Jide Taiwo is the chief executive officer of Ocean and Sea Limited, a maritime services and logistics firm. In this interview with ANOZIE EGOLE, he speaks on the challenges in the sector and how it can contribute meaningfully to the economy.
There have been several complaints of inefficiency at the nation’s seaport. How do you think this can be addressed?
The factors that contribute to the inefficiencies at Nigerian seaports are many, but I will start with infrastructure. Currently, as I speak, the roads into and out of the seaports need to be built and completed. The situation delays the processes of transporting cleared goods out of the port environment, which causes a lot of delays for imported goods. It makes it difficult for the goods to leave the port and also results in expensive transportation services which, in the long run, put additional costs on the goods.
Secondly, I will also say that there is a need for full automation of the clearing process. If the Nigeria Ports Authority (NPA) introduces a 100 per cent automated clearing system, there will be a reduction in the clearing time. It will also reduce the crowd and daily traffic as well as the population at the seaport. In the long run, it will have a positive impact on the economy because the percentage of revenue generated from our seaports is part of the Gross Domestic Product of our economy.
If the automation system is properly incorporated, it will as well create job opportunities for the youth who can work from any part of Nigeria to carry out their daily operations.
Then for transportation, which is part of logistics chain, these trucks do not have businesses being parked all along the road sides within the port environment. Doing that paralyses the free movement in and out of the port. Once the Nigerian Ports Authority introduces full automation in the clearing process, things will get better. The trailer park can be in another state and the logistics approval will be given to private companies. When the containers are ready for pickup, importers will contact the transportation company online and send to them necessary documents to pick up the container. Hence, this is the reason the logistics companies have to be registered under the NPA with approval licences for accountability. All these licences will generate additional revenue for NPA as a regulator. This will solve the problem of long queues and trailers parking on the road side while blocking the free flow of movement.
The present situation has shown that the crowd we see at the port does not translate to productivity because Nigeria port potential is presently under-utilised. The full automation of the port will infuse all government agencies and shipping companies into a platform that will make the clearing process smooth and less time-consuming.
The Nigeria Customs Service recently deployed scanners at the Lagos ports for cargo examination. Do you think it will boost port efficiency and reduce cargo dwell time?
The recent deployment of scanners at the seaport by the Nigeria Customs Service is highly commendable and in line with best practices globally. This will eliminate the manual process of inspection and it will result in effectiveness. It will reduce cargo dwell time and boost port efficiency.
The nation’s seaports have gradually turned into dumping grounds for containers. How do you think this can be addressed?
Firstly, I suggest that the NPA should sponsor a bill that will make them take over abandoned containers or goods once they are six months old at the port. But a special three months additional waiver, when specifically applied for by the importer, can serve as time extension.
The international best practice is for containers to be in use for five to six years and during which they can be refurbished two times before their life spans expire. Most of the containers dumped at our seaports are expired and, sadly, Nigeria does not have recycling plants to re-manufacture them.
Most of the shipping companies strategically make use of containers that are about to expire to bring goods into our country and choose to abandon them back here, which is economically cheap for them as a form of disposing them off.
This happens because the Nigerian government does not impose heavy fines on shipping agencies that engage in abandoning containers. So, once a container is taken over by the NPA, people should bid for it and take over. This will decongest the terminals and create spaces for newly-arrived containers. I will appeal to the NPA to grant more organisations that are willing to invest in container terminals approval to own such facilities. Adequate transfer should be done so as to decongest the port.
How do you think the weakening local currency, naira, affects cargo clearance at the nation’s seaports?
The weakening local currency has a negative impact on cargo clearing because the clearing fees and tariffs are also affected by the exchange rate. The clearing fees have gone up over 100 per cent higher than what the fees used to be some years back.
There have been complaints that the country is losing a lot of cargoes to neighbouring ports due to policies. How do you think some of these policies can be addressed?
I must say that the government knows what to do as regards to policy reversing. As we speak, most freight forwarding firms have lost some of their clients because the policies are not very favourable to importers. Some of them have been frustrated out of business. Some are bankrupt, while some take their goods to neighbouring countries and later smuggle back into Nigeria.
I believe that importers should be considered in the area of clearing. When you listen to most of them, they say most times that they pay equivalent of 200 per cent of the amount the goods are purchased as clearing fees because of policies, which are not very encouraging for them to remain in business. It has been observed that the Nigeria Customs Service at the land boarders has recorded increases in cargo tariffs and revenue generated from freight coming into the country through the land borders. The land borders are recording unusually high cargo traffic, showing that importers are engaged in cargo diversions. I will advise the government to improve on operational delays at our seaports, which will discourage diversions to neighbouring seaports.
There are some who believe that when the proposed taxes on foods and beverages are finally implemented, they may spike illicit importation. Do you believe that? And what other implications can this have on Nigerians?
Amid inflation growth, this will put a lot of burden on Nigerians with numerous unending challenges. With the struggling economic growth, weak naira, many companies are struggling to survive. The sector players will face a lot of impacts because of excise duty, which will rub off on production cost and economy. I don’t believe that introducing the taxes is an illegal act, but the government should consider the timing and how hard the economy is at the moment.
How prepared do you think Nigeria is for the African Continental Free Trade Area?
Nigeria is not well prepared for the African Continental Free Trade Agreement. The whole essence of AFCFTA is to accelerate intra- African trade and boost African trading positions in the global market by strengthening African common voices and the policy space in global trade negotiations.
According to the African Union, this trade agreement, if implemented fully, will create a continental free trade zone with a combined Gross Domestic Product of $3.4trn. The AFCFTA calls for reduction of tariff and non-tariff barriers and the facilitation of free movement of people and labour, rights of residence, rights of investment and establishments.
Do you think with the coming of Lekki Deep Seaport, the challenges with other existing ports would be addressed?
The establishment of Lekki Deep Seaport will encourage shipping agencies and importers to patronise a new port with adequate infrastructure compared to patronising the older ports. The present challenges and poor services rendered at the old ports will definitely encourage us to patronise the new ports with better infrastructure. This will also reduce the traffic and decongest old existing ports. The capacity of the Lagos ports complex will be under- utilised. This under-utilisation will come into play by the time the Lekki Free Trade Zone comes into full operation. However, the development of new ports is a strategy employed to accommodate either an existing cargo surplus or a targeted increase in cargo traffic occasioned by improved technology that has led to increased shipment capacities. This helps to reduce the chances of diseconomies of scale that will be experienced at transhipment.
So many airlines are threatening to exit the country’s airspace due to trapped funds running into millions of dollars. As an air freight forwarder, what do you think this means to Nigeria?
I cannot specifically state what the effect will be, but it will paralyse certain aspects of the economy. I believe the authorities understand what this means and the government should assure us of a good resolution.
How do you think the current economic challenges of the country could be tackled?
The truth must be told, the present hardship in the country is not something that has to do with the Nigerian economy alone. A lot of countries around the world are experiencing the same. We must understand that the pandemic left a lot of negative impacts on the world economy. The International Monetary Fund has released a statement that there might be a global recession next year. This is an index that those who are in charge of the Nigerian economy should be prepared and also work on how to ease the burden on Nigerians.
Article first published on the Punch Website