Monday, 21 September 2015

We must dump rationalization to fight the rot at our ports

Trapped in the morass of a thieving and an uncaring governing elite that has done everything but govern well, the Nigerian Ports that constitute one of, if not, the most veritable gateways of trade between the import-driven economy and the rest of the world, appear riddled with endemic corruption. Everywhere you go, from the Federal Ministry of Transport, the supervisory ministry that overseers the entire gamut of transport and logistics industry; the Nigerian Ports Authority – a major parastatal in the maritime sub-sector, and to the Nigerian Customs Service – the para-military agency that polices the land, air and sea borders of the country, all your nostrils can sniff is the putrid stench of corruption. And, to all intents and purposes, the three major priorities in all these agencies are: corruption, corruption and corruption.
Dan Amor, June 2012

Nigerian ports are quite expensive but the reasons go much beyond the simplistic argument by the uninitiated who blame it all on shipping companies and terminal operators. The issue is much deeper than that.
Corruption is the main reason why our ports are expensive. There are several unreceipted payments within the system. Unfortunately those who shout the loudest are major contributors to the malaise.
A publication titled ‘Why Does Cargo Spend Weeks in Sub-Saharan African Ports?’ written by Gaël Raballand, Salim Refas, Monica Beuran, and Gözde Isik and published by the World Bank in 2012 ranked Nigerian ports as having the highest cargo dwell time in Sub-Saharan Africa. The book is the outcome of research conducted on ports operations in six countries in the region.
The authors of the book claimed that most ports in Sub-Saharan Africa have average cargo dwell times of about 20 days, compared to three to four days in most large international ports. They blamed the trend on the low level of professionalism of importers and clearing and forwarding agents and the strategies of shippers.
Even the most impenitent critics of the 2006 ports reform programme are agreed that, overall, private terminal operators have added great value to the system by enhancing operations at the terminals, thus contributing to the tremendous boost in ship traffic and cargo throughput Nigerian ports are recording.
Unfortunately, however, the good tidings delivered by the ports reform programme are being fouled by the fact that the cost of doing business at the seaports has remained high owing to corrupt tendencies in the system, largely promoted by the depreciatory roles of officials of government agencies.
A Corruption Risk Assessment (CRA) Report released in 2013 by a consortium comprising the Independent Corrupt Practices and other Related Offences Commission (ICPC), the Technical Unit on Governance and Anti-Corruption (TUGAR), and the Bureau of Public Procurement (BPP), with the support of United Nations Development Programme (UNDP) on Nigerian ports revealed that an importer or agent will require a minimum of 79 signatures of government officials to clear his/her goods at the gateways to the nation’s economy.
This shocking revelation came to the fore after the ICPC, TUGAR and the BPP met with maritime industry stakeholders in Apapa to validate the CRA Rreport. One of the consultants to the CRA Study, who did the presentation of the report to stakeholders at the validation meeting, Constantine Palicarsky, also identified lack of standard operating procedure by government agencies as a major hindrance to ports operations, thus giving rise to corruption in the system.
“It takes 79 signatures to process a cargo in some ports, while, in other ports, it takes up to 100 signatures. This shows that the process is not harmonised, giving rise to corruption,” Palicarsky said.
Identifying rationalization as one of the reasons why corruption persists at the ports, saying that people rationalise corrupt practices, giving excuses why they should not be held culpable, he added: “If we cannot address rationalization, we cannot address corruption.”
Palicarsky also identified ineffective administrative practices and weak institutions as major causes of corruption in the nation’s ports. Other causes of corruption in the system, according to the report, include widespread poverty, with over 70 per cent of Nigerians living below poverty line, serious security problems and lack of independent institution where corruption occurring in the ports can be reported.
The report also identified huge discretionary powers enjoyed and exercised by officials of government agencies as a major source of corrupt practices at the ports.
The CRA findings confirmed that government officials in the ports not only enjoy huge discretionary powers, but also are also able to delay indefinitely the required signing of documents without consequence.
The study was conducted in six major Nigerian ports, including the Lagos Port Complex (LPC), Tin-Can Island Port, Port-Harcourt Port, Onne Port, Warri Port and Calabar Port.
Just last month, the World Bank rated Nigeria among the 16 worst nations in the world in the area of doing business and the third most difficult country for cross-border trade in the Economic Community of West African States region.
A report by the bank specifically placed the nation in 170th position out of 185 world economies polled.
It gave some of the parameters used for the ranking as starting a business; dealing with construction permits; getting electricity; getting credit; protecting minority investors; paying taxes; trading across borders; enforcing contracts and resolving insolvency.
The report listed the parameters used for the regional rating as the time and cost (excluding tariff) associated with exporting and importing standardised cargo or goods by sea transport; document preparation; Customs clearance and inspections; inland transport and handling; as well as port and terminal handling.
In the ECOWAS region, Burkina Faso was ranked the most difficult country for trade across borders at 174. Mali came second at 163 while Nigeria ranked third at 159.
Gambia was ranked the easiest country for trade across borders in the ECOWAS region at 77; Senegal came second at 79 while Cape Verde came third at 101.
While it takes an average of 19 days to export goods at $1,040 per container and with six documents in the Gambia, it takes an average of 22.9 days to export goods in Nigeria at $1,564 per container and with nine documents, according to the report.
It stated that a trader in Gambia would require an average of 19 days to import cargo at $745 per container with six documents. But in Nigeria, it would take an average of 33 days to import cargo at $1,959.5 per container with13 documents.
There were also slight variations in the cost of exports and imports in Lagos when compared with the entire country. In Lagos, for instance, the cost of exports per container was put at $1,380.
The report gave its breakdown as document preparations cost, $280 for 12 days; customs clearance and inspection cost of $350 for three days; inland transportation and handling cost, $300, to take three days.
For imports, documents preparation would take a period of 14 days at $330; customs clearance and inspections, 12 days at $360; inland transportation and handling, two days at $400.
A list of the documents required for imports in Nigeria was given as Bill of lading, Cargo Release Order, Combined Certificate of Value and Origin, Commercial invoice, exit gate, Form M, Letter of Credit, Manufacturer’s Certificate of Production (SONCAP), packing list, payment receipt of customs fees and duties, Pre-arrival Assessment Report, Single Goods Declaration Form and Terminal Handling receipts.
Documents required for export include; Bill of Lading, Cargo Release Order, Commercial Invoice, Customs Export Declaration, Form NXP, Inspection report, Packing List, Technical Standard/Health certificate and Terminal Handling receipts.
Ironically, those whose voices we hear the most are beneficiaries of this jerky system. The more chaotic it is, the better for their pockets. They will rationalize where it benefits them, condemn where it doesn’t and device clever ways of passing the blame, deceiving and confusing the public.
How else do you explain the fact that despite the high and alarming costs identified above, groups are still planning to introduce various charges that are not linked to any services at the port? And they rationalize it!
If you ask me, all charges should be on hold irrespective of what it is called. Let us trim the existing ones and plan to at least match Gambia in the next one year. This should be the crux of economic regulation.

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