The level of corruption and frightening bottlenecks in the ports, serving as gateway to the nation’s economy, are herculean tasks the incoming administration of Muhammadu Buhari is expected to tackle if the port reforms of 2006 will make significant impact.
Port reforms that transferred cargo handling operations from government to private companies brought some level of improvements over the past decade, according to shippers, but bad access roads and extortion by government officials pile up traffic and costs, defeating the core objective of the reforms to improve efficiency and reduce cost by 30 percent.
Nigerian business environment is viable but ‘kickbacks’ and other bureaucratic bottlenecks makes cost of doing business in the country very high.
“Kickback demanded particularly in government ministries, agencies and departments affects a lot of businesses. Sometimes you use more than 40 percent of your production cost to do settlement for government officials,” said Aminu Musa, a shipping expert in Lagos.
He said the issue of kickbacks and other factors contributing to the high cost of doing business in the country are what people want the administration of Muhammadu Buhari to tackle. “That is why investors are starting to gain confidence in Nigeria business environment following the peaceful declaration of winner”.
“If Buhari fights that corrupt system in the ports and you are able to pay appropriate duty and other legitimate terminal charges without paying kickbacks before taking your consignments, then costs will come down. Corruption undermines the growth of this economy”, he said
He said the bottlenecks in the system is responsible for why many of the importers try to maneuver, underdeclare and classify goods in lower tariff index in connivance with Customs officials in order to pay lower duty.
“Sometimes you pay at least N200,000 as mandatory kickbacks for 20 feet containers and up to N700,000 for 40 feet containers before you secure the release of your goods,” he said.
Seaports Terminal Operators Association of Nigeria (STOAN), an umbrella body of port concessionaires in the country argue that despite over one billion dollars they cumulatively invested in modernizing and upgrading the ports terminals, and acquiring about 1,300 cargo handling equipment across various terminals in the country, the bottlenecks and high cost persists largely because of large-scale physical examination of containers, and illegal levies imposed by multiple government officials.