‘Import business will be slow early in the year but will pick up middle of the year’

Tony Anakebe, managing director, Gold-Link Investment Limited, a clearing and forwarding firm, in this interview, spoke extensively on what would shape business activities in 2015, and also highlighted issues that hindered businesses in the previous year, among other issues. Excerpt:

2014 industry review

In 2014, the maritime sector received a boost from the appointment of Nigerian Shippers’ Council (NSC) as the economic regulator for the ports. This helped in stabilising the terminal and shipping charges as well as the movement of cargoes at the ports. Also, the Nigerian Ports Authority (NPA) beefed up the security level at the ports, thereby making the ports’ environment safe for businesses.

In terms of cargo clearance, the Nigerian Customs Service (NCS) embarked on some reformations that helped in fast tracking cargo clearance at the ports. Though, the Pre-Arrival Assessment Report (PAAR) experienced some hiccups in the first quarter of the year, but it started normalising in the second quarter of the year such that PAAR was issued in days, and it had slight improvement on cargo clearance, even though it was not 100 percent successful as it was conceived to be.

In terms of revenue, it helped Customs to block all revenue leakages, thereby boosting Customs’ revenue and saving the nation billions of naira that was formerly being earned by destination inspection service providers. The implementation of the auto policy in 2014 resulted to the reduction in the volume of imported vehicles by at least 40 percent.

Challenges

The year brought forth lots of problems, which the government needs to improve on to enhance port business in 2015, especially in the area of improving on the accessibility of the two major roads into the port (Apapa-Oshodi Expressway and Ijora-Apapa Road). The volume of traffic on the roads does not happen elsewhere in the world because the port road is usually 100 percent free from illegal parking of trucks and tankers. The issue of persistent traffic gridlock was the most challenging thing that happened to the port system in 2014.

We, port users, do not want to experience such in 2015, because Nigeria can only facilitate trade and generate more revenue if we make our ports user friendly. Just like Olisa Agbakoba rightly said, “the maritime industry is about 88 percent untapped,” and I strongly agree with him.

Another challenge is the issue of lack of adequate cargo handling equipment at the port. Therefore, Shippers’ Council needs to encourage the terminal operators to invest more into acquiring new equipment this year.

To enhance cargo clearance this year, Nigerian ports need a database that would connect Customs, terminal operators and shipping companies so that information would be rightly shared among them. This will help in removing the delay cleared cargoes experienced at the ports.

Impact of naira devaluation on imports

Currently, world economy is facing recession due to falling price of crude oil, and as an oil dependent economy, this is seriously affecting Nigeria. This is a good time for the economic team to diversify the economy, and tap into the resources in other sectors such as maritime. We see a reduction in the volume of imported goods due to high cost of foreign exchange such that importer of three containers will now be importing only one container or one plus half, because the value of currency with the importer last year is no longer the same this year.

Inflation rate would also go up because the market price of imported goods would rise as importers will sell their commodities according to how they bought. For the manufacturing sector where most manufacturers hardly make use of locally sourced raw materials, we see a situation where some manufacturers will benefit while many others will not because the cost production will also go up.

Therefore, I suggest that all incentives for the manufacturing sector should be discarded, and they should be encouraged to source their raw materials locally if we are to make any headway. This is because most Nigerians abuse Federal Government incentives by diverting it to their own benefit.

Outlook in 2015

Given the high exchange rate and the forthcoming national election, import business will start on slow pace early in the year but will likely pick up in the middle of the year.

Most Nigerians spend a lot on demurrage and storage charges, but we are canvassing for one week demurrage free days from both concessionaires and shipping companies. Here, shipping companies collect container deposit that is worth more than $1,000 as well as demurrage that is on the high side. Thus, the regulator needs to step in and put an end to this.

Also, agencies operating in the ports must be advised to help in fasting up the process of our clearing system, so that people can take delivery of their consignment as at when due. Customs needs to reduce the number of units that control cargo clearance at the ports, including those that intercept cargoes that are on transit so that importers can take delivery of their consignment very quickly. We need to also reduce the number of human interface at the ports, especially between Customs and agents so as to reduce corruption.