By Steve Agbota
Bonded terminal operators in Nigeria have raised the alarm over the threat to over N3.5 trillion invested in bonded terminals across the country.
They said the worrisome development stems from poor local content integration within the federal government’s 2006 port concession reforms.
At the inaugural Portnews Summit 2024, themed “Port Reforms and Local Content: Has Nigeria Fared Well?”, held in Lagos on Thursday, investors under the umbrella of the Association of Bonded Terminal Operators (ABTO) expressed growing concerns over the declining state of bonded terminal operations. They warned that the sector’s investment is under serious threat due to systemic neglect and a failure to prioritise indigenous operators within the broader port reform agenda.
The General Secretary of ABTO and Managing Director of Harsecom Logistics Limited, Haruna Omolajomo, painted a grim picture of the current state of the industry.
He revealed that from 2001 to 2008, bonded terminals contributed more than N1 billion annually to the federal government’s revenue, operating at 80-100% capacity.
However, the sector’s contribution has dwindled drastically, with annual revenue now hovering around just N300 million and most terminals operating at less than five percent of their capacity.
“Bonded terminals, once vital to the functioning of Nigerian ports, are now largely abandoned, with some being repurposed for non-logistical activities such as football events,” Omolajomo said. He pointed to the Dala Inland Dry Port as a glaring example of the sector’s decline. Despite an investment of over N500 billion, the port, which has the capacity to handle 25,000 containers, has not processed a single container since its completion.
“From 2001 to 2008, bonded terminals played a crucial role in decongesting Nigerian ports, handling over 500,000 TEUs annually to prevent vessels from diverting to neighboring ports like Cotonou. But today, the facilities are either underutilized or left in disrepair,” Omolajomo explained. He blamed the 2006 port concession reforms for the marginalization of bonded terminals, which were overshadowed by foreign concessionaires providing door-to-door services. This shift has left local operators sidelined and struggling.
Omolajomo issued a stark warning that unless the government takes immediate action, bonded terminal operations in Nigeria could face extinction. “What we are witnessing is a form of economic recolonisation,” he said, stressing that foreign companies are benefitting from the neglect of local operators. He pointed out that five bonded terminal operators that were active in 2006 have since shut down due to crippling debts.
He called on the Nigerian government to urgently review its contractual arrangements with foreign concessionaires to protect the future of local operators and promote the growth of local content within the industry.
Wale Oni, Publisher and Editor-in-Chief of PortNews, also weighed in on the issue, highlighting how initiatives like off-dock terminals and Inland Container Depots (ICDs), supported by the Nigerian Shippers Council, were successful in alleviating port congestion in response to increasing trade volumes. However, Oni noted that the reforms implemented between 2004 and 2006, which privatized key terminals and handed management to foreign concessionaires, had a detrimental effect on Nigerian-owned bonded terminals and ICDs.
“The Dala Inland Container Depot in Kano, despite its state-of-the-art infrastructure and rail connectivity, has not received a single container 18 months after its commissioning,” Oni lamented. He criticized the shift towards foreign management, which he said has left Nigerian operators struggling to survive, while local facilities remain underutilized.
Both Omolajomo and Oni agreed that a comprehensive review of Nigeria’s port reforms is urgently needed. They emphasized that without prioritizing local content and protecting indigenous operators, Nigeria risks losing its once-thriving bonded terminal industry, with lasting negative consequences for the nation’s economic growth.