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By Chinelo Obogo [email protected] 09051862508
Multiple charges, inadequate infrastructure, extortion and other corrupt practices have been listed among the factors leading to Nigeria’s estimated loss of over $250 millions yearly in revenue in the nation’s air freighting of agro-cargo export produce.
At the second edition of the annual Chinet Aviacargo Conference held recently in Lagos, experts from different subsectors of the aviation industry lamented Nigeria’ was losing out on the immense oppourtunities in the air cargo sector due to many of these practices.
Besides these issues, statistics have shown that Nigeria loses billion of naira annually to informal exports that are not usually documented because they are exported as personal effects. With this form of export, the foreign exchange that would have been earned by the country does not reflect in government’s finances.
The reason for this is because several products exported from Nigeria are not captured in Form M, and foreign currencies earned are not documented because the export of the products do not follow acknowledged official channels since they are usually labelled as ‘Personal Effects’. This kind of informal export trade goes on to circumvent the very cumbersome regulatory requirements and multiple charges by government agencies in the formal export.
Why Nigeria’s cargo aircraft fly out empty
At the conference, experts expressed concerns over the consistently empty cargo aircraft departing the country despite huge agro produce from Nigeria. They said that despite the available cargo aircraft to move farm produce to other parts of the world, as well as trucks and equipment provided by logistics firms to move cargoes locally, these produce still lay waste in various states because there are there are lack of markets and information.
The Chief Executive Officer of Chisco Logistics, Obinna Anyaegbu, said cargo planes leave Nigeria regularly almost empty, yet agricultural produce get rotten in farms showing a huge gap that the company seeks to address.
Recalling how Chisco Logistics leased an aircraft for cargo export but did not get cargo to fill the aircraft, he said: “We leased an airplane two years ago, doing Lagos-Accra when our vehicle service was down. Every single day, we move from Lagos to Accra with buses and trucks. But when COVID-19 hit, we leased an airplane but we had no goods to move. It was a 14 tonne 737 airplane and we were struggling to get two tonnes in a week.
“We observed that the biggest player on the route was DHL and they are bringing about 70 to 80 tonnes of cargo into Nigeria and move it across West Africa. So it is mostly imported goods that are moving via the African routes. Kenya is taking out a lot and they have great supply contract. This is because they meet the international standards.
“We have one of the most nutritious fruits in the world but demand and supply are not meeting at the moment and that is why Chisco Express wants to bridge this gap. We have seen aviation investments go bad, so if we have to do this in the aviation sector, we want to ensure we do this correctly with the government and traders that have contracts for supply in Europe and other parts of the world.
“When you look at the GDP of the country, about 10 to 13 percent is from the logistics sector because this is about commerce and production. We eat and drink every day and things have to move around. We need to pay for logistics. Nigeria’s logistics market is about 60 billion dollar market. If you say our GDP is $500 to $600 billion market, it means 10 percent of this will amount to about $60 billion,” he explained.
President, Aircraft Owners and Pilots Association of Nigeria, Alex Nwuba, highlighted the importance of building cargo airports strategically where there are comparative advantages for traders, farmers and airlines. He however said a major challenge is the information gap that exist in the industry, adding that the Federal Government ought to provide information on things that are being produced, where the market for those things are and the service providers.
Using Anambra and Calabar airports as a case study, he said: “Anambra has a strategy for producing agricultural products and vegetables for domestic and international markets. You can’t move this by road. The airport will be useful to achieving this. Anambra is a huge industrial and commerce based economy and some of these things that are produced within that economy and taken out of that economy will take advantage of that airport.
“In Calabar where there is huge potential for tourism, the state government is building a new airport at Ogudu to bring you closer to that experience. We can take advantage of this. Airports are nothing more than real estate. There are opportunities. The logistics companies have said they have the trucks and means to move goods, the aviation sector said they have the airplanes. We are lacking the information on where things are and the market for those items. We need these market intelligence, so that service providers can take advantage of those opportunities,” Nwuba said.
Multiple charges
At the conference, the Director General/Chief Executive Officer of the Nigerian Export Processing Zone Authority (NEPZA), Prof. Adesoji Adesugba, said government agencies have put up many obstacles and hurdeles which makes it very difficult for the air cargo sector to thrive and that until these hurdles are crossed, he said, government efforts to attract more revenue into the gross domestic product (GDP) will not materialize.
Adesugba, who was represented by Assistant Director Investor Promotion, Augustine Onyekwere, said lack of infrastructure, high cost of aviation fuel, inadequate funding and resources, high cost of operation, insecurity, insurance and corruption and lack of corporate governance, policy and regulation are part of the reasons that the air cargo sector is not thriving and this is costing the country US$250billon on agro-export produce to the country alone.
He told reporters at the conference that eleven out of sixteen charges are illegal, emphasisisng that this is one of the reasons international cargo airlines prefer flying out of Nigeria empty. He said among the 16 charges tracked for goods coming in or departing the country through the airports, only five are officially recognised by the Federal Government while Nigeria’s import-to- export airfreight ratio imbalance stood at 87:13 from available statistics. The implication according to cargo agencies is loss of at least about USD 250 billon agro-export produce to the country.
Adding her voice to the conversation, the Chairman, Export Group of Lagos Chamber Commerce and Industry (LCCI), Mrs. Boson Solarin, expressed her frustration at the bureaucracy and cumbersome regulations that has made it almost impossible for exporters to thrive.
She indicted the Nigerian Aviation Handling Company(NAHCO) for allowing badly processed and packaged items and goods to be exported to other countries, saying it is one of the reasons exports from Nigeria are rejected and unable to compete with cargoes from other countries.
Some of the problems she enumerated are lack of infrastructure, limited export production, lack of capacity for certification and packaging of exportable products, deficiency in the logistics and evacuation of exports, low penetration and access to key markets.
“Should we continue to allow badly processed and packaged items/goods through this cargo sheds? No wonder, our products receive negative comments outside the country, I was worried the only time I went to NAHCO and saw what our people freight out of this country, and we allow them.”
She also criticised the National Agency for Drug Administration and Control(NAFDAC) for the lapses in certifying production facilities, asking why Nigeria should have many registration numbers for the same product and advising the agency to register facility and with facility numbers for each company as obtained at Food and Drug Administration (FDA) in the United States and Hazard Analysis Critical Control Points(HACCP).
On the issue of multiple taxation, she also advised the government to place less emphasis on revenue generation by agencies like NAFDAC. She revealed that that NAFDAC charges businesses about N40,000 for one product and that each business is allowed to produce a maximum of five products even when such businesses have the capacity to do more. She then said that if a business wants to add the sixth product, they are charged N90, 000 for NAFDAC certification.
She also pointed out that small businesses are tasked daily to get Mandatory Conformity Assessment Programme (MANCAP), a mandatory product certification scheme put in place by the Standards Organisation (SON) to ensure that all locally manufactured products in the country conform to the relevant Nigerian Industrial Standards (NIS) before such products are presented for sale in the market or exported but that despite this procedure there are no standards to process the applications. Solarin also revealed that it costs almost N1.5 million to get the minimum third party certification Hazard Analysis Critical Control Point (HACCP) that some countries still accept recalling that in 2021 Nigerian Export Promotion Council (NEPC) bridged the gap when it paid to assist 120 exporters to get certified with HACCP and International Organization for Standardisation(ISO).
Free trade zones at international airports
In order to support the aviation sector, he said the Federal Government designated the four International Airports (Lagos, Abuja, Kano and Port Harcourt) as Special Economic Zones (SEZ) to enable the companies operating at these airports enjoy the benefits of the free zone scheme.
According to him, SEZ can grow the aviation and cargo export in Nigeria with the incentives and concessions available in the Nigeria Free Zones with concepts like tax holidays, one stop approvals as well as 100% foreign ownership of businesses.
He said, “Companies would enjoy complete tax holiday from all Federal, State and Local Government taxes, rates, customs duties and levies, one-stop approvals for all permits, operating licenses and incorporation papers. Duty-free, tax-free import of raw materials and components for goods destined for re-export.
“Duty-free importation of capital goods, consumer goods, machinery, equipment, and furniture. Permission to sell 100percent of manufactured, assembled or imported goods into the domestic Nigerian market and meeting the 35percent value addition. Export duty into the custom territory is calculated based on the value of the raw material or components used in assembling the product not on the finished product’s value,” he said.
Double standards
During one of the panel discussions, the Managing Director, Flight and Logistics Solutions Limited, Mr. Amos Akpan, said that the greatest challenge facing the export of agricultural produce from Nigeria is the downgrading of the quality and species of the produce by foreign countries.
Ironically, the same foreigners, Akpan said, are consuming Nigeria’s farm produce in all the five-star hotels in the country, in events and homes, also pointing out that the same foreign citizens join their produce agencies and market unions to treat Nigeria’s produce differently at international trade.
He listed the farm produces to include: maize, cassava, onions, tomatoes, banana, plantain, palm oil, groundnut, cashew nuts, yam, rice, millet, beans, okro, vegetables, rubber, cocoa and cotton.
Akpan posited that Nigeria’s agricultural produce is in short supply compared to demand and that rubber, cocoa, and cotton are not sufficient to meet the demands of the local processing industries. He said Nigeria does not seem to be the right path towards reaching this goal, arguing that rather than putting in the work to achieve results, they are more engaged in seminars and policy statements, but that what happens in the farms, logistics chains, airports and seaports is far from what Nigerians want to achieve.
Akpan said that more non- recorded export trade is ongoing in airports than those captured by the bureau of statistics. He said entrepreneurs want to build factories to process these agricultural products but that there is no electricity to power the plants, no finance facility, no security and no storage system.
