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Nigeria’s competitiveness undermined by dead hand of port bureaucracy

By David Whitehouse
Posted on Tuesday, 16 April 2019 11:00

Ships offload their cargo at the Apapa, sea port in Lagos, Nigeria. AP Photo/ Sunday Alamba

Nigeria needs to fix its ports if the economy is to start to realise its potential.

The country in January announced its goal of improving the country’s ranking in the World Bank’s ease of doing business index by 45 places, to move into the top 100 by 2020. Improving efficiency at its ports is a key part of meeting that aim, and much needs to be done.

The World Bank’s Trading Across Borders report, an indicator for measuring the effectiveness of a country’s ports, ranked Nigeria at 183 out of 185 countries in 2017.

Users of Nigeria’s ports face a bewildering array of agencies, including the:

  • Comptroller General’s Strike Force,
  • Comptroller General’s Task Force,
  • Federal Operations Unit,
  • Customs Intelligence Unit,
  • Comptroller General’s Monitoring Team,
  • Ports Police,
  • Nigeria Immigration Service.

Most cargoes take between five and 14 days to clear Nigerian ports, compared with the set timeline of 48 hours, says Dr. Anthony Chibo-Christopher, a business economist in Abuja. Some cargoes take up to 20 days to get through.

  • Most of these delays are the a result of deliberate corrupt practices, he says. Nigeria must “stringently and decisively” act against corrupt practices in its ports if it wants to move up the ease of doing business rankings, he argues.

New, privately owned and government regulated seaports must be encouraged in Nigeria, Chibo-Christopher says. The country can apply the successes of its privately owned but government regulated courier services industry, where competition between private operators has brought about improved services, he says.

Self-imposed handicap

Femi Ademola, an economic and financial consultant who was commissioned by the Lagos Chamber of Commerce and Industry as one of the authors of a report on Nigeria’s ports in 2018, says that there has recently been a “slight improvement, especially in the area of infrastructure challenges.”

  • Roads around the ports are being repaired and reconstructed.
  • There has also been an improvement in the activities of regulatory and security agencies, Ademola says.
  • “However, the processes are still cumbersome and in most cases, manually driven.”

Ademola estimates the total costs to the Nigerian economy of port inefficiencies at about 5% of GDP. He is optimistic that this can be reduced.

  • “The most important concrete step will be to automate the cargo handling process” and reduce the levels of human contact as cargoes enter, Ademola says.
  • There is also a need to streamline the approval process and create a single point of authorization, he adds.

The 2018 report from the LCCI pointed to high incidence of corruption among port users, operators and government officials, militating against ease of doing business. Delays of imports and exports, unofficial charges, technical breakdown and security concern “remain predominant”, the report said.

The maritime sector’s contribution to GDP in Nigeria lags behind at just 0.05%, versus 3% in Kenya. Around five important bills that could help in achieving reforms have been awaiting passage by the national assembly for more than a decade, the report says. The handicap “will continue to hurt government’s aspiration to grow the non-oil sector and undermine the capacity of investors” to benefit from Nigeria’s growth potential.

About 10,000 direct new jobs in the maritime port sector and approximately 800,000 jobs in industry could be generated over two years says the LCCI research, if there was a more efficient port system in Nigeria. A 25% improvement in port performance would mean a 2.1% increase in GDP, the report says.

Bottom line: The extremely low global ranking of Nigeria’s ports mean that even modest improvements could quickly change perceptions.

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