Time for Nigerian Ports Authority to become a corporation

By Lanre Badmus 

Last August while on a visit to the Port of Lome, I overhead two port officers discussing the economic implications of a technical agreement signed in July by Cotonou Port with Transnet of South Africa to assist with improvements in container handling and freight rail operations.  In the last two years, Port Autonome de Lomé with its deep habour has been edging towards a regional transshipment hub, attracting quality investments from major players like MSC, Bollore Logistics and China Merchant Holdings. As a Nigerian, the news of the Government of Benin Republic going all the way to South Africa to seek assistance to improve her port system was far from cheerful, especially with the jocular remark often made by President Boni Yayi that his country is Nigeria’s unofficial 37th State resonating in my head.

 

While still scratching my head over this “act of betrayal” by a sister country, I recalled that in September 2014 during a tour of the Port of Durban as part of the Africa Shipping and Oil Roundtable delegation, one of its senior managers informed us that a team from Ghana Ports and Habours Authority (GPHA) had just left town after signing a cooperation agreement with the Transnet National Port Authority of South Africa. One is aware that GPHA and other sister port authorities often send delegations to cross-fertilize ideas with their colleagues at Nigerian Ports Authority (NPA). However, one is not sure if such visits had culminated into bilateral or cooperative agreements. Is our NPA being sidelined due to competition or because it is not competitive?

South Africa commands the most advance economy in the continent, ditto her port infrastructure.  Arguably, one major factor responsible for this feat is the early recognition by the country’s leaders to integrate transportation into economic development. While many African countries seem satisfied administering their ports as public utilities, South Africa is perhaps the first in Africa to corporatize the management of her national transport infrastructure including the seaports. Transnet SOC Limited was formed in April 1990, by the government of South Africa as a limited public company or corporation, merging the operations of the country’s seaports and railways under one entity. Till date, this holding company remains a state owned enterprise, while its port division is administered under two business lines namely, landlord businesses (Transnet National Port Authority of South Africa) and Transnet port terminals (SAPO).

Appraising the performance of port administrations in the continent, the Transnet business model has helped the South African economy to be one of the most competitive.

Nigeria on her part embraced the landlord port model in 2006, but without any strong regulatory framework to drive this arrangement. Aside the transfer of terminals to private operators, some services hitherto being provided by the NPA was restructured and new businesses or joint ventures were established in areas like dredging and pilotage. Meanwhile NPA would retain its ambiguous status of acting the role of a technical regulator as well as being a player under a market environment.

Having a modern port facility does not guarantee an efficient port system, other variables include a deep access channel, simplified customs clearance, excellent terminal handling and a cost effective inland transportation network.

In the World Bank’ Doing Business 2015 Report, Nigeria is ranked (same in 2014) 156th out of 189 countries monitored. In terms of “trading across borders”, Nigeria is ranked 28th in sub-Saharan Africa.

According to the report, to export from Nigeria; documents preparation takes 12 days; customs clearance and inspections take 3 days; ports and terminal handling take 4 days while inland transportation and handling take 3 days; bringing it to a total of 22 days. For import procedures: documents preparation takes 14 days; customs clearance and inspections take 12 days; ports and terminal handling take 5 days; inland transportation and handling take 2 days; bringing it to a total of 33 days.

Mauritius is the highest ranked “trading across borders” country in Africa. Export procedures in Mauritius take 10 days, while import procedures take 9 days. Customs clearance in the island nation is concluded within a day, due largely to the implementation an advance electronic single window platform (TradeNet system).

To better understanding the above statistics, the average cost of clearing a container in Mauritius is US$710, in Nigeria it is US$ 1,695.

For Nigeria to stop losing billions of dollars every year for operating a less competitive port system, our two leading border agencies namely Nigeria Customs Service and Nigerian Ports Authority – would have to raise their game. As a key arm of the national treasury, the new NCS leadership has to focus on change management as well as improve on the use of modern ICT tools to enhance revenue collection. For the NPA, a new administrative model is required.

The Nigerian Ports Act (as amended) allows for joint ventures or public private partnerships. But rather than allow it push on the commercialization agenda which it began in the late 1980s when it granted concessions to the likes of Dangote, Flour Mills and Intels, as well as set up joint ventures like Continental Shipyard Limited, the NPA was directed to halt that trajectory by the mid-1990s. The leadership of the country at the time would not let go the regime of patronage inherent in the NPA.  The verdict was that NPA should retain its “authority” status.

Going by the current negative growth in the country’s revenue, the high cost of doing business at the port has to be addressed in view of the multiplier effects on the national economy.

The time has come for NPA to drop its ‘authority” toga and become a commercial enterprise.

As a state owned public corporation, the NPA going by its current market value has the capacity to raise a US$5billion infrastructure bond from the international market, with a maturity period of between 10 to 15 years, to upgrade critical infrastructure like the port access roads, a national freight rail network, advance traffic management system etc. For greater efficiency and accountability, all the major seaports should operate as autonomous business units. The new NPA should equally establish new joint ventures in engineering, inland transportation and logistics. It may even consider investing in cruise tourism.

The initial ripples experienced with the introduction of the treasury single account policy is a good reminder that NPA will have to shift from being a department of government to a state owned company, in order to better serve the industry.

The impressive management of the Lagos channel is perhaps the major contributor to the appreciable increase in cargo throughput recorded by the two ports in Lagos in recent time.  The story circulating is that maintenance of the port access channels (Lagos, Bonny, Delta and Calabar) and other critical operational activities being funded by the NPA have now come under serious threat due to the TSA policy. This should not be the case.

For Nigeria’s economy to be globally competitive, the port system in the country must equally be made competitive.

The time is right for the Federal Government to allow the NPA function as a public owned corporation. It is the best path for it to become a truly brand asset for the country.