Airport concession: ART expresses cautious optimism

Stories by Ime Akpan Lagos—

Th e Aviation Round Table (ART) has applauded the federal government’s decision hand over airports to concessionaires but doubts that the policy thrust designed to raise the level of services at the airports is in sync with global best practices.

Th e president of ART, Mr. Gbenga Olowo said in a signed statement issued in Lagos that the organisation’s cautious optimism “is premised on government’s non-recognition of the team spirit and interdependence of activities prevalent in the aviation industry.

” Consequently ART enjoined that the federal government adopts collaborative strategies in its decision making regarding aviation matters.

“To this end ART advises sustained and formidable stakeholders engagement of all relevant elements in the Nigerian aviation industry to reassure, gain confi dence and buy-in into the new policy thrust,” he said.

“Mindful of controversies that dogged the path of similar exercises in the recent past together with the need for transparency and the adoption of credible legislative instruments, Olowo implored the government to ensure transparency, accountability and fairness to all stakeholders and participants in the concession process so as to tally with the “Ease of Doing Business” model.

“Th e government could demonstrate this by making it accessible to interested members of the public, the report of consultants it engaged with public funds on the airport/ national carrier projects.

“We believe this could enrich contributions and the participation of a large segment of Nigerians.

It will also ensure a successful execution of the programme.  “ART demands the government make categorical pronouncement on provision made to address capacity building and service level agreement to be embedded in the proposed concession.

“ART recommends the clustering concession model where the smaller airports are attached to a major airport through which the concessioning could be phased to accord with the national interest, priority and objectives.

‘We also advise that the security management of the concessioned airports be retained by the federal government and factored into the national security architecture once advocated by ART.

“With the clustering concession model if adopted and the management of airport security still in government hands FAAN can transmute in name, functions and responsibility.

“We implore government to provide necessary guidelines that will facilitate and smoothen the concessioning process bearing in mind the pit holes of the past.

“Th e government should ensure that emergent concessionaires include insurance and routine certifi cations of the airports so concessioned,” said Olowo Govt policies responsible for cargo diversion to neighbouring ports – Yusuf

Director-General, Lagos Chamber of Commerce and Industry (LCCI), MUDA YUSUF in this interview speaks on the need for government to review some of its trade policies especially those that impact negatively on port operation and manufacturing.

He also makes a case for the concessioning of scanning machines at the ports, among other issues.
What is your assessment of government eff orts so far at improving the ease of doing business at the ports? I think government has demonstrated some commitment, some will to ensure that things work better and the system runs more effi ciently at the port.

Measures have been taken through the Executive Order, streamlining operations at the ports and reducing the number of agencies all in an eff ort to ensure that the ease of doing business is improved at the port.

But, it is one thing to show that demonstration of commitment and the will to change things, it is another thing for the changes to happen.

The changes are very slow in happening because it is a system where there are some very strong and rigid interests hence it will take some time to get people to change their thinking and orientation.

But I believe that if the government is persistent and occasionally wield some big stick against whoever is standing or obstructing the reform that is taking place, people will sit up faster than what it is.

We have institutions to deal with like the Customs, the Nigerian Port Authority (NPA), shipping companies and others.

Some of these institutions are benefi ting from the status quo and it has not been easy for anybody to get them to change but if there is strong will and appropriate sanctions for those who are standing on the ways of these changes, then I think we would move faster in achieving the kind of changes that we want to see.

Some of the things that are required are not only institutional, some are physical.  For example, infrastructure is a physical thing and you need money to fi x the infrastructure.

So beyond just talking about it, we need to see that there is fi nancial backing to ensure that these infrastructures such as the roads, railways to the ports are fi xed as well as other facilities that are suppose to make it easy for operations in the port to function.

Those things are still not there and the irony is that close to 30 percent of government revenue if not more is coming from the port, so if you are making so much money from a particular place and you know that if you make the system more effi cient, you will make more money, so why not just fi x whatever challenges are there? I think that is the logic that we should begin to push for government.

It is in the interest of government to raise more revenue for us to have a more efficient port system in terms of the institutions that are operating and in terms of infrastructures that are on ground.

Th ese two things are very critical.  Th en, there is also the policy aspect especially with regard to trade policy.  If the trade policy is also defective, you lose a lot of business to ports of neighbouring countries and that is what is happening now because some of those tariff s are too high and also not sustainable.

If a tariff is too high, people cannot go over it, they will go under it and that is what is happening.

People divert cargoes and they smuggled some of these products because the borders are so porous and there is limit to what Customs can do.  Even those who are doing legitimate business at the ports fi nd it more diffi cult when you have such unsustainable tariff regime.  Th e government is losing revenue and we are also losing our jobs.

So our trade policy is also very important in ensuring that we have a vibrant maritime sector.  How have these lapses especially with regards to high tariff impacted on your members? It has impacted negatively because all these things come down to cost.  When you have a system that is not efficient, it increases your cost of operation.

Some of the challenges we are seeing in the ports, the man on the street is paying for it without knowing because the increase in cost will be transferred to the importer who in turn transfers to the end users because everybody along the chain are in the business to make money.

So as their cost is increasing, the price at which they will sell their products will increase.

Secondly, it will erode the margin of all the people working in the chain because it is not all your cost you will transfer to the consumers, you have to absorb some.

So it erodes the margin of a lot of businesses. Of course, it also aff ects production process.

So these are some of the eff ects. What do you think can be done to curb the problem of cargo diversion? Port activities generate tremendous multiplier effects for the economy especially in terms of job, revenue and incomes for people.

So to the extent that we are losing so much to neighbouring countries, we are losing so many things including expertise.

And ultimately, some of these products still fi nd their way back into the country.  Th at is the irony of it because the borders are porous. One way to address this problem is to ensure we review our trade policies.

We should not set a tariff at a level that will make it more commercially expedient to make people avoid using our ports.

Some of the reforms that we are putting in place to make our institutions more investment friendly is also very important.

If we are able to drive that to a logical end and get our institutions that relate with importers at the ports, we need to change their orientations so that they can begin to see importers as customers and relate with them the way a business person will relate with a customer.

Th en the infrastructure too has to be there.  If the infrastructure is not right, it could create bottlenecks for operators and it could make things more expensive.

If it is taking you such a long time to discharge your vessel, to get your consignment out of the port, these are big problem that could lead some people to say rather than get stuck at the Lagos ports, it is better to go through Cotonou and come through the land border.

Th ose are the things I think we can do to stop the diversion or reduce cargo diversion to neighbouring countries. Some private firms are calling for the concessioning of scanning operations at the port.

What is your take on this? First, there is need for government to invest a lot more in facilities at our ports including scanners.

So the political will must be there and we need to push the government to make that happen.

All these things call for eff ective advocacy on the part of all the stakeholders that are operating in that environment – the importers, freight forwarders and even the business people.

If government is making so much revenue from that area, government should be able to plough back a bit of it to ensure that there are facilities.

Secondly, Customs cannot do everything.  My view is that Customs should face the issue of revenue collection and trade facilitation.

Th ings that have to do with scanners and their maintenance should be outsourced.  It doesn’t have to be the Customs that will be managing scanners.

That is contributing to the inefficiency and the challenges we have with the scanners because Customs is operating within a bureaucratic structure unlike if you have a private sector company that knows that it has the responsibility to manage and maintain these scanners, the response time to fi x the scanners will be shorter and they will be able to deal with it faster.

But if you leave it to the Customs to manage and run and something goes wrong with the scanners before you do a memo get the hierarchy to approve it, you know how a bureaucracy works.

Source: Ships and ports news



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