Monday, 15 December 2014

Olusegun Obasanjo: A master of deception

The shipping sector is inadvertently shaped by events in the larger Nigerian society. This is why I have taken the liberty to sometimes ‘deviate’ from discussing ‘core’ maritime issues to taking a broader view of the country’s socio-political environment.
In the past, I have written about former President Olusegun Obasanjo in this column. I particularly praised the former President for paying quality attention to the shipping sector during his tenure as military ruler from 1976 to 1979, and in his second coming as civilian President from 1999 to 2007. Obasanjo it was who reformed the ports, reformed the docklabour industry, signed the Cabotage Act and merged the National Maritime Authority (NMA) with the Joint Maritime Labour Industrial Council (JOMALIC) to form the Nigerian Maritime Administration and Safety Agency (NIMASA), among other bold initiatives. Obasanjo personally visited the port to commission the PTML terminal built by Grimaldi in 2006. The controversial 19 ships bought for the Nigerian National Shipping Line (NNSL) in 1979 were bought by the Obasanjo administration. And when we invited him to chair the opening ceremony of the third annual Nigeria Maritime Expo (NIMAREX) last year, he obliged and honoured the invitation.
Unlike President Goodluck Jonathan, Obasanjo was clear-eyed about the role of the shipping sector in national development. He also had a good understanding of the kind of policies to formulate and steps to take in setting the sector on a growth trajectory.
All of these said, however, Baba Iyabo’s egregious way of life should give any of his well-wishers concern. I wonder how the man sleeps. He seems to enjoy controversy and derive pleasure from attracting public odium to himself. He also doesn’t know when to stop. Since he reluctantly left office on May 29, 2007, Obasanjo has daily hugged headlines for the wrong reasons.
In a messy divorce proceeding between Gbenga Obasanjo, first son of the former President and his estranged wife, Mojisola Olayemisi Amope, which came to the public domain in January 2008; Gbenga accused his own father of having sex with his wife before awarding contracts to her. Gbenga’s celebrated marriage to Moji, which took place at the Archbishop Vinning Memorial Church, Ikeja, in April, 2000, headed for the rocks barely four years after the lovebirds exchanged marital vows. Gbenga stated in his affidavit that the paternity of the two children that are the product of his marriage to Moji was in doubt, considering the alleged multiple sexual relationships she had with several men.
As if that was not enough, in November of the same year, his wife of 45 years, Mrs. Oluremi Obasanjo, published a 142-page book entitled Bitter-Sweet – My Life with Obasanjo, which is an autobiographical account of her experience in the relationship with the man.
I have read the book and I found its content quite amusing and rather shocking. The book is a curious portrait of Obasanjo who started out in life as a kind, tender and loving person, but whose pride and arrogance later became dominant. It drips with the narrative of a once caring and romantic man who allegedly became a serial philanderer, often focusing on women quite close to the family.
Mrs. Obasanjo went further to describe her husband as "complex" and "a curious subject" who neither forgives nor forgets wrongs done him by others.
Her words: "Obasanjo is complex and a master of the art of deception. He is a curious subject. He is self-opinionated. This has become worse nowadays. Unfortunately, he does not forgive nor does he forget. He is a bohemian and can be an exploiter. I remember how he outmaneuvered me in a business deal."
Why would a wife go to such lengths to talk about her husband publicly? Well, you might need to read the book yourself.
We all remember vividly the provocative letter written by Obasanjo to President Jonathan in 2013. Obasanjo would condemn any government in power. Nobody else is good enough for Nigeria. Here is a man who delights in attacking all his predecessors and successors. Shagari, Buhari, Babangida, Shonekan, Abacha, Yar’Adua and now Jonathan all tasted Baba Iyabo’s caustic ‘koboko’ tongue.
In the snippets from his new book, ‘My Watch’, which he launched last week and which I read online, Obasanjo attacked every other person including Jonathan, Wole Soyinka, Atiku Abubakar and several others. He accused Jonathan of not heeding advice and the question I ask is ‘Why must Jonathan do what Obsanjo says?’ No one was beyond reproach. No character was too big to be cast in what he considered to be their true image, which, in most cases, is contemptible. Some personalities who have presented themselves as leaders and reformists will have to present counter-evidence to defend their reputation: Abubakar Atiku, Bola Tinubu, Tony Anenih, Nasir El Rufai, and many others. In the book, their characters were presented as defective as their personas are large. Obasanjo described former Vice President Abubakar Atiku as a “blatant and shameless liar”. Nasir El Rufai was described as “a brilliant man, economical with the truth”. He was not much kinder to some Yoruba chieftains whom he described as preferring rather to be “rulers in hell, if they cannot be rulers in heaven”. He described Asiwaju Bola Tinubu as “definitely one of the worst cases” in terms of corruption. He was much kinder to General Mohammadu Buhari whom he said “would not be a good economic manager” though he would be “a strong, almost inflexible, courageous and firm leader”.
In December 2013, the former President’s first daughter, Iyabo ruled out further communications with him until his death. In her reaction to a letter entitled “Before it is too late”, which the former President wrote, sent to President Jonathan and leaked to the media, Iyabo described her father as a liar, manipulator and two-faced hypocrite determined to foist on Jonathan what no one would contemplate with him as president. She accused him of having an egoistic craving for power and living a life where only men of low esteem and intellect thrive.

Obasanjo has had his time. He ruled this country with an iron fist for 11 years and he should learn to become a statesman. He must not have his way at all times and the sitting President is not bound to take orders from him. Obasanjo’s regime as civilian president recorded modest achievements for this country but he now runs the risk of casting to the swine, his own legacies.

Sunday, 7 December 2014

End of the year, so what?

Sometimes being a writer totally sucks but then; writing gives one the unique opportunity of serving as the conscience of the society.
Being a professional writer is a strange and wonderful thing - kind of a combination of philosopher and vagrant. It permits experiences that a fortunate few will ever get to have, and many more that would make most 'normal' people wonder why on earth someone would purposefully subject themselves to such emotional torment.
It was in light of this incredible cross-section of joy and despair, inspiration and rage, that I drew up a set of questions to enable the maritime sector analyse the Year 2014.
I am embarking on this exercise because in order to embrace the new, we must release the old. It is said that a trapeze artist cannot swing from one bar to another without letting go. An important part of preparing for the New Year is to review the past year—to release it—and to learn from it.
My questions (and answers) aim to stimulate the thinking of the movers and shakers of the maritime sector. You don't have to agree with my answers though.

Q: What did we accomplish in the maritime sector this year?
A: Nothing.

Q: What would we have done differently? Why?
A: Everything, because none of our past approach worked!

Q: What key project did we complete?
A: None.

Q: What were the three most significant events of the outgoing year?
A: Seminar, seminar, seminar

Q: What did we do right?
A: Nothing.

Q: What were our biggest challenges/roadblocks/difficulties?
A: Government.

Q: How is the maritime sector different this year than last?
A: Roads into the ports are worse off. Nigerian ship owners are worse off. PAAR did not function as promised. Importers/agents still cut corners, as disclosed by their leaders.

Q: For what are we particularly grateful?
A: Ijora bridge did not collapse in the year.

Honestly apart from a few private operators in the industry who raised one's hope of a better tomorrow through their committed investments, everything else points to a gloomy future for our beloved maritime sector. For example, it is two and a half years already since President Goodluck Jonathan hosted a retreat on charting a roadmap for the development of the maritime industry. Several stakeholders enthusiastically attended the retreat with the hope that the sector would finally get a deserving attention from the Federal Government. A Presidential Committee was set up with the Minister of Transport, Senator Idris Umar as Chairman and maritime lawyer, Olisa Agbakoba as Vice Chairman. The committee members worked within their terms of reference and promptly submitted their report to the President. The President, I learnt, referred the report to the Economic Management Team. The EMT made its input and returned the President for implementation but that was the last anyone heard of it. Does this show seriousness in developing the maritime sector?

I will be happy to know your own answers to my questions.

Sunday, 30 November 2014

Coins make noise while notes are silent

It was the English poet and playwright, widely regarded as the greatest writer in the English language and the world's pre-eminent dramatist, William Shakespeare, who said that coins always make sound but currency notes are always silent.

The Bard advised that "whenever your value increases, keep yourself calm and silent". People of value are wise and careful with their utterances and actions.
Truly, an empty barrel makes the loudest noise and one place where we have empty barrels in abundance is the maritime industry.

The maritime industry is one place where people of mediocre abilities lay claim to expertise. A few days ago in Abuja, I heard a man who, a few years ago, was a typist claim that "there is no where in the world where..." but before he could finish his sentence, a very wise Abuja-based government official asked him if he had visited every country of the world to lay claim to knowing the trend in every part of the globe. It turned out that our typist turned 'maritime expert' had travelled to only Ghana – by bus – in his whole life. He had never been to Europe, America, Australia or Asia. He had never carried out any comparative analysis of the regulatory trend elsewhere, yet he sits here and bamboozles the gullible with an expertise he did not possess. And he is one of the most vociferous. Our friend uses his loud voice and noise to drown opposing views. Those who have substance in their arguments simply walk away rather than join issues with such a character. It would be futile arguing with someone so steep in self-adoration worship.

The thing with the barrel is that it won't make any noise if you don't hit it with a rod or stick or mere hand. So does the empty barrel really make the loudest noise? Are not those hitting it the ones making a noise? The sound that eventually comes from the empty barrel is a result of cause and effect. Without a preceding action, emptiness will remain still. Without an argument, the emptiness of someone like our friend will remain still.
A major problem of the maritime sector is the preponderance of pseudo-leaders. The sector has abundant potentials but its growth is stunted largely by the low quality of its leaders.
Have you heard that weird joke by those comedians where they tell us that God once was queried by other nations for His apparent bias treatment of a country called Nigeria? They alleged that the countries complained that God so loved Nigeria that He gave her everything needed to be the greatest in the world. But God laughs all knowingly and asked them to wait until they see the caliber of leaders he would give to Nigeria. I hasten to add that this joke is apt with regards to the maritime sector.
I find the views of many of the noisy pseudo-leaders and 'experts' in the maritime sector immature and sometimes appalling.  A philosopher once noted that something is odd if a person is not liberal when he is young and conservative when he is old. I am far from being a conservative but one matures and regards some of the views of one's younger years as undeveloped and callow. But for many of these pseudo-leaders, nothing changes. When you hear then shout, it is because their interests are being threatened or they fear that they could lose relevance. Their agitations are never altruistic. They will go as far as pull down an organization to maintain their nuisance value.
Many a times, these pseudo-leaders play the roles of saboteurs and spoilers. They are the 'opposite people' in Fela's song. They are disagreeable and polarize the industry. They stunt the growth of the shipping sector in pursuit of selfish interests. They make misleading statements and dish out false information.
But the real valuable leaders are not noisy. I respect Mr. Chidi Ilogu, a Senior Advocate of Nigeria and one of the most respected lawyers in the country.
A man of very few words, Ilogu told me: "Bolaji, forget all these noise. Focus on the substance". What a wise counsel. We should henceforth forget the noisy lot and pay attention to real issues in the maritime sector. These people are not fighting for us, but for their own selfish interests.    

Monday, 24 November 2014

Maritime Microfinance Bank Gets CBN nod to Start Operations

Nigeria's apex bank, Central Bank of Nigeria (CBN) has given nod to a Maritime Microfinance Bank (MMB) to start operation next month.
Described as the first financial institution fully dedicated to servicing the maritime industry in the country, MMB is expected to formally open its doors to the public on December 1, 2014.

Confirming the development, a promoter of the new bank, Mr. Bolaji Akinola said, the  MMB was set up to fill a yawning gap within the financial services industry by offering small loans or micro-loans, to maritime industry operators and workers who are unable to access conventional loan services.

According to Akinola who is also one of the directors of the  MMB, this is the starting point for us. We are embarking on a revolution in the provision of financial solutions for the maritime industry. We are starting as a unit micro-finance bank but our vision is to evolve into a full fledge commercial bank fully dedicated to the growth and development of the maritime industry.

He maintained that the birth of MMB was a culmination of several years of research and team work between several well-meaning people who are passionate about growing the maritime industry.

Giving an insight into the operations of the new financial institution he said MMB would use small and microloans to develop small businesses based on their existing talents and skill sets.

He said: "Dockworkers, freight forwarders, truckers, port workers, staff of private companies and government organisations who mostly have challenges accessing small loans can now heave a sigh of relief as the bank for them has finally come. Access to finance is an invaluable element that brings growth and development to any sector of the economy. It also helps in realizing full economic capabilities of the people.

"As part of the agenda for full development of the maritime sector, access to finance has been identified by the stakeholders in the industry as one of the key elements that needs to be considered".

According to him, the bank will build exceptional value for its clients by demonstrating incomparable care for their needs and increasing their financial wealth by providing tailored solutions to meet their financial needs and protecting their assets. We are deploying the latest banking technology and have developed very exceptional financial solutions that will help our clients grow. These are in addition to the regular banking products which include savings account, current account, salary account and co-operative account among others.

The promoter explained that micro, small and medium enterprises in the maritime industry can now easily access loan facilities to grow their businesses through the new establishment of the new financial institution in the maritime industry.

Thursday, 13 November 2014

Danger zone: chasing West Africa’s pirates

Take a boat ride out from the Nigerian port of Lagos and it is easy to see why piracy, sea robbery and other forms of maritime crime are such a problem.
The ocean is swarming with cargo ships, oil tankers, barges and other vessels waiting for permission to enter the overcrowded port.
Great hulks of rusting metal, anchored and sitting low in the water, almost as if they are inviting pirates to sling their ladders over the side and clamber up on board.
"It was 14 August 2014," says Nigerian navigation officer Rotimi George.
"At around 2am I heard banging on my cabin door: Boom, boom, boom, boom. 'Pirate attack, pirate attack'. They seized the captain, who was Russian, and the Ukrainian chief officer."
Mr George is one of hundreds of seafarers who have been attacked this year off the coast of West Africa one of the world's top piracy spots - and far more dangerous than the waters off Somalia.
Psychological scars
According to the International Maritime Bureau (IMB) and the Oceans Beyond Piracy group, there has been an escalation in violence.
More seafarers were killed and wounded in the first nine months of 2014 than for the whole of 2013, when more than 1,200 were affected.
This is believed to be a conservative estimate, as the IMB says about two-thirds of attacks off the coast of West Africa go unreported.
As well as physical violence, there are the psychological scars.
Captain Suresh Biradar, an Indian who was kidnapped off the coast of Nigeria, says he will never return to sea again.
"They kept us on the bare wooden floor of a tiny hut. Each day, the only food we had was a 70-gram packet of noodles.
"The pirates became violent after taking drugs. They pointed guns near our heads and ears, and fired bullets.
"I was released after 28 days when a ransom was paid."
The experiences of Mr George and Capt Biradar reflect a growing trend, not only of kidnapping for ransom, but of pirates sorting through the crew and taking away those considered to have "high-value" nationalities.
A study by Oceans Beyond Piracy has documented how pirates have seized American, Indian and Polish seafarers, but have left behind Nigerians because they are considered worthless in terms of ransom.
Robbery, cargo theft and ransoms
Unlike Somali pirates, who have used the single technique of seizing ships and their crew for ransom, there are three types of piracy in the Gulf of Guinea.
According to a former member of the British special forces, Sven Hanson, who now works for a private maritime security company in West Africa: "You've got the classic armed robbery at sea, which has been happening for centuries, where pirates board a vessel to steal money, radios and mobile phones.
"The next scale up is cargo theft, the predominant threat in West Africa, when pirates hijack an oil tanker, take her to a quiet place, bring another ship alongside and siphon off the oil.
"Third, there's kidnap for ransom when pirates seize the expatriates."
In most cases of West African piracy, the pirates want the cargo, not the crew.
This means levels of violence are higher than they are off the coast of Somalia, where the pirates need to keep the crew alive in order to obtain ransoms.
"The attacks are deadly and brutal," says the first female head of the Nigerian trawler owners' association, Margaret Onyema-Orakwusi.
"The pirates throw the captain and chief engineer into the cold room where we store the fish. They freeze to death," she says.
"Piracy has decimated the fishing industry; 100,000 jobs have been lost and Nigeria now imports more than 80% of its fish."
Many of the pirates are former militants from the oil-rich Niger Delta region, although, as maritime expert Bolaji Akinola points out, they are just part of a complex, global jigsaw.
"The criminality stretches very wide - if someone steals crude oil, he has to sell it either to a country or a multinational company."
A pirate based in the Niger Delta said the only way to get a share of the region's oil wealth was to rob ships.
"We attack seafarers and we beat them so they'll tell the government," he told the BBC.
"They're eating the oil companies' money while we go hungry. We have to collect their money in order to survive."
In its efforts to combat maritime crime, Nigeria has a bewildering number of government agencies, partnerships with private security companies, even deals with former seafaring militants who have themselves carried out spectacular acts of piracy.
Senior naval official Rear Admiral Samuel Alade says piracy has been "drastically reduced" because of what the navy and others are doing.
'War risk area'
Not everyone shares his point of view.
The Norwegian Ship-owners' Association says the number of times its vessels visited Nigerian ports decreased by 37% between 2011 and 2013 because of the threat of attacks, even though port calls to the rest of Africa increased by about 20%.
Underwriters have designated the waters off Nigeria, Togo and Benin a "war risk area", pushing up insurance costs.
This ultimately affects the cost of food, oil and anything else that is transported by sea from West Africa.
Nigeria's multi-pronged approach to tackling piracy has generated confusion, even amongst its own security agencies.
Nigerian maritime police in October 2013 opened fire on Nigerian naval personnel after mistaking them for pirates.
In March 2014, two British men working for a private maritime security company were arrested and accused of stealing oil.
The strategy of paying former militant leaders to help fight maritime crime is also proving problematic.
One former Delta warlord, General Boyloaf, who led a spectacular attack on a Shell oil platform 120km (74 miles) out to sea, was in August 2014 appointed by the authorities as leader of a maritime security outfit in his home state of Bayelsa.
"The government was having serious security challenges in the creeks," he said.
"They chose me to deal with it as the creeks are my terrain. I was born in the creeks, I fought against the government in the creeks and I will now use that knowledge to hunt the pirates."
But dressed all in white and sitting on a black sofa under an oil painting of a tiger in his villa in the capital Abuja, he complained the government was "choking" funds agreed as part of a 2009 amnesty for the militants.
"What do you expect us to do? We will fight. I know what my people are capable of doing," he said.
Maritime expert Bolaji Akinola does not think former warlords should be involved.
"People who fought against the state are now being hired to protect its most precious facilities. If they're no longer satisfied with what they're getting, they can hold the state to ransom."
Mr Akinola believes efforts by the Nigerian authorities and their partners in the private sector are beginning to "push the pirates back", at least in Nigerian waters. But the pirates are not going away.
A bit like squeezing a balloon, he says they are "going further west and further south, and deeper into the Atlantic Ocean".
"The situation in the Gulf of Guinea is going to get worse before it gets better."


Monday, 10 November 2014

Fracking, shale gas and the Nigerian economy

The Middle East region has been embroiled in an unprecedented dimension of crisis of late yet rather than climb, the prices of crude oil have been on a downward spiral. I think this trend signposts the end of the era when the prices of oil shot through the roof whenever the region erupted in crisis.  

Less than six months ago, oil was trading at $106 per barrel, up from a low of $91 per barrel earlier this year.
Since 1990, there have been 21 "destabilizing" events that have occurred in the Middle East. From Operation Desert Storm in 1990 to the Anbar Clashes in 2013, the area has had both major and minor political/military disruptions. Over the last 23 years, on average, oil prices have risen by 5.4% 30 days following the beginning of a disruption. 

Usually, following the first period of price surge, still-higher prices follow. Historically, three months after the start of the crisis event in the Middle East, oil prices have risen by 9.2% from their pre-crisis levels. If this average holds true, oil prices should be approaching $112 per barrel by now. But this has not been the case as the prices have crashed by about 27% in three months.
When oil prices rise, oil-producing countries including Nigeria, which exports over two million barrels per day, benefit. 

Historically, the OECD countries (large, developed countries) have been the largest consumers of oil in the world. However, that historical truism has changed over the last number of years. The OECD (developed countries) consumed 72% of the world's oil production in 1992. Today, that percentage has fallen to 49%. The non-OECD (developing) countries now consume 51% of the world's energy output. 

Besides, oil consumption in the U.S. has declined from a high of almost 21 million barrels per day in 2004 to the current 18.8 million barrels per day while the country, which was the largest buyer of Nigeria's crude no longer buys our hydrocarbon. This is simply because the United States' domestic oil production has risen from less than 5 million barrels per day to 12.8 million barrels, currently. What that means is that its oil imports are running at an annualized rate of around six million barrels per day, down from well over 12 million barrels per day in 2004.
A process known as 'fracking' has made all the difference for the world's largest economy. 

Fracking, the common name for hydraulic fracturing is widely used to extract oil and gas, particularly from deep shale formations. A single well requires the use of millions of gallons of water and tons of sand. 
Fracking has lead to a boom in U.S. energy production, with a number of beneficial effects. According a 2014 report from the Federal Reserve Bank of Kansas City, in states where natural gas fuels a significantly higher proportion of power plants, average electricity prices have fallen. 

Fracking has led to an abundance of oil in the United States of America, which has in turn reduced the demand for import, and consequently stability in the prices of crude oil on the international market. 
Sliding oil prices means declining revenue for Nigeria, and other oil exporting nations.

At a recent Senate committee session on the Medium Term Economic Framework (MTEF), which serves as a basis for the preparation of the estimates of revenue and expenditure for the annual budget, Mrs. Ngozi Okonjo-Iweala, Finance Minister and Coordinating Minister for the Economy, admitted that the Nigerian economy was facing challenges on account of the oil price drop. To put it succinctly, the Nigerian economy is facing serious crisis as a result of drop in oil revenue due to slowing global demand and the rise in US shale oil production.
Further price drops may result in further difficulties, considering that our 2014 national budget is predicated on a benchmark of $77.50 a barrel and daily production of 2.39 million barrels. 

The activities of crude oil thieves and oil pipeline vandals are also making it more difficult for Nigeria's output. 
There is still demand for Nigeria's crude from Asian economies like China but the outlook is worrisome. What if the economies of Asia, with their heavy investment in research and development, discover cheaper sources of energy in their backyards? And this could be sooner than later. 
Nigeria is in a typical Catch-22 situation: the demand for our crude is shifting at a fast pace to new buyers who may not have the capacity for large volumes; and we do not have significant refining capacity in our country. So a significant proportion of crude oil earnings go out to import processed petroleum products. 

The drop in global oil prices makes it imperative for Nigeria to urgently diversify its revenue base.
There is now a compelling need to unlock the potential of agriculture. With over 84 million hectares of arable land, Nigeria should be a net exporter of food, which should enable the country earn substantial revenue outside oil. The maritime industry is also good as an alternative source of revenue if accorded necessary priority. 

Monday, 3 November 2014


Like several other Africans, I enjoy listening to Fela's songs. I love music generally but as the late wolrd statesman, Nelson Mandela said in his book Long Walk to Freedom, the music of my own flesh and blood goes right to my heart. 
The curious beauty of African music is that it uplifts even as it tells a sad tale, Madiba said. And that is very true for me with regards to Fela's songs.
ITT (International Thief Thief) was a great album recorded by the Abami Eda in the 1980s. It told the story of how politicians connived with businessmen to loot the public treasury. He infuriated the political establishment by dropping the names of ITT Corporation vice-president Moshood Abiola and then General Olusegun Obasanjo at the end of the hot-selling 25-minute political screed.
Another of my favourites is Perambulator. The dictionary meaning of perambulate is to walk or travel through or around a place or area, especially for pleasure and in a leisurely way. Perambulator on the other hand means "a machine, similar to an odometer, for measuring distances by means of a large wheel pushed along the ground by a long handle, with a mechanism for recording the revolutions". It is also means a baby carriage; pram. Irony of the English language!
Well, Fela's perambulator means a person who makes a lot of motion without making any progress; a man that is full of activities without an iota of productivity.
Fela made the analogy of a commissioner in charge of dirt in Lagos. The commissioner is worried that the "town council" had been collecting salary without ridding the city of its stench. He determined to do something about it.
The commissioner's starting point was go on radio to announce: "I am going over to London to learn how English carry dust bin."
Fela: "Wetin commissioner no know be say other people dem go there to learn atomic energy, but our own commissioner dey go there to learn dust bin carrying.
"You see, him just dey perambulate and him still dey same same place."
One of the morales in the song is that we waste so much time on frivolities. We look for exotic answers to simple and uncomplicated problems. And we talk too much. 
On a subject, we will hold seminars, workshops, talkshops, symposiums, conferences, debates, forums, awards, launching, get-togethers and all. We will do everything except solve the problem.
The Apapa gridlock, which remains a sore point for the managers of our roads and for this administration, is a typical example.
Series of seminars and all manners of stakeholders' meetings have been held on the same subject by almost every other interest group within and without the maritime industry yet several years after, the problem lingers.
All the recommendations are there, rotting away on moth-infested papers piled up in some archives as if they would grow feet and implement themselves. 
The gridlock is as a result of four major factors namely; increase in the volume of business activities at the ports and jetties without corresponding increase in road infrastructure; lack of holding areas for trucks; collapse of Apapa-Oshodi expressway; and the insatiable appetite for graft by security operatives.
It is a fact that cargo throughput at the ports in Lagos have doubled over the past five years from less than 40 million metric tons in 2008 to over 70 million metric tons handled last year. Container throughput for both ports has also risen to more than one million TEUs in 2013 from about 400,000 TEUs in in 2006. But despite these increases, the road infrastructure has remained the same. Tank farms and petroleum jetties are now preponderant in the same port corridor, a situation that was alien to the port environment about 10 years ago. Yet inspire of all these, government has not deemed it fit to either construct new roads or develop alternative modes of transportation to cope with the rising cargo volume. Many of the tank farms and oil jetties were licensed by the Nigerian Ports Authority (NPA) with the understanding that they would evacuate their products by rail but none has complied with that licensing condition. 
In the days of Abacha, the dark-goggled General was accused of grounding the nation's refineries in order to dish out patronage to his cronies to import petroleum product. But the level of importation, fifteen years into our democratic experiment, is unprecedented in the history of this country. And the refineries are in worse shape than during the Abacha era. So long as we are not refining petroleum products, importation will continue unabated and tank farms will remain in business. And as long as they continue to conduct their businesses in Apapa, their trucks will continue to compete with trucks plying the port for the shrinking and collapsing roads. 
The second factor responsible for the gridlock is also man-made. For almost ten years, operators have shouted themselves hoarse on the need for the Lagos State government to dedicate a sizeable portion of land for use of truck operators as holding bay.
Over two thousand trucks are required at the ports and oil depots daily to evacuate cargo to various parts of the country yet there is nowhere the trucks can park. So they stay on the road. The ideal is to have a parking lot where the trucks will all go to and wait until they are called into the port to either drop or pick up cargo. It is common sense but then, someone said it is not common. 
For the umpteenth time, Fashola, Jonathan et al, please allocate a land space that can hold up to 5,000 trucks at a time for use as holding bay for trucks plying the port. Such facility should have canteens, dressing rooms, resting rooms, showers, repair yards etc for the truckers who will be happy pay to use it. It could even be concessioned to a private operators. 
The collapse of the Oshodi-Apapa expressway is another major factor responsible for the pains commuters are being put through right now. Every vehicle, every truck going in and out of Apapa now uses the narrower Ijora-Apapa road with its attendant consequences on the Ijora bridge. The result of this is the chaos which has become a daily occurrence and which is capable of leading to the collapse of that bridge. Static trucks remain on the bridge day and night. And of course, operatives of the Western Naval Command of the Nigerian Navy, with base on dockyard road Apapa, are cashing in on the ensuing commotion. They 'charge' N2,000 per truck to pass through. They don't mind delaying a truck for hours if the driver fails to 'cooperate'. The Police, Army and other security operatives are not left out of milking the hapless truck operators.
Desperate situations require desperate measures; there is need for spirited move to salvage the situation. All these seminars are not the answer. We need to do the needful, now.

Monday, 27 October 2014

National interest and local shipowners

Last month China gave four shipping lines including China Cosco 1.8 billion yuan ($293.3 million) in subsidies to encourage them to retire and upgrade their vessels. This amount is about the size of Nigeria's Cabotage Vessel Financing Fund (CVFF).

In December 2013, China announced it would hand out subsidies to the shipping lines to replace old models with new and greener ones and to generate orders for its shipbuilders, which have been hit by an order slowdown in a global shipping slump.
Shortly after the announcement, one of the shipping lines, China Cosco said it had received 1.3 billion yuan through its controlling shareholder, state-owned China Ocean Shipping Group, to compensate it for scrapping and upgrading old vessels. Sister company Cosco Shipping also said it had received 182.9 million yuan for ship upgrades while China Shipping Development Co. said China's finance ministry had given it 215 million yuan in subsidies for scrapping 15 ships. China Shipping Container Lines also acknowledged receiving a subsidy of 40 million yuan.
The companies said they expected the subsidies to have a positive impact on their full-year results.
There are arguments that China has become the leading exponent of an economic model called "state capitalism," in which state-owned or state-supported companies used public money to dominate markets and advance strategic interests.  
Truth is state capitalism, as well as a range of new forms of protectionism involving barriers behind borders such as regulations, discrimination against foreign companies, and forced technology transfers have become tools with which countries enable their indigenous businesses compete in key markets. 
Every country, including the United States of America which professes open, free, transparent, and fair system practices some form of protectionism which is what state capitalism is all about.
Besides, developing economies like Nigeria have a lot of work to do to lift hundreds of millions of their people out of poverty. This imperative must outweigh any obligation to play by established doctrines. 
The notion of open market operation is a misnomer in shipping parlance and that is why I am concerned about our government's laissez-fair philosophy, which has entrenched a hands-off approach in the sector.
Whereas developed nations and emerging super powers like China are consciously providing subsidies and other relevant incentives to their ship owners, ours is flexing all the muscle it can to decimate its own. The actions of government through the Nigerian Maritime Administration and Safety Agency (NIMASA) clearly show that the administrators either lack requisite knowledge to promote the sector or are deliberately entrenching policies that will shove operators down the cliff.
Late 2007, NIMASA concluded plans to float a ship repair and maintenance fund. The plan was to carry out an audit of Nigeria-owned ships, repair and place them in class so they could effectively perform Cabotage operations. An MOU was to be signed with the Naval Dockyard in Victoria Island, Lagos. The idea was not to give money directly to the ship owners but pay the shipyard seventy per cent of the repair cost while the owner pays the rest. It looked good on paper and was applauded across the industry but problem was; the scheme never saw the light of day. 
Four years earlier, government had enacted the Coastal and Inland Waterways Act, known as the Cabotage Act. That law is now eleven years old and it is nowhere near implementation.
With the Cabotage Law came the Cabotage Vessel Financing Fund (CVFF). CVFF is a contribution by ship owners and it is not government money. It smirks of mischief (or ignorance) to describe the CVFF as an intervention fund. It is a direct contribution by ship owners at the instance of government and backed by adequate regulation and guidelines. 
The idea behind CVFF was to create a pool fund accessible by the contributors from time to time at a single digit interest rate to acquire vessels.
The CVFF account has grown to over N50 billion in ten years with no hope in sight for disbursement. There is a sort of ding-dong and a game of musical chairs between the uncanny banks selected by NIMASA as primary lending institutions and the docile maritime administration. The banks are the beneficiaries of the non-disbursement as it provides them cheap deposits while NIMASA is content with using the fund as a bait and bargaining chip. 
Over the past four years and especially under the present NIMASA leadership, the nation's fleet has suffered substantial depletion due largely to lack of sufficient funds needed grow and maintain them. There are also instances of nepotism, which are better discussed some other time.
Without belabouring the issue, the leaderships of NIMASA and the Federal Ministry of Transport are accountable for the comatose state of the shipping sector. 

They have one more chance to redeem themselves by disbursing the CVFF and reviving the fleet maintenance subsidy. The lesson from China is a good one to imbibe. 

Monday, 20 October 2014

Jonathan's anti-people policy

Implementation of the hike in tariff of imported vehicles will place the cost of vehicles beyond the reach of about 90 percent of Nigerians, increase the cost of transportation by at least 50 percent and increase inflation before the end of this year. It is for these reasons that I join my voice to those of concerned patriots to call on the Federal Government to halt implementation of this obnoxious policy to save the masses from further hardship.
I believe the new automotive policy will be bedeviled by several problems. First, there is a huge gap between demand and local capacity. Local production capacity of automobiles by all the assembly plants in the country today stands at a pathetic 45,000 units per annum while demand stands at 800,000 units per annum.
There are a handful of assembled-in-Nigeria vehicles alright but how many Nigerians are able to buy such vehicles? 

The price of locally-made vehicles is way out of the reach of average Nigerians and this is mostly as a result of the collapse of public infrastructure including power supply. Infrastructural challenges will make it impossible to produce enough cars locally and cost-effectively
for the Nigerian market.
Imported second hand cars have an average price N750,000 million while the cheapest locally assembled car sells for N3.5 million. It is just too expensive to manufacture in Nigeria and President Jonathan's argument that Nigeria would soon begin to export cars is a mere pipe dream. Who does he plan to sell the cars to and for how much? Under the current production environment in Nigeria, can any manufacturer churn out products that can compete with those made in Taiwna, China, Japan and Korea?

Truth is if government makes it too difficult to import cars into the country legitimately, importers will do so through unapproved means. And with over 1,400 illegal entry routes, over 80 poorly manned borders, and an ill-equipped and largely corrupt Customs structure; smuggling will boom. So the federal government is inadvertently promoting smuggling through its ill-conceived policy.  

Whatever we manufacture here will be insufficient for the local market and cannot compete on price so the imported ones will still reign supreme in the market place. 
There is a precedence that has cost this nation well over N365 billion in a year – an amount that would have been sufficient to reconstruct and modernise the Lagos-Ibadan expressway and the Apapa-Oshodi expressway together. The ugly consequences of Jonathan's ill-conceived and hastily implemented policy on rice, introduced in the first quarter of 2013 still stares us in the face. It is similar to the new automotive policy.
Supposedly to support Nigerian rice producers and make their product competitive, the federal government in 2013 imposed a 100 per cent levy on polished rice in addition to a duty of 10 per cent. This was meant to discourage rice production despite knowing that the local capacity was, and still is, insufficient for the overall Nigerian market.

Since there is a huge demand which cannot be satisfied by local production because of the capacity and price, a massive amount of rice is being smuggled into the country from Benin Republic on a daily basis. Experts estimated that over a million tons of rice was smuggled into the country between April and December last year. Nigerian ports lost all their rice shipments to Cotonou port and the commodity eventually commodity found its way, under the nose of our Customs operatives, into our market illegally. 99 per cent of the rice consumed in this country during the past Christmas and New Year festivities was smuggled in.
The consequence has been a loss of huge revenue to terminal operators and the three tiers of government through customs duties, value added tax, corporate taxes and others.

Of course, the price of rice shot through the roof in the market while local production – which was to have benefited from the policy – has not recorded any significant increase.
Since there is a huge demand of vehicles which cannot be met by local production because of the capacity and because of the price, the Nigerian buyer will be inadvertently left with no choice but buy smuggled vehicles from Benin Republic just as we have seen with rice.

It may interest Mr. President to know that if his policy is implemented, over 600,000 vehicles will be smuggled from the ports of neighbouring countries mainly Benin Republic into Nigeria annually. 
I heard there was a big feast in the Presidential Palace in Cotonou to celebrate the folly of the Nigerian government.