes five minutes to examine a container and pass it when we have scanners. It is five hours when we do physical examination. So, which one is better? At every stage there has to be some level of automation to reduce physical contacts when doing business at the port. Human interface or contact is a source of corruption and delay,” Bello said.
He further noted, “Physical interference also breeds inefficiency. We want a situation where there is central payment system on the platform. A shipper can be at his office and clear his cargoes at the port. The Federal Government has embraced automation. Ultimately, we are going to have the cargo tracking note (CTN) and the international single window, which is a one-stop shop where all these transactions can be conducted. It is open and transparent, so that there will be no leakages of government revenue; there will be no cheating and no under-declaration and no concealment of cargo.”
National single window and trade facilitation
Nigeria cannot continue to pay lip service to the issues of trade facilitation and ease of doing business in the country’s ports. Nigeria controls 75 per cent of trade in the whole of West Africa, but has a very low rate of ease of doing business by World Bank rating. The country now ranks 131 on the World Bank’s Doing Business 2020 index, released in October 2019. Also, the country’s businesses lose about N2.4 trillion to very complex business environment and operationality.
As international trade break new frontiers with technology and ultra-large vessels of economies of scale, the world continues to deepen trade facilitation between and among nations for inherent advantage of saving cost, time and eliminating bottlenecks in the global trade chain. Easing up business procedures in the country is also important for the attraction foreign investment.
According to Bello, “the modernisation of laws and trade facilitation means that full automation of trade and port processes must be in place in Nigerian ports. This will not only save time and cost, but will also eliminate too much human contact which is blamed for the wanton corruption in the country’s ports today.”
Trade facilitation anchored on building and implementing Single Window platforms for all players in the international trade chain can help the global economy save up to $1 trillion annually, according to a World Trade Organisation (WTO) expert, Tom Butterly.
Trade facilitation means the simplification, standardisation and harmonisation of trade procedures and associated information flow required to move goods from seller to buyer and to make payment for the goods.
Butterly anchoring his argument on the position of a recent WTO report, said that trade transaction cost can be up to 15 per cent of value of goods traded, where one day delay at the border reduces trade by one per cent.
Managing director of Trade Development and Facilitation Consulting (TDAF) at the World Trade Centre II, Geneva, Switzerland, Butterly buttressed that for developing countries such as Nigeria and Ghana, trade transaction cost can be more than 15 per cent, indicating a bigger need for West African countries to embrace the Single Window reform.
In Nigeria, a digital company with flair for international trade, WestBlue Consulting, began to build the national single window in 2013, but the effort was thwarted. The firm owned by a Ghanaian has since developed a national single window in Ghana after leaving Nigeria and its idea, which was novel in West Africa at that time.
Many countries are now focusing on implementing deep trade facilitation reforms, with the Single Window becoming a game changer.
A facility that allows partners involved in trade and transport of goods to lodge and obtain standardised information, the Single Window provides for single entry point by the shipper with the information being shared among government agencies involved in trade and other private sector players, such as banks and insurance.
For a typical West African country, such as Nigeria, or Ghana, there are about 200 pieces of information to be provided by an importer/exporter at offices of about 14 government agencies, banks and insurance and some of these may require a return visit where mistakes occur.
Experts believe that if implemented, trade facilitation processes of the World Trade Organisation (WTO) could save Nigerian businesses at least N2.4 trillion annually in transaction cost.
Butterly said the Single Window reduces time of doing business by 50 per cent and can bring down cost of doing business by 25 per cent.
He said, “The Single Window reform is now helping to create a fundamental change of the mindset. Countries even in Africa that have embraced and implementing the Single Window have been able to reduce cost of doing business significantly and are doing so well. They include Coasta Rica and Rwanda and Ghana is also able to save about $200 million in 2015.
According to a 2015 study carried out by the World Trade Organisation (WTO) economists, full implementation of the Trade Faciliation Agreements (TFA) which Nigeria became a signatory to in February 2017, would reduce members’ trade costs by an average of 14.3 per cent, with developing countries having the most to gain. With a very effective single window platform leading in a well thought out ease of doing business plan, automation processes in the port, harmonising all relevant agencies, service providers, include banks and insurance, and all port users has become indispensable and inevitable.
The WTO Agreement Article 10.4 discusses the Single Window, while Article 4.1 states that members shall endeavour to establish or maintain single window- single entry point where all trade information can be accessed by government agencies and the private sector.
“By 2020, about 100 economies and some regions would have implemented the Single Window reform, enjoying the benefits of pre-clearance formalities down from four days to 0.5 days and Customs clearance from 18 to nine days. The Single Window reduces export time from 22 to 11 days. But most importantly, Single Window is about people more than technology,” Butterly said