Maritime: Ease of doing business policy eroded on account of bad road, FX variability


Mr. Paul Ndibe is the National Executive Director (NED) of the Chartered Institute of Logistics and Transport (CILT) Nigeria. In this interview with our correspondence, he made a holistic assessment of the performance of the transport and logistics industries in the outgone year of 2017, the Ministry of Transportation and Nigeria’s loss of the IMO Council seat. Excerpts;

What is your assessment of the transport and logistics sectors in the year 2017?

The transport and logistics sectors in Nigeria in 2017 faced some serious challenges which actually impacted on the consumer price index, on inflation rate and also on the level of service delivery in terms of shippers and it is not only in that sector, it is also a reflection of the occurrences in different modes.

The aviation sector is also included. As a matter of fact, it started with the aviation sector; one, we don’t have a national carrier and two airlines almost go under-Aero and Arik and it has not been fully resolved. So, those distortions in aviation sector actually impacted on the stability in that sector. Taking it a little bit further to the users of this service, you could recall the closure of the airport in Abuja and that created some disharmony in the sector. Thank God it has been resolved but then you can see the effect in the sector. So, using the situation in the airlines, those that went under and no replacement of a more vibrant or more robust ones, the closure of the airports and also the inconsistency in the flight schedules and then the increasing delays in flight schedules and complains from even the airline operators in terms of service and taxes, you can see that there is some disquiet in that and that affected also the level of service delivery.

If you now come to the road sector, that is also one of the greatest problem of the country. Currently, if you talk of Apapa, or inviting anybody to Apapa, you are likely to make preparation for two days. You may start off the journey today; you may end up not getting to Apapa until the next day. Even for trucks going to Apapa, it takes an average of may be four to six days within Lagos, just to get into Apapa Wharf. So, it is as bad as that. The construction of the road was an issue and surprisingly we heard that only 10% of the road has been completed. So, that will give you an insight to the situation come 2018. So, the difficulties of 2017 in terms of access into Apapa may not abate until way into May/June of this year given the time it has taken to achieve 10% of the road construction and then the complains of absence of fund to further invest into the project. So, that is an issue.

Beyond that, the situation of the road and if you look at the foreign exchange variability in the beginning of the year 2017, people almost decided not to import anything because of fears- whether they will be able to sell the product of whatever they will import as raw material. That was a big challenge but suddenly towards the middle of the year, some people started to take the risk and started importing and by September down to November/December, there was full importation resulting in high dwell time of ships which has translated to higher fees transferred to the shippers and then to the consumers. The effect of all these will be felt in 2018. That is not also healthy for our economy.

The ease of doing business which the federal government started has greatly been eroded on account of these two factors that I have enumerated. It is not people coming and having easy passage but coming to do what? The businesses that they are going to get in, there are doubts in that, so how would they reinforce their investments if there are doubts even in the business they are going to promote or invest in. That is another distortion on its own.

Then on the maritime itself, I don’t know how to describe it because if you look at the quantum of what we import and also what we consume, we are import dependent country, on account of that, there should not have been any impediment to our international trade facilitation. If you look at the ports, even the way they are currently configured or operated, we don’t have that type of ports that you can easily access in term of predictability. The open port like the ENL is there and then the container terminals, the AP Moller is also there but this last year, you recall the challenges they had, they increased taxes of which the importers protested. That was a big challenge. Asking the freight forwarders to pay professional fees was also a challenge on its own. So, these are distortions on our international trade services and they have ripple effect on the level of delivery of services.

So, stepping into 2018, government should make serious effort to address these concerns because they are still there. They can come up one day and each time they come up, they have their own effect on the economy.

On the railway sector, there has been announcement of huge investments in the railway sector but in real terms, they are not there. My thinking about the situation would have been that let us see what the railway is like. You cannot be successfully using one train set to run Abuja-Kaduna and you say you are operating; we are losing in terms of line capacity because the tracks have not been fully occupied, you cannot run that route with only one train set and may be two trains a day- up and down. That is not railway operation. So, if government wants to have full realization of Abuja-Kaduna route that we can say yes, we have close to a modern railway, I am not talking about the speed because the speed has its own issue but the frequency of service is not there. So, government should at least increase the frequency of service by bringing in additional train sets so that that service can be more functional and then more efficient.

If you have more trains running on that route, because the fixed costs are being attained and those fixed costs, somebody is picking those fixed costs. If you have more trains on that route and having meet your fixed costs, whatever incremental costs you are making will add to your income generation level but if you are running a lower number of trains and meeting a higher maximum standard cost in terms of fuelling generators, putting up staff, manning the signaling equipment, of course, you will not make any money. So, nobody has told us whether that line is making money or not but I am saying that from what I can perceive, it is not making money.

So, for federal government to sustain that line, they need to put in additional train sets so that the standard costs, having been met now, the additional trains you are running can add to the income generation capacity of the corporation. Beyond that, they have been making so many announcements on new projects but the existing ones are not being sustained. One would have expected that by now, trains going to Kano, considering the narrow gauge of the Lagos-Kano route, the nature of the tracks, the nature of signaling system, the train may not be able to get to Kano under 36 hours because they have a maximum speed they have to run on that route. Government should think of, even if it is the 36 hours, do you have sufficient rolling stock to ply the route? If you don’t have sufficient rolling stock, what is the problem? Bring in sufficient rolling stock let us see what the current railway can offer, then we can base on that expect a better railway in future. But we are not seeing it.

Now, look at the congestion in Apapa, railway is trying by evacuating some containers from Apapa to Ebute-meta for trailers to take them to the north and then return empty containers but do they have sufficient capacity to do that sufficiently well? Of course, not. So, what is the problem? If it is loco, what is difficult to bring in a loco? The rails may not be fixed until let us say May this year using what we are seeing but it can take just three months or two months to bring in wagons. Are they saying that the railways cannot improve on the wagons they have? Fleet the wagons repair the wagons and make them available for these routes. If spare parts is the problem, what is difficult in bring spare parts since that will aid and facilitate trade and ease doing business?

So, there is a disconnect between the Transport Ministry and Industry, Trade and Investment. So, the two Ministries should sit down and then look at the scenario and see where they can come in in order to help otherwise we carry this burden into 2018.

Now, the telecommunication that is being accepted as part of mode of transportation, we have not been hearing of the in the telecommunication unit. Of course, we know that Etisalat went under, now we have 9mobile and then there are still issues about MTN and then these smaller telecommunication companies are coming up but where are the big ones? How are they performing? There is no difference in terms of service level between the upcoming ones and the big ones. At least, there would have been some distinctions. Let the big ones demonstrate that they are the big ones that they can offer best of whatever you can think of the telecommunication but they are not offering that, they still have call drops and all that. So, the competition is still not there yet.

We aware that somebody is driving this sector and he has made a lot of promises and a lot of pronouncements and people are yet to see most of these pronouncements come to pass. Now, looking at the activities if the Transport Ministry in the outgone year, are you satisfied with the performance of the Ministry of Transportation as it is in the year 2017?

Well, the Ministry may not be a budget allocating unit; one would expect that they would perform based on the fund allocated to it. I am aware that they have proposed a particular Lagos-Calabar rail line that is still causing ripples in the National Assembly and eventually, it was resolved but for the fact that they are picking up the issue of the new railway bill is something that we can give them credit for, the fact that they have taken up the National Transport Policy bill is something we can give them credit for, they fact that the National Transport Commission bill, that they are driving the bill, you cannot take it away from them.

So, in the light of these three broad areas of the bills that they are driving, I think they have a direction they are going but the critical thing is, we are not seeing the signs of the benefits of what will come from these policies. Secondly, the fact that the Chartered Institute of Logistics and Transport bill is still not enacted so to speak, it may also add to the weakness of the activities of the Ministry because if the CILT bill has been enacted, CILT would have been able to also come in more effectively and make its own contribution under the law. So, we are hoping that that will happen so that the Ministry can also be relieved of certain element of what may have been holding them down.

Nigeria towards the end of last year bided for Category C seat at the International Maritime Organization (IMO) Council and lost and that thrown up blames and counter blames to the extent that some associations called for the sack of the NIMASA Director-General. What is your reaction to that development sir?

It is a wakeup call for Nigeria. At times, we take things for granted but for me, it is not the end of life for us. So, my thinking is that the agency responsible would have noted where it failed and make better preparations for the next election and as far as I am concerned, having issues like that and it worries you is also matter of something that will dictate very big implication for us because, one, it goes to say how Nigeria is prepared for anything happening in the maritime sector. Having lost that seat is anindication that we are still not concerned about the development in the maritime sector. Of course, the evidences are there, if we are concerned about development in the maritime sector, we will not allow the mess in Apapa, we will not allow ships to have increasing dwell time staying in Apapa, incurring demurrages transferred to the shippers and transferred to the ultimate consumers. And then you wouldn’t have these distortions, interferences from the government, the policies should be set and let NIMASA or any other agency run its organization according to set standard and so, government should be consistent with its policy and should make it known and clear so that the agencies responsible should know that they are driving this policy because of its expectations which will transform into growth of the economy.

Apart from all that you have mentioned, are there other factors that may have contributed to the loss because this is the second time Nigeria is losing out in that election?

Well, to some point, it might be personal. If there are personal issues from those that vied for the position, yes, there can be some effect to that but that I cannot say was responsible for the loss. Then, there is no good team work, look at what is happening with the ship owners, look at what is happening with cabotage, there are people in this sector that are aggrieved and they cannot be aggrieved and you think these other areas would progress. So, it is a holistic thing and every person in the maritime sector matters. So, the expectation is that NIMASA, NPA, Shippers’ Council should come together and look at what the policy is like and call everybody together, that is the only way we can make progress.

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