With the degree of uncertainty over what the full global impact of the novel coronavirus will be, the Executive Secretary of the Nigerian Shippers' Council (NSC), Mr. Hassan Bello says there is no better time than now for Nigeria to smoothen her export potentialities, submitting that the country can earn more revenue from export of her produce. Excerpts:
The Shippers Association Lagos State (SALS) revealed recently that its members lose more than N5 trillion in one month owing to the coronavirus pandemic. What is the impact of this huge revenue loss to the sector and the economy as a whole?
The revenue that the government derives from the ports has been disrupted; the ports are not operating optimally for obvious reasons and so there is shortfall in revenue. This will go on for maybe a year and half and there will be a gap during this period because the production of the things we import has been affected and the whole global supply chain has been disrupted. Economies of the countries we trade with have been disrupted and some will not even allow imports or export of their products because they are trying to satisfy their own markets. So you will see that volumes, throughput and deployment of ships have reduced. Consequently, the ports will not be as engaged as they normally are. This implies a dip in revenue generated from the port system.
This is like painting a gloomy picture of the entire sector. Are you prepared for the unknown?
Yes it is a gloomy picture but there is always a silver lining and the most important thing is deep introspection. For example, if we lose on import, we can gain on export, and there is no better time than now for Nigeria to develop its export credentials. Nigeria can gain and earn a lot from export, we have the commodities. What we lack is the infrastructure, efficient logistics chain, easy access to the ports and the simplification of processes and procedures so that we can make export the alternative revenue base for Nigeria. Nigeria must make deliberate effort to ensure that the revenue we lack from import can be replaced by exporting.
Do you think the government has done enough in trying to diversify the country's revenue base?
It is a common tragedy of a mono-economy. In Chile in the 70s, when the price of copper went down, the whole Chilean economy suffered. It is the same thing we are seeing in Nigeria now with the volatility of oil prices. Why should our fate ride on the fortunes of one commodity on which we have no control; $17 per barrel, that was the price of oil in March, which means the cost of production far outstrips what we are selling, and we have unsold oil. It is therefore time to look at other areas, if the Government was not doing so before now, necessity has forced it to do so. We have diversified our economy quite all right, but we need to be deliberate in strengthening other areas. Nigeria is so blessed. We have no choice but to look at export now.
At the height of the COVID-19 pandemic in March, the Nigerian Ports Authority (NPA) had directed terminal operators to give demurrage waivers to importers as a form of palliative to ease the pains of goods clearance at the ports occasioned by the scourge. What is the level of compliance to the directive in view of the recent crisis at some terminals?
There is compliance, the problem was lack of communication.
Nigerian Shippers' Council (NSC), after meeting with the shipping companies agreed that demurrage within the time of the lockdown should be suspended and immediately; this was agreed by the shipping companies. But then shipping companies have to adjust their applications and their modes of payment etc. So certain people were caught in the web before they could do that. One thing I want people to know is that these are abnormal times. The shipping lines are not operating optimally also; they have about 50 per cent of their workforce staying at home.
There was no public transportation at the beginning of the lockdown and NSC tried to fill that gap by providing buses for freight forwarders and other port users. As a matter of fact, many people have been refunded the demurrage and quite a few were not charged for demurrage, but you will not hear about it. It is the responsibility of the shipping companies to also communicate to the shippers because this demurrage is paid by the shippers and should be refunded to them. There must be a way of saying 'please we are going to refund this but our system has to be changed or adapted etc.' Shippers' Council has recently written to the shipping companies to do exactly that. I think what I will do is to appeal for patience and understanding considering that we are living in an abnormal time. NSC has resolved that nobody will be charged for demurrage, any consignment or cargo that falls within the space of the lockdown, which is from March 30- May 3, should not be charged demurrage.
Various legal issues such as port health and safety, crew health, seaworthiness of vessels, delivery and redelivery and others have arisen from the outbreak of the COVID-19 pandemic. What is your take on these?
Port ordinances and rules have been there since time immemorial. Safety of crew that is the seafarers, their engagements, how they should offload and load vessels and all these things have been captured. There is a department called Port Health Services under the Federal Ministry of Health, which is the first to determine the health status of the crew on a vessel; whether there are some cargoes that are not fit for offloading etc.
But as you said, the COVID-19 pandemic has strengthened the capacity for us to look at issues especially that the port is a red zone for the spread of this contagion. So NIMASA is the agency responsible for that and right from the beginning, NIMASA issued a marine notice in compliance with International Maritime Organisation (IMO). One of the stipulations of the marine notice is that a ship must not berth until it quarantines for 14 days. So within those 14 days, any illness would manifest. So it is a kind of isolation. Secondly, ships coming from countries of interest (where 1000 or more people are infected) will have to be watched seriously and that is what the Navy does. The Navy tracks all the vessels movements. NIMASA also tracks vessel movements. So they have special interest in vessels that come from such countries of interest.
We have been able to stop any incidences that might be a problem. NIMASA is vigilant and the Navy is also vigilant. So as far as the seafarers are concerned all agencies hands are on deck.
My fear however is the commercial aspect of it; that is people going to the port. NSC is so concerned because the ports had to remain open being an essential service. The port must open so that our economy doesn't collapse entirely. Even to fight the COVID-19, we need the port to take the delivery of pharmaceutical products and other essential commodities. We need the port for raw materials to keep our industries working. But our fear is that the port is a red zone because the tendency for people to gather in the port is there and we did everything to adhere to the health protocols. First of all, we enforced the directive that there should not be a gathering of more than 20 persons, use of hand sanitizers and washing of hands, wearing of masks.
These are things we did at all the terminals and shipping companies. The first two weeks was very difficult for us because people were not observing the social distancing and the shipping companies and terminals were not taking responsibility. But after a time, we had to find decent places for the agents to stay and conduct their business, and it has been getting better since then. But up till now, there are still areas of concern and so in collaboration with the Nigeria Centre for Disease Control (NCDC) and the Port Health Services, we formed a team to sensitise the users of the port about the dangers of the COVID-19. This virus is the most contagious that the world has seen in a while and so we are not relenting; we have concluded the first cycle of sensitisation where we distributed a lot of gears. For me, I will rather we close the port than to have contagion spread into the general population. Those working at the ports have families, so if they are infected, it will affect their families too.
If the spread is not contained in the port, we might be in danger because the port is a red zone. But if you ask me, all these could have been avoided. The more, we look at this thing, the more we are learning lessons. For example, we can't have a port that everybody rushes to; we should have an automated port, where physical presence is unnecessary and that is what NSC is going to embark on. We have already started assessing the situation and we hope by March 2021, there will be no need for anybody to go to the port. For instance, years back, the banking halls were jammed, everybody had to go to the bank, but with automation and technology, the banking halls are now empty except for this abnormal situation we are in, people transact all businesses using their phones or other electronic devices. We want a contactless, automated and transparent port; a port where the processes and procedures are simplified and technology-based; where the agencies will be talking to one another or to each other and this will drive efficiency and competition. Don't forget that we are competing; the ports in Nigeria are competing with the ports in the region. So we are learning, every day we go out to see what can be done to make things better.
The proliferation of illegal arms has been a very big issue in the country and there are reports that some of these shipping companies are guilty of this. What have you done as a regulator to check this menace?
The Shipping Companies and the Customs have a lot of responsibility as far as small arms and any illegal or dangerous arms are concerned. Every year or so, there is a prohibited list of items not to be imported into the country. There is also another list of items not to be exported. The responsibility we have given to shipping companies concerns the bill of lading which is the document under which trade is mostly transacted in Nigeria, apart from the charter parties. When there is a charter party, the bill of lading has what is called "said to contain" which kind of exonerates the shipping companies from the contents of the bill of lading. If it is "said to contain" which means the shipper is responsible for the description of the consignment.
So when we saw that, we had a meeting with the Comptroller General of Nigeria Customs Service (NCS) and shipping companies. We told the Shipping companies in very clear terms that they have responsibilities with regards to what is coming in and I think that has stemmed the influx of small arms at least through the seaports and the Customs has been very vigilant. But as I said technology is very important. If we had adopted the International Cargo Tracking Note, we wouldn't be having the problem of illegal importation of dangerous goods because the tracking note more than any other transport document will reveal what is coming to Nigeria, even before the ship sails from the port of loading. It will also describe the quality, the weight, the cost, the distance and many other features which no other transport document such as the bill of lading will describe. So we hope that Government will consider the Cargo Tracking Note and that will mean transparency in what we import. We have been working with the Nigeria Customs and the incidences of importing small arms through the sea have reduced drastically.
As a regulator in the sector, what measures have you put in place to harmonise with stakeholders on the issue of retrenchment of workers, occasioned by the COVID-19?
As far as our sector is concerned, we are watching to see how the problem will lead to job losses, but job losses sometimes are inevitable because of what COVID-19 has brought to the world economy and if many people lose their jobs that means importation will be less; people cannot afford to buy things because they have no earnings. It will a ripple effect on the economy and that means there will be shortfall on consumption and the purchasing power etc. But we are looking at employment, even last week that was part of what we discussed at one of our meetings with the shipping companies. We looked at their employment profile, and people should not use the excuse of the COVID-19 to just retrench people. There are adjustments which one can consider.
We are also following the Central Bank of Nigeria's (CBN) interventions. The interventions of the CBN through stimulus packages (N100bn to the health sector and N50bn to SMEs) and the direct intervention in the economy are highly commendable. We have had a meeting with the organised private sector such as NACCIMA, Shippers Association and others, where we fashioned out a plan for the CBN come and look critically at the sector with a view to making interventions. We have shared our discussions with relevant stakeholders and we hope something will come out it because there are so many industries that are in danger. Look at the hotel industry, the aviation industry, there are in danger of going bankrupt.
Bankruptcy means job losses and weak economy. So the economy is stumbling like any other economy in the world. We could look at some agencies of Government and direct them to reduce their charges. I know there will be a conflict because while the Government is looking for revenue, it will be hard for us to lose this revenue stream. But sometimes, it is penny wise pound foolish, you got to let off some revenue stream to attract buoyancy to the other. These are balances, I think, with time, working with the CBN and the organised private sector, we will be able to strike.
Is it possible to put a figure to what your sector will lose to this coronavirus pandemic?
Not now; but when you say our sector, you're also looking at the Customs. Substantial part of revenue from Customs is from Maritime. We are looking at the payment of fees -the Government three per cent, NIMASA fees, and the fees you pay to Nigeria Ports Authority (NPA) which are statutory fees that the shipping companies pay. We are looking at these issues to properly understand how the situation has affected the sector. Our discussion with one of the terminals was very frightening. It could be because like I said, the world economy is in turmoil.
It was frightening to be sincere but I don't see it as alarming, the reason being we are not the only one. Let me say it that we admire the interventions of the CBN and we also admire the measures the CBN has taken in trying to regenerate the economy. I think the CBN has been proactive by looking inwards at how to kick start the economy. We have the productive population; as a matter of fact, most of us are youths, we are in the productive brackets. There are lots of things we can do internally, so it means deep introspection, trying to see what we can do. Things will never be the same again in the country post COVID-19. People need to look inward and see what the economy could do as there is a lot Nigeria can do internally.
What do you think can be done to cushion the effect of COVID-19 on Nigeria's economy?
What we should do is to first of all look at our infrastructure. Our infrastructure does not support resurgence of the economy and transport drives the economy. So we need a good look at infrastructure. We need to develop the infrastructure. In 2016, non-oil export was N344 billion, in 2017, it was N629 billion. In 2018, we had N1.192trillion, in 2019, it went up to N2.5trillion. This was what we earned from non-oil export. If there are massive disruptions in China, India and some other places, Nigeria should be the alternative. But we need quality infrastructure. Look at the ginger we are exporting, it has been on the increase but the challenge is that the infrastructure is not just there.
I'm talking about road, rail, and the inland waterways, we have to fulfil contracts and we need to be consistent. Export is becoming expensive because of our inefficient infrastructure. So the Government needs to look at this seriously and come out with a Marshall Plan as far as the logistics supply chain is concerned, from the farm house up to the sea. For instance, we need to have a terminal that is dedicated to export because we have for so long depended on import and oil. Even our ports are not configured to handle export. But now, we either export or perish. Even now, we are having problems with export because there is no interstate movement and some states will stop export coming to the sea. Right now exports should be given free and express access to the port.
The processes and procedures could be bogged down by bureaucracy and make it tedious and difficult for exporters. All these should be addressed and that is what we are doing with the private sector. We want an effective export regime; look at all the incentives we give to importers and see how we can review them so that Nigeria can say this is the target, I need to get the X cost for the price of the export. Export are not just commodities; we should add value; we can process these commodities, package them and all these processes will lead to employment. That is how we create the chain until we get the revenue that we may be lacking in importation and also from the falling oil prices.
We did N2 trillion in non-oil export in 2019. Is there no hope of an improvement in the figure this year, granted that COVID-19 has taken a large part of the economic activities this year in Nigeria?
It depends on how hungry the world economy is for our export. Many people are looking inwards. Just like oil, when there is a dip in production in China or India, you will know that our oil price will go south. Most of the factories are already closed; who will use your oranges, bananas, mangos and ginger. Markets are closed and so this would potentially reduce earnings from export before the world economy is resuscitated. When you go to shops in Spain, Italy, France, UK etc., they will have backlog of many items. So you will have a shortfall of revenue from export. All these are temporary setbacks, they are not permanent. Nigeria has to be ready to sprint out of the starting blocks; we have to be rejuvenated and look at this particular aspect consciously this is what we are going to do and I think we can do it.
I am optimistic that Nigeria is not configured for luxury goods but for basic items especially commodities that should be our comparative steps compared to other economies. How will this play out for us in terms of when the world economy will start?
Yes that's what I said. We should study the disruption and open our market to the world. We can tell them that Nigeria can fill the gap instead of allowing them to go to India and other markets that are still trying to re-start their economies. We can say to them, come to Nigeria and have all the garlic you want, come to Nigeria and have all the cashew nuts etc. So we could fill in the gap that the disruption has created in other economies.
But still on the issue of automation, there has been some automation in the ports since we came on board and many transactions have been moved online and we monitor that. Some terminals are almost 80 percent online and agents don't have any business going into the port. In fact when we visit them, we see fewer people going there. So we have some aspects that are electronic. What we want to do is to ask the shipping companies and the terminals to, as a matter of urgency and regulatory directives, make sure that their systems are automated. Payments should be segmented, once you make payment, like electronic payment, you can sit in the comfort of your office to make payment to whichever the agencies are. So what we are trying to do is to create a port community system that will lead to the national single window, so that we simplify everything and then there will not be revenue losses. Physical contacts breed corruption. The moment you dip your hand into your pocket and say you are paying for this or that, corruption comes in. We want to eliminate that and increase the level of automation in Nigerian ports.
What is the resistance to the national single window?
There is no resistance as much as administrative bottlenecks and I think the office of the Vice-President, Prof. Yemi Osinbajo, is handling that and very soon, we will have national single window, which is the panacea for all these delays and bureaucracy.
Nigeria should forget about oil for now and concentrate on the maritime and transportation industries. They are credible alternatives whereby you can get more money than oil. We as regulators are talking at various levels.
We have sent memos and submissions so we can start, and we have started. There must be a reform in freight forwarding profession, there must be reform in trucking. We cannot have rickety trucks carrying consignments and breaking down everywhere. We are going to implement Carriage of Goods by Land Act. We want to bring insurance into the maritime sector. I sight the example of containers, where physical cash is paid before you take containers. We think the insurance could take this burden and free the money which is in trillions. That means we are reducing the cost of doing business in Nigeria. We have already negotiated a 30 per cent reduction in the cost of doing business but for the COVID-19 pandemic, we would have signed it. We want to make our ports competitive. We want Nigeria to be the hub where more cargoes come and are distributed to other countries.
The Lekki Deep Sea port is a game changer. 200,000 people are already employed in Lekki Deep Seaport. You know it is located within the Free Trade Zone. It is also configured for export and there is going to be rail link, another road link, then there will be waterways. We don't want to see goods cleared at the port. Cargoes should never stay at the ports; cargoes should be taken out of the port and examined inland. What we are doing is ensuring that we do not repeat the mistakes of Apapa and Tin can at the Lekki seaport.
Calabar port is also operational now. Calabar did not see cargoes for many years but because of the incentive provided by the NPA, by reducing the charges, people are taking their cargoes to Calabar. Of course, Port Harcourt is also there. It is a very busy port. We have about four ports in Port Harcourt.
We are looking at Warri port also. We have the dry port also in Kaduna. So many things are exported through the Kaduna Inland Dry Port to the seaport using rail. Don't forget the rail revolution that is happening in Nigeria now. By the time, we have Lagos-Ibadan, Ibadan-Kano, and Port Harcourt-Maiduguri, there will be reduction in the cost and there will be efficiency of transportation, which will in turn drive the economy. So there are no alternatives like transportation and shipping now.
The rails are very important; with rail transportation, Nigeria will never be the same again. It will make Nigerians integrated socially and mostly economically.
Also, we can establish more factories to boost our production. All these things we import, we can produce here in Nigeria.
So this is a clarion call to all Nigerians. For us, this is another opportunity. If we lose it now, then we will never have it again.