Nigeria: The POF Controversy

30 July 2021

Eromosele Abiodun writes that the revelation that the Nigerian Shippers Council may not be in support of the collection of POF by the Council for the Regulation of Freight Forwarding means that the controversial initiative may not succeed.

After months of planed take off of the collection of the controversial Practitioners Operating Fee (POF) by the Council for the Regulation of Freight Forwarding in Nigeria (CRFFN), the controversy that trailed the initiative has refused to subside. When the Council for the Regulation of Freight Forwarding in Nigeria introduced POF early last year, customs agents across the country vehemently opposed it, decrying the high cost of doing business at the nation's seaports. As if the clearing agent's opposition is not enough, it has emerged that the port economic regulator, the Nigerian Shippers Council (NSC) is not totally in support that the Practitioners Operating Fee be tied to cargoes leaving Nigerian ports.

Even though the Council supports POF collection as a concept, it however argued that it should be collected as fees from practicing freight forwarders, and not collected on every cargo leaving the port.

The port economic regulator argued that the cargoes belong to the "Shippers" and not the freight forwarders as being erroneously implemented by CRFFN.

Speaking to newsmen at the weekend, a senior director at Nigerian Shippers Council who do not want his name in print said it was wrong for CRFFN to issue directives to terminal operators not to exited from Nigerian ports without payment of POF.

He stated that, "I hope this directive is not coming from CRFFN, that cargo should not be exited without the payment of POF. The cargoes belong to Shippers and not freight forwarders. In as much as we support the payment of POF, the payment should not be tied to Cargo. It is practitioners fee for freight forwarders."

"This is akin to saying that a patient should not be discharged from a hospital because the Doctor that treated the patient failed to remit membership dues to Medical Association of Nigeria. Please let us be guided. Cargo can't be delayed in port for that. But we encourage all Freight forwarders to pay their POF, "he said.

The Shippers Council top chief was reacting to reports of plans by CRFFN to begin collection of the controversial POF by 1st August 2021.

In a notice to port users issued by Grimaldi Shipping, the terminal stated that payment of CRFFN dues is now a compulsory requirement for releasing of cargoes.

The notice signed by management of the shipping company, warned that Terminal Delivery Order (TDO) would no longer be signed except POF payment is reflected.

Under the POF regime, the CRFFN is targeting between N5 billion to N10 billion annually from the collection of the POF.

Under the POF regime, importers would pay N3.5 per tone of cargo imported into the country, N1.5 per kilo for air cargo, N1, 000 on each imported 20-feet container and N2, 000 per 40-feet container.

FG's Approval

The Minister of Finance, Budget and National Planning, Zainab Ahmed had in a letter dated January 6, 2020, and signed by the Director, Home Finance, Okokon Udo, gave the approval for the commencement of the collection of Practitioners Operating Fee at the nation's seaports by the Regulation of Freight Forwarding in Nigeria.

The minister stated that freight forwarders must henceforth show receipt of payment of POF before they can exit their cargoes at the ports.

To drive home the message, the CRFFN organized a sensitization workshop in Lagos earlier this year. A the forum, the agents lamented that the implementation of the new directive by the Finance Minister will lead to congestion and increase the cost of doing business at the nation's ports.

According to CRFFN, under the POF regime, importers will pay N3.50 per every ton of cargo imported into the country, N1.50 per kilo of every air cargo, N1, 000 on every imported 20-feet container and 2,000 per 40-feet container.

Meanwhile, after several failed attempts by the CRFFN early last year announced that it has commenced the collection of the controversial POF. The CRFFN it was gathered is expected to rake in as much as N10 billion annually from the imposition of these fees on shippers.

At a press briefing to announce the commencement of the collection of the POF, the agency warned that freight forwarders who fail to comply will not be allowed to exit the ports wit their containers.

The Registrar/CEO of CRFFN, Samuel Nwakohu, said with the approval from the Finance Ministry and other government agencies at the ports, there will be no going back on the collection of POF.

With the new initiative, he said the council would now be fully equipped to regulate freight forwarding in the country, adding that as a noble profession, freight forwarding is not an all comers' affair.

The CRFFN had following the conclusion of the integration with the Nigerian Ports Authority (NPA) and the Nigeria Customs Service (NCS) in January this year announced plans to commence the collection of POF in all seaports in the country, a move that was held back by fierce protest by freight forwarders and COVID-19.

Speaking during the media briefing Nwakohu revealed that any freight forwarder that refuses to comply with POF payment will not be allowed to carry his or her cargo out of the ports.

According to him, "We are glad to inform you that following successful integration with terminal operators in the western ports, enforcement of POF collection has now commenced."

This is just as he revealed that only 64 freight forwarders out of a total registered 787 freight forwarders are currently practicing legitimately at the nation's ports and borders points.

He added that the POF, which is derived from the provisions of section 6 of the CRFFN Act is a major source of the Council's internally generated revenue, first for the government and second to drive the necessary reforms and develop the industry

According to him, "Integration with terminal operators in the Eastern ports is on-going and we shall communicate to you accordingly with respect to enforcement of same in the Eastern ports.

"The user public is strongly advised to verify the authenticity of the freight forwarder they wish to engage on the CRFFN website. This is to ensure you are dealing with a registered freight forwarder.

"We really want to appreciate the body of shippers and freight forwarders who operate under very difficult conditions to keep Nigeria moving. The CRFFN will do her best to provide the enabling environment for the freight forwarding industry, "the CRFFN boss added.

Challenges Expected

On challenges expected from operators as regards the POF collection, Barrister Nwakohu stated, "I did not wake up one morning and decided that CRFFN should start collecting POF from operators. POF is nine years old, meaning it has been in the Council's long before I became Registrar/CEO of the CRFFN. The laws have been made by government, and whoever decides that he or she won't pay, then such a person will not take his or her cargo out of the ports.

"We have written to all the Accredited associations. We are done with sensitisation. We will be publishing the names of freight forwarders whose subscriptions are up to date very soon on our website."

He added, "As at today, we only have about 64 freight forwarders whose payments and subscriptions are up to date in line with the law regulating the freight forwarding practice in Nigeria. These are the people we can validly call freight forwarders as at today. We will be updating that list as more people pay their subscription to the CRFFN.

"On our register, we have 787 names of freight forwarders that are practicing at the ports and borders, but only 64 are practicing legitimately as at today."

He said that contrary to opinion in some quarter, POF collection will reduce the cost of doing business at the Nigerian seaports.

He said it is mischievous when people say that that POF collection would add to the cost of doing business.

He contended, "It will not add to the cost of doing business rather it will reduce the cost of doing business in several ways. POF is that service charge that a freight forwarder charges his client. For example, if the service charge for 20ft container is N20, 000, we are asking the freight forwarder to pay us N1, 000 out of that money. From that N1, 000, we will be able to train him; we will be able to look into other issues. Nothing comes free, for us to equip you for tomorrow; we need some funds to be able to help you. You can't go to any school at all without being able to pay for it.

"So, for me, I believe that it will bring down the cost of doing business because the man who is the beneficiary, at the end of the day will be better equipped on how to go about his business. It will no longer be an all comers affair."

He further stated that under the sharing formula, a certain percentage would go to the declarant who he said was that man who worked and paid the POF.

"We also need money to administer ourselves. We are regulatory agency. Let the truth be said, over the period, some people have been collecting this money and putting it in their pockets.

Naturally, you don't expect them to be happy. Let me tell you something, if you have been sitting on something for a long time and that thing is going to the pockets of a group of people, when you want to do it legally, you don't expect that everybody will say well done, that you have done well. No! People will resist you because those people who are the beneficiaries would definitely resist you", he said explaining why some people are opposed to it.

Customs Agents Reject POF

However, a large army of freight forwarders plying their trade at the Lagos ports rose against the payment of Practitioners Operating Fees.

The leadership of National Association of Government Approved Freight Forwarders (NAGAFF), Association of Nigerian Licensed Customs Agents (ANLCA) Association of Registered Freight Forwarders, Nigeria, (AREFFN), had all warned their members of the implications of resisting the collection of the fees.

Public Relations Officers, Association of Nigerian Licensed Customs Agents, PTML Chapter, Suleiman Ayokunle, expressed disappointment at CRFFN, saying that the Council has not done enough to address operational challenges faced by agents at the port but is more interested in the collection of POF.

"We have series of problems at the ports, which should be a priority for whoever that thinks well for the country. POF as good as it is being projected, can then come after the infrastructures have been put in place because every delay in cargo operation has multiplier effect. The shipping company release that POF is directly attached to simple means that if POF is not paid, you cannot get your cargo release from shipping companies, and by implication, if there is a five minute delay, it can create a one week congestion. So we believe that the machinery to make things work should be put in place before issue of POF," he said.

On his part, an executive member of Tin Can Chapter of ANLCA, Emmanuel Onyema, said CRFFN has not made any positive impact to regulate the freight forwarding practice.

He added that the POF collection would only amount to additional cost of cargo clearance for importers, which in turn, would be passed on the consumers.

"Ever since the council members were inaugurated, we have not seen any value they have added to members. We don't see them in the port. How can they come up with the issue of money? We expected them to work because we are having challenges at the port. At the moment, cost of clearing is high and they are coming up with POF. With the amount of money they want to collect per container that means cost of clearing will increase and the importer is the one that will pay but at the end of the day, whatever they spend will be passed to the final consumer," he said.

Another freight forwarder, Emmanuel Njoku, also expressed concern over the delay experienced in assessing the portal created by CRFFN to make the POF payment, saying that agents are finding it difficult to register on the platform. This, he said, would lead to delay in cargo clearance at the port.

However, the former Chairman, Igbo Maritime Forum, PTML Chapter, Mr. Francis Uchechukwu Aniezechukwu said POF is a government order which makes it a constitutional issue.

He explained that CRFFN was supposed to veer into capacity building for the betterment and welfare of freight forwarders first before venturing into POF matter.

According to him; "The contentious issue shouldn't be whether the money be paid or not. CRFFN hasn't done enough. Let collect the POF but the question is; what will it be used for?"

On the way forward, Aniezechukwu maintained that what CRFFN should do is for them to make their presence known by the freight forwarders in the industry because there are so many things hampering freight operations.

The National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), had in 2019 called on the federal government to halt the collection of POF by the dissolved governing board of the CRFFN through the Ministry of Transport.

President of NCMDLCA, Lucky Amiwero, in a letter to President Muhammudu Buhari stated that CRFFN no longer exist.

According to Amiwero, "Federal High Court ruling on Suit No FHC/L/CS/5172 /2008 as referred by the Court of Appeal, was delivered on the 24th of March 2015, which upheld that the tenure of the Council/Governing Board Expired on the 25th of November 2012, that the Council has vacated office, as there is no existing Council and no Council to deliver judgment.

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