Government setting up shipping line on its own is bad business – Usifoh

Val Usifoh is the Chairman, Shipping Association of Nigeria (SAN). He is a respected voice in the maritime industry which he has traversed for more than 40 years. He has worked at top management levels at Elder Dempster Shipping Agency; served as Chairman of the Port Consultative Council (PCC) and as pioneer Chairman of the Port Industry Anti-corruption Standing Committee (PIACSC), which was set up by the Nigerian Ports Authority (NPA) in 2000.

In this interview with FOSTER OBI, the maritime expert x-rays the industry in the last ten years, the intriguing but surprising move by the government to set up a National Shipping Line , the challenge of infrastructure outside the port, the call for relocating the tank farms, how Nigeria can be the hub of maritime activitiesamongst others.

 

 

How do you assess the maritime industry in the last ten years?

The industry is a subsector of the economy;it’s very strategic in many ways and it’s a barometer of how healthy the economy is. Any nation that has a Port has natural resource that never loses its value. There may be ups and downs but it’s a strategic natural resource especially in international trade.There is hardly any nation today that can survive without international trade.  We are so well blessed in that regard. You can see the fortunes of oil; the country is trying to diversify. You have to attract investment, and even also we have to move into a situation in which we are not entirely an import dependent economy so we should be thinking about export and bulk of it is by sea. All our importations are also by sea.

You mentioned the past ten years. If ten years ago, somebody told you that in 2016 the industry or even the nation will be in this situation, you won’t believe it.

The advantage which the industry has is that the previous government had the foresightto introduce the port reforms that brought in the private sector, to do what the NPA has been trying to do since inception but couldn’t do effectively; that is handling cargo operations and improving on the infrastructure.  10 years ago NPA was still running the industry and NPA being a government agencysuffered from not being funded to continuously carry on the upgrading of infrastructure.

So while the world ports were moving forward, we were moving either laterally or southwards. Bigger ships were coming here, the pattern of packaging and trade were changing, security issues, pollution issues, all these things were just coming fast.

Now in terms of infrastructure, the ports are reasonably in good shape comparable to many other ports in the western world and in the Far East. On that score we have done very well. The ports are now able to handle modern ships.If it were not for this recession, the ports are in a position to handle any increase in tonnage.

On the flip side, the decay we suffered before concessioning the ports, you have it manifesting itself outside the port because the two major ports in the country Port Harcourt andLagosin particular are metropolitan Ports, which means they are just in the outskirt of a city that has grown so much to surround the Port. There are no good roads; there is no easy access to move cargo in and out.  What we gained inside, we lost quite a lot of it outside. It made things more expensive and the movement of goods very challenging.

So that is the problem we are still facing now. Infrastructure that should support the Port outside is in a very bad shape. We have not developed intermodalism, we have been aware of the concept for so long but we have not put our money where our mouth is in that respect so we are suffering it.

Government is now realising it. You can open the port and extend it into the hinterlands by good rail network, have inland dry port in as many states as possible so that everybody really doesn’t have to come down to the waterside all the time.

What about the last one year?

Things have gone down, the economy is in a recession like many countries of the world; ours is made worse because we were solely dependent on oil and we have not managed our oil well and we are dead broke.  When you are broke everything virtually comes to a standstill. Manufacturing, small scale industries, employment generation, even banking; there is no area of the economy that is not suffocating now.

How do you react to the Maritime Workers Union of Nigeria allegation that government policies have been anti-trade?

This is their opinion; I don’t know the part of the government policy that has been anti-trade.We should not only be talking of trade we should be talking of investment because trade is a word that embraces other sectors of the economy so if every sector of the economy is growing well, the maritime industry will be the first to benefit, because everybody will need something in or outside the county. So as I said earlier, with our great wealth from thePort, we should be able to generate enough hard currency, generate wealth and create employment. I will not make a general statement that the government policy has been anti-trade but so many things will be taking into account; it is difficult for you to stay outside the government and be too critical of the government because you don’t know the information at its disposal.

Everybody is looking up to government to do this or to do that.   There is this accusation that the government does not listen very much, we should understand that this country is in transition, from affluence to opulence to poverty; we know what we should have done which we didn’t do so, we should be better equipped to prepare for the future;that is why we have the pains we have now and we shouldn’t blame everything on government but of course government policy depends on how the economy goes.

Of course any group of workers will be worried about employment issues because the wealth of its members is very critical to them and we are in the shipping industry we know how challenging things has been. We are feeling serious pinch of the economy. The ships are not coming as before and even when they come they don’t come with full load; you are faced with competition from neighbouring countries. So if you are the leader of workers union and you see your workers going through this stress you will shout. Who is the cause of this, my members are ready to work no work, the ships are not coming as before, government what have you done to put us in this mess? I don’t blame them. It is a question everybody asked and everybody now is developing survival strategies.This is the best time now for you to think about the future. Government has a major role to play but we shouldn’t blame everything on government.

Again the Port access roads; especially that of Lagos have become a recurring decimal; the more we talk about it, the worse it gets?

This is where we have missed opportunities in the past; we should not depend solely on our roads to move cargo from one port to the other;we should have developed good road network;we are not using our inland waters well;there should be faster ways of moving cargo out of the ports. The issue of inland port has been in the burner for a long time. Many years ago, I was part of what was called ICNL. ICNL had inland depots in Kano and Kaduna and everything was moving by rail. They were the first inland ports we had.  It was collaboration between the private sector and the government. I know that my former employer then was part of that arrangement. It was working and we didn’t have to go through the challenge of moving cargo in and out of the metropolis. We should look for better ways.

Yes they are setting up deep sea ports all around. The emphasis should be on finding ways to move these cargos in and out of the ports. Yes there is need to regularly maintain these roads; the Minister of works was a former Lagos state governor so he knows what is involved.He knows very well the strategic nature of the wealth coming in and out of the port for the whole nation. So it all boils down to money. There are other ways of doing it.  You can concession these roads and make them toll roads. There will be enough money to maintain them.

How do you see the collapse of the Indigenous shipping companies’ in spite of cabotage law?

Our group, Shipping Association of Nigeria actually includes the multinationals; there are very few indigenous operators in the association.Sincerely an indigenous shipping company needs a lot of support. To run a shipping company is a very expensive enterprise.Shipping is an international business; that is the only way it can be profitable. You cannot start a company and you say you shuttle from Lagos to Port Harcourt, or Warri and back and think you will make money. To run a ship is very expensive.To acquire a ship is expensive; so you need patronage. Most countries in the world support their indigenous shipping companies and some even legislate. You talked about Cabot age. We suffered with the Cabotage because everybody was focussing on the oil business. And in the oil business you are competing with known forces that you can’t see. There is collusion everywhere; there are cartels which you will findit difficult to break in so government has a big role to play there. It goes back so long because in my younger days when the Nigeria national shipping line was set up; then it was owned by the government, there were few other indigenous companies. They failed because in everything indigenous one person wants to be at the top.  Everybody is competing to be chairman. They think more of the proceeds than the investment and shipping is not cheap. It is just as if you set up a supermarket and that is your bread and butter and at the end of every month you want to know how much we have made. You don’t think about the future, how do we grow?How do we expand? Core shipping is an international business, so you should think of even if you attract cargo to send out you have to have reputation and customer ship offshore to be able to fill the ship and bring it back and run a regular liner service. If you are a Tramper, then you will be competing with big liner operators. A liner operator has regular schedule which the importers trust that if it says it’s coming today and it will be there next week, the liner keeps its word.

If you join this business your ship is in port, the others are going and coming, and you do not have much to load, you cannot profit.Sogoing back to our indigenous shipping in the past they were a problem to themselves. Two, they did not enjoy as much patronage as they can especially the Cabotage regime. In cabotage, government should have a deliberate policy to encourage indigenous shipping by making sure that terms of contract includes that an indigenous operator must have first consideration particularly for government related cargo.  It is when you have this patronage and you can establish a track record that you can say you are in business. But if you get one cargo and you wait for another one year, you have to pay the captain; you have to pay the crew you have to maintain your bunkers and so on. These are some of the reasons why it has not worked in the past but we need to fine tune our cabotage arrangement. The act itself is good but this is the time for the government to rethink on the exception clause in it.

Government is going ahead with plans to set up a shipping line even when experts said it is an expensive venture.

Well having a national shipping line is no longer popular all over the world unless you are a despotic state. If you areKorea and want to set up shipping line and want to fly your flag all over the world, it’s good. It means you will support it and you will be proud that it goes everywhere.The shipping industry is not in many aspects like the airline industry. The similarity you have among them is that it is an industry where competition is very stiff.

So we have go through a regime where there were so many shipping companies all over the world, now they are consolidating, the ships are getting bigger and specialised. If you are setting up a national shipping line, it is better that it is run by the private sector. Government should not be the one to set it up, government, should encourage the private sectorthat are already in it and say ok, I think the problem that you ladies and gentlemen had in the past is two much fragmentation; come together, set it up; we will take a golden share in it, support you, once we have a golden share, the government will know that you are there and we don’t want you to die. We support you with cargo; we support you with facilitating bank credit because we have indigenous operators who are well experienced in all the fields of shipping; they are there suffering and languishing, so if government want to set up a shipping company in this 21st century it is a big mistake;

In any case, the current exercise I fought it because they had already decided what to do before they set up a committee to do it. For me if government is investing in anational shipping line, it is bad investmentin this day and age when very big multinationals are finding it difficult to survive.

The three largest shipping companies in the world are suffering now just like the small ones.

Are you worried that international shipping firms are leaving the country?

It is a thing for worry, not only in Nigeria, it is worldwide. Many shipping companies are broke, and some are being bought over. You see that a company has established a track record, if it comes into another group another group takes it over it, benefits from all those advantages that it had that is good; it is a very good question because here we are, some are closing down and the government with all its challenges wants to set up a project which to my best of knowkdge if it is not driven by the private sector, it is dead on arrival as far as the thing is concerned.

Do you support the call that tank farms close to the Port should be relocated?

Why do we need the tank farms? It means we are entirely dependent on imported petroleum products. We shouldn’t be in that position because tank farms are individuals that have thought it through and cashed in on a bonanza that was available at that time.We can’t say we have oil on our ground and we are importing all the time. And another thing is that when these tank farms came into effect, I don’t think the government did environmental impact assessment. There was no collaboration.Peoplejust saw there was spare land they bought it and started the business. There was no synergy between those that there likely to affected.

I am not sure that even the ministry of transport were aware that the ministry of petroleum had authorised that these tank farms should be there. This is the problem. They shouldn’t be there in the first place. They are there now, to move them will be a very big challenge. But if gradually they have no employment they become redundant.  But you know that those who own them will do everything to make sure they are there. Just as the big roadtransporters killed the railway, they didn’t want it to work.

So also these people want us to be import dependent so they will always be in business. It needs a drastic government paradigm shift; why should we be an oil producing nation and be so much dependent on oil importation.

We created a demand for them and they are meeting that demand. It just like the petroleum subsidy, once you remove the sugar that attracts the ant, like what has happened, the ants will disappear; now you can drive into a petrol station and buy fuel. Those are the kind of strategies that our policy makers should be thinking about. You think about the interest of the people rather than a particular class interests. The difference between the Nigerian businessman and the politician is not as wide the difference between the widths of your hair. Almost two sides of the same coin.

Can we say that our water ways are secure?

I think we are trying. The Navy, Nimasa are trying.Initially there was no synergy; no collaboration, but now everybody has seen how strategic it is. It is an international requirement that the waterways should be safe. It is not only an international thing but for the country as a whole. But you know the country has pretty security challenges not only on our water ways but in fact more now on land.

The challenges on our water ways are the things that the government has taken seriously. Countries along the gulf region are working with international bodies to secure the waters. I think serious attention is beinggiven to that.

Is it possible to eradicate corruption at the ports?

Corruption is a subject that is so dear to my heart. Corruption can be eradicated. But corruption arises when there is human contact. Fortunately the first attempt to boldly deal with corruption at the ports was in the time of Obasanjo; seriously and now, we have Buhari and they were former military leaders and passionate about it.

I f the leader is passionate about fighting it, it can be eradicated. If you do your business in the modern way, less of human contact, with transparency and probity; corruption will be reduced to the barest minimum. You cannot totally wipe out corruption.

How do you view the menace of smuggling along the borders?

My personal view is that smuggling is carried out by criminals. A serious business man has no reason to smuggle his goods into the country. You have an obligation when you are bringing in something; there are rules.  Government cannot build a wall around our country; even if it does; it is individuals who want to cheat that get engaged in smuggling.  If government also changes a policy like the Common ECOWAS External Tariff, you have no incentive to try and cut corners.  I think theCustoms with other security agencies are spending so much time and money trying to eliminate smuggling.

Smuggling means that government spends so much money and people risk their lives to make sure everybody is protected; smuggling means nobody should have sympathy for a criminal.

How can Nigeria become a hub for maritime activities?

The two critical areas are that the ports should be safe andvery competitive. If it is cheaper for somebody to go to another country’s port than coming to Nigeria, they will go there. The port should have facilities for landlocked neighbouring countries to evacuate their cargo in and out quickly.

The processes should be simplified; it should run competitively; that is the only way we can be a hub.  Currently we are not in that position. The processes are still too complex; everybody wants to be seen, especially the agencies. Yes you have a law that tells you to create synergies.

If you have a single window where everybody keys in not that Custom has one, other agencies have their own, it won’t work. We should have a singleplatform where all agencies can operate from, then things will move faster and be more transparent but clash ofinterests add to the cost of doing business at the ports.

 

 

 

 

 



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