Doing Business in Nigeria | |
Doing Business in Nigeria | |
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Saturday, October 5, 2019 / 06.00PM / Teslim Shitta-Bey, Managing Editor, Proshare/Header Image Credit: EcoGraphics
Sea ports and terminals in Nigeria are amongst the
world's most inefficient cargo handling facilities says a recent survey
produced by the Convention on Business Integrity (CBi).
The survey
commissioned in 2018 and published in August 2019 notes that Nigeria's sea
ports suffer from a cocktail of challenges ranging from inefficiency to
corruption. The short list of 'pain points' for Nigerian ports, according to
the survey, included, but were not limited to the following:
These challenges have led to Nigerian ports and
terminals being amongst the most expensive in the world; inefficient, and
allegedly riddled with corruption, the poor value propositions of Nigeria's
maritime handling facilities has resulted in individuals or group of
individuals taking advantage of the poor conditions of port infrastructure,
slow processing time, and wide discretionary powers of officials to create
caches of personal cash.
Mapping the Ports Problems/Corruption
Monsters
In addressing these problems, CBi's 2019 survey notes
the following action points that need to be addressed:
Port Challenges; The Other Layers
CBi's report further notes key challenges to port
effectiveness and efficiency along the following lines:
The PESTEL Framework:
Political Factors: Politics
plays an intrusive role in deciding appointments and taking decisions
concerning port charges or waivers. This discretionary bias creates problems
for port capacity as workers may not be the best for the jobs at hand.
Economic Factors:
Rent-seeking and entitlement revenue models by individuals leads to situations
were greed defines the actions of port/terminal officers and port/terminal
patrons. The survey notes that, "Many public officers are themselves
insurance covers for many in their society where many are unemployed thereby
further creating and fueling the propensity for cycle of corruption within the
economic system of the port".
Social Factors: A
poor social value system and attitude towards productivity and reward has
created problems around individual attitude to work. The CBi survey observed
that, "the common orientation in Nigeria is that the end justifies the
means. Nigeria is a system where people do not ask how people do their work to
earn a living but celebrate bogus and unsustainable lifestyles. For example, if
a port official has a fleet of expensive cars and houses in highbrow areas of
the country, Nigerians will likely not ask the source of income but only
celebrate his/her time has come and even wish they were like him/her".
The social dissonance between value-based action and rent-based activity
creates problems for patrons of the local terminals and ports.
Technological
Factors: The report noted that, "There is no sufficient
systemic technology to counteract corruption at the ports". In other words,
high levels of human intervention at every point of the port service value
chain makes the operations of the docks easily susceptible to corruption. If
corruption is to be mitigated in our Ports technology needs to be deployed as a
tool of first choice.
Environmental
Factors: Postings to the ports are often based on ethnic,
tribal or political factors regardless of the innate character of Ports. This
means that several Ports officials are not indigenous to the local communities
and are nor sensitive to unique demographic characteristics and idiosyncrasies.
According to CBi's survey, "Although most Nigerians are poor, the country
in itself is rich in terms of resources and the ports are seen as the nation's
main source of income. Officials and non-officials at the ports are seen as
working in rich sector of the country. This orientation and mindset create a
cycle of mismanagement and corruption".
The report goes on to say that, "Based on the
principle of Federal Character, postings in government establishments are often
based on ethnic and political considerations and these affect the nature of
operations at the ports. It affects how people perceive the ports and how they
operate in them. Even though there are many ports in the country, there is
significant power distance between the supply side and the demand side such
that there are exercises of discretionary powers and demand for unofficial
payments within a broader corruption framework" (see
illustration 1 below).
Legal Factors: Similar
to other areas of economic management in Nigeria the laws governing the
Ports/Terminals are robust and appropriate but availability and enforcement are
separate issues. Even though laws can be said to be adequate, enforcement is a
major challenge, as officials find no personal financial benefits from adhering
to the letter and spirit of official procedures governing port administration.
Says the survey, "Many existing laws, rules and Standard Operating
Procedures (SOPs) only exist on paper while applications are poor as people
rather operate informally and see the laws as meant for the management and not
to be applied thereby making the ports run as business as usual. This creates a
fertile ground for corruption and inefficiency. The letters of the rules and
SOPs are not usually activated to combat corruption and in many cases,
officials and customers innovate fresh strategies to counteract the laws and
rules through which they create systemic legal, regulatory and administrative
bottlenecks for personal gains and against effective ports operations and
anti-corruption since corruption fail where there are seamless operations and
effective rules and SOPs".
Laws and rules are not worth the paper they are
written on, unless they are enforced, and this is the challenge of Nigeria's
Ports/Terminals as are being administered today. If the Ports are to become
more efficient and effective, providing improved service quality at lower
operating costs to users, SOPs need to be followed to the letter, technology
needs to put to use in the context of an enforcement system blind to human intervention
and disruption.
Soji Apampa, chief executive officer (CEO) of CBi
Nigeria, and the Maritime Anti-Corruption Network (MACN) will need to do more
than report writing and engage the federal authorities in actionable programmes
to get the Ports working competitively driven by private economic imperatives
and pervasive use of technology.
Illustration 1 The
Economic Burden of Ports/Terminals Inefficiency
Source: Proshare Content, Research
Behind the Walls of Fear
The report noted a myriad of challenges associated
with gathering information needed to assess the conditions of port operations.
According to the report, the Research team "encountered some challenges
during the primary data collection process. This was not strange to the team
given the nature of issues interested in and the general contexts of study
which have been in the front burners of national and global discourses over the
years. There was a high level of ambivalence, suspicion and resistance on the
part of some respondents. Some people outrightly refused to participate citing
frustration with the systems. Such people claimed problems at the
ports/terminals have existed for too long without much serious positive
interventions to address the problems. Many were frustrated with the system and
have resigned to fate and see no reason to participate in any study."
The review went on to note that respondents developed
a chill when they observed that their observations were to be recorded, "There
were also cases where some agreed to participate but refused to participate
within the ports/terminals for fear of persecution in case they give
information that indict the system. They did not want to be seen to be speaking
against the system for fear of reprisal even when they were assured of confidentiality
and anonymity. They therefore agreed to be interviewed elsewhere or virtually.
There were also cases where some people who have agreed to be interviewed
blatantly refused interviews when they saw electronics to be used for
interviews. They thought their voices were to be recorded so they refused for
fear of the voices being used as evidence to victimize anyone who speaks
against the system".
Sweating the SWOT
To understand the underlying difficulties of getting
Nigeria's ports working at the competitive levels of Europe and the America's,
CBi's report offered a strength, weakness, opportunities and threat or SWOT
analysis to provide insight into the state of port operations and
administration (see illustration 1 below)
Nigerian ports have well-trained officials with
intensely competitive customers and a high level of port service demand. The
ports and terminals are politically stable with proper supervisory frameworks
but burdened by a perception of pervasive corruption.
The impression that Nigerian port officials are
corrupt is compounded by visibly poor infrastructure, excessive discretion on
the part of officers and weak implementation of anti-corruption laws. Politicization of the public service has also
hurt port performance. One way out of the problem of efficiency and
discretionary abuse would have been the use of technology, but this has been
inhibited by those that currently benefit from the system as it exists
presently.
The problems of corruption, rampant officer discretion and poor infrastructure are internal to the port management system, but external factors that may influence the port sectors future include, but are not limited to, the following:
These opportunities would need the authorities to
address the threats posed by:
Sweating the Nigerian ports and terminals SWOT would require a set of bold and forceful initiatives in the areas of infrastructure and investment in technology to remove or at least reduce the amount of discretionary powers exercised by port officers.
Illustration 2 SWOT Analysis of Nigerian Ports
Source: CBi 2019 Port Users Survey
Report
Getting The Ports Operational Framework
Right; Beyond Talk and Intentions
To reconfigure port efficiency and effectiveness to
enhance regional competitiveness CBi's report takes into account strategic
objectives and actions which if implemented could bring the desired results in
port and terminal performance. CBi's Strategic objective/Impact Matrix provides
clarity about the needed actions to bring the local ports to international
standards of operation (see illustration 2/Matrix below).
Illustration 3 Strategic Objectives/Indicators Matrix
Source: CBi 2019 Port Users Survey Report
The Search for Clearer Waters
To improve the Nigerian economy, subsystems need to be
optimized, one of the most import subsystems are Nigerian ports and terminals,
the ease of doing business is critically constrained by the challenges
importers and exporters face at marine docks. For the overall strategy of
improving the quality of the business environment to be achieved the government
and private sector agents in the maritime sector must be prepared to make the
CBi Report 'actionable'.
Unlike standard reports that gather dust in government
cabinets, this report must do more, it must make Nigerian ports, efficient,
effective and competitive for the country to predictably grow beyond the 2 per
cent resistance growth rate of the past four years.
According to CBi's Survey Report, "There are charges that are not transparently arrived at and they could not ask valid questions/explanations in many instances. There is poor infrastructure, non-compliance with rules and regulations, exercise of discretionary and unofficial powers as well as poor infrastructures breed inefficiency that affect level of predictability and consistency at the ports. For instance, in Apapa and Tin Can, gridlocks have made it impossible to project how long it will take to finish and deliver goods and this has led to skyrocketed prices of doing business. Port congestion is another issue affecting consistency and predictability. Corruption and exercise of discretionary powers by officials also create problems. There is over concentration of activities at the Lagos Complex Apapa, Tin-Can Island and Port Harcourt ports while most other ports/terminals in the country are poorly used. The pressure on these heavily demanded ports/terminals overstretches capacity and breed corruption and inefficiency which partly account for most of the problems identified in the maritime industry" (see illustration 3 below).
Illustration 4 Port/Terminal
Business Over 12 Months
Source: CBi 2019 Port Users Survey Report
Improved policy framework with intensive use of
non-human supervised compliance would enable the extraction of greater levels
of value addition across ports and terminals.
The need for private sector intervention in port
development is evident but recent disagreements between private sector operator
BUA and the Nigerian Ports Authority (NPA) is an indication of
the challenges that could frustrate a clearer direction towards the needed
private public partnership (PPP) in the improvement of port operations and
incremental growth in capital
expenditure for port infrastructure (see "Our Case: Between NPA and
BUA Ports and Terminal, Port-Harcourt").
Conflicts between Nigerian private port operators and
government agencies can only lead to sub optimal performance of the sector;
just as in a social marriage, success comes from tolerance and commitment and
not impatience and irritation. There is a need for clearer waters in the
relationship between government and the private sector to develop Nigeria's
marine infrastructure and improve the management of its ports and terminal
facilities. Blue ocean strategies do not emerge from Red ocean battles.
On Tuesday October 8, 2019 the Convention on Business
Integrity (CBi) in collaboration with the Maritime Anti-Corruption Network
(MACN) will organize a round table session with stakeholders to discuss the
outcome of its recent survey and chart ways of building a transparent and
robust operating standard that will improve the ease of doing business at Nigeria's
ports and terminals.
Download PDF Copy of Port Reform Report
1. Operations At Nigerian Sea Ports & Terminals: Ports Users Survey Report - Proshare
2. Operations At Nigerian Sea Ports & Terminals: Ports Users Survey Report - CBi
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