How high ports charges engender bleak fortunes for Nigeria

 By Sulaimon Salau
Astronomical charges that make Nigerian seaports among the costliest in the world are currently throwing operators and importers off balance, and ultimately jeopardising the fortunes of the nation’s economy.

Charges are a critical factor in the cost of doing business at the ports, and apart from the tariffs, levies and taxes, there are also computed cost of delay, documentation process corruption, bureaucracy, and lack of political-will that compound the problems.
High charges coupled with the unfriendly ports environment threatening over $7 billion investments by operators in the maritime value chain, including the terminal operators.

Reports in recent years show massive diversion of cargoes to neighbouring countries given their competitive advantage over Nigerian ports.
These issues, among others, brought industry stakeholders together at the Taiwo Afolabi Yearly Maritime Conference 3, sponsored by Sifax Group in Lagos, where possible solutions were proffered.
Recurrent issues at the conference included: excessive or inappropriate charges and levies; damage, pilferage or short delivery cargoes; demurrage and terminal rents; fraudulent release of cargo to unauthorised parties; and delay in locating and delivery of cargoes.
Others were the auction of cargoes by the Nigeria Customs Service; multiple agencies examination and scanning procedures delays; and intervention of cargoes in transit between the ports and destination and a host of others.
Stakeholders, who expressed their displeasure over the prevailing situation believed it was high time the Federal Government reformed the maritime sector, and reviewed it’s policies to reflect the current realities in the global market.
A frontline shipping expert and Chairman, Ports Consultative Council, Otunba Kunle Folarin, said: “If the port industry truly deserves to be productive, competitive, and earn a hub status in the region, it must reform and stop deluding itself.”

He added that: “The colossal growth in traffic, environment and empowerment, which we deserve, will forever elude Nigeria unless the entire industry is reformed to meet the performance level of the ports in the sub-region now husbanding Nigeria destination cargo traffic.
“There is much more to do to achieve the objectives of unbundling and creating efficient and competitive ports environment.
The reforms must start now in an all-inclusive way; it must be total. That is the only way, and that is the way forward,” he said.
Folarin, who was apparently agitated, said a typical shipping company debit note in Nigeria contained at least nine different elements of charges.
These include: shipping line charges, container cleaning, container deposit, MOWCA charge, NIMASA sea protection levy, MOWCA fee, freight levy, document release, demurrage charges, NIPOST stamp tax, and Value Added Tax.
Currently, eight of these charges have generated dispute between the Nigerian Ports Authority (NPA), and the shipping companies, while four are a source of disaffection among importers, exporters and the terminal freight forwarders.
Also, another four charges are being contested among shipping companies, importers, exporters and freight forwarders.
Ports cost is a collective responsibility for both government and the private sector.

Total port cost per a given cargo unit include Customs duty/taxes – 70 per cent, and Ports Terminal Operators – 13 per cent. The Nigerian Ports Authority’s share is negligible (+/-1%) excluding Customs duties, and comprises costs of handling, storage and delivery.
Rolling out strategies to reduce ports cost, Folarin said there is a need for deliberate government policy to reduce Customs Duty and taxes; set up an effective and efficient Single Window platform; regulate infrastructure development especially in the port environment and common users’ areas.
He emphasised the need for a stakeholders’ dialogue, and encourage Public Private Partnership in ports business, invest in modern facilities, and provide good quality human resources.
Executive Vice Chairman, Sifax Group, Taiwo Afolabi, said: “We are convinced that these are matters of immediate and practical concerns to every Nigerian, and more so to the regulatory authorities who need to harmonise and balance the conflicting viewpoints to the satisfaction of the stakeholders.
“I recall as an industry player that the exchange rate (Naira to dollar) in Year 2016 for instance, when we became ports concessionaires was between N125 and N131 to a dollar.
How much is the exchange rate today?
In other words since many of the operations are expected to be discharged to the lessee in dollars, how much naira will be enough today to purchase the required dollars.