Clearing agents and other practitioners operating in the country’s maritime domain had it very rough in 2022. ANOZIE EGOLE looks at some of the activities that marked the year in the maritime and the expectations for the coming year, 2023
Players in the country’s maritime industry believe that the sector has been plagued with many controversies arising from the government’s inconsistent policies and bureaucracies. They argued that some of the events that shaped the industry this year were spilt over from 2021 and the previous year.
Although the global shipping industry had an eventful year despite disruptions caused by the Russian-Ukraine war which also affected the cost of goods and commodities, especially in countries like Nigeria, for the Nigerian maritime sector it has been a boisterous year when compared to 2021. The foreign exchange volatility, increased freight prices, duties on imported goods, especially used vehicles, the insurance premiums on goods bound for Nigeria, and the introduction of some policies by the Federal Government, which made the clearing of goods in the country more stressful, highlighted 2022.
Introduction of VIN
Stakeholders in the maritime sector were hopeful of a seamless clearance of cargoes in the country’s ports when the Nigeria Customs Service mooted the idea of introducing a Vehicles Identification Number for the clearance of imported vehicles. The intention was to ensure uniformity in duties payable on imported vehicles in the country irrespective of the port and ease the clearing processes. However, the introduction of VIN in the second quarter of 2022 was trailed by a lot of controversies, as clearing agents and importers have alleged that the platform has been hiking the duties payable on imported vehicles. They also accused the platform of not capturing some imported cars with non-standard VIN coming mostly from Europe. Some of them had to abandon their cargo in the port.
Meanwhile, in a bid to proffer solutions to the issues by the clearing agents and importers, the customs had to recently introduce a new platform for vehicles with non-standard VIN. This assuaged the aggrieved agents.
However, the introduction of a new platform for vehicles with non-standard VIN came with a 15 per cent National Automobile Council levy on imported cars, which shot up the cost of clearing used cars in the country.
Scanners unveiled
To ensure seamless and fast clearance of cargoes at the port, customs installed three scanners in Lagos ports. Though some port users have lauded the efforts of customs in this regard, others believed the scanners were not fast enough, thereby, leading to a backlog of cargo at the ports. The Nigeria Customs Service has, however, promised more scanners before the end of 2023.
Concession agreement renewal
Another important event in the sector this year was the renewal concession agreement. Terminal operators and the Nigerian Ports Authority have been on different pages on the issue. While terminal operators have been urging the management of NPA to ensure speedy renewal of the agreement, the agency called it has done all the things needed for the renewal.
The decadence of port infrastructure, especially the quay aprons of the terminal, also headlined 2022. It was a source of concern for most port users. They claimed the dilapidated infrastructure in the ports is costing the country huge revenue as importers are opting for neighbouring ports because of the poor state of infrastructure in the country’s ports. NPA has stated that it was already fashioning ways to renovate and reconstruct some of the ports. It disclosed that renovation of the dilapidated port infrastructure was not included budgeted in the 2023 budget.
Lekki Deep seaport
One of the major highlights of 2022 was the completion of the Lekki Deep seaport. It also received the first ship during this period. It was good news in the maritime sector during the year. Industry experts believed the project has the potential of turning the country into the maritime hub of West Africa. Although the promoters of the project, Lekki Port LFTZ Enterprise, have assured that the deep seaport would commence operations in the first quarter of 2023, logistics experts have stressed the need to connect the rail line to the Lekki deep seaport.
Experts speak
Meanwhile, experts have described 2022 as one of the worst years in the maritime sector in the last 10 years.
The acting President of the Association of Nigerian Licensed Customs Agents, Kayode Farinto, said that the industry did not move forward in the year 2022 as expected. He claimed inconsistent policies from the government marred the year.
“This year 2022 has not been the kind of year we wished it should be, because the industry is not moving forward as we expected. The industry is moving at a snail’s speed at a point. We have an inconsistent policy on the part of the government, not considering the importers and all that.
“We have a situation where there is confusion even among the policy formulators. The Central Bank of Nigeria will be saying something different and the Ministry of Finance will also be saying something different. Even consignments that are not banned, CBN did not even allow them to open FORM M. So, we are in a state of confusion in the maritime industry and also in running the economy of this country,” he lamented.
Also, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said that the maritime industry has grossly underperformed over the years and 2022 is no different.
He said smaller countries with more efficient ports are doing much better, adding that there are several instances of cargo diversion to other ports in the sub-region.
“There are policies, institutional and structural bottlenecks bedevilling the maritime ecosystem. The current foreign exchange environment has caused a significant deceleration in maritime sector activities in 2022. Importers had to contend with drastic currency depreciation, volatility of the exchange rate, scarcity of foreign exchange and multiple forex windows. Since foreign exchange is the currency for international trade, it follows that a dysfunctional foreign exchange policy would naturally impact on the maritime sector,” he explained.
Muda also argued that the seeming parallel import prohibition list introduced by the CBN created several dislocations in international trade transactions.
He asserted, “Trade facilitation issues constituted a major hindrance to trade in 2022. There were issues of a multiplicity of government agencies that have to authorise releases of cargo. There are territorial tendencies among government agencies which impede the efficiency of cargo clearance. There were concerns around the quality of ports infrastructure, excessive documentation, inadequate deployment of technology, the Single Window is yet to be fully operational, weak dispute resolution system and the obsession for revenue generation by all government agencies. These were some of the key issues that characterized the maritime sector in 2022.”
The CEO of CPPE, however, commended the Federal Government for the installation of scanners at the Apapa port and the Tin Can port, adding that the scanners should be made available at other border locations.
Meanwhile, the Chief Executive officer, LWL Concepts, a freight forwarding logistics firm, Mr Lawal Wasiu, said, “The year 2022 was a year of mixed feelings in the maritime sector. You know some agents specialise mainly in the clearing of cars. They do not do general cargo. So, if I am to talk from their own perspective, I will say that the year 2022 in the maritime sector has been filled with ups and down. First, with the commencement of VIN valuation, we went on strike for almost three weeks before we were given grace. This was followed by the increase in tariff before they came up with a levy. So, there were so many changes put in place, especially in car clearing.
“So, I would say that the maritime sector when it comes to car clearance has not really been moving well due to all these tariffs. It has affected the free flow of services in the sector. So, from that point of view, I will say that the sector faced huge challenges. Before now, we used to have a massive importation of cars; one importer who usually brings in five cars may hardly be able to bring two or three because of the high cost of clearance, high tariff, among others.”
He claimed inflation also had an adverse impact on the sector. “Imagine a car that was N3m before in the market is worth more than N5m now. That is to tell you that there is low turnout in the market because of how expensive these cars are. So, if you take it from the angle of car clearance, you will see that there is no business this year compared to what it used to be. Cars that we usually clear with say N350, currently cost about N700 to clear.”
Expectations for 2023
Farinto said that he expects a clear understanding of government policies in the coming year 2023.
“So, going forward in 2023, we want a clear-cut understanding of government policies. Except if we have the expertise and put a round peg in a round hole, for now, we are in a state of confusion. There must be a clear statement from the presidency on the role of CBN and Ministry of Finance and customs administration should not just be for revenue generation but for trade facilitation.”
Farinto said that the industry needs a customs management team that is trained and versatile, adding that the government should review upward the age limit policy on imported vehicles.
“The Federal Government should give us a consistent policy in the maritime industry. They should also look at the policy on underage vehicles. They should reduce the age limit to 15 years so that our youths who are coming out from the university and want to do e-hauling can do that.”
He also said the role of CBN should be clearly spelt so that it should not interlope into the functions of the Ministry of Finance.
“I expect an acceleration of reforms in the maritime sector. We should see more serious commitments to better use of technology, full implementation of a single window for cargo clearance processes, better access to the ports and more investments in port infrastructure. I would also like to see shorter turnaround times for vessels coming into the country. We should also ensure shorter cargo dwell time in our ports,” Muda Yusuf stated.
Wasiu is looking further for positive changes in the sector next year, as some of the policies put in place in 2022 would have taken full effect during this period.
“I know they will positively impact the sector. Imagine that VIN valuation is being implemented in the maritime sector over time. It will get along. So, we are expecting a boost in the maritime sector, but it will happen if the government will only create a soft landing by ensuring that the naira gains more ground over the dollar and also by ensuring that there is a boost in exportation,” he enthused.
