Val Usifoh is the Chairman, Shipping Association of Nigeria (SAN). The highly respected maritime expert has served the maritime industry for over 40 years. He has worked in top management position at Elder Dempster Shipping Agency; served as Chairman of the Port Consultative Council (PCC) and as pioneer Chairman of the Port Industry Anticorruption Standing Committee (PIACSC), which was set up by the Nigerian Ports Authority (NPA) in 2000.
In this interview, Usifoh blames the maritime sector’s challenges on inconsistent government policies.
Excerpts:
What are the current challenges facing shipping lines?
The major challenges are that as a developing nation, there is too much officialdom in the port but this is gradually coming down. The officialdom I mean is that every government agency in the past wants to be in the port, it is only now when discipline is being enthroned as a way of life that some of them are not physically present. We are also dealing with the challenge of too much paper work. The world has gone e-commerce but there are some agencies, people we have to deal with that are still doing the manual work, man-to-man contact. When I was the Chairman of the Port Industry Anticorruption Standing Committee, we tried to help the Nigerian Port Authority (NPA) and a few others to minimize physical contact, which is the main reason why there is corruption. So that challenge is there. Inconsistency in government polices also affect the generality of the business environment. These things should be predictable so that when you are making investment medium or long term, you are sure of where you are going. The other challenge is infrastructural decay. The nation hasn’t put enough investment on a regular basis to upgrade our port, that is why Apapa and Tin Can are the major ports that are active even now that business is going down and because they are attractive, they are more secure than the others and the system seems to work better here.
These challenges relate to customers of shipping lines.
If the infrastructure is dilapidated and not upgraded regularly it means our customer’s cargoes spend more time in the ports. So, these are the major challenges facing shipping companies. Above all, international trade is on the low ebb. Business is down for everybody and if it is down for the importer, it is down for the ship owner. It is a global trend but we are feeling it more because we are an import dependent economy.
Can you cite examples of the inconsistent government policies you mentioned and how should be impacts be remedied?
Well, you know that shipping is just a service arm of the business. It helps carry people’s goods from point A to point B. Those goods are driven by economic policy of the government. So when people cannot predict exactly where to move their investment, it is difficult for you to program the types of ships you have to bring to this part of the world. For example, these ports are very old; Apapa particularly is much older than Tin Can. But you can find out that globally we now have much more bigger ships plying the waters which means we still need better port facilities. So if government is not investing to develop new ports, it is a big challenge for people to plan how to do business and that is why if big ships at an international shipping company cannot bring their big ships here, it means they have to transship the cargo at a certain point. So instead of bringing the whole bulk here, they take smaller ships and bring it because we need bigger channels, we need bigger facilities, we need to turn the ships round the clock 24/7. It means that every of the new ships must come to Lagos where you have deep channel and may be Onne. But there are other ports in the country which are not used. Calabar is there, Warri and the old Port Harcourt port is there. In the past we used to have Sapele and Burutu. In my younger days, ships used to go to all these places. But these ports are idle facilities now. It means that every importer has to find his way to Lagos until the inland dry ports are being developed and there is a good railway system and until we can get other roads other than Western Avenue and Apapa-Oshodi to take goods out of the two ports. So these are the issues.
When you are sure that the economic environment is stable and friendly enough over a period of time, then you can make such huge investment. And of course, you know the ports are exclusive federal government domain. So you cannot even develop any port without the approval or partnership with the Federal Government. These challenges as I said are tied with the policies that drive our economic development.
I don’t want to tie down to a specific issue because there is no aspect of the business web that doesn’t affect shipping. Let’s take for instance the problem we are facing now – the difficulty in business getting dollars. With the result of it, people are not ordering as much as they do because they can’t afford it and things are more expensive. So the ships are not coming, there is less cargo coming in. But if it were easy to predict, that would be nice. Let me give you another example; the rice policy and the automotive policy. If government would give the local businesses opportunity to develop or people who are investing create enough supply of goods and services before you lock the gate and say; okay, everything must be done here locally like rice, vehicles or cars then you can plan. But suddenly you say okay, no more this and people are investing money in it. They will not be able to plan long term. Those are part of the challenges we have about the inconsistency in policies. Take Grimaldi PTML for instance; the car park used to be filled up to the brim. They used to have two ships here every day. But now, the bulk of the business has gone to Cotonou because government suddenly said no more tokunbo cars. Before this auto policy came into effect, 80 percent of the tokunbo cars were coming to Nigeria and then maybe 20 percent to Cotonou. And at that time, all the second hand trucks were coming to Nigeria. But after this policy, the change is that over half of the second hand vehicle business is going to Cotonou now. And trucks are now going to Cotonou, which means overall, Nigerian ports have lost about 50 percent of these second hand vehicles trade. And these vehicles are needed because how many car or truck plants do we have working for these large population of over 180 million? The fact that the RORO business is down by at least 50 percent currently, this company had to retrench almost half of its staff recently because there is no business. You cannot plan when government doesn’t give you a long-term prospect of your business developing.
How did the recent truck drivers’ strike affect your operation?
It affects us anytime the port grinds to a halt. The government losses money through constant revenue, the port losses money through loss of throughput, SON, NAFDAC loses money, everybody loses money. The truckers themselves lose money. The trouble with the truckers strike is that they have a good case but they have not handled it well. Everybody sympathizes with them. These roads for instance, from Coconut to Berger have been under construction for God knows when. The stretch now from Trinity to Coconut has been abandoned. The truck terminal here has been under construction, nearly finished but abandoned. I can’t tell you more. God knows when they touched it last. So, the truck owners had a good case but they didn’t handle it properly. The problem they have created was a loss to everybody because it means that if a ship had estimated to spend two days or 24 hours in the port, it means it would stay longer. And if the ship is tied down in a port, it cannot meet its other commitments at other ports. That is a loss to the ship owner. If a cargo is moving under contract, like our produce and our semi-finished products or even finished products that we send out, if you miss your bill of lading time, there is a penalty. The buyer will impose the penalty clause and don’t forget too that buyers worldwide have choices. You are not the only supplier of these raw materials and they go to where they can get the cheapest. They have sources all over the world.
Any strike is a big loss to the economy and including the ship owners too.
What are operators doing about corruption in the system?
We started the Port Industry Anticorruption Standing Committee in 2001. I was going through my old laundry and I saw some T-shirts with the inscription ‘Don’t give, don’t take bribe’, which we printed and we were giving out to people then. NPA was running it as a solo crusade; they were financing the committee 100 percent. But, we tried as much as possible to sensitize people, corruption is attitudinal, it is a habit. Many people come into the port believing that once you go there, you have made money. But you journalists can tell me better, it is not as easy as that.
So, like I said earlier, once we discovered that there was too much one- on- one contact, Customs wasn’t like this at that time, people were entering long room, carrying documents all about and we said; look, let us move with the times, create platform where people don’t even need to enter the port and do their business as it happens elsewhere. We are getting there almost right now as we are talking. Those were the challenges.
We found out that it was a crusade that would take much longer and it was costing NPA lot of money to sustain the committee solo when it was supposed to be an industry committee. Secondly, we found out that the Nigerian business sector cannot end corruption at a short time. That is why our current President has reawakened that crusade. Corruption is endemic. All the problems would take time to go out unless we take the bull by the horn and fight it frontally.
There were so many groups, there were too many parties involved in the port system and they don’t allow the critical stakeholders to do their business., so the maritime industry engine was not running smoothly because of these obstacles. We tried to create that sensitization; we tried to make examples of some people that we discovered were corrupt but our legal system also frustrated it because if you catch or arrest somebody stealing something, they charge him to court, the case is adjourned, six months, one year, maybe after some time, they discharge the man the following day and you see him in the port again.
So, we thought that maybe with the development of recommendations that were made and I am happy to say that most of the government agencies that we were dealing with then have actually moved on in the right direction. Most of them, except for Customs and the port authority are no longer at the port. They have electronic platforms where they can handle anything both within Nigeria and outside the world. So it has reduced the stress of human traffic in the port but you cannot avoid it because people still come to the port thinking that if they enter the port, they would open the container and show them.
It is not as easy as that since there are processes. That was why the committee, after doing a good job, found out that its either we allow progress to come or everybody must be committed. If everybody does not show the same passion to fight corruption, it can never end.
What do you think about the reintroduction of Cargo Tracking Note (CTN) by the Nigerian Shippers’ Council?
I hope that government would for the sake of the economy make haste slowly on it. Why did I say so? In 2010, the Federal Executive Council approved it but in 2011, it was abolished because they found out that there was no value it is adding. All the monies they collected in dollars, where is it? Who accounted for it? Now, the same people have come to Nigeria in the 21st century to say we can help you make your cargo secure.
The same people are coming and they are going through the government agency to say that Cargo Tracking is coming and Nigerians are told it has no cost. If government has decided to bring in or reintroduce CTN, that is government’s decision but the position of the shipping companies is that there is a cost because the operators are not 100 percent Nigerians and even if they are 100 percent Nigerians, to get the information that would go into the manifest especially for import would be produced by the shipper. And the shipping agent over there would pay so much. If it is reintroduced on container trade alone, our projection is that it would cost up to 30 million dollars per annum. Who will pay this money? Based on the figures that the operators have given – per unit of container, per vehicle and for general cargo that is our estimation. So, somebody would pay for it and it is not the ships that would pay for it. It is the cargo that will bear the cost. Business is already bleeding. And I don’t blame them because many of these groups – MAN, NACCIMA and freight forwarders – have been told that it won’t cost them anything. There is no free lunch in business. That is it. They have experienced it before; they assured them it wouldn’t happen when it started but there will be a cost. That is fundamental. There will be a cost if it is reintroduced.
Will government derive full value for it? The concept of CTN is over 20 years old when as I said earlier, everybody was doing paper work. But most of the agencies, especially, critical government agencies that have to do with cargo now are compliant. They do electronic business. Manufacturers, importers all use electronic platform and do their documentation. So it is more secured because that is the trend in the world. Shipping is an international business. That is the trend worldwide.
If you are talking of security, we have security agencies. They have ways of tracking things now. You can see that the volume of hard drugs, contrabands and substandard goods is reducing because the agencies concerned have established electronic platforms for tracking the movements of cargo coming into Nigeria.
If you are talking of security registration, three agencies are already doing it. We have e-SEN (electronic ship entry notice) and you apply for it if you are bringing in ships to NPA. So they know what is coming.
From the ASYCUDA, Customs know what is coming, same with NAFDAC and SON. NIMASA also has a registration platform. If you are bringing in ships, they see the manifest; they work closely with Customs and NPA. If government feels that there is room to make some people rich at the expense of others and bring another load of bureaucracy, we won’t quarrel with it but all we are saying is that whatever we are doing as far as CTN is concerned, t has been tried before but it didn’t work.
In Ghana, they tried to introduce it a few months back but I think it was the Ministry of Industry in Ghana that shut it down because people were protesting that it was going to cost them more.
In Togo where they have introduced it, the cost has gone up from I think 25 euro per unit of container where it was before to almost 200 percent more.
Nigeria is not an integrated economy where things are not working well. The economy, the agencies are working in collaboration, the systems are robust enough to withstand any interference and I don’t think we should be selling our trade secrets and handing them to a third party in that way.
Some people have being clamouring for the refloating of the liquidated National Shipping Line (NNSL). Where do you stand on this?
In my personal opinion, if Nigerians can come together, those who want to seriously come into it, it would work well. If you say that somebody like Dangote who runs a shipping line now should form the nucleus of the shipping line, it may work because he would attract other investors. People will trust him that he would deliver. But the problem with us is that we know that government cannot run a shipping line on its own because these days government doesn’t have the money to invest except you put it to the private sector. So it is wrong to have a National Line run by government.
Government can only say I guarantee you that the business climate would stay favourable so private investment should come in.
If our people now can come together and convince government that they can work together, I think National Line can work. But as I said earlier at the beginning, you are competing with global multinationals and very few countries in the world now, except centralised economies, run national lines.
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