We have made reasonable recoveries in 10 years – Ogo
Executive Secretary, Cargo Defence Fund (CDF), Ms. Azuka Ogo, in this interview speaks on the activities of CDF and the impacts the fund has had on the business of export and import in the country. She equally spoke on the current challenges facing CDF.
What is Cargo Defence Fund?
The Cargo Defence Fund is a project of the Nigerian Shippers’ Council set up with the approval of the Federal Government of Nigeria to assist Nigerian importers and exporters in the pursuit of their claims recoveries and legal remedies. It is a public private synergy, a non profit company limited by guarantee. So these are Nigerian operators, you are a company, you are registered in Nigeria in respective of ownership, you qualify to access the Cargo Defence Fund. We help or assist shippers pursue their legitimate cargo claims within or outside Nigeria.
Cargo Defence Fund has being in operation for about 10 years now, would you say you have succeeded in delivering on your mandate?
Yes. Since the fund was established ten year ago we have assisted several Nigerian businesses that have found themselves short changed through short landing of imported cargo, damage of cargo in transit, non-remittance of export proceeds and sometimes outright fraud against our nationals. From the complaints we have received, we have been able to conduct a survey on the kind of problems Nigerian importers and exporters face. We do organize programmes, like training programmes, enlightenment fora to teach them to avoid pitfalls so that they don’t continue to make the same mistakes. And this is why we’ve been talking about the exportation of certain commodities too, because we discovered that there is a reoccurring problem with certain things that have been going on. So we sanitize them on the best way to go about it.
So, how are you funded?
We are primarily funded by the Nigerian Shippers Council and the importers pay a token amount. We don’t rely on what the importers and exporters pay because we are all staff of Nigerian Shippers Council. This is to make it easy to operate the fund but primarily by the Nigerian Shippers Council sometimes we receive grants from other agencies that receive funds from importers and exporters. Like Nigeria Ports Authority has us a grant sometimes ago and then we put that into the pool and we just continue to run. And when we recover successfully we take 10 percent just to add to what we have so that we can continue to operate.
How many recoveries have you been able to make in the last 10 years? Would you say that they are substantial?
Reasonable, but not substantial. For the cases abroad first of all we have to look at the time because after sometime the life of a case goes off except if it is a criminal matter which gives it a longer life span, if it is really fraudulent but if it’s just a claim and you don’t bring it within a year, two or three years; depending on the jurisdiction of the system, enforcement then that’s it.
So, if you come to us after five years, we wouldn’t be able to pursue it legally except if it’s by negotiation between the parties. But then somebody who has refused to pay for a year, two, three years . If you can’t go to enforce your rights anymore, what is the likely hood that he will agree to pay now? That’s after three, four, five years by logic, otherwise the person could have paid between himself and his business partner. So if we received the complaint on time it makes it easy to be able to enforce through the courts. But if it is too late, in the sense that where we have to bring the action, we wouldn’t be able to get into the legal system to be able toenforce then that’s it. But now we run what we call a token insurance cover scheme which is what government have put in place so that shippers (importers and exporters) can continue to trade for economic sustenance. So we quantify the lost sustained and then give something so that they can continue to trade.
What are the nature of the claims that you have been having from importers, exporters and the likes?
They are insurance claims depending on type of insurance taken. If it is a comprehensive insurance policy, the person should be able to recover from the insurance company. But we fund a situation where some insurance companies pay and some don’t pay.
So when we have that kind of situation we normally meet with the Nigeria Insurance Association (NIA). There is a joint committee of the Cargo Defence Fund and the NIA and we talk about it. We are saying that insurance companies don’t settle claims. No! Some settle, some don’t settle and I have taken up these issues with them. But with the intervention of that joint committee because I have to give kudos to some insurance companies, members of the marine offices committee we’ve been able to get additional insurance companies to settle. Some have not cooperated with us but a reasonable number of them have cooperated with us.Where the problem is, is with the shipment. In the sense that maybe somebody should send 100 bags of commodity and send 60 bags. That problem lies with the trading partner of the importer. So that has nothing to do with the shipment because it is what is at the port of shipment that the vessel will take. So, that may not have a direct problem with the carrier but it’s between the person who is importing and the trading partner abroad.
We do have a lot of complains with that regard and then we describe them as fraudulent practices because you should know the quantity you send. If there is an invoice or if there is a contract specifying the quantity you should send. If you send any quantity less, you should agree with your business partner to that effect and then your business partner should pay for that quantity or you refund the excess. But we find that in a lot of cases that they would not refund the excess. Some would say okay we make it up with the next shipment and then nothing happens.
And then we have cases where some of them have agents in Nigeria who represent the interest of these foreign partners and then between the agents and the foreign partners they confuse the shipper. We had a case of somebody who used a letter of credit for the transaction and they now told him to spend an additional sum of $30,000 for bills of exchange which is just another method of payment. But that shipper didn’t realize, you know. So he ended up becoming duped. And we have the problems from the export side which I think is tied with the method of payment as well.
So we do have difficulties with the banking systems. It’s not that the banks have a problem but shippers need to understand and agree with their business partners on the method of payment to be use to secure the transaction financially.
Let’s talk about the charcoal export. You recently raised an alarm that several Nigerians have been duped by foreign buyers. They send their charcoal and they don’t get paid. How do Nigerians avoid pitfalls like this?
Before we talk about the problems we have to realize what is happening with the systems where they exports to. Many of the consignments are sent to Europe and then you find that lot of companies are already having difficulties. Spain, Netherlands, Greece etc. And when you contact the companies, which we do directly or through the Embassy, they will tell you that they are owed, that their suppliers have not paid and that their banks are wobbling etc. So there is that one and we do have cases of some people who just take delivery and tell one story or the other or cook up on story or the other. So if we have that in mind then you can understand what is happening at the other end. But then what some of them will say is just send us more and more shipments, we will sell then and then we would be able to pay you.
But I don’t believe that is a sincere way of doing business because if you have not paid what you owe, you can’t keep telling to send more and more because you are going to end up owing more and more because you are going to end up owing more and more people. So you find in some situations they pay half, one third, some don’t pay at all and some the companies claim they are gone bankrupt and we find that they are trading under new names.
In some systems they will say look, let just pay 50 per cent of what we are owing but we find that there are some companies we are dealing with whether it’s in Germany or in Netherlands or in Spain. You will that about six or Ten Nigerian Companies are dealing with the, some buyer in a system. Some 15, some 20 Nigerian companies dealing with the same buyer in one country.
This is what we have experienced. The companies have gone bankrupt. We’ve contacted the lawyers that handled their affairs, advised us that the banks have to take first and whatever is left, that’s what they give to other creditors but based on the asset they don’t see but then they have listed the Nigeria companies. The one that says that he will pay 50 per cent hasn’t gone bankrupt completely but he has voluntary filed but they looked at the situation of things and they said no, you may be able to pull through, so just be patient, based on what he said to us but we are verifying that so we can’t say categorically that is situation. We have asked for a verification of that status and then when we receive a report then that will advise us on what next to do. Where we have a problem is in Germany because we find out that the same buyer is still asking for suppliers because people come to us and say we’ve an invoice from the same company that hasn’t paid other companies and they want to supply and we warn not to because others that supply to that company have not been paid. So he can’t keep asking for fresh invoices and fresh supplies. We do have some people that say oh! The charcoal is already at the port we can’t recall it and I believe now there are about five companies that have come to us and we have dissuaded them from supplying to that particular company.
For those who are willing to export what are the key steps that they should take to protect their money?
We ran a seminar that we took around the country, we have to look at the payment systems, we have to look at insurance, we have to look at packaging etc. But the point is that they should not agree on the open account system, they should use the letter of credit. You spend a bit more but it’s more secure. They could use Bill of Exchange which is very secure. And they should enter into a contract. We are doing a standard form contract which we going to circulate to the trade groups because the world is sophisticated now bringing in INCOTERMS 2010 up to 600. These are the International Chamber of Commerce rules for international business transactions. So if they contact us for advice and consultation is free and we can be reached at 4, Park Lane, Apapa, Lagos or our website www.cargodefencefund.org or email: [email protected] We have contacted the Central Bank of Nigeria and they said for new exporters they should have a Letter of Credit.
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