Nigeria not ready for AfCFTA trade implementation
Nigerian Tribune | 17th November 2022
By Tribune Online
Ocean & Cargo Limited is a service provider in the Nigerian maritime and aviation sector, rendering services for seaport and air cargo logistics. In this interview with TOLA ADENUBI, the Chief Executive Officer of Ocean & Cargo, Aare Jide Taiwo, speaks on issues bedeviling the nation’s maritime industry.
There have been several complaints of inefficiency at the nation’s seaports. How do you think this can be addressed?
The factors that contribute to the inefficiency at Nigeria’s seaports are many but I will start with the infrastructure. Currently, the roads into and out of the ports need to be built and completed. This delays the process of transporting cleared goods out of the port environment which causes a lot of delays for imported goods to leave the port and results in expensive transportation services, which in the long run put additional cost on the goods.
Secondly, automation is an issue. If Nigerian Ports Authority introduces 100 percent automation in the clearing process, this will reduce the clearing time. It will also reduce the crowding and daily traffic issues at the ports. In the long run, this will have a very positive impact on the economy because the percentage of revenue generated from our seaports determines part of the GDP of our economy. If the automation system is properly incorporated, it will as well create job opportunities for the youths who can work from any part of Nigeorganizationsout their daily operations.
Most trucks don’t have business being parked by the roadside within the port environment because it disturbs free movement in and out of the port. Once NPA introduces a full automation system for clearance processes, the trailer parks can be in another state and the logistics approval will be given to private companies. When the containers are ready for pickup, importers will contact the transportation companies online and send to them necessary documents to pick up the container, hence the reason the logistics companies have to be registered under NPA with approved licences. For accountability, all these licences will generate additional revenue for the NPA as regulator. This will solve the problem of long queues and trailers parking on the roadside and blocking free vehicular movement. The present situation we are experiencing has shown that the crowd we see at the port does not translate to productivity because Nigeria port potential is presently underutilised. The full automation of the port will infuse all government agencies and shipping companies into a platform that makes the clearing process smoother and less time-consuming.
The Nigeria Customs Service recently deployed scanners at Lagos ports for cargo examination. Do you think it will boost port efficiency and reduce cargo dwell time?
The recent deployment of scanners at the seaports by the Nigeria Customs Services is highly commendable and in line with best practices globally. This will ease the manual process of inspection and it will result in effectiveness and lesser timing procedures and boost port efficiency with a good effect on cargo dwell time.
The nation’s seaports have gradually turned into dumping ground for containers. How do you think this can be addressed?
The international best practice is for containers to be in use for five to six years and during which they can be refurbished two times before their life span expires. Most of the containers dumped at our seaports are expired containers, and sadly, Nigeria doesn’t have a recycling plant to remanufacture them.
Most of the shipping companies strategically make use of containers that are about to expire to bring goods into our country and choose to abandon them back here, which is economically cheap for them as a form of disposing of them since the Nigerian government does not impose heavy fines on shipping agencies that engage in dumping containers.
If such containers can be taken over by NPA in good time, it should be bid for by members of the public that need them so as to decongest the terminals and create spaces for newly arrived containers. I will appeal to the NPA to grant more organisations that are willing to invest in container terminals approval to own them and adequate transfer will be done so as to decongest the ports.
How do you think the weakening local currency, Naira, affects cargo clearance at the nation’s ports?
The weakening of the local currency has a negative impact on cargo clearance because the clearing fees and tariffs are also affected by dollar exchange rate. The clearing fees have gone up over 100 per cent higher than what the fee used to be some years back.
There have been complaints that the country is losing a lot of cargoes to neighbouring ports due to unfavourable government policies. How do you think some of these policies can be addressed?
I must say that the government knows what to do as regards policy reversing. As we speak, most companies into customs clearing have lost some of their clients because the policies are not very favourable to importers. Some of them have been frustrated out of business, some are bankrupt, some take their goods to neighbouring countries and later smuggle them back into Nigeria.
There is a study that shows that the Nigeria Customs Service at the land borders have recorded an increase in volume of cargo tariffs and revenue generated from freight coming into the country through the land borders. This study investigated the reason for diversions of cargo meant for Nigeria’s seaports to ports in neighbouring countries. That the land borders are recording unusually high cargo traffic shows that importers are engaged in cargo diversions. I will advise the government to improve on operational delays at our seaports which will discourage diversions to neighbouring sea ports.
There are some who believe that when the proposed taxes on foods and beverages are finally implemented, they may spike illicit importation. Do you believe that?
Amid inflation, this will put a lot of burden on Nigerians with numerous unending challenges on the struggling economic growth. The sector players will feel a lot of impact because of excise duty which will rub off on production cost and economy. I don’t believe that introducing the taxes is an illegal act, yet the government should consider the timing and how hard the economy is at the moment on Nigerians.
How prepared do you think Nigeria is for the AfCFTA?
I feel Nigeria is not well prepared for the AfCFTA, but we are ripe and have a mature economy for the agreement. The whole essence of the African Continental Free Trade Area (AfCFTA) is to accelerate intra-African trade and boost African trading positions in the global market by strengthening African common voices and policy space in global trade negotiations. According to the African Union (AU), this trade agreement, if implemented fully, will create a continental free trade zone with a combined gross domestic product (GDP) of $3.4 trillion.
The AfCFTA calls for reduction of tariffs and non-tariffs barriers and the facilitations of free movement of people, labour, rights of residence, rights of investment and establishments.
Do you think that with the coming of the Lekki Deep Seaport, the challenges with other existing ports will be addressed?
The establishment of the Lekki Deep Seaport will encourage shipping agencies and importers to patronise a new port with adequate infrastructure compared to patronising the older port. The present challenges and poor services rendered at the old port will definitely encourage us to patronise the new ports with better infrastructure. This will also reduce the traffic and decongest our old existing ports.
How do you think the current economic challenges of the country can be tackled?
The truth must be told; the present hardship in the country is not something that has to do with Nigeria’s economy alone. A lot of countries around the world are experiencing the same. We must understand that the pandemic left a lot of impact on the world economy. The IMF has released a statement that there might be a global recession next year. These are indices that those who are in charge of Nigeria’s economy should be prepared for and also work on how to ease the burden on Nigerians.