How Fiscal Policies Alter Business Plans At Ports
• Retrenchment Gale Hits Shipping Firms, Port Terminals
• Agents Relocate For Greener Pasture In Neighbouring Countries
THE Nigerian Maritime sector is the second revenue earner for the government, after the oil and gas sector. As oil revenue continues to dwindle, it is natural for the country to turn to the maritime sector, to close the gap. But this may not be, because the sector is going through its own crisis, orchestrated by low volume of trade between Nigeria and her trading partners globally, no thanks to the various policies, which have reduced the volume of import, making the ports to almost remain a ghost environment.
Cargo throughput to the ports has reduced tremendously and by extension it has affected revenue generation capacity of various government agencies, including the Nigerian Ports Authority (NPA), the Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigeria Customs Service (NCS). The Terminal Operators and Shipping Companies are not left out of the crisis. They are groaning and are on the verge of closing shops.
For the first quarter of 2015, NPA said about 5,1329 ocean-going vessels with a total Gross Tonnage (GT) of 61,990,999 called at Nigerian Ports, compared with GT of 57,034,338 in 2014.
Within the period under review, Lagos Port Complex (LPC), handled 372 vessels with a gross registered tonnage of 9,298,761, indicating an increase of 10.6 per cent over 8,407,233 gross tonnage achieved in 2014.
In a related development, Tin Can Island Port handled 435 vessels with a gross tonnage of 12,232,575, indicating an increase of 8.15 per cent over 11,310,751 gross tonnage recorded in the corresponding period of 2014.
The Calabar Port complex recorded a total GT of 958,288, an increase of 11.67 per cent over 858,174 gross tons of 2014, leaving the port with 100 ocean going vessels during the period.
But maritime watchers said the comparism between cargo throughput between the first quarter of 2014 and that of 2015 will not produce exact picture of policy effect on trade and cargo movement at the ports. According to them, the policies were announced during the second quarter of 2015.
The NPA was not forthcoming with the second quarter cargo throughput figure of the second quarter of this year for easy comparison, as officials at the statistic department refused to respond to all enquiries relating to the figures.
The downward trend in cargo operation at the ports has taken a toll on all agencies of the government, particularly the Nigeria Customs Service.
For instance, the revenue of the largest revenue collecting command of the NCS, the Apapa Area Command, plummeted for the third consecutive month, due to the policy of the Central Bank of Nigeria (CBN), which has restricted sales of foreign exchange for the importation of 41 select items.
The Command’s Area Controller, Comptroller, Charles Edike, told stakeholders in Lagos few days ago that the Command collected N23.8 billion in September as against the N30.4 billion it collected in the corresponding period last year, representing about 22 per cent loss of revenue.
The policy summersault of the government is responsible for what we are going through at the ports today. The volume of imports has reduced. Foreign exchange is a major problem. The Dollar is now very difficult to source, the exchange rate has gone up and it has escalated the cost of commodities. That alone has reduced the buying power of majority of Nigerians. The way Central Bank of Nigeria did it, you have to explain how you got your Dollar because you cannot operate your domiciliary account anymore. There is no direction yet for this government, the ministers are yet to come on board. So nothing is happening. The government is not even spending, they have not spent on capital project this year
Edike also painted a gloomy picture when he declared that the situation would not get better anytime soon.
In order to stay afloat and remain in business, some of the port terminals are now retrenching or rationalising their workforce, as revenues continued to dwindle because of the low volume of cargo.
Already, Ports and Terminal Multi-Service Limited (PTML), one of the RORO Port terminals in Lagos and flour mills have sacked some of their staff, especially those whose services were considered not critical and technical.
Investigations revealed that while PTML retrenched Maritime workers union members under shipping branch, flour mills sacked 169 dockworkers recently.
The Managing Director of PTML owned by Grimaldi Shipping Company, Mr. Ascanio Russo, confirmed that the company had retrenched 10 percent of its workforce because of low cargo throughput as Nigeria bound cargoes are now diverted to the ports of neighbouring countries like Ghana, Togo and Republic of Benin.
‘‘What is happening at PTML is the outcome of the Automotive Policy, which raised duty to 75 per cent on new cars. The result is the dramatic diversion of vehicles to Republic of Benin. The Number of cars discharged at the terminal before the policy was 350,000 per year.
Before the policy was put in place, vehicle diversion to Cotonou was 50 per cent of what was discharged in Nigeria. But now over 75 per cent of the vehicles are taken to Cotonou Port. That is a big diversion and the ports are very dry. We now have between 60 and 65 per cent reduction in cargo throughput and Nigerians are now going to Cotonou to buy vehicle. We are losing, but the biggest loser is the Federal Government, because with the diversion, the Nigeria Customs Service, NIMASA, NPA and other agencies are not collecting the actual revenue. Since this diversion started, Nigeria has lost close to N200b annually to Cotonou.”
Ruso confirmed that his company was forced to retrench because of the loss of business to ports in other countries.
‘‘The company has reduced overhead cost as much as possible and we have reduced our workforce by 10 per cent through retrenchment. We are trying to diversify our operations. We want to go into general cargoes, from sole RORO operation. Everybody is being affected. It is not only bad for us, but the entire country. People cannot access forex and so the general level of import has gone down. Containers too are not coming and NACCIMA, LCCI have all expressed concern because of the challenges.”
The President of Association of Seaport Terminal Owners Association of Nigeria (STOAN), Mrs. Vicky Haastrup, who is also the executive Vice President of EN Terminal at Apapa Port, described the situation as terrible, adding that the impact would be too harsh on Nigerians by January 2016, “if most of the recent policies of government are not reviewed.”
She condemned the monetary policy of the Central Bank of Nigeria, which restrict import of 41 items, saying no goods should be placed on prohibition until the country’s power problem is resolved for industries to produce at maximum capacity.
According to her, the policy summersault is responsible for the low cargo throughput at the port. She linked the policy on domiciliary account, and inability to access foreign exchange for many items drop in cargo throughput at port, believing that they combine to reduced the purchasing power of many Nigerians.
The policy summersault of the government is responsible for what we are going through at the ports today. The volume of imports has reduced. Foreign exchange is a major problem. The dollar is now very difficult to source, the exchange rate has gone up and it has escalated the cost of commodities. That alone has reduced the buying power of majority of Nigerians.
The way Central Bank of Nigeria did it, you have to explain how you got your dollar because you cannot operate your domiciliary account anymore. There is no direction yet for this government, the ministers are yet to come on board. So nothing is happening. The government is not even spending, they have not spent on capital project this year.”
Continuing, she said, “the past president made a lot of policy change, which Buhari must review. The automotive policy has enriched Republic of Benin. The vehicles you ban here, are going to Cotonou, from where they find their ways into the country, through smuggling. The Nigerian Ports are now very dry. The Rice that was banned still comes into the country through illegal routes. The government has to look into all these. The government will need to set up a committee to look into all the policies, it needs to liaise with stakeholders.
Manufacturers Association of Nigeria (MAN) is talking because raw materials they have are being exhausted. Their stores are dying up, Nigerians are suffering, if government refused to look at all the issues now, by early next year, it will be very difficult for Nigerians. Every organisation at the ports are retrenching, five star logistics, port and cargo terminal and many other terminals are empty. It is also affecting container terminals. Yet, the government expects us to pay lease fees when activities at our terminals have reduced drastically.”
She predicted that more job loss will definitely occur if the trend continues till January 2016.
‘‘This is a serious problem and the government is expected to make a clear pronouncement. They should look at three issues holistically. There should be no ban until power issues are resolved and companies can now produce for local consumption. What you are losing to all these policies has become a gain to other countries. So the ban, if it must be, must be gradual until we are self-sufficient.”
The President of Shipping Association of Nigeria, an umbrella body for foreign shipping companies in Nigeria, Mr. Val Osifoh confirmed the reduction in vessels visiting the Nigerian Ports as a result of government policy summersault.
“The fortune of shipping companies to this part of the world depends on the economy. Many of the cargoes are now going to Cotonou for less charges. The ships are no longer coming as before because they have no cargoes to carry to Nigeria.
The cargoes are now diverted to Cotonou. This situation is affecting everybody, Nigerian Ports Authority (NPA), Nigerian Maritime Administration and Safety Agencies (NIMASA) clearing agents, importers and many other port users. The situation does not have a friend, and it will continue like this until we have changes in the fiscal and monetary policies that will give people hope of better days to come.”
According to Osifoh, Apart from the Nigerian fiscal policy, “there is global recess that is making Nigeria to tighten up in order to have money to do what it wants to do and the first casually of all these is the workers, which they are now retrenching.
The RORO Ports are not alone in this, it affected shipping agencies are also attached, and terminals. Others are watching the situation closely. It is a crisis we are facing because we as a country, we did not manage our wealth when things were good. We could not save for the rainy days.”
On what will happen to shipping companies and shipping agents, should the situation continue unabated, Usifoh said: ‘‘They are international traders, they will survive and they can absorb loses for sometimes. The smaller operators will be swallowed up by bigger operators and there will be stiff competition. Many of them will divert their business to where they have goods to lift.”
Clearing agents are also not left out. They are the people that handle the goods at the ports on arrival. Many of them have become jobless because the goods have reduced in volume.
The president of Managing Directors of licensed Customs Agents, Mr. Eyis Lucky Amiwero said some of the agents have relocated to Cotonou, while many have relocated to their respective villages because of low business opportunity at the ports.
The situation in the ports is terrible. There is no work. The exchange rate has affected everything. The inability to access forex for 41 items has affected importers. It is a very big problem. The CBN policy is affecting the flow of cargoes. There is no clear direction from the government. They increased duty on cars to 75 per cent when we don’t have vehicle assembly plant. Companies operating at the ports are retrenching workers. There are no ministers to direct. There is need for government to come out with a clear policy direction for this nation. We are losing freight to Republic of Benin, where we are also creating unemployment as a result of the recent policies,” he lamented.