By Martins Uba Nwamadi
WITHOUT any qualm, Nigeria’s maritime sector, especially the seaports can be said to be the lifeblood of Nigeria’s economy. It is not an understatement that the ports are important and formidable sector of the economy. Historically, development of port infrastructure has always been of primary concern to any government given its strategic importance. This is so because maritime contributes to at least 4-5 percent in GDP growth while it contribute to 80 percent of export/import trade. The following numbers will interest you if you have any doubts.
In 2019, Nigeria’s imports from China alone was N4.3trillion, 25 per cent of total imports, while imported manufactured goods took up about 70 percent of total imports. This is likely to be affected now as China and the rest of the world have resorted to closing down factories, imposing travel bans and even total country lock-downs, as they struggle to contain the spread of the virus. This, experts say, could put more pressure on inflation numbers going forward as cost of local production goes up. Nigeria’s inflation rate was 12.2 per cent year-on-year as at February 2020.
Navigating uncertain times
However, Nigeria is not is this dilemma alone. Like all the nations of the world, Nigeria is navigating uncertain times. Nevertheless, for Nigeria, as an oil-dependent economy, this is a twin shock. Nigeria’s vulnerabilities to the impact of external shocks can be adduced to increased dependencies on global economies for fiscal revenues, foreign exchange inflows, fiscal deficit funding and capital flows required to sustain the nation’s economic activities.
The twin shocks; COVID-19 pandemic global and domestic shock, and oil price shock, are expected to impact the economy through three channels: supply, demand and financial. In the same vein, the rapid outbreak of the COVID-19 presents an alarming health crisis that the world is grappling with. In addition to the human impact, there is also significant economic, business and commercial impact being felt globally.
Beyond the tragic health hazards and human consequences of the COVID-19 pandemic, the economic uncertainties, and disruptions that have resulted come at a significant cost to the global economy. The United Nations Trade and Development Agency, UNCTAD, put the cost of the outbreak at about $2 trillion in 2020.
Similarly, Nigeria’s latest Excess Crude Account balance, according to a statement from the Office of Accountant General of the Federation, was put at $71.81million, while movements in reserves showed that the country’s reserves stood at $35.94 billion, down by $2.59 billion from $38.53 billion in which it opened the year. While the world was struggling to contain the spread of the virus and consequently shutting down their ports, Nigeria took the bold decision to keep its seaports open for business. This is because the government knew the importance of the seaport to its economy as an import dependent country. However, opening the ports posed a huge challenge.
With over 1.5 million infections and 300,000 deaths recorded so far globally, the coronavirus pandemic is said to be the biggest challenge the world has faced since World War 2. Countries over the world are wagging war against the pandemic, outlining measures and policies to ensure further spread of the deadly virus is contained. Nigeria is not left out in the war against COVID-19. In fact, scientists and experts have applauded the federal government’s effort at halting the spread of the virus.
Even as the government is doing its best, the private sector has also joined with several billions donated to support in the effort to halt the virus. Government agencies are not left out of the fight. However, some have more critical role to play given their strategic importance to the economy of the country. For instance, as the port economic regulator of the country, the Nigerian Shippers Council, NSC, has ensured that the ports do not become the hotspot for the spread of COVID-19 virus. Also, the NSC has taken steps to ensure that the directive by President Muhamadu Buhari in a nationwide broadcast on the pandemic, that the ports remain open is adhered to in a responsible manner for the safety of port users and the general public.
To achieve this, the Executive Secretary and Chief Executive Officer of the NSC, Hassan Bello has since then visited the Apapa and Tin can Island Ports several times to ensure that extant measures are in place to protect Nigerians who use the port on daily basis. Also, the NSC has held sensitization forums for leaders of freight forwarders. The meeting, which was strategically arranged because of the social distancing directive by the World Health Organisation, WHO, had just four leaders of the critical stakeholder associations in attendance, who will now pass on the agreed objectives to the members who are key operators at the ports.
Because many Nigerians do not know how important the role of the NSC is to the ports, it is important to put into perspective the relevant laws that empowers the agency to play the role it is judiciously plaid before now and during the COVID-19 outbreak.
Specifically, section 3 of the Nigerian Shippers Council establishment Act sets out the functions of the Nigerian Shippers’ Council. The substance of these provisions restated in concise form include; Protection of Shippers interest in matters affecting exports from and imports into Nigeria, Promoting stakeholder consultation, negotiations, consensus and agreements on service standards, rates and other charges, moderation and stabilization of costs (freight rates, port charges, local shipping charges, haulage charges etc.).
Others are: practitioners education and enlightenment on international trade issues both at the macro and micro levels, regular and reliable advice to the Federal Government on matters affecting the shipment of goods to and from Nigeria, promote efficient and timely delivery of shipping services to importers and exporters by shipping services providers under the most economical arrangements, and Intermediation and moderation in resolution of stakeholder disputes and complaints.
In recognition of its critical role, the NSC has continued to champion the fight to ensure that terminal operators and shipping companies abide by the Federal Governments directive that charges be suspended at this time because of COVID-19.
Meanwhile, reports and complaints by port users over arbitrary charges, such as terminal and demurrage charges at weekends, during holidays and especially after the Federal Government directive as regards COVID-19 is being tackled by the NSC. Despite the NSC efforts, shipping sources hold that about N70 billion has been lost to shipping lines via container deposit charges, whose refund processes have become too herculean to waste time on. These are some of the many costs being run by Nigerian importers in a port system that badly needs a strong economic regulator. This is why all well-meaning Nigerians in the maritime industry should support the NSC to end arbitrary charges at the nation’s ports.
With the ports concessioned in 2006 to private operators, most of whom are foreign companies without an economic regulator, the benefits of the concessioning were soon to be lost as multiples of charges on cargoes by shipping lines and port operators became the norm, which the economic regulator had to weigh-in.
Therefore, in 2014, the Nigerian government declared and gazetted the Nigerian Shippers Council as the economic regulator of the ports following a near-decade of outcry by port users over multiples of arbitrary charges by multinational shipping lines and port terminal operators, became a thing of the past.
Apart from ensuring that the ports remain open to save the Nigerian economy, the NSC under Bello’s watch has ensured that only those with immediate need to be at the port are allowed to avoid the spread of COVID-19 at the port. Also, the Nigerian Shippers’ Council has provided free buses to ease movement of accredited clearing agents and port workers affected by the lockdown to access the ports to enable them clear their consignments.
That is not all, the council has donated protective gears for port users worth N5million and another sum of N5million to fight the COVID-19 pandemic in Lagos and Abuja. For over three weeks now, the buses have been conveying ports users from designated locations at 8.00am and will continue until the end of the lockdown.
The routes are Festac (by Apple junction), Okokomaiko (at Alakija under bridge), Surulere (by National Stadium). Others are Oshodi (at Charity bus stop) and Ikeja (at Ikeja along bus stop). The NSC has also ensured that all agencies at the port play their role for effective port operation during these trying times. The NSC is also working with the banks and private institutions to ensure government directive that the ports remain open and functional are adhered to.
An official of the NSC has also been inundated with complaints that banks are not offering services with respect to port operations. According to him, “The attention of the banks is, therefore, drawn to the Notice by the Federal Ministry of Finance and Central Bank of Nigeria, which allows operations in the financial system. We note that port operations as indicated by the President are essential and critical services,” the official said.
The council called for synergy amongst port users and government agencies to support the Federal Government efforts in containing the scourge of the deadly virus, while making it possible to sustain port operations during this period.
According to Hassan Bello, apart from the directive of the president, the SGF Mr. Boss Mustapha is so interested and is judiciously monitoring what is happening at the port due to its critical role in the economic. The SGF insist that the ports must operate to avoid total collapse of the economic. “This present situation has indeed caused unimaginable disruption of the logistics supply chain. Users and providers of services are seemingly unable to carry out their obligations for reasons beyond their control.
“Nigeria Shippers’ Council, as an arbiter is conscious of the fact that obligations, responsibilities, duties and rights may have been frustrated. Therefore, Nigerian Shippers’ Council is discussing with all parties so that a balanced solution can be achieved especially the issue of demurrage and incentives to facilitate the clearance of goods from the ports.
“The devastating effect of the corona virus, COVID-19, has made it mandatory for these restrictions which we believe are critical to the reduction of transmission of the disease so that health professionals can cope with the challenge.”
There is no doubt in my mind that the NSC has fully discharged its responsibilities during this critical and will continue to do so. The Nigerian economy stands to gain a lot from the modest achievements of the NSC under Hassan Bello, who has painstakingly followed the directives of federal government to ensure that the ports are running.