New York — A graphic detail of how importers and government officials connive to create a cycle of corruption at the Lagos Port, Nigeria's busiest port, has been given in an essay drawn from Africa Development Indicators (ADI) 2010, a publication of the World Bank.

ADI is the flagship report of the World Bank's Africa Region and it is the most detailed collection of data on Africa, containing over 1,600 indicators, covering 53 African countries and spanning the period 1961 to 2008. The report also includes an annual essay drawing on ADI indicators.

The report titled "Silent and Lethal: How Quite Corruption Undermines Africa's Development Efforts", has a box which gave a detailed highlight of how corruption has eaten deep into the fabric of the Lagos Port.

The report noted that the 2006 reform of the Lagos Port viewed as one of the best in sub-Saharan Africa in the last decade, had, within a few months of operation under private ownership, increased productivity at the container terminals, while "chronic delays for berthing space had nearly vanished leading shipping lines to reduce their congestion surcharge".

It, however, wondered what could have happened between then and February 2009 when the Nigerian Ports Authority (NPA) announced a temporary but immediate suspension of ship entry to enable terminals to clear what it described as "alarming" backlogs.

As a result of this, the report stated, the NPA also considered diverting vessels already heading into Lagos elsewhere.

Tracing the genesis of the problem, the report noted that on June 12, 2008, the Customs management issued a circular disallowing the clearance of goods that had discrepancies such as lack of appropriate import clearance documents and false declaration.

"This circular, in fact, modified the behaviour of some importers/customs brokers; priority clearance in favour of goods that were easily cleared was given, while the others were abandoned in the port. After the publication of this circular, the amount of uncleared and abandoned cargo started to grow and congestion increased," the report stated.

This development, the report noted, created two possible situations that explain cargo abandonment.

According to the report, "Importers of prohibited goods or those with other related offences may abandon goods in the port, wait for their goods to be auctioned, and then bypass the import regulation to get their goods at a relatively low price.

In the second scenario, an importer makes a false declaration including an undervaluation of declared goods and decides when caught to abandon the consignment in order to obtain the goods through auction, which in any case, is cheaper than full payment of import duties with penalty fees for false declaration and incidental port charges.

"In both cases, the importer needs to be sure that during the auction process, his cargo will be assigned to him and not to another, which is where collusion with the Port Authority plays an important role. The result of the auction has to be known in advance; otherwise the importer would not abandon the cargo."

This year's report, which focuses on "quiet corruption", noted that, "In an environment where regulations provide several loopholes, reckless businessmen with connivance of public authorities manage to avoid clearance costs or to import prohibited goods."

It however said: "The mechanism used, abandonment of cargo that is recovered later via a public auction, has consequences, less visible in the short run, that go beyond the direct revenue loss of clearance evasion. As the Nigerian case shows, the long-run effect is the port congestion and delays in clearance that completely eliminated the benefits of the 2006 reform with obvious consequences on the competitiveness of Nigerian producers."