Mr. Michael Luguje is the Director General of Ghana Ports and Harbours Authority. During recent International Association of Ports and Harbours (IAPH) conference in Abuja he discussed several pertinent port and economic issues in Africa with MMS Plus newspaper. Enjoy it:
Congratulations on your appointment sir. Holistically, how would you do an overview of what happened here in this training?
It was a success for Africa. It was a success for Nigeria and for the Nigerian Ports Authority (NPA) and its Managing Director, Ms. Hadiza Bala-Usman. You heard what the Managing Director of International Association of Ports and Harbours (IAPH) said. This is a project they were planning to undertake but we have conceived it and executed it.
Earlier this year, when we were in Bangkok we presented it and said that the African region was already doing this. They accepted it and said that it was the dream of IAPH and other regions. Fortunately, the event turned out to be a success.
One of the recurring problems we have had in Africa is the Cabotage implementation and the connectivity in terms of railway. Today we talked about connecting the hinterlands but some of us are scared that this may end up as the usual theoretical exercise we have always had. What’s your view on this?
On hinterland connectivity, we really don’t have a choice. If we don’t improve hinterland connectivity the ports cannot be attractive. Let’s take the Lagos ports for example, where access to the ports is a challenge, if you measure the impact in terms of efficiency the impact is huge. The issue of hinterland connectivity is within our control as port authorities and governments. Maritime connectivity is apt. For example, there must be cargoes willing to come to a country and the cargo must be huge enough so it doesn’t require assistance from other countries. As a small country, you have no choice and you can’t be connected directly by ships but big countries like Nigeria, if all the factors are provided at the ports and there is smooth connection to the hinterlands, Nigeria should be able to rise very high and boost connectivity inwards.
Firstly, Nigeria has a huge cargo mass that could see full shiploads from point of origin to Nigeria without stopping at any country. The only challenge is that ships stay a long time when they arrive the port before they can berth to discharge. The ship is discouraged by this challenge and it is forced to use a second port by going to Lome to discharge to smaller vessels because of the delays it would face here in Nigeria. Nigeria can control the hinterland connectivity was there’s that commitment and willingness to do it. Other countries like Togo, Benin and the rest, where as an economy they don’t generate cargo in mass, it is most likely that maritime connectivity can’t be effectively controlled. This is because such nations don’t have control of the destination and they don’t have sufficient cargoes. They would be forced to rely on other ports or other countries cargo.
However, for the hinterland ports, no port authority has any excuse to give because that is the strong points you are going to sell to your stakeholders in the country. The ports wouldn’t be attractive if the hinterland connectivity isn’t smooth, accessible, safe and efficient. The government has to listen to ensure that when cargoes come into the nation’s ports, they could transit to the various destinations easily. Export cargo should also be able to come to the nation’s ports in a smooth and efficient manner.
During your presentation, you talked about African countries scrambling for transshipment cargoes. Can you throw more light on that?
All ports want to be the biggest where all the big ships could come to it first and smaller ones also come to big cargoes to other destinations. Every nation wants to have these deep seaports with deep draft so that the ships would come. However, the issue comes down to the size of the economy. For instance, if a big ship comes to Lagos ports and discharges 5000 containers, it must be able to load cargoes back. If it cannot load cargoes back then the attraction isn’t so much. If it can’t load cargoes back two things would happen. Unless your facility is owned by a shipping line, then the ship is compelled to come because that is its facility. If a shipping line doesn’t own the terminal at the ports and your economy doesn’t generate sufficient cargo to take back, no matter the level of your facilities you mayn’t be attractive to ships. It is good for the African region because we have seen a cascading effect where all the big ships or those that were the biggest few years ago are dropping down to trade in the African region.
We are compelled by our masterplan to develop deeper draft so that when the big ships come we can receive them. As for the transshipment hub, every nation can dream but there are several factors. It isn’t just about the deep water, but several factors to make a port become the hub. At the end of the day, naturally the ports that have the capacity to be hubs will because become hubs. Nobody could forcefully become a hub. I believe that when facilities like the Badagry and Lekki deep seaports come up, Nigeria would have the capacity to be a hub port. If they are also able to improve on the access to maritime facilities it would be an added advantage because the economy already generates volumes of cargoes. For example for several years, Abidjan has been a transshipment base for West African because its export cargo is quite significant. They have almost about 40% to the imports as a result of what is exported. So, it looks attractive for ships to go there to drop cargo because they would get something to take back from the ports. So far, no port has developed just because it targeted to become a hub. Most of African ports are built based on the masterplan of the cargo they intend to carry and export, revenue to be generated and demand and supply level.
For the landlocked ports, there seems to be a competition between Ghana and Nigeria to serve other nations. How would you explain this?
Once a country isn’t a coastal one, it has to depend on the neighbouring country’s seaports to receive cargoes as well as for exports. That is business because about six nations are competing for cargoes for Niger, Mali and Burkinafaso; Nigeria, Ghana, Togo, Benin, Cote’D Ivoire and Guinea are competing for the cargo of the three landlocked countries. That competition is based on preference by these landlocked countries. The landlocked countries have to consider the distance of the ports, safety, level of infrastructure, cost and other factors. Nigeria doesn’t do much. Nigeria does more business for Niger because there is a direct access. If Nigeria is to do any business for Burkinafaso, the cargo must first pass through Niger to enter Burkinafaso. The same thing also applies for Mali.
Burkinafaso has direct access to Togo, Ghana and Cote’D Ivoire so there is serious competition between the three countries for Burkinafaso’s cargoes. For Mali, Senegal is the most advantageous port because they have direct access to Mali via rail connection but you still find few shippers from Mali who opt to use Ghanaian ports which 2,000 miles away. The question is why is the shipper choosing the 2,000 mile journey from Ghana when the port in Dakar is just 900 mile away? They have the choice to make after considering other factors. That competition would always be there.
For transshipment cargoes, there are also various issues like the longer periods to store cargoes at ports, differential rates in tariffs, customs relief strategies, among others. However, the customs are always skeptical about these cargoes because they leave the port without paying any duties because they are transshipment cargoes heading to landlocked countries but some unscrupulous shippers can divert it and sell in the country without paying duties. So, there are several regimes to ensure that when a cargo is in transit it is monitored across the border to its destination.
Someone also shared a thought about having an integrated continental port industry. Do you see this happening? Would it reduce trading cost?
That concept itself has to be explained. What does integrated continental port industry entail? The point is that a port is developed primarily for a captive economy and as it grows in trade you can attract hinterland businesses which are across the border.
When you go to European countries you find that every coastal country has its port. Sometimes, even in the same country there are several ports. So, I think what we should be looking at in Africa is regional integration where as a businessman, I can do my calculations and realize that if I export to Cotonou port; it is more advantageous to me than going to Lagos.
I should be able to access the Cotonou port under the regional integration arrangement. The process should be so accessible that it would be as if I’m still within my country. This is what obtains at European ports where someone in Northern Germany could easily pass his cargo through France because it is closer to his destination and cheaper for him. So, he is a Germany importer and there is no problem. Once the cargo is destined to Germany, it passes the port in France without the type of bottlenecks we have in Africa. There is rail connection as well as roads and waterways. The situation is different here in Africa because if you’re exporting through Cameroon you have crossed into another regime and all the difficulties with the port. When you consider all the challenges you would decide to manage the Lagos ports.
For example, someone decided to import a cargo through Lome port because it was Christmas season and he felt Accra ports would be too busy. By the time he got the cargo to transit through the roads to Accra, he realized that he got the cargo quickly to the market but it cost him more. If the integration was working properly, and trade facilitation is taken seriously, all those bottlenecks are unnecessary because the cargo is in transit from Lome to Accra. In the European countries you wouldn’t even see the borders. You would drive across a border and need someone to tell you that you have crossed into another country.
We have had ECOWAS Trade Liberalization Scheme over the years yet nothing seems to be working. What is the problem behind this failure of integration in Africa?
We have to defeat that common enemy in the region which is the political will. Lack of political will is a problem, otherwise why would presidents in the region agree to sign a document, ratify and domesticated it, yet implementation isn’t done and nobody says “this is a commitment we made; we have to make sure it works” to ensure free movement of goods and services within ECOWAS. At least we have succeeded in the issue of visas for ECOWAS countries. You don’t need visas to go to Ghana as a West African citizen.
Take a look at the number of checkpoints from Seme to Lagos. It’s the same security agencies with several stops and you keep asking what they are checking. The point is that even when driving a diplomatic car, you have to queue up for them to inspect all the other vehicles before you go. When I was told it is 80km between Seme and Lagos I couldn’t believe it because people spend three to four hours for an 80km journey. You can imagine if you are transporting cargo. This can be a disadvantage for any businessman in Lagos who wants to import or export through Cotonou. The cost would be too high for him to pay.
The problem is the absence of political will and indiscipline as we seem to embrace the wrong things. We aren’t firm with punishments and we are very impartial as far as punishment is concerned. I believe today, if you are the head of the Police Force and you have a brother who has been caught in a criminal act by the police and the officers are ready to mete out the punishment, your sister would call you and say please do something because your people have captured your brother. That is the problem in Africa. Immediately, you find yourself thinking that according to your culture you should be helping your brother, but you know that your brother has gone against the law. Until we move away from that culture and insist that people that are wrong have to be punished, a lot of things can’t be done.
Would you say the same thing for Customs in the African region?
Of course! When you are crossing from Ghana to Cote’D Ivoire, it is an open secret that for the officers to stamp your passport you have to pay and they don’t collect their monies secretly. They take it openly and their bosses are aware that such practice is going on. Why do we condone it? It is more about integration that is backed by strong political will to ensure that any agency that is a bottleneck should be eliminated or the officer in charge is dismissed.