Double charges, clearing hiccup make Nigerian ports most expensive for businesses
Double charges imposed on importers and exporters of consignments by service providers and government agencies operating in Nigeria’s seaports, and cumbersome documentation procedure have been identified as reason Nigerian seaports are rated the most expensive in the West African sub-region.
BusinessDay learns that these factors, which not only result to high cost of doing business, but also engender an unfriendly business environment, have caused about 40 percent of Nigerian bound cargo to be taken to ports in neighbouring West African countries and brought in through the land borders. On the other hand, shipping companies that bring imports into Nigeria in line with the contract of carriage, charge high freight on imports probably to cover for the cost of handling import container that are loaded back to the country of origin as empty container, due to the low level of export business in Nigeria.
Recall that a recent survey carried out by NAFITH, an international company contracted by the Nigerian Shippers’ Council (NSC) to study challenges of cargo clearance at the ports, reveals that Nigeria needs to introduce electronically powered operations at seaport to ease the problem of port users. The survey recommends that Nigeria Customs Service (NCS) needs to introduce single window model of cargo clearance, presently the global best practices.
“Nigerian port needs paperless Customs; e-payment of Customs duty; e-container loading list; electronic risk-based inspection; connecting other government agencies under one platform and e-permit exchange among operators as manual operation incur cost for shippers,” the survey advises.
“Government agencies and service providers at the port are guilty of passing double bills on importers and exporters. The shipping liners ‘Terminal Delivery Charges’ (TDC), for instance, is one of the charges that are collected from shippers by both terminal operators and shipping companies,” Lucky Amiwero, an industry analyst, said in a position paper sent to BusinessDay.
According to Amiwero, the presence of multiple government agencies involved in cargo clearance and documentation process for import and export cargo constitutes serious bottleneck through cumbersome procedure that has associated delays and high cost implication on shippers. He believed that money earned from such duplicated charges cannot be beneficial to the economy because such result to business loss, as many Nigerian importers now prefer neighbouring ports in Cotonuo, Togo and Ghana, where it was cheaper to do business.
Amiwero, who requested for setting up of trade procedure committee (TPC) that constitutes industry experts whose mandate would be to address the obstacle and the shortfalls inherent in the system as related to export and import trade, believed that implementation of such recommendation would properly position Nigeria to drive non-oil export and increase import in short-run.
Boniface Aniebonam, founder, National Association of Government Approved Freight Forwarders (NAGAFF), who disclosed that the cost of clearing cargo in Nigerian ports had increased by 500 percent in the last 10 years of port reform embarked on by the Federal Government to reduce cost, blamed service providers and government agencies’ tariff regime and billing system for the woes experienced by shippers.
“Port reform is supposed to make our ports friendly in terms of cost of doing business at the port but Nigerian port is now rated as one of the most expensive port to do business. According to the concession agreement, the Federal Government through the Nigerian Ports Authority (NPA) is supposed to provide power to the terminal operators to reduce cost but these terminals are not even connected to the national grid. This result to high cost of generating power, which is directly or indirectly passed unto shippers, “he said.
Kayode Farinto, national publicity secretary, Association of Nigerian Licensed Customs Agents, who stated that Nigerian ports were losing business to high cost and cargo clearing bottlenecks, noted that a lot of rent-seeking was ongoing among service providers and agencies of government. These operators, he said, ride on deficiency in the system to enrich themselves, including the officers of government agencies like Customs men, who promote their personal interest and short-change government of its revenue.
“It was painful that shippers are forced to pay storage rent and container demurrage to terminal operators and shipping companies on public holidays and Sundays without any consideration, and they also pay even when the delay is caused by the bottleneck in the system,” he said.