Nigerian ports and timely cargo clearance

For many years now, clearing cargo at Nigerian ports takes unnecessarily long periods of time due to bureaucratic bottlenecks. As a result of the logjam, importers, exporters, manufacturers and clearing agents pay huge amounts as demurrage. That challenge may soon be over following the recent launch of Phase One of the National Single Window (NSW) initiative by the Federal Government. One of the objectives of the plan is to drastically cut cargo dwell time at the ports from the current period of over three weeks to less than seven days. Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, who unveiled the initiative in Lagos recently, said the move “represents a decisive step towards modernising Nigeria’s trade ecosystem”.

We heartily welcome the plan expected to start before the end of this year. It is a step in the right direction. It will serve as an integrated approach to address transaction delays at the ports. The plan also coincides with government’s plan to upgrade Apapa and Tin Can Island ports at the cost of £746 million. The contract for the refurbishment of the ports in Lagos was awarded to ITB, a subsidiary of the Chagoury Group. This, according to the government, is also designed to reduce cargo dwell time, as well as reduce trade costs and unlock economic growth.

Statistics have shown that that cargo dwell time at the Nigerian ports is about 475 per cent higher than the global average of four days. This long period in clearing cargo at the ports leads to high cost of doing business in the country. It also hampers the competitiveness of Nigerian goods in the international market. About 75 per cent of cargo dwell time in Nigerian ports is often spent on documentation, Customs processing and other regulatory approvals. All of this hampers efficiency of business.

To make this initiative worthwhile, government should fast track the inclusion of electronic submission of licences, permits, certification, digital manifest processing, centralised risk management across agencies and ensure transparent e-payments. This will eliminate human interface, paper-based processes, ensure faster document processing and reduce inefficiency.

There is need for improved stakeholder coordination. The Customs, NAFDAC and the Standard Organisation of Nigeria (SON) should perform joint inspections to reduce time and costs associated with separate agency processes.

Recent statistics show that clearing of goods activities have either been halted or significantly scaled down in recent months, with over 5,000 cargoes yet to be cleared. This has resulted in huge losses to port users in demurrage in recent years. The ports affected are Apapa, Tin Can, Ports and Terminal Multi services Ltd (PTML) command, owned by Grimaldi Group, a global shipping giant. The disruption has been attributed to persistent network glitches on the Nigeria Customs service platform which has left manufacturers and other port users incurring about N1.2trillion in the last five years, according to figures from the Manufacturers Association of Nigeria (MAN).

These challenges, which highlight the continued set back in ease of doing business in Nigeria, have affected government’s ambitious $1trillion economy. According to port statistics, a 40-ft container currently attracts a daily demurrage of between N120,000 and N140,000, while a 20-ft container attracts a 24-hour demurrage of N80,000. Also, a car attracts a daily demurrage of N10,000, a truck,N35,000, while a caterpillar is charged a daily demurrage of N45,000. The charges increase after the initial grace period has elapsed.

Due to these exorbitant charges, volumes of cargoes bound for Nigerian ports have been diverted to the ports of Lome, Togo, Cotonou in Benin Republic, and Tema in Ghana. It is also for this reason that the United States and Russia are planning to make neighbouring West African ports as their preferred maritime hubs in the sub-region.

Though Nigeria’s maritime sector is valued in excess of $6.4trillion, and annual revenue estimated at N1.6trillion, Nigerian ports are fast losing their top position in West Africa. That is not good news for the economy that depends on the effectiveness and efficiency of the ports. Nigeria is currently ranked among the lowest African countries in global maritime tourism. Just recently, data from the World Trade Organisation(WTO) showed that Nigeria’s contribution to world trade is at all-time low of 0.33 per cent. This abysmal contribution should make the government to overhaul our ports in the face of global maritime competitiveness.

It is unfortunate that trapped cargoes at the ports have been a recurring issue. Therefore, government should ensure that the National Single Window is seamlessly implemented. Authorities of the Nigeria Customs Service (NCS) must ensure the smooth take-off of the initiative. The Comptroller General of the Customs, Bashir Adeniyi, recently stated that the persistent disruption at the ports that had hampered the clearing of cargoes was partly due to attempts by hackers to infiltrate its digital system.

This is one excuse too many. It is affecting the ease of doing business in Nigeria. Besides, the ports have proved to be major employment hubs, creating thousands of direct and indirect jobs, while also accelerating growth in supporting logistics, transportation, and warehousing. It stimulates economic development by enhancing regional trade and improving supply chain efficiency.