Saturday, 17 April 2021

High haulage costs •This must be tackled if ease of doing business is to be achieved

Posted On Monday, 15 March 2021 23:51 Written by Thenationonlineng.net/ Editorial Board
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In fairness to the Muhammadu Buhari administration, it has taken some steps aimed at facilitating business transactions. These include the Executive Order 1 signed by Vice President Yemi Osinbajo in May 2016. Also, following the World Bank annual rating, which placed Nigeria 131st position among 190 economies rated, the government also took some steps towards further making its dream of bringing the rating up to 70 by 2023, in tandem with its Economic Recovery and Growth Plan (ERGP). It was in pursuance of this objective that the government also came up with a new Companies and Allied Matters Act (CAMA) which was signed into law on August 7, last year, for the purpose of bringing in new perspectives in the handling of commercial transactions in the country.

Salutary as these initiatives are, and in spite of their inherent challenges which the government is contending with as expected with such new ideas, another area that requires urgent attention is the prohibitive transportation costs of goods from the ports to their respective destinations, even within the Lagos metropolis. If not quickly addressed, this is capable of undermining all the other efforts aimed at facilitating business transactions.

What obtains with regard to haulage of goods from the ports is simply incredible. How, for instance, do you justify a situation where an importer pays more than what he spent to import his goods in transporting same from the port to final destination?

A few examples will suffice. A Nigerian who decided to relocate after spending about 30 years abroad soon realised the folly in his decision to ship his belongings with a view to reducing the cost of settling down. But his wisdom was turned to foolishness, no thanks to the ubiquitous ‘Nigerian factor’ that has become the fall guy for everything untoward. The man was slammed about N1.3m to convey the 40 feet container to his residence in Ikeja. Many other people are caught in this quagmire.

According to this newspaper, quoting a Financial Times report titled “Nigeria’s port crisis: the $4,000 charge to carry goods across Lagos”, business entities pay more than $4,000 to truck a 40ft container 20km to the Nigerian mainland. Interestingly, this is almost as much as it costs to freight a container from China which is about 12,000 nautical miles away from Nigeria.

How can any business do well in a situation such as this? Even blue chip companies would feel the heat of such excessive haulage cost, not to talk of the many business enterprises that are struggling, having been bogged down by other encumbrances, among them epileptic power supply? Indeed, an entrepreneur answered the question on behalf of others in similar circumstance: “I practically had to beg the truck owner before he accepted to collect N950, 000 from Tin Can port to this place (Ogba). What is the total profit on the goods that I have to pay so much? I am not in business to make a loss, so, unfortunately, I will have to transfer this cost to the final consumers,” she said.

This is the issue. The extra cost will eventually be borne by the usual beast of burden in the business mix: the consumer. But the implication by no means stop there. Ultimately, demand for the goods will begin to shrink, leading to contraction of the economy, job losses and eventually social dislocations and rising crime wave.

The government must be ready to address the issues that gave birth to this ugly development. Perhaps not much has been achieved in nipping this development in the bud because, rather than seeing it as a product of corruption. The government is looking at it as an issue of demand and supply. But something gave birth to the demand and supply crisis, even if that is what we choose, for the sake of convenience, to adduce to be the cause. President, National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), Lucky Amiwero, put the issue in context:

”Somehow, a driver that has spent two weeks on the queue has to make up for the lost days by charging more; he also has to make up for the bribes he has to pay,” he said.

Jonathan Nichol, Chairman, Nigerian Shippers Association (Lagos chapter), corroborated this aspect of corruption: “It has never been like this in times past. Official and unofficial compulsory payments are made on every cargo movement. Trucking has become a big challenge.”

The media has drawn attention to this development in several reports and editorial comments. Why the long arm of the law has been too short to apprehend a few persons as scapegoats on this sordid affair at the ports is puzzling. It is also a paradox since the access road to the Tin Can Island Port has been restored.

Although there is so much optimism about the Electronic Call-up system just introduced by the Nigerian Ports Authority (NPA) as panacea to the problem of high haulage cost, it would require a renewed vigour on the part of the government and the NPA to succeed. We say this because, as we are removing one clog in the way of inefficiency at the ports, another is rearing its ugly head.

We must be ready to do things differently at the ports to complement other measures aimed at facilitating business transactions in the country.

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