Haastrup: Imports to Nigeria Have Fallen by 50 %

The Chairman, Seaport Terminal Operators Association of Nigeria, Vicky Haastrup in this interview with Nosa Alekhuogie, expressed concern that cargo importation to Nigeria has reduced by at least 50% owing to the current economic downturn

What are the challenges faced by operators in our ports?

The main challenge that we are faced with is the current cargo downturn in the country. From what it is now, cargoes are gradually reducing day by day. Importation of goods to Nigeria is reducing by at least 50 per cent. My terminal is about 65 per cent and basically that happened due to the lack of access to forex by importers of goods to Nigeria and also, the 42 items that were banned by government. The restrictions that were placed on those banned items. It is a major cause of concern to importers. This is the most challenging time the port industry has ever been. It has never been this bad and of course I am not blaming the present federal government for the problem because it is an inherent problem by the immediate past administration of President Goodluck Jonathan. So this new government of President MuhammaduBuhari inherited this problem. The policies were made by the immediate past president. All the present government did was to continue with some of those policies that Jonathan implemented while he was there. The new forex policy, which will allow the dollar to be market driven and allow it float is very good and welcomed. But I would want to implore federal government to look into the issues of those banned items. As long as the restriction is still there, there is still a lot of burden for importers because it is going to be very detrimental to the economic activities and also a lot of people in Nigeria. So to me, that is a very serious challenge. The new forex policy that has started is a welcomed development as I said that would help in a way to a large extent. But that should not be the end of it. If the government wants to see an impact in the market, the government needs to remove the restrictions on those banned items. It is very important because what the government thinks they are gaining somewhere, they are also losing. If you look at the income of the Federal Ministry of Finance, Nigeria custom service (NCS) is under the Ministry of Finance and I know the Customs service is complaining. The comptroller General of NCS has said it over and over again that the Customs service income has dwindled. It is at the bottom level and constitutes a major source of income for the government. The income of customs service is the income of the ministry of finance, by implication the income of FG. Asides from oil, the sector that has the potential and ability to generate revenue for the Nigerian government is the maritime industry so right now other countries in the world are looking for alternatives and I want to emphasise that the maritime industry remains the other alternative for Nigeria as at today. If we talk about agriculture, it takes a while, planting and becoming an agricultural export nation, it takes a while because the farmers have to be encouraged. You need to support them with soft loan, equipment to work and all these things take time but what can give instant and buoyant revenue for federal government as it is today, is the maritime sector and by extension, the port industry. The government should look into that critically because the money that should come to the Nigerian government is actually going to the Republic of Benin. It should give the government a cause to worry. The major source of income to the Republic of Benin today is from imports. The government of Republic of Benin has expanded the number of their berths and as I am talking, vessels wait as long as three weeks to be able to berth while at the Nigerian ports, our berths are empty, since January. Most of the goods that go the Republic of Benin are actually goods meant for Nigerian market. No matter what the government does, no matter the policing by the Customs service, those goods would always find a way to the neighbouring market.

Do you think the government agencies at the ports are too many? Are they actually performing their duties?

We should run the Nigerian ports the way other countries run their ports. Clearing of goods at the Nigerian ports is very cumbersome because of the multiplicity of the functions of government agencies. You do not need most of the agencies that are the port. Basically, in other major ports of the world, you need just three agencies which are Customs service, port health and the immigrations service. You do not need anything other than. When you talk of National Drug Law Enforcement Agency (NDLEA), maybe to some extent we need them, but at other ports, they are not even needed because scanning of containers take care of the content. You know exactly what is in the content. So what is StandardsOrganisation of Nigeria (SON) needed for, National Agency of Drug Administration and Control (NAFDAC), Quarantine, National Environmental Standards and Regulations Enforcement Agency (NESREA), they are not needed. It is frustrating the importers of goods to Nigeria and making it more costly. Everybody says the cost of clearing of goods in Nigerian ports is the most expensive, yes, I would say it is to some extent. It is true because all these other agencies collect one due or the other from the importers. So when you add all of that together, the Nigerian Ports Authority(NPA) fees, Terminal Operators, NIMASA, SON , it makes it very expensive and all of those add up to the cost of the goods. The landing cost of the goods becomes very expensive and it becomes unaffordable to the Nigerian people.

There are complains of high cost at the ports, what other factors are contributing to the high cost of doing business there?
Well, the access roads to the ports are one because at the end of the day, you also make cost of transportation, logistics, are very expensive for importers because it is such a nightmare coming into the ports and basically it is because of the poor state of the roads that leads to the ports. All those things add up as far as I am concerned. Eight five percent of the port cost is associated with clearing, it is not even the terminal charges. Everybody talks about terminal operators, but there are so many other charges that are being imposed for clearing of goods in the port that nobody bothers to look at. At least we terminal operators know we are investing huge money to keep the terminal running but there are other people out there who are imposing lots of dues that importers of goods or clearing agents have to pay. So those are aspects that I think people should look at.

Why are the cargoes meant for the Nigerian market land at the Ports of neighbouring countries?

I have said it and it is basically because of the restrictions that are in place. The major reason is the items that were banned and there are unscrupulous elements in the society who just feel they must smuggle, no matter what the government says. Even when those items are banned they would still smuggle to those neighbouring countries. Nobody goes to the neighbouring countries because of the state of our mode of operation in Nigeria at the Nigerian port because at the end of the day it is still better for them to clear their goods through the Nigerian port so we are not losing ships to the neighbouring countries because the port industry is not efficient, we are very efficient in that regard. We are losing ships because those items are banned and they feel they can easily take them to Cotonou. Take for example, fairly used cars, as it is now the federal government has banned importation of fairly used cars to Nigeria indirectly. They did not say do not bring but what they said was if you bring, you would pay an exorbitant fee to clear those goods. If you buy for example, a car for One thousand dollars or two thousand dollars but when it gets to Nigeria, you clear with about seven hundred or eight hundred thousand Naira, and then you can go to Republic of Benin and pay one hundred thousand naira to clear such goods, it is only natural for you to go to Republic of Benin. One thing I want to say is those vehicles still get to Nigeria whether we like it or not. How many illegal routes do people use to smuggle those goods to Nigeria, they are uncountable. Customs service cannot cope because there are so many routes. Someone told me the illegal routes are in hundreds. So how many will they cover. Will they go to the bushes to get exposed to danger. They might get killed in the process. A lot of our Custom officers have been killed as a result of trying to police these illegal routes. But what I think the government can do is over time, they should try to review the restriction and these 42 items that were banned. I understand why the government is doing it and I also believe they should look at the bigger impact that it is having not just on Nigeria as a whole, but also on its people. Because at the end of the day, how much are Nigerians paying for these commodities. We are talking about local production, it is very good, any responsible government would want us to buy locally made goods but what is the landing cost of the locally made goods if you ask me, you would discover that some of these locally made goods are more expensive than the imported items. What is responsible is simple, we do not have infrastructure that would back up local content in Nigeria. People are running on their generators. Now diesel is almost N200 per litre, for those who are producing locally, they would spread it on d cost of production which makes it go up. The cost of the commodity would simply increase because people go into businesses to make profit. It is such a nightmare and it is so frustrating for the few industries, I would say few, because how many people are producing in Nigeria today. I believe first things first. The government should look into the issue of power that is the key for Nigeria to become an industrialised nation. Power is the key to this whole thing. When there is power, there would be an explosion of industries that would be producing one thing or the other. Even in individual homes, we would be producing like China. Because the good thing we have going for Nigeria is the people. We have the number when it comes to population. Nigerians are very hard working and intelligent people. When we have power, federal government would not teach anybody to begin to produce one thing or the other. We just go into it because Nigerians like to work. So if we want to say the government wants to project and encourage local content, it is not going to happen unless we have power. That is the truth because that is the key. I know the FG is looking seriously into the issue of power and I know the Minister of Power is very a very dynamic and efficient person. I know they are looking into all these things but one of the things I also want to advise the government is to look into other sources of power. We should not depend on hydro or gas power. The world is going beyond all those sources of producing power. They can look at other alternatives. There is the nuclear one, there is wind energy, there are various sources of power, so that in all areas of the country, power can be produced. We should have something we can fall back on. When we have that spread and other sources of power, it would be very easy for Nigerians to begin to produce a lot of things locally. We would have a lot of made in Nigeria goods.

What is your assessment of the Nigerian ports, have they attained high standards of operation?

I would give the Nigerian port a pass mark and I make bold to say that the Nigerian port has done really well. We haven’t attained the high standards yet because of all the problems which I have mentioned here. We are not where we should be but we have the capacity to be where we want to be. In the concession agreement, everybody has a responsibility, the terminal operators have their own responsibility, NPA by extension, government has their own responsibility and even the users of the ports have their own responsibility. Everybody has something to bring to the table as long as those things are adhered to. Nigerian ports have the potential to equate to any other ports of the world. I make bold to say that. Having said that, Nigerian ports have really done very well and I am proud of what we have achieved. It is very simple. Asides the last couple of months, when the issue of forex became came up. When you look at the activities at the ports, before now, January to June or September last year to now, if you look at the volume of activities and the volume of cargo that has passed through the Nigerian ports and then the Nigerian ports industry was able to handle and accommodate that level of cargo, we have done very well. About 10 years,for people who condemn terminal operators, maybe they have short memory because they need to think about what the port looked like back then. The port industry was a completely run down system. When government saw that they could not handle it anymore, they gave the concession to private companies to run and within a very short time, what the government could not do, we did double of it in one year. In one year most of us had achieved a hundred per cent increase on volumes of cargoes that we handled. It was not that those cargos were not there when NPA was doing the job, but there used to be a lot of congestion because of ships waiting to come in. In those days ships that we discharge between three to four days used to be in 15 days, so, at the end of the day, how much ships or cargo could NPA do. So the Nigerian port industry has evolved and is still evolving and I believe that eventually, we would get to where we are going.

It has been 10 years since the concession which private terminal operators assumed responsibility for cargo handling, what is your assessment of the journey so far?

The journey for me has been a sweet one because I like challenges. It has been a wonderful experience for me as a person because I like a situation where something is spoilt and I am allowed to fix it up and that is exactly what we have done. The port industry was in pieces and terminal operators were asked to couple it together and that is exactly what I have done. I am very proud of myself and what ENL has been able to achieve as a terminal. I am also very proud of what other terminals have achieved as a member of the association of STOAN.
What the port industry used to be to what it is now, in ten years, there has been a remarkable transformation in the Nigerian port. Anybody that tells you anything contrary is lying. If you look at all the poor terminals in Nigeria, we have developed the port to the level where getting equipment to discharge ships is no more a problem. We have invested heavily in gears, equipment and all of that. You need to go to the ports in Tin can Island, or in Port Harcourt or Apapa. Wherever you go, you would see a lot of development. We have changed the face of the port. We brought a lot to the table in the Nigerian port and I am very proud.

What is the mode of operation do the ports adopt 24/7?

I operate 24/7 but my customers do not operate 24/7. If you come at night, I have people who work night shifts. I discharge ships at night, everybody does. But the question is, are clearing agents taking delivery of their cargo at night? No. Why? The customers should be asked why they cannot come to take delivery of their cargo at night. If you come here unannounced at night, ports are in operation.

What is your advice to the government on bringing back cargo to the our ports

First of all, this current forex policy which the government calls flexible forex policy floating. It is a welcome development and is very good. It would make the Nigerian naira to regain its balance and find its true value. That is the way it should be because that is the way it is in other parts of the world where currency finds its true value. Nobody intervenes on the true value of the currency. What the central bank has done now is very welcoming; at least business owners can make projections and plan now. At least they would know what would be the landing cost of their goods; they would know how much forex is. Having said that, the issue of restriction of the 42 items, I want to implore the government to revisit those items because the manufacturers of goods in Nigeria are also suffering as a result of this ban because some of these items are some of the things they need for production in their various factories. It is also destabilising the importers of goods to Nigeria. The economic activities are being affected seriously. Right now, there are no jobs for young people, when you restrict importation of those goods, you are also restricting Nigerian economy as a whole. Local content should be encouraged but I think it is something that should be done in phases and gradually with a human phase so that Nigerians would not suffer much as a result of those restrictions. Right now Nigerians are passing through a lot of pains and I know Mr. president is aware of it because he has mentioned that he is not unaware that Nigerians are going through pains, he did not cause these pain but it is just unfortunate that what he met on ground is the one that has put him in a difficult position where he has to make certain decisions but some of these decisions should please have human phase so that the Nigerian people would not suffer too much. Re-emphasising on the 42 items that were banned should be looked at. The impact of the ban has also been very negative. I do not know why it is still banned because forex has been allowed to float any way so what is the point of banning. I thought initially that government placed those restrictions because they could not afford to provide forex for the importers but now that naira has been allowed to float, why are we still here.