NAGAFF picks hole in FG’s palletisation policy

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As the business community in Nigeria begins to adjust to the new palletisation policy of the federal government through the Federal Ministry of Finance, the National Association of Government Approved Freight Forwarders (NAGAFF) has said that the policy if implemented is capable of depleting the Nigeria’s foreign reserve by 50% within six months of implementation.

This is even as it said that implementation of the policy meant that the Nigerian importing public would now pay more to import goods into the country as the content of one container would now be split into two or three containers while forcing them to pay higher freight charges.

The National President of NAGAFF, Chief Increase Uche who disclosed this in an interview with our correspondent in Lagos last Friday said that palletisation of cargo would have been the best option assuming the Nigerian environment had grown to the level of the developed countries as it was the global best practice currently.

According to him,” Unfortunately, the state of our economy, the state of the ports, if you look at the shipping sector, you will discover that Nigeria that claims to be a maritime nation does not have sea going vessels. Right now, if all containers coming to Nigeria is now to be palletized, it then means that space utilization will become an issue, that any shipment that was supposed to come in 1×40 container under the current arrangement of stuffing the container in order to utilize space in the container, when they palletize such container, it then means more than two containers that can take such volume of cargo.

“In that wise, what we are bound to face now is that more cargo will come to Nigeria if every other importer key into that palletisation but where they don’t key in, that is another issue because we are foreseeing a situation whereby cargo diversion will be on the increase because of palletisation.

“The second one is that the use of containers again might reduce, importers might resort to use of trucks, buses and cars to bring in their cargo to beat that policy but the worst scenario will be a situation where we will continue to maintain this contract whereby Nigerian merchants are compulsorily expected to open LCs on CIF, that is a very bad exchange control system that has been in place.

“So, LCs contracts that are opened on CIF terms under this palletisation policy, what that means is that a cargo that should have come in one container is split into two or three containers because of use of pallets. In their opening that LC and buying exchange that will cover that shipment, the freight charges you are paying for will be for three containers.

“And ordinarily, cargo coming from Europe pays between $5,000 and $6,000 and that you have to multiply it by three and if an importer is buying foreign exchange, it then means you are buying three times what you should have bought just once. That now will eat into our foreign reserve. That was why I postulated that if care is not taken, within six months of the implementation of that palletisation policy, that our foreign reserve will be depleted maybe by 50%”.

Uche recalled that he made a presentation last year during the breakfast meeting where the issue was raised and condemned the policy adding that he reminded them of the absent of scanners at the ports as according to him,” the safe mode for this palletisation would have been to go through scanners to ease off the process and fast track cargo clearance.

He added that where palletized containers were to be examined manually, it then means that the government agencies including customs would request that importer or their agents pull those pallets out of the containers because none of them will forced himself to pass through the middle with the tight space that is remaining, which would in turn amount to hiring of a forklift.

Recall that the federal government through the Federal Ministry of Finance announced that a revised import and export guidelines that would replace the old one was out, coming with it palletisation of cargoes coming into Nigeria to check influx of firearms and was expected to take effect from January 1, 2018.

Photo: National President of NAGAFF, Chief Increase Uche.

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