Monday, October 7,
2019 / 06:35PM / By Yinka Ogunnubi /
Header Image Credit: CBi
On the 18th of May
2016, the acting President Prof Yemi Osinbajo signed the executive order on the
Ease of Doing Business in Nigeria. It contains far-reaching initiatives to be
implemented by MDAs to ensure easier access to information, processes and
documentation, as well as promote efficiency in public service delivery. The Executive
order had five major planks namely:
With specific regard to Port Operations, there were 6
reform initiatives chief among which were:

- All agencies
physically present in the Ports are to harmonies their operations into one
single interface station in one location in the port and implement by a
single joint task force at all times.
- The Apapa Port to have 24-hour operations
- Export Terminal in each port dedicated to export of
agricultural products
- No bribing and
No Touting policy
Why
was there special focus on the Ports? First because one of the index of
measurement of the East of Doing Business report is "Trade across
Borders", an indices that we rank 183 out of 190 countries and secondly
because there is a strong correlation between trade and GDP. In a world were
80% of trade are sea borne, ports when well managed are enablers of national
development. For instance, studies show that US ports contribute 20% to the US
GDP (https://www.ttnews.com/articles/ports-shipping-industry-responsible-26-us-gdp-study-says).
Unfortunately,
in Nigeria, we are unable to determine the contributions of the maritime
industry to the GDP as it is not captured as a line item.
It
is within this light that we examine the report of the survey by the Convention
of Business Integrity (CBI) on operations at Nigerian Sea Ports and Terminals.
The report allowed us to analyze from the port users perspective the feedback
regarding the operational and governance effectiveness of the ports,
professionalism of port officials, ethical conduct especially those bothering
on corruption and in general the effectiveness of the ease of doing business
reforms that have been put in place.
The
report set out to establish the following:
- Presence or lack of
clear procedures and processes backed up by relevant laws (including
obsolete laws and procedures) in many areas of port operation including
such processes as Temporary Imports, Permanent imports, Midstream
discharge, Emergency importations (Hand carry policy) etc
- Exercise of
discretionary powers by Customs officers and other port agencies including
Terminal Operators and Stevedoring Companies including the discretionary
powers to impose customs duties and tariffs, classification of goods, port
charges and the potential disruption of operations of companies that
depend on the ports for the importation of critical parts and goods for
their operations.
- Existence or absence
of a system of bottlenecks made possible due to wide discretionary powers
of port officials and the likelihood for such powers to be used to create
opportunities for graft and extortion of port users.
- Payments for services
not rendered by port agencies including the dredging of waterways by port
users, payment to Stevedoring companies without any services being
rendered; collection of pilotage fees in areas outside pilotage districts
including international waters etc;
- Awareness or lack of
awareness of port users on the existence of the port agencies SOP - Standard Operating Procedure
- Availability or
absence of complaints/feedback desks/redress mechanisms and the
effectiveness of such where available.
The
report established the following:
- There is presence of
clear procedures and processes backed by laws. The procedures as backed up
by law are instituted to guide operational processes for efficiency at the
ports and terminals as managed by Nigerian Ports Authority. And that port
users are aware and familiar with these procedures and that they are
transparent, consistent and predictable.



- There is exercise of
discretionary powers by port/terminal officials relative to processes,
fees, charges and fines. This encourages corruption and ultimately,
inefficiency in the operations of the ports and terminals.

- Ports and terminal
officials enjoy exercise of wide discretionary powers even when these are
in conflict with the legal procedures and processes. These discretionary
powers are sometimes indiscriminate, bridge port processes, lead to
bottlenecks and create fertile ground for corruption and graft and the
procedures become convoluted. Often, such exercise of discretion creates
opportunities for outright graft and extortion of port users.

- There are payments
for services not rendered by ports and terminal agencies and these
payments are often at the discretion of officials. Even when customers
know these services are not rendered and levies are discretionary, they
still comply to facilitate their businesses and avoid delay.
- Grievance mechanisms
are available at the ports but some customers are not aware of these
mechanisms. For those who are aware of the availability, most of them have
never used the mechanisms. Even in the case of grievances, customers often
choose not to complain because they perceive the process as subjective.
There is perceived weak enforcement and poor investigative structures and
ineffectiveness in the case of complaints/feedbacks. Port users do not
have total trust in the complaints/feedback mechanisms as they consider
the mechanisms part of the problematic processes. There is also the belief
that the mechanisms will always lead to backlashes.


- Fees are also
verifiable but even when they are verifiable, officials at ports/terminals
still exercise discretionary powers in the processes.

- There are, generally,
poor infrastructures at the ports/terminals and this cause delay in
accessing services at the ports/terminals and make businesses cumbersome
and unnecessarily expensive to the extent that they are frustrating.

In summary, much against NPA's vision to be the
leading Port Authority in Nigeria and its mission to deliver efficient port
services in a safe, secure and customer friendly environment, the data actually
suggest that the presence of operational challenges as enumerated above, create
bureaucratic bottlenecks and incessant delays, that facilitate illegal charges
and undermining of the Standard Operating Procedures.
According to the Lagos Chamber of Commerce and
Industry (LCCI) and its private sector partners, these negative operational
elements lead to huge revenue loss of as much as about N2.5 trillion in annual
corporate revenue in the ports industry. While Capacity utilization stands at
38-40%, approximately 40% of businesses located around the ports communities
have either relocated to other areas, scaled down operations or completely
closed down.

There are so many things in this report to unpack. But
in my analysis of the data, what I can deduce is the following:
- There is clearly an
abundance of will politically and by the administrators to put in place a
system that will ensure the delivery of an efficient and effective port
system. For instance, there has been a number of initiatives from
The Federal Government and Nigerian Ports Authority to ease procedures at
the ports. Especially through the Presidential Enabling Business
Environment Council. These efforts include reduction of documentation of
imports from 14 to 8 stages, reduction of export documentation from 10 to
7 and removal of Cargo Release Order, Manufacturers' Certificate of
Production, Payment, receipt of Customs Fee and so on from documentation.
- The fact that a large percentage of the users
acknowledge the existence and usage of a Standard Operating Procedure and
allude to its transparency and consistency, speaks volumes about the efforts of
the NPA and the Shippers council to ensure best practices.
- Even though the
report in its executive summary seem to suggest otherwise, a majority
(85%) of the port users acknowledge knowledge of the grievance mechanism
and over 80% of them have actually used it. This means that there is a
growing appetite from port users to test the system even at the risk of
being victimized in the process. The import of this should not be lost.
Users want a more transparent, fair and corruption free system.
-
- It is obvious to me
that the issue at play here is not that of a lack of enabling laws or
enabling procedures, but rather a lack of compliance by State actors (e.g.
Customs, port officials) to comply with existing rules without relying on
their discretionary powers. Add to that the gross infrastructural deficit
to adequately cater for the volume of activities (which creates gridlock
outside the port), you would have nailed down the two biggest enablers.
These operational challenges creates the perfect storm for graft and corruption
to thrive. If there is no effort to eliminate or significantly reduce the
use of these discretionary powers, the ease of doing business indices is
not likely to improve.
It is necessary to acknowledge that under the current
leadership of the Customs and the NPA, a lot of efforts have been put into
making the processes seamless, payments cashless and ease of operational
bottlenecks, but some of these efforts (like the increase of the rent-free period
for cargoes stowed at the terminals from 3 to 21 free days and increase in the
demurrage free period on return of empty containers from 5 days to 15 days) are
temporary or palliatives at best. There is a need to have a full, integrated,
comprehensive and structural approach to the problem.

For instance, if there is no solution
to the infrastructural deficits in the port, there will no solution to the
gridlock which in turn increases the cost of import (by up-to 600%) and is the
major enabler of the corruption that is seemingly acceptable in the ports. It
doesn't matter how good and transparent your procedures are, if the operational
facilities are inadequate, you will enable graft and also re-direct
transactions to other more efficient ports in the region.
This is probably the reason why regardless
of efforts to improve the ease of doing business, Nigeria is hardly increasing
in the index. A lot needs to be done and all stakeholders must be on the table
to carve out a lasting result. An efficient, effective and well functional
port, will not only increase our ease of doing business, it will also lead to
higher government revenue and growth. It is within this light that I look
forward to the round-table discussions on "Service Delivery at the Nigerian
Ports" taking place on Tuesday 8th of October 2019 in Lagos.
Hopefully, this is herald the beginning of a long conversation on the way
forward.

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

Related News - MARITIME
1.
Port Reforms: Why Nigerian Ports Lose Money;
Understanding The Economics of Inefficiency and Sleaze
2.
CBi and MACN Explain Inefficiency At Nigerian Ports;
Corruption Still A Problem
3.
Maritime Anti-Corruption Network (MACN) to hold
Session on Service Delivery at The Nigerian Ports
4.
CBi and MACN to hold Round-Table Session On
"Service Delivery At The Nigerian Ports"
5.
International Maritime Organization 2020 Deadline
Fast Approaching
6.
Nigeria Maritime Industry
7.
Mauritius - Eyeing A Place on Maritime Silk Road
8. Japaul Oil and Maritime Services Plc Appoints Mr.
Akinloye Daniel Oladapo as Ag. Managing Director
9.
Average Water Transport Fare Increased By 0.57% MoM
in May 2018 - NBS
10. 4,175 Ocean Going Vessels Recorded at Nigerian Ports
in 2017
11.
Lagos to Strengthen Infrastructure On Waterways, to
ease Transportation
12. Average Fare Paid by Passengers for Water Transport
Increased by 6.05% MoM to N631.55 in Dec 2017
13.
Kenya's First Commercial Cargo Train Begins
Operations
Related News
- Doing Business 2020 Rankings:
Nigeria Named One of The Top 20 Improvers
- CAC Apologises For The Current
Disruption Of Its Online Services; Sets Up CSS Nationwide
- CAC Makes Changes To Pre And
Post-Incorporation Processes On Its Portal
- PEBEC Engages Stakeholders on
Legislative Reforms, Agribusiness and Apapa Gridlock
- PEBEC Engages NBA Section on
Business Law On Provisions In CAM Bill 2018
- 2nd Annual PEBEC Awards
Recognises MDAs, Public and Private Sector Supporter
- Transmit CAM Bill 2018 For
Assent Into Law, Now - Business Community
- CAM Bill 2018: Legacy or
Laggards
- Reforming The Business Climate
In Nigeria: Critical Changes Introduced By The CAM Bill, 2018
- Why Nigeria Needs To Urgently Pass
and Sign The CAM Bill 2018
- FG Launches PEBEC REPORTGOV.NG
App, To Improve Nigeria's Business Environment
- PEBEC Commences Fourth 60-Day
National Action Plan (NAP 4.0) on Ease of Doing Business
- How PEBEC Is Improving Trade
Across Borders in Nigeria
- PEBEC Holds Lagos Stakeholders
Forum, Reports 140 Business Reforms in Three Years
- Kano Judiciary Launches Small
Claims Court for Prompt Resolution of Commercial Disputes for SMEs
- Perspective on the Presidential
Executive Order 007 with Dr Tayo Aduloju
- Executive Order 007 On The Road
Infrastructure Devt and Refurbishment Investment Tax Credit Scheme

