How Absence Of Export Base Hampers Efficiency Of Nigerian Ports – Udofia
Mr. Ofon Udifia is the Executive Secretary of the Institute of Export Operations and Management (IEOM) and Chairman, Bayelsa and Rivers Shippers Association. In this interview with MMS Plus newspaper, he expounds on the numerous challenges facing shippers in the country, appraising the move to get insurance replace container deposit, takes a peak into African Continental Free Trade Agreement (AfCFTA), women involvement in export, among other salient issues. Enjoy it:
Nigerian Shippers’ Council (NSC) has initiated plans to get the container insurance to replace container deposits at ports. What’s your take on this?
I want to thank NSC for always been proactive and being there for shippers and other players in the maritime sector. A lot of Nigerian shippers have been suffering as a result of this container deposit conundrum and Shippers’ Council has made efforts to address this with several interventions.
I want to assure Shippers Council that our institute and the Shippers Association in Rivers and Bayelsa States would support this move for container insurance instead of container deposits. By extension, I would also convince of Shippers Associations across the nation, on the need to buy into this development.
In Rivers and Bayelsa, we already initiated discussions with an Insurance firm on the issue of container deposits and the return of Cargo Defence Fund (CDF). So, we started working on this even before discussing with NSC. We just saw the MMS Plus publication which revealed that the Council is taking the same direction and we wholeheartedly support this.
Note that the final consumers of imported goods and services are made to pay for the non refund of container deposits today. This is because the shipper transfers the cost to the profit margin he or she intends to make.
Most Nigerian shippers already calculate the container deposit as foregone payment and part of the cost of importing, but this shouldn’t be the norm. They see container deposit as part of their expenses and not bother whether they get the refund or not. However, the introduction of the concept of insurance would eliminate this revenue loss.
Last year, you stressed the need to have dedicated export base at the ports and pledged to take up the discuss with the Ministry of Transportation and other agencies. Has there been any development on this?
For now, the management of the port environment has been taken from Nigerian Ports Authority (NPA) as a result of the port concession. Private companies manage the terminals and it makes it extremely difficult to have a dedicated export base at the ports.
If I’m unstacking my consignments at my warehouse, it means I have to bring Customs there and other relevant agencies. Who pays the bills to move these government officials to the warehouse? We have numerous cases where government officials say no fuel to come down to the warehouses, just to collect monies. All these add to the cost of production for the exporter who intends to compete on the global scene. Almost everything in Nigeria comes at a cost but a designated export base would eliminate this.
Today, there is only one terminal I’m aware of that is dedicated as an export base in Lagos. The sealink project being floated by Nigerian Export-Import (NEXIM) Bank and Shippers’ Council, wouldn’t work if we can’t consolidate these cargoes at an export base in the ports. Export cargoes should be received at the ports and treated speedily at an export base to facilitate export. For instance, if an exporter is bring saseme seeds from the North, he would have to get a warehouse in Lagos and wait for two weeks before he can go into the ports. These items should have somewhere to stay at the port to prevent the additional cost on the shipper and fast track the export process at ports.
Coronavirus is the biggest issue in the world today. How has this pandemic affected export activities in Nigeria?
This has really affected exporters as well as manufacturers in the country. This morning I received a call from someone asking how he could get packaging materials for his products. The packaging companies have shutdown. If you export or sell what you have already, how do you get materials to continue production. The pandemic has been a major issue for export business just as it has affected other sectors in the country.
In Rivers State, the border region into the state has been shutdown and it is a challenge to get basic food spices coming from the Northern part of the country. There was a case of someone coming to Port Harcourt from Niger State, only for her to discover that there was no vehicle heading to Port Harcourt.
On African Continental Free Trade Agreement (AfCFTA), there have been lots of postulations in the last one year. Where are we now with regards enhancing Nigeria’s position when this takes off, especially for exporters?
With the advent of AfCFTA, insurance will also help our production companies because the cost of importing raw materials would be reduced.
Nigeria is yet to ratify this and we have to ratify it soonest. However, the agreement becomes binding on Nigeria from July 1st, even if we refuse to sign it before that time. The only thing that could hinder the agreement could be the coronavirus, if it lasts till July. We have to realize that other countries would take advantage of this to export to Nigeria.
IEOM planned some conferences for Chief Executive Officers (CEOs) amounting to 120 on the opportunities and possible challenges with the impending AfCFTA take-off. The conferences were scheduled to hold in Port Harcourt, Lagos, Enugu, Kano and Abuja before the spread of the pandemic in Nigeria.
The objective is to train these CEOs on how to position their businesses so that they maximize the benefits and mitigate the risks. We are also doing a publication on the issues and these documents would be circulated to CEOs and other stakeholders. By the time the pandemic is over, we would proceed with the conferences as planned.
The articles and publications wouldn’t be restricted to Nigeria as we also intend to send them all over Africa. We intend to publish over 40,000 hard copies and distribute more online copies. We want people to be adequately prepared for the take-off of AfCFTA.
Would this CEO summit be expanded to include heads of government parastatals, or is it just for exporters?
It is not just for exporters. We are going to bring the exporters and the heads of government agencies into the symposium. There would be panel discussions for the government agencies to tell shippers and exporters what they have put in place to support their operations.
It would be an opportunity for government agencies and other service providers to engage the users of their services. We would also compare the operations in other countries that the nation would compete with as it would help Nigeria maximize the opportunities in AfCFTA.
MMS Plus is gender friendly, and we are concerned with the Women in Export group. Can you tell us about their activities?
As an Institute, we are geneder friendly. We have a group known as Women in Export and that group champions activities to sensitize women on export. These women also get regular training on packaging and we have resource persons and experts who train them on export opportunities in agriculture.
There is also an agenda by the International Trade Centre and United Nations to reach 3 million women in this worldwide trade. These women would get lots of training and other opportunities, so we have done a lot to get Nigerian women involved. For a company to benefit from this, 30 percent of the stakehloders must be women and the business must be women driven.
One possible challenge with container insurance replacing container deposit is that the freight forwarders mayn’t have a stake if the insurance is paid by the shipper or the shipping line. Hence, freight agents will not be motivated to ensure the return of the containers. How could such cases be prevented?
This is possible, hence the need to properly address the modus operandi from the onset. The good thing is that Shippers’ Council is already acting as the mediator. We got things wrong in the port sector when shippers failed to know vital things about cargo movement. They left too much for the freight forwarders to handle. Shippers must know what they want. It is okay to give money to someone to get something done but you must know how the business is done. I would suggest that shippers work closely with NSC on this issue and possibly domicile the insurance companies in the Council’s office across the nation.
I won’t subscribe to a scenario where the freight agent does this aspect of insurance for the shipper. The shipper should do the insurance and give the details to the agents.
The issue as to whether the shipping line or the shipper should pay would be decided after a strategic meeting by all stakeholders. However, it is the shipper that pays the container deposit so it would be the shipper that pays the insurance. The difference is that the complexities of getting refund would be eliminated in the new arrangement.
On the part of insurance companies, there might be need to deal with the shippers through their associations so that they know who they are dealing with and have people to report to. The insurance company can fall back on the association when there is any conflict because the association must have guaranteed the shipper before the premium was paid.
Insurance companies to be utilized for this initiative must have the capacity to handle this. We don’t want to have issues when the shipper pays for insurance and the insurance company can’t live up to its expectations. Shippers, NSC, and other stakeholders should be involved in this process to decide the kind of insurance companies to patronize and what capacity should be the prerequisite. For instance, if a vessel is coming to Onne port with 1000 containers, would an insurance company be able to handle this volume of cargoes?
Shippers must be more involved in these negotiations because they pay the insurance and not the freight forwarders. One of the challenges at the port sector is that shippers leave too much for the freight forwarders to handle. The shipper should make the insurance payment themselves before giving evidence to the freight forwarder.