Shallow seaports worsen Nigeria’s economic woes – By Sulaimon Salau

Owing to their shallow water challenges, the nation’s seaports are not contributing optimally to the growth of the economy.

The Guardian’s investigations revealed that any vessel that requires about 15 meters’ water depth and above cannot berth at any of the six ports in the country.

The situation is having adverse effects on international trade, as many large ships are diverted to neighbouring countries while others berth on the high sea, requiring feeder vessels to transship their consignments. This attracts additional charges, which further increases the cost of transportation and production in the case of raw materials for industrial goods, which is ultimately transferred to the final consumer.

Apart from the Lagos water channel that has about 14 meters’ draught, other ports in Calabar and Port Harcourt are currently facing the challenge of shallow water which limits their ability to receive big cargo vessels.Today’s ships are worth about 4000-5000 twenty-foot equivalent units (TEUs), 1988 evolution of ships, with a depth requirement of about 13.5 meters. These are the vessels that mostly come to Nigeria. But the 2013 vessels (Tripple E) are of 18,000TEU with depth requirement of 15.5 meters. The next generation vessels are targeting 22,000TEU and above.

“Mega ships” reduce transportation costs by half, accommodating more cargoes and saving fuel and manpower.

According to some stakeholders, bigger ships always mean more profit, but they also mean deeper and longer docks as well as bigger container cranes, wider storage space and a more developed logistic infrastructure.

Currently, the Apapa water channel is 14.5 meters, Port Harcourt is seven meters while Calabar ports are six point four meters. This is a far cry from what could freely sail a large ocean liner which is currently being pursued by shipping lines across the world. One of the reasons the Lagos port is usually congested, compared to others in the country, is because it has the deepest draught.

Already, port operators are contending with the high cost of shipping, clearing and multiple charges by a numbers of government agencies. The poor state of the scanners prolongs cargo clearing while also creating a leeway for illegal movement of arms, ammunition and other unwholesome goods into the country. The dilapidated roads to the ports coupled with the high customs tariff and other inefficiencies have impacted negatively on port operations, making the operators to declare 2016 as the “worst year.”

Indeed, recent statistics from the Nigerian Bureau of Statistics (NBS) indicate a drop in the number of vessels that berthed in all the ports from 5,369 in 2013 to 4,025 in 2016.

Although efforts are being made to float three new deep seaports in Akwa Ibom, Lekki and Badagry, hopes are deeming daily as these projects have overshot estimated costs and construction plan.

Efforts by the Nigerian Ports Authority (NPA) to dredge the waterways in many cases have hit brick walls. For example, a particular company collected about $56 million to dredge the Calabar channel, but nothing was done after many years.

Around the world, demand for “mega ships” has increased in recent years and countries that lacked seaports with sufficient size and logistics to take them in are fast adjusting.

The Group General Manager, EcoMarine International, Balogun Moruf Adedayo, told The Guardian that the current position of the ports, in terms of shallow draught and technological advancement, might jeopardise the national aspiration of becoming a maritime hub for the West African region.

Adedayo said: “Nigeria really needs to look at dredging of its ports very sincerely because the dynamics in the shipping world today are in the direction of bigger tonnages. The global shipping industry is now in an era where we can do 7,000-14, 000 TEU capacity vessels. Nigeria will need to have deeper channels to be able to accommodate these bigger vessels (bigger tonnages) because shipping is about economics of size.”

Balogun decried the shallow water in Calabar port, saying: “Looking at the strategic importance of Calabar port to this country in terms of its proximity to 16 northern states and accessibility to the neighbouring countries of Cameroon and Equatorial Guinea, it has the potential of also becoming a trans-shipment hub for the land-locked countries such as Chad and Niger. It is only natural that such a port should be provided with the required infrastructure and should be dredged to be able to realise such enormous potential. It will also go a long way to reduce overdependence on the Lagos ports.”

The NPA had last year launched a probe into the $56 million Calabar channel dredging contract to ascertain why so much was spent on the project without achieving the desired draught to attract bigger vessels to the port.

The Federal Government awarded the contract at N3 billion in 1996. It was re-awarded in November 2014 at N20 billion to complete the project, and later re-awarded in 2006 at $56 million. The contract, which was signed by the NPA, the Bureau of Public Enterprise (BPE) and the Calabar Channel Management, was to dredge the port up to 9.8 metres.

On the investigations, the General Manager, Public Affairs of NPA, Chief Michael Ajayi, said the matter was being handled by the Economic and Financial Crimes Commission (EFCC). But the anti-graft agency could not give details when contacted by The Guardian.

On the shallow channel, Ajayi said the Lagos carriage could accommodate big vessels but could not go to Calabar due to the shallow water.

On attracting bigger vessels, Ajayi said: “That is why there is an emergence of deep seaports that would require little or no dredging. We have other ones under construction in Akwa Ibom, Lekki and Badagry. These ports will be able to accommodate bigger vessels. By the time the newer bigger vessels are ready globally, our own deep seaports would have been on stream.”The President, Association of Nigerian Licensed Customs Agents (ANLCA), Olayiwola Shittu, said: “We have been very poor at maintaining our ports.

We need a draught of nothing less than 16 meters. In some places, we have nine meters or eight meters. Now we are building several other new ports when we have not maintained the existing ones.”

Why FG’s Ban on Land Border-Importation of Vehicles Makes NO Sense – Adeeko Ademola

BusinessDay search shows that before the implementation of the new auto policy, which raised duty paid on imported vehicles from 20 to 70 percent to encourage the upcoming assembling plants in the country, about 30,000 new cars and trucks used to arrive Nigeria every month across all the Roll-on Roll-off (RORO) terminals, but the volume has now dropped to about 10,000 monthly. 

 

Most times, I can’t help but chuckle at the sheer incompetence and shallow reasoning employed in drafting government policies in Nigeria. These attributes are evident in almost every decision the Nigerian government has taken over time. Such of these ill-advised policies is the latest ban on land border imported vehicles into the country.

 

Yesterday night, I got a message circulated via WhatsApp. As I read through the message which was laden with the intention to sway public opinion about the government’s decision to place a ban on land border-imported vehicles.

 

After reading the ridiculous reasons the government gave for the ban, I was compelled to address what seems to me like a damning decision by a government that has done little to nothing to alleviate the suffering of it’s own citizens especially in a period of economic recession. Therefore, I will share with you the points circulated by the FG as reasons for the ban before addressing them:

 

Why FG’s ban of vehicle imports through land borders makes sense

 

1. Ensures the proper documentation and duty collection on vehicles that comes into the country. Many vehicles brought in through land borders find ways and means to avoid payment of duties thereby shortchanging Nigeria.

2. Reduction in smuggling of vehicles older than 15 years into the country. Many of these vehicles have a lot of harmful exhaust which could be responsible for increasing cases of lung cancers seen in younger people in Nigeria. The government cannot control the vehicles imported through land borders with some as old as 20 years!

3. Reduction of corruption and bribery of customs by smugglers through land borders and of course the attendant security challenges whereby arms and other dangerous products can be smuggled in along with those vehicles.

4. Avoidance of double payment of duties on imported vehicles. Most Nigerians who buy used vehicles brought in through land borders still have to pay as much as extra 300,000 Naira as duties to customs within Nigeria, with many vehicles impounded along with the pains to the affected individuals.

5. Reduction in 419, armed robbery and several other losses to Nigerian buyers who travel all the way through land to buy used vehicles in neighboring countries.

6. Helps to protect the local auto industry and makes government more responsible.

 

Laughable, isn’t it? I have read the reasons over and over again and nothing in it suggests that a total ban will eradicate or in any way reduce the vices listed in those reasons. As a matter of fact, whoever came up with those reasons, either has a low reasoning capacity or just lacks critical thinking abilities and I will tell you why.

 

In order to solve a problem perpetually or let me say; put an everlasting solution to a problem, you should be ready to go as far as the root causes of the problem. Once it is evident that you’re not ready to tackle the causative factors of a particular problem, then you have no business holding any leadership position. Nigeria, as it is now, does not need cosmetical or short term solutions. We need thoroughly thought out solutions to be able to solve our systemic problems.

 

If you remember, some years ago, Ex-President Jonathan increased sea port importation tariff by 70% in a bid to discourage importation of automobiles and to encourage a ‘non-existent’ local automobile industry or let’s just say; “Innoson Motors”. The increment in importation tariff resulted to spike in the price of imported automobiles as Nigerians continued to demand for imported automobiles. At a point, the tariff was unbearable and due to the natural demand for foreign brands of automobiles, importers, willing to meet the demand and also sell at affordable rates resorted to land border importation otherwise known as smuggling. What they do basically, is; ship their merchandise to a neighboring country where the importation tariff is relatively low and then they bring the cars into Nigeria via porous borders, hereby cutting off the costs of paying government the necessary monetary dues which also means government has continued to lose revenue in Billions of Naira to smuggling over time.

 

Going back up to the reasons listed by the FG for the ban, you’ll realize that the ban will have very little effect on the listed reasons except for number 1 which clearly states that; “the ban will ensure the proper documentation and duty collection on vehicles that comes into the country. Many vehicles brought in through land borders find ways and means to avoid payment of duties thereby shortchanging Nigeria.” Truth is the Nigerian government cannot really be bothered about the type or the age of cars brought into the country. The government cannot be bothered about the respiratory problems that come with driving very old cars. The government cannot be bothered about the rate of armed robbery and 419 schemes people may go through traveling all the way to neighboring countries to purchase automobiles. The only thing the government is interested in is the loss of funds involved in the land border importation venture. Simple!

 

Moving on, why does the government need to place a ban on land border importation when it encouraged the venture some years ago by increasing tariff at the seaports? Why is it so hard for the government to reduce the throat-cutting tariff at the seaports to encourage importers abandon the land border importation? After all, seaports are safer and closer to the importers’ customers. Importers who make use of the seaports readily know that seaports are way better than using land borders especially when you put into consideration, the treacherous journey from the borders to the inner cities coupled with bad roads and security risks. The question we should ask ourselves is; why do importers risk everything to use land borders over seaports? The answer is simple; cut-throat tariff at the seaports.

 

Innoson

 

That period Innoson started it’s operations in Nigeria, the FG under Goodluck Jonathan, in a bid to support the locally manufactured cars by Innoson, decided to hike the importation tariff at the seaport to discourage importation and encourage the growth of the local automobile sector. It would have been a very good move if Innoson had taken the opportunity to widen it’s business scope. First off, Innoson is yet to be a trusted brand and it’s market penetration has barely left the surface even years after inception. Instead of Innoson, in what is expected of it to penetrate the market targeting the low/middle income earners in it’s production, was busy competing prices of automobiles with world renowned brands like KIA and Hyundai and Toyota. If Innoson is not a trusted brand yet in terms of quality and it’s cheapest car is at same price with say; Hyundai. Honestly, I don’t think there is any Nigerian who will buy an Innoson over a Hyundai, all on the altar of supporting locally made cars. In general, I doubt any Nigerian will buy a car because it’s a local brand as opposed to quality. At least, not at this time. As a matter of fact, an average Nigerian will buy a product for it’s longevity/durability (at a reasonable price) over luxury, even at same price.

 

This why I have always opined that Innoson needs to follow the market penetration model of a company like Tecno. Target low/medium income earners, who are the majority first, then rise through the ranks to compete with other brands over time especially with advance in research on latest technology. With the untested nature of Innoson vehicles, no one is willing to risk hard-earned money to buy vehicles they’re not certain about the availability of it’s body parts and durability.

 

Given the current state of the economy, how many Nigerians can actually afford brand new cars from Innoson now that we have placed a ban on cheap land border-imported cars? How many Nigerians can even afford Tokunbo cars with the high tariff demanded by the seaport? To go back to the root of the problem, why in the first place did importers choose land border importation? Simply because the tariff at seaports is too high. If a car merchant buys a car worth 500, 000 Naira and ends up spending almost 300k to clear it, how much do you think he’ll put up the car for, after adding his profit? Who is willing to buy such car at that imagined price especially with the recession in the country?

 

If the government is really serious about growing the local automobile industry, then it should look inwards to ensure the cost of production is relatively low so that companies like Innoson can drop their prices to create an edge over imported brands or better still, make the country business-friendly enough to invite automobile companies to set up manufacturing plants here in Nigeria which is also a good avenue to boos employment.

 

Solution

 

The only move that is appropriate right about now, is for the government to embark on a downward review of the seaport importation tariff before ever considering a ban on land border importation. The government has enough to gain by reducing the tariff and the reason I propose this is quite straightforward;

 

1. A reduction in importation tariff will encourage car importers to rescind on their decision to smuggle. It will encourage them to make use of the seaports in as much as they don’t have to break the bank to clear their imported merchandise from the ports.

2. The ripple effects of a tariff reduction will be felt immediately as government’s revenue generation from seaports will soar as a result of the increase in the importers who will patronize the ports over smuggling.

3. Their will be a reduced friction between smugglers and men of the Customs service. The less smugglers we have to deal with, the more effective the Customs service will be.

4. There will be a huge reduction in the corrupt practices of Custom officials basically because patronage will definitely fall to the barest minimum and this also grants the agency a clearer opportunity to rid itself of corrupt officials.

5. Fewer Nigerians will patronize smugglers when they know they can purchase vehicles at a reasonable price without the unnecessary risks of traveling long distance to neighboring countries and also they can get proper documentation for their vehicles without the risk of being caught and asked to pay double for import duties.

6. The Nigerian government can keep tabs on the necessary info it needs about every imported vehicle.

 

However, if the FG strongly believes the ban on land-border importation despite maintaining a high tariff  at seaports will deter smugglers, then it has really got jokes because a country like Nigeria with absolutely porous borders will only see a shift in entry point for smugglers not a reduction. In brevity, we will only succeed in overstretching our already overstretched Customs service.

 

Those who advised the presidency to place a ban on land imported cars while maintaining a high importation tariff at the seaports didn’t take their time to think it through properly. I sincerely hope that they get time to read this piece and make appropriate adjustments.

 

However, I won’t leave you without this piece of information to corroborate my stand on this issue. These are words from Asconio Russo, managing director/CEO, Ports and Terminal Multi-Services Limited (PTML), operators of Nigeria’s biggest RoRo terminal. And I quote:

Our business is down by about 60 percent, which is a significant drop and this has to do with the auto policy, which increased duty on imported cars and buses from 20 to 70 percent since July 2014. As a result, there was huge diversion of traffic to Benin Republic such that Benin Republic that used to be one of the major reason why Nigeria has been losing revenue from imported vehicle, became the most important port for Nigerian vehicles,” he said.

Port operators hail Nigeria’s ban on vehicle importation through land borders

The Seaport Terminal Operators of Nigeria has commended President Muhammadu Buhari for banning the importation of vehicles into the country through the land borders.

The chairperson of the group, Vicky Haastrup, while reacting to the ban announced by the Federal Government on Monday said the move, if well implemented by the Nigeria Customs Service, will reduce the smuggling of vehicles into Nigeria and revive the operations of Roll-On-Roll-Off (RORO) terminals in the country.

RORO terminals are specialised port terminals that handle all types of vehicles.

Ms. Haastrup asked the government to take a step further by scrapping the high import duty regime imposed on vehicles by the administration of former President Goodluck Jonathan in 2013.

“We are confident of the ability of President Muhammadu Buhari to turn the economy around. The earlier ban on importation of rice, and now of vehicles, through the land borders is a welcome development,” she was quoted as saying in an emailed statement on Tuesday.

“We are happy that the President has listened to our appeal to reverse incongruous policies inherited by his government from the former administration and which have deprived Nigerian ports of cargoes to the advantage of the ports of neighbouring countries.

“In addition to this ban through the land borders, we appeal to the President to return the import duties on vehicles to 20% from the prohibitive 70% tariff imposed by the former administration.

“The reversal to the old tariff will serve as an incentive for Nigerians to import legitimately through the seaports and make appropriate payments to government. This will boost revenue collection by the Nigeria Customs Service. It will also lead to the return of lost jobs at the affected ports.

“We also appeal to Customs officers at the border posts to support the Federal Government and the NCS leadership by ensuring that no smuggled vehicle finds its way into the country through the land borders from 1st January 2017 when the new policy is expected to come into effect,” Ms. Haastrup said.

She said since 2014 when the 70% hike in the tariff of imported vehicles came into effect, Nigeria had lost 80% of its vehicle cargo traffic to the ports of neighbouring countries.

“Since the high tariff was introduced, importers have resorted to landing their vehicles at the ports of neighbouring countries and smuggling them into Nigeria without paying appropriate duties to government. This amounted to huge revenue loss to Customs.

“The policy also led to loss of more 5,000 direct and indirect jobs at the affected port,” the STOAN Chairman said.

Massive Blasts Rock Chinese City Of Tianjin; 44 Dead, Hundreds Injured

Two huge explosions tore through an industrial area where toxic chemicals and gas were stored in the northeast Chinese port city of Tianjin, killing at least 44 people, including at least a dozen fire fighters, officials and state media said on Thursday.

At least 520 people were injured, more than 60 of them seriously, the Tianjin government said on its Weibo microblog, and the People’s Daily newspaper said four fires were still burning.

Wednesday night’s blasts, so large that they were seen by satellites in space, sent shockwaves through apartment blocks kilometres away in the port city of 15 million people. Internet videos showed fireballs shooting into the sky and the U.S. Geological Survey registered the blasts as seismic events.

Vast areas of the port – the 10th largest in the world – were devastated, crumpled shipping containers were thrown around like match sticks, hundreds of new cars were torched and port buildings left as burnt-out shells, Reuters witnesses said.

“I was sleeping when our windows and doors suddenly shook as we heard explosions outside. I first thought it was an earthquake,” Guan Xiang, who lives 7 km (4 miles) away from the explosion site, told Reuters by telephone.

Guan, 24, said he saw flames and a mushroom cloud in the sky as he and other residents scrambled to get out of the building.

Tianjin authorities said 12 firefighters were among the 44 killed.

The cause of the blasts was unknown but industrial accidents are not uncommon in China following three decades of breakneck economic growth. A blast at an auto parts factory in eastern China killed 75 people a year ago when a room filled with metal dust exploded.

The state-run Beijing News earlier cited Tianjin fire authorities as saying they had lost contact with 36 firefighters, and that another 33 were among the hundreds of people being treated in nearby hospitals.

The official Xinhua news agency said 1,000 firefighters and more than 140 fire engines were struggling to contain a blaze in a warehouse that contained “dangerous goods”.

“The volatility of the goods means the fire is especially unpredictable and dangerous to approach,” Xinhua said.

Several fire trucks had been destroyed and nearby firefighters wept as they worked to extinguish flames, the Beijing News reported.

President Xi Jinping demanded that authorities “make full effort to rescue and treat the injured and ensure the safety of people and their property”.

Xi said in a statement carried by official media that those responsible should be “severely handled”.

City officials had met recently with companies to discuss tightening safety standards on the handling of dangerous chemicals. The Tianjin Administration of Work Safety posted a notice about the meeting with companies at the port on its website a week ago.

TOXIC SMOKE

Anxious residents rushed to hospitals to seek news about injured loved ones. Dozens of police guarded the entrance of the TEDA hospital, a Reuters witness said.

Pictures on Chinese media websites showed residents and workers, some bleeding, fleeing their homes. Xinhua said people had been hurt by broken glass and other flying debris.