Since 1973 when the Arab-Israeli war conjured an alarming escalation of oil prices, Nigerian rulers have fixed their eyes on the oil wells of Niger Delta as the only source of income. Even the ports, through which 90 per cent of the goods imported with the oil revenue enter the country, are never regarded as serious sources of income. Recent developments will change all that.
Nigeria is broke. The economy is in recession. The economic indices are even more frightening than the rate of negative growth. Brazil has been in recession for two years now. But unemployment rate in Latin America’s largest economy remains at 11 per cent.
Nigeria’s economy slipped into recession just eight month ago, but the unemployment rate is above 13 per cent. Data from the National Bureau of Statistics (NBS) show that 26 million people are either unemployed or heavily under-employed.
Nigeria’s worst enemies are its past rulers. They never looked beyond the oil wells of the Niger Delta for income. Nigeria has a vibrant maritime industry that was practically handed over to corrupt customs, ports administration officials and fraudulent foreign shipping lines to exploit.
Now, low oil price, economic sabotage by Niger Delta militants, insurgency by Islamic fundamentalists in the north-east, corruption and lack of planning by past leaders have combined to plunge the economy into recession. The federal government is desperately looking for funds to balance the budget. The 2016 Appropriation Act was predicated on oil output of 2.2 million barrels per day at $38 per barrel. Nigeria currently produces a scant 1.6 million barrels per day.
Government is seriously considering national assets stripping as an option to raise at least $15 billion to fund the yawning deficit in the 2016 budget. This writer believes that government could nudge the economy out of recession by focusing on agriculture and the ports rather than selling national assets.
Nigerian ports offer cheap and easily accessible sources of income for stimulating the economy. The ports had over the years been grossly mismanaged. During the concession of the port facilities, the Nigerian Ports Authority (NPA) was temporarily handed the dual responsibility of landlord and regulator of the industry. That was an anomaly. Now that the error has been corrected with the appointment of the Nigerian Shippers Council (NSC) as industry regulator, the federal government should leverage on the recent strides made by the NSC and work out measures for raising more funds from the ports. Benin Republic, Nigeria’s tiny neighbor to the west, has a population of 10 million people.
That is about half of the population of Lagos state. However, ports of the tiny republic record three million metric tons of cargo annually. Port watchers believe that 60 per cent of the cargoes landing in Benin Republic eventually find their way into Nigeria. That raises the question on why importers abhor Nigerian ports. The simple answer is that the clearing process in Nigeria was cumbersome and corruption-ridden. One importer lamented that it takes a minimum of 79 documents to clear a cargo in a Nigerian port. On the contrary, goods come out of Cotonou Port with less than one third of the paper work required in Nigeria. The simple logic is that it is cheaper and faster to clear goods in Benin Republic than in Nigeria.
The NSC as the regulator of the industry has been battling to reverse that trend. Since its appointment as regulator, the NSC has recorded giant strides in a bid to make Nigerian ports importer-friendly. It has abolished the arbitrary charges and levies that stakeholders used to impose on importers. NSC has clipped the wings of exploitative concessionaires by wielding the big stick against them. Stakeholders no longer hike charges without the permission of the regulator. Even the concessionaires are being protected against the exploitation of the landlord. That posture has occasionally put the regulator and the landlord on collision course. NSC is not deterred.
The reforms introduced by the NSC as the regulator has reduced ship turnaround time in Nigerian ports and drastically cut the cost of vessel management. It has curbed the excesses of the notorious pilferers known as port rats. The result is enhanced security of goods and lower losses by importers.
Ultimately, revenue from the ports is beginning to look up even at a time when recession has drastically reduced cargo traffic. With the reforms by the NSC, Nigerian ports could attract more of the goods diverted to Benin Republic. It could as well convince importers in land-locked Niger Republic, Nigeria’s northern neighbor, to route their cargoes through Nigerian ports. Currently they route their imports through Cote D’Ivoire, despite the long distance. The cumbersome clearing process and high port charges of the past apparently diverted those goods from Nigerian ports.
With NSC’s reforms reducing those inhibitions, the federal government could use economic diplomacy to convince importers in Niger Republic to patronize Nigerian ports.
Feelers from the international oil market suggest that oil prices might remain low for at least two more years. No one knows precisely when the oil boom would return. Nigeria can beef up its revenue from the ports by encouraging the NSC to make them more importer-friendly.
