By Charles Nwaoguji
The potentials of the Nigeria economy continue to elicit interest among local and global investors. It is also a well-known fact that efficiency in ports operations has become an incentive and one of the major drivers of trade and investing activities across countries.
Yet, the Nigerian ports are currently classified among the worst ports in the world due to challenges bordering on delay of import/export processes, heavy human and vehicular congestion around the ports, difficulty in gaining access to the ports due to bad roads, security concerns and incidence of corruption and infractions among the players – government officials and port users.
The World Bank 2015 – 2017 Ease of Doing Business indicator for measuring the effectiveness of ports, “Trading Across Boarders” ranked Nigeria at a depressing 182/183 out of 185 countries. Significant efforts were made in reforming the Nigeria’s maritime sector through the partial privatization of the ports in the mid-2000s and other subsequent interventions. However, more than two decades after, the results of the reforms are not impressive. Consequently, operators, users of the Nigerian ports and industry players are increasingly faced with bureaucratic red tape, constant delays and illegal charges leading to high costs of operations.
The economy is currently losing about N600 billion in customs revenue, estimated $10 billion for non-oil export and about N2.5 trillion corporate revenue in the industry on an annual basis. Capacity utilization stands at 38-40% and approximately 40% of businesses located around the ports communities have either relocated to other areas, scaled down operations or completely closed down. These developments have very huge adverse implication to tax revenue, job creation and real economic activities with downside effect of about 3% on the country’s GDP.
Apapa gridlock is an existential problem for the country. The poor quality of port access roads, complex port procedures, and ineffective truck call-up system in the Apapa area, among other factors, continue to lead to delays and inefficiencies, with huge costs to the manufacturing of goods. In addition, its impact on the community is unbearable and has resulted in a reduction in property valuation as well as environmental and health hazards.
The President of Manufacturers Association of Nigeria (MAN), Engr Mansur Ahmed said in an interview with Daily Sun recently said a lot of manufacturers are recording colossal losses as their goods get stuck in gridlock on Apapa port road in Lagos for weeks; many firms are either suspending operations or relocating out of the area, even out of Nigeria to Africa countries.
To this end, he says, the Organised Private sector are worried over the constant Apapa gridlock, urging the Federal Government to be proactive in solving the heavy traffic jam on the road.
According to him, the perpetual heavy traffic on the Apapa road is having an adverse effect on the manufacturing sector and that of Nigeria at large, saying that the road has become a nightmare for the OPS.
He charged the Federal Government to engage the Nigeria Railway Corporation as an alternative route to alleviate the gridlock situation, urging the FG to enhance the NRC capacity to use rail facility for the evacuation of goods from the port to alternative terminals away from Apapa.
The OPS want the Federal Government to create alternative route palliatives from Apapa to Ibafo, noting that creation of alternative route will mitigate the effect the daily heavy traffic on the economy and as well relief the road users.
Delays in the issuance of the Pre-Arrival Assessment Report (PAAR) to manufacturers
We are worried over persistent delays in the issuance of the Pre-Arrival Assessment Report (PAAR) to importers by the Nigeria Customs Service. This situation is contributing to cost escalation for many businesses, cargoes are delayed unduly leading to the payment of avoidable demurrage and high interest cost on borrowed funds by importers. The protracted delays in the issuance of PAAR is a negation of the policy of the governmentonEase of Doing Business. We therefore calls on the Comptroller General of the Nigeria Customs Service, to urgently intervene to put an end to the persistent delays in the issuance of PAAR.
Multiple Taxation on SMEs manufacturers
We called for a concessionary tax rate for Small and Medium Sized Enterprises (SMEs) in order to promote the objectives of job creation and inclusive growth as enshrined in the Economic Recovery and Growth Plan (ERGP). Small businesses more vulnerable to the current challenges in the economy, hence the high mortality rate. This group of businesses, therefore, deserveevery support that the government can give.
the practice by the Federal Inland Revenue Service (FIRS) instructing the banks to put a lien on the accounts of alleged tax defaulters. The Chamber stresses the need for FIRS to adhere strictly to due process in dealing with issues of alleged tax defaults. There should be a proper communication and engagement with taxpayers to properly ascertain a tax liability before such extreme actions of invocation of a lien on the accounts of companies are teken. This practice is very disruptive and has caused grave embarrassment to many corporate organisations.
Foreign Direct Investment-Erosion of investors confidence
Foreign Direct Investment (FDI) is possible in this country. But government need encourage those investor who are already in the country. when encourage the investors already in the country, it will attract new ones.
We expressed concern about the investigating activities of anti-graft agencies and regulatory institutions regarding alleged infractions by corporate organisations. We admonishes that such investigation, as much as possible, be conducted in a discreet manner devoid of any form of media hype. This is necessary to avoid unwarranted reputational damage and erosion of investors confidence. This position does not diminish the significance of compliance by corporate organisations with extant laws and the imperative of proportional sanctions for proven cases of infringements of the law. MAN is a leading advocate of sound corporate governance in the country. Meanwhile, it is also important that there should be proper coordination between regulatory institutions and anti-graft agencies in dealing with suspected regulatory infractions to avoid duplication of investigative actions. When there is proper coordination among the government agencies, there will be foreign direct investment into the country.
Federal Government needs to pay more attention to the challenges hindering optimum utilization of the capacity in the sector and the economy at large.
Ahmed noted that the challenge of inadequate electricity supply persisted and made worse by the steadily high electricity price. Inadequate electricity supply remains a major driver of the cost of production, as it constitutes between 30% to 40% of the cost of production. This is not manufacturing friendly and does not support competitiveness as in addition to other challenges hindering production efficiency in the sector ranging from overregulation, multiple taxation, dilapidated port infrastructure and low purchasing power of the citizenry due to high inflation amongst others.