Nigeria is currently losing about $1.96 billion in customs revenue and an estimated $10 billion dollars on non-oil export because of poor business environment at the ports.
The Lagos Chamber of Commerce and Industry (LCCI) said the major way to drive the Nigeria’s economic diversification is to fix ease of doing business at the nation’s ports.
LCCI said research conducted in collaborations with some other organisations also revealed that the economy was also losing about $8.1 billion corporate earnings across sectors on an annual basis.
The President of LCCI, Babatunde Ruwase, said the research was conducted in partnership with the Centre for International Private Enterprise (CIPE), Nigerian Economic Summit Group (NESG), Manufacturers Association of Nigeria (MAN) and other Organised Private Sector organisations.
He made the assertion in Lagos where he said political will, active enforcement and monitoring framework were necessary to drive the process.
The Presidency, he said, should empower the Ministries, Departments and Agencies (MDAs) that were the most essential enablers for present port reforms to succeed and be sustained.
According to him, findings from a LCCI research on the nation’s ports show that the economy was currently losing $1.96 billion in customs revenue and an estimated $10 billion on non-oil export.
The LCCI president said according to the research, that industrial capacity utilisation currently stood at 38 per cent to 40 per cent, and approximately 40 per cent of businesses
located around the Lagos ports’ communities had relocated to other areas.
He said that some had also scaled down operations or completely shut down.
“These developments have very huge adverse implications for jobs creation, tax revenue and real economic activities with estimated downside effect of about three per cent on the
country’s Gross Domestic Product (GDP),” he said.
The LCCI chief said that the research revealed a worrisome level of deliberate resistance by some MDAs to implement or enforce enabling regulations, including the 2017 Presidential Executive Orders relating to the ports.
“Fights for supremacy, conflict of interests among the MDAs and revenue ambitions that conflict with trade facilitation objectives among the MDAs are common issues,” he said.
Ruwase said that deliberate delays induced by MDA officials currently accounted for approximately 65 per cent and 80 per cent of import clearance and export processing time
He said about 10 per cent of cargoes are cleared within the set timeline of 48 hours, while majority of the cargoes take between five to 14 days to clear as some take as long as 20 days or more to clear.
The LCCI boss noted that about 5,000 trucks currently sought access to Lagos ports on daily basis, whereas the port and its access roads were designed to take only about 1,500 trucks daily.
“Thus, trucks currently spend days and sometimes more than one week to access the port from Lagos Mainland due to traffic gridlock.
“Barring the traffic situation, the journey should have taken about one hour,” he said.
Ruwase said that the delay and traffic congestion led to an astronomical increase of trucks transport cost by 200 per cent to 500 per cent over the last two years.
He also said that the congestion resulted in high demurrage charges, disruption of production schedules of manufacturers as raw materials were not delivered to factories in good time.
“Feedback from stakeholders confirm that bad access roads to the port accounts for 90 per cent of accidents that caused damage to fragile imported items leading to significant losses.
“In addition, there are painful reports of loss or damage of perishable agricultural export due to extended time spent by the trucks on the roads before getting to the ports or the poor condition of warehouses at the ports.
“For instance, about 25 per cent of cashew nuts exported from Lagos to Vietnam in 2017 went bad or downgraded due to these factors,” he said.
Ruwase said that the challenges at the ports had paralysed industrial and commercial activities in the Apapa axis and some other parts of Lagos.
To address these challenges, he urged government to implement the use of Single Window Platform by all the relevant MDAs.
He said that this would reduce process delays, human interface, bureaucracy and multiplicity of agencies.
“This will have an immediate, wide and positive impact in the port,” the LCCI chief said.
Ruwase called for enforcement of Presidential Executive Order on single examination, adding that any MDA that violated the order should be sanctioned.
“There is also the need to digitise export processes, especially the processing and approval of Nigerian Export Proceed (NXP) forms,” he said.
Ruwase urged government to pay attention to other ports outside Lagos, saying that there was need to extend reform action plans of the Presidential Enabling Business Environment
Council (PEBEC) to the Eastern air and land ports.
“Stakeholders request that government should approve and publicise a bouquet of incentives to importers and exporters that patronise ports outside Lagos State.
“These measures will make ports outside Lagos attractive for patronage by importers and exporters and will ultimately reduce the current pressure on the Lagos Port and roads,” he said.