Clearing agents and other professionals operating in the country’s maritime domain had a very difficult time in 2022. ANOZIE EGOLE reviews some of the activities that marked the year in the maritime industry and the expectations for next year 2023
Players in the country’s maritime industry believe the sector has been plagued by many controversies stemming from inconsistent government policies and bureaucracies. They argued that some of the events that shaped the industry this year spilled over from 2021 and the year before.
Although the global shipping industry had an eventful year despite the disruptions caused by the Russo-Ukrainian war which also affected the cost of goods and commodities, especially in countries like Nigeria, for the Nigerian maritime sector it has been a year bustling compared to 2021. Exchange rate volatility, rising freight prices, tariffs on imported goods, especially used vehicles, insurance premiums on goods bound for Nigeria and the introduction of some policies by the Federal Government, which made the clearance of goods in the country more stressful. featured 2022.
Maritime stakeholders were hoping for smooth cargo clearance at the country’s ports when the Nigerian Customs Service raised the idea of introducing a vehicle identification number for clearance of imported vehicles. The intention was to ensure uniformity in the duties to be paid on vehicles imported into the country regardless of the port and to facilitate clearance processes. However, the introduction of VIN in the second quarter of 2022 was followed by many controversies, as clearing agents and importers claimed that the platform has been increasing the duties payable on imported vehicles. They also accused the platform of not capturing some imported cars with non-standard VINs coming mostly from Europe. Some of them had to abandon their cargo at the port.
Meanwhile, in an attempt to offer solutions to the problems of clearing agents and importers, customs recently had to introduce a new platform for vehicles with non-standard VINs. This reassured the aggrieved officers.
However, the introduction of a new platform for vehicles with non-standard VINs came with a 15 percent National Automobile Council tax on imported cars, which skyrocketed the cost of used car liquidation in the country.
To ensure smooth and fast clearance of cargoes at the port, customs installed three scanners at the ports of Lagos. While some port users praised customs’ efforts in this regard, others believed that the scanners were not fast enough, leading to a backlog of cargo at the ports. However, the Nigerian Customs Service has promised more scanners before the end of 2023.
Renewal of the concession contract
Another important event in the sector this year was the renewal of the concession contract. Terminal operators and the Nigerian Ports Authority have been on different pages on the subject. While terminal operators have been urging NPA management to ensure early renewal of the agreement, the agency called for doing everything necessary for the renewal.
The decline of the port infrastructure, especially the platforms of the terminal docks, also led in 2022. It was a cause of concern for most port users. They claimed that the dilapidated infrastructure at the ports is costing the country huge revenue as importers are opting for neighboring ports due to the poor state of the infrastructure at the country’s ports. NPA has stated that it was already designing ways to renovate and rebuild some of the ports. It revealed that the renovation of dilapidated port infrastructure was not included in the 2023 budget.
Lekki Deep Harbor
One of the highlights of 2022 was the completion of the Lekki Deep seaport. He also received the first ship during this period. It was good news in the maritime sector during the year. Industry experts believed the project has the potential to make the country the maritime hub of West Africa. Although the promoters of the project, Lekki Port LFTZ Enterprise, have assured that the deep-water port would come into operation in the first quarter of 2023, logistics experts have stressed the need to connect the railway line with the Lekki deep-water port. .
the experts speak
Meanwhile, experts have called 2022 one of the worst years for the maritime sector in the last 10 years.
Acting President of the Nigerian Licensed Customs Brokers Association Kayode Farinto said the industry did not advance in 2022 as expected. He claimed that inconsistent government policies marred the year.
“This year 2022 has not been the type of year that we wanted it to be, because the industry is not progressing as we expected. The industry moves at the speed of a snail at one point. We have an inconsistent policy from the government, not considering importers and all that.
“We have a situation where there is confusion even among policy makers. The Central Bank of Nigeria will say something different and the Ministry of Finance will also say something different. Even shipments that are not prohibited, CBN did not even allow them to open FORM M. So, we are in a state of confusion in the maritime industry and also in the functioning of the economy of this country, ”he lamented.
Furthermore, the Executive Director of the Center for the Promotion of Private Enterprise, Dr. Muda Yusuf, said that the maritime industry has underperformed greatly over the years and that 2022 will be no different.
He said that smaller countries with more efficient ports are doing much better, adding that there are several cases of cargo diversion to other ports in the sub-region.
“There are political, institutional and structural bottlenecks that afflict the maritime ecosystem. The current exchange rate environment has caused a significant slowdown in maritime sector activities in 2022. Importers had to deal with drastic currency depreciation, exchange rate volatility, currency shortages, and multiple currency windows. Since currencies are the currency for international trade, it follows that a dysfunctional exchange rate policy would naturally impact the maritime sector,” he explained.
Muda also argued that the apparent parallel import ban list introduced by the CBN created various dislocations in international trade transactions.
He stated: “Trade facilitation issues were a major obstacle to trade in 2022. There were issues from a multiplicity of government agencies that have to authorize the release of cargo. There are territorial trends among government agencies that impede the efficiency of cargo dispatch. There were concerns about the quality of the port infrastructure, excessive documentation, inadequate deployment of technology, the Single Window not yet fully operational, weak dispute resolution system, and obsession with revenue generation by all governmental agencies. These were some of the key themes that characterized the maritime sector in 2022.”
The CPPE CEO, however, praised the Federal Government for installing scanners at Apapa port and Tin Can port, adding that scanners should be available at other border locations.
Meanwhile, the CEO of LWL Concepts, a freight forwarding logistics company, Mr. Lawal Wasiu, said: “The year 2022 was a year of mixed feelings in the maritime sector. You know that some agents specialize primarily in auto compensation. They do not do general cargo. So if I have to speak from your own perspective, I will say that the year 2022 in the maritime sector has been full of ups and downs. First, with the beginning of the VIN valuation, we went on strike for almost three weeks before we were given the grace. This was followed by the rate increase before they came up with a levy. So, a lot of changes were implemented, especially in car cleaning.
“So I would say that the maritime sector as far as auto clearance hasn’t really moved well because of all these fees. It has affected the free flow of services in the sector. So, from that point of view, I will say that the sector faced great challenges. Before we had a massive importation of cars; an importer who usually brings five cars can hardly bring two or three due to the high cost of clearance, the high tariff, among others”.
He stated that inflation also had an adverse impact on the sector. “Imagine a car that was N3m before on the market is worth more than N5m now. That’s to tell you that there’s little market share because of how expensive these cars are. So if you take it from a car liquidation standpoint, you’ll see there’s no business this year compared to what it used to be. The cars we usually clean with N350 currently cost around N700 to clean.”
Expectations for 2023
Farinto said that he expects a clear understanding of government policies in the coming year 2023.
“So going forward in 2023, we want a clear understanding of government policies. Except if we have the experience and put a round peg into a round hole, for now, we are in a state of confusion. There must be a clear statement from the presidency about the role of CBN and the Ministry of Finance and the customs administration must not only be to generate revenue but also to facilitate trade.”
Farinto said the industry needs a skilled and versatile customs management team, adding that the government should revise the age limit policy for imported vehicles upwards.
“The Federal Government should give us a consistent policy in the maritime industry. They should also look at the policy on underage vehicles. They should lower the age limit to 15 so that our young people who are coming out of university and want to e-haul can do so.”
He also said that the role of CBN should be clearly explained so that it does not intrude on the functions of the Ministry of Finance.
“I expect an acceleration of the reforms in the maritime sector. We should see more serious commitments to better use of technology, full implementation of a single window for cargo clearance processes, better port access, and more investment in port infrastructure. I would also like to see shorter response times for vessels entering the country. We must also guarantee a shorter cargo stay time in our ports,” said Muda Yusuf.
Wasiu is looking for positive changes in the sector next year, as some of the policies implemented in 2022 would have come into effect during this period.
“I know that they will have a positive impact on the sector. Imagine that VIN valuation is being implemented in the maritime sector over time. It will get along. So, we do expect a boost in the maritime sector, but it will happen if the government only creates a soft landing by ensuring that the naira gains more ground over the dollar and also ensuring that there is a boost in export,” he said. enthusiastic