By Kenneth Jukpor
Mr. John Egesi is a former Director General of National Maritime Authority (NMA), now Nigerian Maritime Administration and Safety Agency (NIMASA). In this interview with MMS Plus, he explains the crucial role of trade in Nigeria’s economic development,with emphasis on export, which he says is more important than the establishment of a national fleet. Find his reasons and other insightful comments as he dissects shipping business in Nigeria. Excerpts:
Despite the enormous maritime potentials in Nigeria, the nation is lagging behind in shipping business in terms of insurance, freight and administration. How did we get here and what’s the way out?
The movement of ship is dynamic. They have to call at several ports in many countries that may operate different laws. I recall when we went to establish Form C, the formula for sharing cargoes under the United Nations Conference on Trade and Development (UNCTAD) code; we were operating beyond our laws, so our moves were halted. We felt bad but the major problem is that we have always been operating only on export. When we talk about cargo insurance, we would also talk about hull insurance which should be considered for every voyage.
Since Nigeria doesn’t have an export base, the only thing that would have helped Nigeria is if it had resolved to be a manufacturing country. If Nigeria was a manufacturing country, the issue of insurance would be more attainable because the cargoes would be Nigerian cargoes. However, the cargoes we want to form an insurance base for are over there in Japan, China or Europe. If Nigeria was an exporting country, the leverage becomes more effective.
We can’t aim to regulate insurance on goods and services that are produced in other countries because they have the right to put prices on these things. This is how the world operates; no one waits for a President to say ‘tell our trading partners that we want this policy or strategy’. We can’t just relax and wish some of these economic disadvantages would suddenly disappear. It is not something President Mohammdu Buhari could sign a beautiful law to change or regulate. This is an issue that requires a comprehensive national strategy and commitment from the requisite regulatory agencies to correct.
I recall when I was in service instead of making money like many Nigerians in public office would be concerned about; some of us were busy trying to fix these problems. I spent many nights at the office in Victoria Island when I was the Director of Operations at NMA, thinking of how to formulate Form A and Form C. We suffered these things while in service as we tried to figure out a solution to ensure that the country stands. We went through the development of the International Maritime Organization (IMO) regarding the Geneva conventions.
At certain times we had to set the clock backwards because it was already 12 midnight but we backward our time to 9pm of the same day so that we could sign documents of the previous day. I was once the Chairman of the African group and we attempted to address these problems. Today, this is a problem that I’m chiefly concerned about and when I look at NIMASA, I wonder if they are aware of this challenge which is proving to be an elephant in the house after several decades.
Can a Nigerian P&I Club or an African one, give the nation an advantage in the insurance component in shipping?
Nothing stops Nigeria or the African region from having P&I clubs, but it must go in line with existing global trade rules. If we tell the shipping companies that our trade must be done on Free on Board (FOB) basis for imports so that we have a say on the insurance and imports, but we have tried it and for this to succeed, the government must take steps to address this in the national planning department.
The government has to provide transport statistics. Earlier, I didn’t want to dwell so much on transport in addressing these issues because I actually see them from the standpoint of the national planning department. If you want to make me a Minister, I would rather opt for National Planning than the Ministry of Transport because these issues require comprehensive national strategies and not just transport policies.
So, we need a holistic approach. If we decide we would do our trade on FOB, how tenable is this? If we try this without planning critically, you would be shocked that the prices of goods would suddenly increase. This is because there is an issue of trust. In marine insurance and insurance generally, there is a Latin phrase ‘uberrima fidei’ meaning “utmost good faith” because of the insurance and global shipping is centered on trust.
The multiple shipping problems in Nigeria can’t be solved until we begin to manufacture things that would be exported to other parts of the world. Other third world countries like Singapore and Japan have left Nigeria behind. These nations don’t need any format of protection anymore because they dug in and were able to create a world of their own. Today, these are nations to be reckoned with, yet Nigeria is still dealing with elementary problems like coexistence. We have potentials but potentials don’t guarantee that one would realize it.
The gold would remain in the ground until someone takes the responsibility of digging it out, washes it and presents it as pure gold. It is the onus of the leadership of this country to resolve to take Nigeria from its current state of potentials to a future where those potentials become realized. To achieve this, there must be unity of purpose and a clear-cut strategy to achieve this. When we have a leader who is out to change Nigeria, without regard to tribe, religion or any form of discrimination, this country would take-off. Everyone who is a Christian recognizes the work of the Holy Spirit who intends to everyone to the promise land irrespective of race, colour or class.
Sometimes, I’m so delighted that things have gotten so bad in this country because it means that we have nowhere to turn to but forward to somewhere better. We have suffered tremendously.
If Nigeria or Africa could have major P&I clubs like the Paris club and Nigeria, Ghana and other nations in the region begin to produce significant amount of goods for export; we could insist that the insurance must be done in Nigeria because the goods are Nigerian goods. The global world would respect that we’re the seat of the trade. Presently, we can put insurance on exports like cocoa but the person buying it has more power because the ship is coming from his place.
The most important thing for Nigeria to do is to develop its trade. Trade is the livewire of every country. Once the trade is developed, every other thing can be categorized in what we call derived demand. Shipping is derived demand. Insurance is derived demand.
When it comes to trade, you find that the generally accepted language is English and this gives Lloyds of London more advantage. In trade, you can reduce the cost burden and volume of exploitation of the person on you, by developing your goods and services. This is what a country like Japan has done. Spain has also done the same thing.
In Nigeria, everyone is after what is there for him or her. This never makes things work; rather it worsens the state of any industry, trade or business. There is the issue of intermodal transport that has been reported to be the most significant component to shipping that the world has ever seen. If you go to certain countries and visit the ports, you wouldn’t know that you are in a port because of the level of automation and effective intermodal system. Everybody knows what to do and the jobs get done timely and efficiently. The trucks know it can get into the ports from a certain location in two hours time and pick containers and leave swiftly. It’s not the same here in Nigeria. People spend weeks on port access roads. Those in authority hardly feel committed that’s why these problems persist.
What solution would you proffer to address the pandemonium on Lagos port access roads, lack of empty container holding bays, and related problems?
We introduced offdock terminals and inland container ports several years ago but they haven’t been effective. Nigeria has no business having the kind of traffic gridlock seen on the port access roads. Nigeria’s problem is the politics and sentiments attached to the placement of professionals to head crucial agencies and institutions. Nobody thinks of the person’s capacity but a politician wakes up and says that this man is my brother I have to place him where he would enjoy money so he puts him at the helm of a crucial agency or institution. However, it is very important to get the right people at the helm of affairs at crucial transport agencies.
When I entered NMA, I took time to tutor those in research and other departments. When I wasn’t around, Dr. Ekong, the first Director General of NMA would insists that I was back soonest. I can’t remember ever going on leave until I retired. I was always in the office and whenever one of the Director Generals was going to retire someone, there was always clamour that I couldn’t be retired because of the efforts I put in. We had people employed into NMA that weren’t illiterates but they had no knowledge of shipping and weren’t interested. Dr. Ekong, Mr. Akinfe and I did a lot for NMA. Dr. Ekong was specialized in statistics while Mr. Akinfe was a man of many laudable qualities and very intelligent. Akinfe and I took it upon ourselves to teach everybody and we tried to develop the place. We had problems because the laws we were operating with was limited to Nigeria. It was Decree 10; but we can’t decree to the world. We can’t even decree to Ghana, Togo or Benin Republic.
The decrees showed the dictatorial mentality of the government at the time. When you say ships must be built in Nigeria, have you thought about it critically? Which single nation builds a ship from scratch to finish? How about the electronic gadgets and other components of the ship? The option of waivers isn’t right also because we don’t have ships in the first place.
So, I want you to take it off your mind that some nations are conspiring against us. The trade is against Nigeria and they know it, but we didn’t help ourselves by failing to do the elementary things. The developed world would continue to develop strategies to ensure that they keep their advantage. However, even if they give Nigeria such advantage, would we be able to use it or administrate it?
Sir, earlier you talked about the introduction of FOB leading to higher costs. Can you explain clearer?
When we do FOB, it may not affect them but when we do our administrative cost you may be surprised to see our insurance companies adding more monies than they should. Nothing comes through the sea without insurance, the only issue is where it is paid and we want it paid here in Nigeria to promote local content. How do we administer it? Our records don’t show that we do such things well in this country.
FOB and CIF issue has been discussed at the Shippers’ Council since Dr. Kingsley Usoh was at the helm of affairs. We have to come together and the government would have to play a key role to get this done.
Can the government solve this problem with policies or how best can we address this?
This is a good question. The government does most of these things in this country but the insurance companies can also take the initiative to do this. How many insurance companies in the country can stand up and be counted in terms of administration, underwriting as well as capitalization?
If insurance companies in the country can congregate, then we can achieve this. I complained earlier because of the way we do things in this country. If we are given the insurance, local people would buy insurance from them and it would reduce the fiscal burden but don’t forget the aspect of the hull. How do you do hull insurance when Nigeria doesn’t have vessels? The vessels aren’t under our control but if we had a national fleet we could have some leverage.
Another recurring problem in the nation’s shipping sector is the lack of absence of national carrier. How do we address this problem?
National fleet is subject to proximity to trade. If the much proposed and anticipated national fleet would depend on cargoes abroad, then the actual people controlling the fleet are those carrying the goods. The fleet has an agent. The agents of ships call the ships and direct them to where cargoes are available. Nigerian ships would need cargoes and we would have to create a balance for the massive imports. The days of Decree 10 and the issue of sharing cargoes come to play again. The 40-40-20 cargo sharing formula has been scrapped and other developing countries started working on developing their industries but we haven’t done the same.
Several years ago, there were factories working in Apapa even at night. They had night shifts but that town and its businesses are dead. What you have in Apapa are just administrative offices of companies and regulatory bodies. Apapa business hub is dead. Where are the cargoes for export that the projected national carrier intends to carry as export? Nigerians are great users, we use technology. Our children quickly understand how to use technology but they mostly use it to perpetrate crime. We use phones and other beautiful devices but what are we manufacturing? One can’t confuse knowing how to tune a radio for manufacturing a radio. The nucleus of trade is the cargo. Each time you think of trade, think of the cargo, think of the 40ft box and the items it should carry. When you think like this, your perception of shipping would completely change.