Examining Nigeria’s Cumbersome Clearing Process on Nigerian Economy

Cumbersome clearing process at the Nigerian seaports contributed to Nigeria ranking on ease of doing business.

ABIOLA Seun writes |

When the Ag President, Prof. Yemi Osinbajo, last year signed the executive order on ease of doing business at the seaports part of it was to have a 24-hour port operation that would facilitate 48 hours cargo clearance.

But, the archaic clearing process has made 48 hours cargo clearance un-achievable that clearance of a container takes a minimum of two weeks due to long documentation process at the seaports.

For instance, Nigeria requires up to fourteen documents for imports and 10 for exports even though the measures include the reduction of documentation requirements from 10 to seven for exports and 14 to eight for imports which is still more compared to just five in Rwanda.

Also, in 2015, local manufacturers said that the process of clearing cargo at the two major seaports in Lagos requires a combination of 110 signatures.

They said before a manufacturer could get raw materials out of the Tin Can Island Port, about 70 people will have to inspect the goods and append their signatures to the documents releasing the goods, while about 40 signatures are required for the same process at the Lagos Port Complex (LPC), Apapa.

However, factors like these are responsible for the country’s lowly rank of 14th out of 15 ECOWAS economies and 145 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings.

Damming Report Against Nigerian Clearance Process

The Maritime Anti-Corruption Network (MACN) and United Nations Development Programme (UNDP) said it can take more than 140 official signatures to get a cargo cleared by local authorities in Nigeria seaports.

This was an analysis carried out by the anti-corruption project aiming for port calls without demands for in-kinds payments, harassment, or the threat of illicit delays.

The analysis which was conducted by MACN and UNDP identified Nigeria as one of the most challenging countries to do business in with unlawful demands commonplace. For the shipping industry there are numerous steps in the vessel clearance process which lead to inefficient operations and increase the opportunity for illegitimate demands in ports.

The report which says 10-35 Danish operated vessels are at any given time operating in the Gulf of Guinea added that corruption adds 10 points to the cost of doing business globally and is fundamentally detrimental to economic development.

The report said, “Unlawful demands put a huge risk on vessel crew and shipping companies. Cases of extortion, harassment and threats of violence are, unfortunately, not uncommon. Danish Shipping has a zero-tolerance approach towards bribery, and we are very pleased that the anti-corruption efforts have been fruitful.

“Danish operated vessels call at Nigerian ports nearly 600 times a year so the financial value of fair and smooth port calls is enormous. It is of upmost importance for the shipping sector that trade and port calls are free from any illicit demands that cause iniquitous delays and stressful situations for the crew,” says Maria Skipper Schwenn, Executive Director Danish Shipping.

The Maritime Anti-Corruption Network has been active in Nigeria for a number of years and has been able to push for improvements in ports processes. With funding from several donors the network has been able to develop a platform of tools to improve the port environment. These tools have been tested in Nigeria with positive feedback and have been further enhanced by an integrity training kit for port officials.

A recent survey of shipping companies calling at ports in Nigeria has demonstrated that the anti-corruption project had a positive effect on the operating environment in the country. Shipping companies have periodically achieved a zero-tolerance approach to corrupt demands without threats or delays in Nigeria.

“Through collective action, and the support of our donors we have been able to push for change in an environment no one believed we could.

However, our work in Nigeria is not finalized. We must still ensure the tools and procedures are both used by the shipping industry and implemented in the ports. Together with the Nigerian authorities and our local partner we have built a solid platform, and we are eager to continue to push for a positive change in Nigeria.

The lessons learnt here and the toolkit we have developed can also be applied globally to combat corruption in other hot-spot locations,” says Cecilia Müller Torbrand, Director of the Maritime Anti-Corruption Network.

To date the project has supported the implementation of harmonized operational procedures in ports, the establishment of a grievance mechanism process, and has carried out an integrity training program for 1,000 stakeholders in Nigeria together with Martine Anti-Corruption Networks local partner.

Nigeria Clearance Process Cumbersome, Archaic – STOAN

Speaking on the archaic clearance process, the Chairman, Seaport Terminal Operators Association of Nigeria (STOAN), Princess Vicky Haastrup observed that Nigeria’s cargo clearing process is still primitive when it comes to the issue of trading across the border.

According to her, most of the sub-indices used by the World Bank to measure the Ease of Doing Business in 190 countries of the world are still begging for government’s attention in Nigeria.

She said, “On trading across borders, our cargo clearing processes are still primitive. Customs checks are duplicated, manual and too laborious. There are also too many government agencies involved in cargo examination at the port and land border posts. All of these slow down trade and add to the cost of doing business.

“The Ease of Doing Business ranking of a country is based on 10 sub-indices which include starting a business; dealing with construction permits; getting electricity; registering property, and getting credit.

48 hours Cargo Clearance Not Visible -Amiwero

The National President, National Council of Managing Director of Licenced Customs Agents (NCMDLCA) Lucky Amiwero, said with the Nigerian archaic clearance process, 48 hour cargo clearance is not achievable.

“In all honesty, it is not achievable. Our procedures are still archaic and not meeting up with international best practices. So you don’t for any reason talk about 48-hour cargo clearances when our system does not have a process.

“Import trade is not only about transportation. It has three components; procedure, process and other logistics part and in all these parts, there are conventions guiding them which we are not implementing. We have not complied with the conventions. If you look at our access roads, going to any ports within the western area is blocked. You spend an average of four to five hours accessing the port and this is a minus. We are talking about the single window but we have not achieved it because it is a one-stop shop approach.

“For instance, why do you clear goods from the port and when the goods are going out the FOU still arrests the goods on the road; those are contraventions of all the procedures of international principles. Now people have abandoned their cargoes at the port because there are no procedures.

“Clearance Process; looking at cargo clearance in Nigerian port for instance, we have high cost in clearance of goods, cumbersome and lengthy port procedures, delay in scanning and physical examination, gridlock on the port access roads, lack of holding bays, and rickety trucks with the government not doing much to solve the problems.”

On how to improve time of cargo clearance at the port, Amiwero said, “my recommendation is that we comply with international convention. World Customs Organisation (WCO) is a convention that was signed by the Nigeria Customs Service and every other customs in the world after the 911 incident in the United State of America. What that convention is talking about is that you must pre-inspect your outbound and inbound cargo and you must supply your information before you load that ship which we are not doing.

“The quantum of ammunition in this country can destroy Africa as a whole. But when you go to America you find out that it is not like that over there because they monitor everything. The conventions are there; if we comply with them it will reduce time, cost and reduce a number of ammunition and weapons of mass destruction that may find their way into the country.”

When asked whether he is calling for the return of pre-shipment as against the Pre-order Arrival Assessment Report (PAAR), Amiwero said, “We are not talking about pre-shipment inspection but pre-screening, the language is pre-screening. It simply means you are not doing normal examination but using a tool like what they call non-intrinsic inspection (NII) which is scanning.

“For instance, talking about the Nigeria Customs Service Pre-Arrival Assessment Result (PAAR), which simply means your goods are assessed before they arrive but when you go to the port now, you find out that the problem there is worse than when we had the RAR.”

Conclusion

For Nigerian seaports to be competitive, efficient and rank among its contemporary in West and Central Africa, the government must overhaul the clearance process.

Also, the government should ensure creation of Single Window Platform where all government agencies and stakeholders involved in cargo clearance can interact. Single window will reduce the clearance procedures, number of people in ports and volume of documents needed to clear cargoes.