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The Great Rip Off: How Nigerian Importers are Exploited By Foreigners

In several other parts of the world, business and entrepreneurs are on consistent government support and patronage because, in these societies, the authorities understand the role of business in economic growth and development. From America to Europe, Australia and even across several countries on the African continent, Ghana and South Africa for instance, the government understand and appreciate the role of businesses, big and small as the key driver of the local economy.

The relevant authorities throw everything including financial stimulus, next-zero-interest loans, moratorium on repayments, tax exemption and reduction to make sure that the businesses thrive sufficiently to be able to create jobs for millions of citizens who in turn pay generous taxes and keep the wheels of governance running. In the developed and several developing countries, it is understood that government’s support for business is not just an act of charity, it is a common-sense approach to reducing unemployment, keeping low, the amount of money paid in unemployment benefits and even more critically, improving the quality of life available to the average citizen and ultimately, keeping crime rates low.

The Country of opposites…

In Nigeria however, things are significantly different. Matter of fact, the opposite is what you find around here most times. Businesses are deliberately sent into extinction through a combination of multiple taxes from several layers of government, charging repetitive taxes and harassing business organisations in a way you do not find in any other part of the world. Nigeria may probably be the only country in the world where thugs and street urchins are employed to enforce compliance with tax laws.

When you find these tax enforcement teams be they from local, state or local governments, you are often confused as to what their real mission is. Are they a gang of mobsters sent to lynch someone to death? You find them with all manner of dangerous tools including machetes, heavy metals, chains and sticks. Is it not strange that at times you find mobile policemen, chasing not armed robbers or kidnappers but cocking their guns at legitimate business owners over some minor issues with the authorities?

Could the attitude of the Nigerian government to businesses be the reason Nigerian unemployment record is becoming frightening with each passing day? Do you imagine what could happen should the estimated 45 million Nigerian youths who are either unemployed or underemployed reach their tolerance limits and decide to do something crazy? How many policemen or even soldiers do you deploy to quell a violent uprising involving more than 40 million unemployed and socially frustrated people? Are you not seeing that the government is playing with fire by refusing to pay serious attention to the plight of businesses in the country?

Tales of agony

Do not forget, Nigerian businesses operate at very low-profit margins because in a country where there are over 100 million persons living below the poverty index, and disposable income available to the average citizen is one of the lowest in the world, business just needs quick turnover at little or no profit just to remain in operations. Recall that a good chunk of business revenue is earmarked for paying extortionate rents, especially in the urban centres, keeping the generators running (at least two for every business) and paying energy bills that are as mysterious as they are heartrending.

It is tragic that the present government has failed to appreciate the role of policies and regulations in spurring economic growth. Corruption is no longer done in secret, impunity thrives and where there are a few quality policies in place, they are implemented in breach. It is all man for himself and God for us all.

For many who have tried to get a thing or two going by throwing their money into a business venture, the story is very unpalatable. Many left in frustration; others were thrown out by the hard reality of trying to draw water out of rock and those who remain do so by constantly peeling at the skin of their teeth.

 

And the big one…

While much of what has been mentioned above are public knowledge, what most commentators hardly give mention to is the pain importers have to go through before they discharge their cargo at the ports, especially in Lagos. The seaports are the first point of contact for businesses that rely on imports for their raw materials or products. The ports are strategic because that is where most major businesses begin. They are where goods and raw materials are received and cleared for distribution and delivery to the factories.

In most countries of the world, the government pays great attention to ports administration because of its importance in economic growth and development. Smart, patriotic and experienced individuals are selected to run the ports for several reasons but most especially, to see that there is free flow of goods into the country and that local businesses importing from aboard are not exploited, not by the shipping line and definitely, not by those managing the terminals.

Over the past few years in Nigeria, the reverse has been the case. The ports administrators, especially in Lagos are not only incompetent and inexperienced and you can find evidence of this in the level of congestions at the ports, the extortionate rates billed importers by the foreign terminal managers and the continuous use of outdated technology in ports operations. If there are good hands running things at the Nigeria Ports Authority, none of these could have arisen and if they did, they would not have been allowed to reach the nightmare proportions we find all over the place today.

Daily thousands of importers abandon their cargos due to excess charges, exploitation by ports officials and out of plain frustration with the way businesses are done at the ports. A serious ports administration ought to be concerned when the investments of its compatriots continually go down the drain through the inefficiency and incompetence of foreign terminal managers.

Those who simply abandon their cargos after analysing their cost-benefit spreadsheets are not the only one feeling the brunt of doing business with terrible ports managers.  Recall that Nigerian importers are charged 100% more by shippers than they charge South African businesses even when South Africa is 4000 miles farther from Europe and America than Nigeria. A proactive ports authority ought to be concerned with all of these and moved in at once to stop the exploitation of Nigerians by foreign shipping lines. But what has the NPA done in all of these? Zilch.

No reprieve, even with coronavirus threatening to send businesses into extinction

After our importers cross the hurdle of paying exorbitant rates to ship in their containers, they are also made to pay heavy demurrages. In essence, the importers pay for the inefficiency of the terminal managers who take unnecessarily long time to clear cargoes. In several countries of the world, cargos inspection, payment of necessary levies and discharge are done so seamlessly that the importers operate with peace of mind. In Nigeria however, all of these processes take time for the simple reason that the government does not care what happens to its business community.

With the outbreak of the coronavirus pandemic, one would have thought that the terminal managers would appreciate the plight of businesses due to slowdown in economic activities, global lockdown and general sense of anxiety. Nothing has remained the same since December 2019 when the virus was first reported in the Wuhan region of China.

The world is witnessing a kind of economic contraction never seen since the end of World War II. Business earnings are in red and across the world, stimulus packages are being put in place to encourage entrepreneurs to get back to business. Sadly, at the Nigerian Ports, things are very different. Importers are still being charged extortionately and demurrages continue to mount- even during an economic lockdown.

Agreed that one of the operators, APMTL, announced a 50% reduction in charges for a certain number of days, that is largely inadequate considering the short duration and the number of uncleared cargoes at the ports, over a thousand two hundred by recent estimates. The discount matter of fact and ports watchers agree with this; ought to run all through the year if most of the importers are to have any chance of remaining in active business.

The losses suffered by the businesses as a result of the coronavirus pandemic are legion and the terminal managers and of course, the government must be very mindful of these. There should be a hefty reduction in charges and duties paid for imports so that jobs can be created for millions of Nigerians and families can find their favourite goods on the shelves.

The way forward

Even more importantly, the government must begin to take a second look at the running of the ports. It does not make sense that Nigerian ports are managed mostly by foreigners who have no real interest in the economic prosperity of the country. This is not a call for the cancellation of the existing contracts with the terminal managers considering that the government must also respect the sanctity of contracts it entered into with foreign and local business. But again, the field must not be the exclusive reserve of foreign players. Nigerians must have a say in what happens at the ports considering how strategic they are for our economic and national growth.

Beyond seeking to bring in local players into the business of managing the terminals, the government must refuse to fold its arms and watch as small scale business operators who rely on imports for raw materials are exploited helplessly by foreigners be they terminal managers or shipping lines. These are critical times and the authorities must intervene to avoid collateral business losses for indigenous entrepreneurs in the near future. This is not a time to be nonchalant. International best practices must be enforced to ensure the survival of our business community.