Capt. Emmanuel Iheanacho, a former Minister of Interior, is the Chairman of Genesis Worldwide Shipping and Chairman, Integrated Oil and Gas Limited. He was a guest speaker at a recent Maritime Business breakfast meeting organized by ZOE Maritime Resources Limited. Shortly after the event, he spoke to MMS Plus on several pertinent issues in the nation’s maritime sector. Excerpts:
Today’s meeting was on the theme; “Tariffs and Rates as Stimulants of Growth for the Nigerian Economy”. How do we address the issue of tariff and rates and how does it come to play in the nation’s economy?
In addressing this issue, it is very important that we make a clear distinction between tariffs and rates that are charged. In business you incur costs to deliver services and those costs would reflect on the pricing because after spending so much money to get the product you must sell it at such a price to make profit. However, tariffs belong to a different category in international trade. It is an arbitrary imposition usually decreed by the government in order to achieve certain purposes. Sometimes, these tariffs are introduced to protect local industries and create job opportunities for indigenes. The bottom-line is that at the end of the day somebody has to bear that extra cost whether it is tariff or rates. Sometimes, the government decreases or increases tariffs on certain goods to say that such goods wouldn’t be allowed into the country unless certain amount is paid; people will pay in order to import but the final consumer would have to pay dearly for such goods or services. It is horses for causes. The government makes more money at the expense of the buying power of the average Nigerian in the street. The commoner loses his buying power because of these tariffs and rates. So, in applying these tariffs and rates, one has to be very careful and really weigh the costs and benefits. If the benefits outweigh the costs then the government can go ahead with the tariff. One of the things that we shouldn’t do is to lay ourselves open to all the international traders of the world so that they bring their goods into the country and Nigerians are sitting there doing nothing because there are no jobs. We must strike a proper balance that seeks to establish that our people get a fair share in the business that comes from the operation of the economy.
Lagos ports are not competitive in comparison to other ports in West Africa yet it is overcrowded with cargoes and the other ports in the country remain idle. How do we reconcile this issue of competition and uniform tariffs?
One aspect that really struck me during this meeting was the talk about uniform tariff structure for ports along the West African region. I don’t understand how that would be because the operating conditions aren’t the same. The cost that I seek to recoup in Nigeria may be different from the cost another operator seeks to recoup if he is located in Ghana or Togo or any other country. How do we talk about having a uniform tariff structure when we are in competition with one another? If we are in competition with one another for instance, let us look at the neighbouring port of Lome, we want to be able to give a choice to the user of the port services to say this is Lome on one hand and the other option is Lagos. The individual should be willing to come to Lagos because when he looks at all the charges, rates and other factors but we can’t be talking about uniform tariff structure for all the ports in the regions.
I would have expected that we go in another direction to create competition and competition leads to greater efficiency and reduced cost. I was a bit surprised that something else is the case and I suspect that our people are focusing on the wrong thing and going in the wrong direction with regards to this matter.
On this issue of tariff, one that affects you as a ship owner is the Sea Protection levy. Looking at the overemphasis on Lagos ports and de-emphasis on the Eastern ports, the problem has been piracy and insecurity along that region. Sea Protection levy ought to provide some level of security for ship owners, so how do we balance this levy with the service delivery?
Whoever collects sea protection levy has the duty and responsibility to deliver services and safeguards the people who are operating within the area. I don’t know really why that isn’t the case if you say people are not getting the necessary benefit. However, I want to raise an issue. Piracy is absolutely a horrible crime and we condemn it; but sometimes I really wonder if the issue isn’t over exaggerated because people have made allusions to people wishing to put insurance premiums on goods coming into the country and the story gets blown out of proportion. Wherever we encounter piracy and pirates we should absolutely seek to exterminate them and make sure that they aren’t there because they give us a bad name but we also have to be worried that people are taking advantage of this problem and putting up stories that allow them to put up premiums they do not deserve in terms of huge charges they put on our trade.
Several deep seaport projects are spring up in various parts of the country. Do you think that this development as well as dredging of other ports in the nation would eliminate the overconcentration in Apapa ports and consequent traffic menace?
With projects like the Ibom deep seaport in Akwa-Ibom State and other deep seaports, a lot of the goods that go through Apapa heading to the Eastern part of the country would no longer come to Apapa. If we take advantage of the infrastructure that currently exists in Port Harcourt and put down investments in renewing the structures on ground and developing new berthing facilities, most operators within the Port Harcourt axis would move away from Lagos. These other ports would thrive and stop suffering from under investments.
It is important that we redesign the Apapa port area because the port and the city is collapsing because the infrastructure has remained the same for over forty years while the volume of activities have increased tremendously. We should look at the Apapa community especially those areas that are no longer being put to good use; find the owners, pay them commensurate compensation and take over those properties to develop infrastructure like truck parks. Such development would dissipate the problems of traffic gridlock at Apapa.
On crude carriage; the Federal Government recently stated that the crude terms have been changed from Free On Board (FOB) to Cost Insurance and Freight (CIF). Has that change really taken place; if so, how has it affected indigenous operators?
I don’t think that change has happened yet and it is a scandal for Nigeria to continue to sell her crude on FOB basis. It is such a primitive concept where you sell your raw materials while the foreigner brings his ships to carry your product, adds value to it. He takes it to his refinery and adds value to it before bringing it back with added value. All those value added that should provide lots of jobs of owners of the cargo those not belong to us. We can’t continue to do business that way.