Mr. Dayo Balogun is the Managing Director of ECM Terminals, one of the seaport terminal operators at Calabar port. During the 2023 National Conference of the Chartered Institute of Logistics and Transport (CILT), he represented the ECM Chairman, Mr. Mahmud Tukur in launching the Institute’s book on published from the 2022 CILT conference. Subsequently, Balogun sat with News Diet to speak on the significance of the book to the industry, even as he discussed other pertinent issues bordering on logistics, port business, cross-border trade, regional integration, among others.
Excerpts:
CILT Nigeria has launched a book summarizing the papers and panel discussions at its 2022 National Transport Conference. As the chairperson of the book launch, what do you make of this initiative?
Firstly, I want to commend the initiative taken to document the resolutions discussed during the previous CILT National Conference. The need to recognize the importance of recording these outcomes for historical and future reference cannot be overstated. The commendable aspect of this initiative lies in its ability to condense a two-day session into a single document, making it more accessible, easily digestible, and suitable for transmission to the relevant authorities.
Secondly, the documentation serves as a valuable point of reference for subsequent conferences. Additionally, it functions as a key performance indicator (KPI) for assessing how effectively authorities have addressed raised issues and for measuring progress on those fronts. It also acts as a tool for impact analysis of the addressed issues, fostering a networking relationship among authorities, conference organizers, and industry stakeholders.
The significance of this initiative becomes even more apparent when considering the turnover in government leadership. With a new set of ministers in place, the documentation plays a crucial role in expediting their understanding of pertinent issues and expectations for their roles. This aspect enhances the networking relationship by providing a means for ministers to receive crucial information promptly.
Furthermore, the presence of government officers at these conferences creates a feedback mechanism, allowing them to gauge industry stakeholders’ perspectives and address questions. In essence, this initiative not only contributes to the documentation of history for posterity but also establishes a commendable effort in fostering communication and understanding between various stakeholders.
During the panel session, one of the issues raised was on the activities of Customs and other government agencies extortion at land border posts. The speaker lamented that the challenge is more pronounced in Nigeria than in neighbouring countries. How would you advise that we address this issue?
Certainly, your observation is quite insightful. The prevailing issue lies in the hindrance posed by government agencies in the effective implementation of policies. What is particularly disheartening is the audacity with which these agencies engage, and this is undeniably regrettable. Achieving economic integration becomes a formidable challenge when government agencies, which are meant to facilitate, become barriers to progress.
A pivotal insight surfaced during the forum, one that has resonated with me since then—the notion that the primary role of Customs should not be revenue generation but rather trade facilitation. It underscores the necessity to reassess our priorities and fully internalize the Customs’ role in fostering seamless trade instead of focusing solely on revenue generation.
The prevalent practice of quarterly announcements highlighting revenue generation by each zone, accompanied by rewards for the highest revenue-generating unit, needs to be reconsidered. This approach has unfortunately diverted attention from the Customs’ fundamental duty of trade facilitation. Customs, being a critical player in this context, should not be swayed by the pursuit of revenue generation.
The emphasis on revenue generation inadvertently creates an environment where individuals, under the guise of revenue collection for the government, exploit opportunities for personal gain. Hence, a crucial redirection and reprioritization is imperative. A shift towards a renewed focus on trade facilitation over revenue generation is necessary for a more effective and aligned functioning of customs in fulfilling its core mandate.
As a port operator, what other things would you highlight as pertinent amid Nigeria’s plan to increase port competitiveness?
Several factors contribute to the complexities faced in the shipping and port industry. Notably, the evolution of port shipping dynamics emphasizes the shift towards economies of scale, with vessels now accommodating substantial tonnages, such as 10,000 to 15,000 containers. This trend necessitates deeper drafts of channels for these larger vessels. However, many ports in Nigeria, including Lagos, possess shallow drafts, around 11 to 12 meters, requiring extensive dredging.
To enhance the competitiveness of Nigerian ports and accommodate larger vessels, significant investments in both capital and maintenance dredging of channels are imperative. A disheartening observation is the absence of Nigerian ports among the top 100 globally for cargo throughput in 2022, revealing a stark lack of capacity to compete. This underscores the pressing need for strategic governmental initiatives.
Another challenge pertains to the multitude of agencies within ports, causing bottlenecks and intense competition among them. Streamlining the number of agencies operating within ports is essential to improve efficiency. Additionally, addressing the issue of equipment, particularly in the realm of cargo inspection, is crucial. The prevalence of physical inspection over electronic methods raises concerns. A potential solution lies in the implementation of hybrid scanning machines that cater to the diverse information needs of various agencies, thus eliminating the need for duplication and reducing waiting times.
Furthermore, the efficiency of cargo flow is hampered by challenges beyond the port environment, such as congested roads. Investing in the development of roads outside the port is crucial to prevent traffic congestion and delays in cargo transportation. Logistics issues, like those witnessed in Apapa and Calabar, highlight the impact of inadequate infrastructure on local logistics costs.
A notable concern is the overconcentration of port activities in Lagos, leading to imbalance in cargo distribution. It is more cost-effective to transport a container from China to Lagos than to truck it from Lagos to Kano. This underscores the need for comprehensive development, especially in the eastern zone, to optimize the capacity of ports, promote hinterland connectivity, and alleviate congestion in major ports like Lagos. Addressing these multifaceted challenges is essential for achieving efficiency and competitiveness in the Nigerian port industry.
You mentioned the challenge of dredging, but there is the Ecological fund domiciled at the Ministry of Environment. The argument is that some of these shadow draft challenges lead to flooding and other environmental challenges. Should the government turn to the Ecological fund to finance dredging projects, including Calabar port?
Certainly, the reality is that if our country conducted a cost-benefit analysis, the case for investing in the dredging of Calabar would be compelling, regardless of the funding source.
The essence of this matter lies in the dual benefits, both social and economic, that would accrue from such an investment. While some investments may be for social benefits without direct financial returns, dredging the Calabar channel presents an opportunity for economic gains with tangible returns.
Economically, dredging the Calabar Channel holds immense potential. Calabar is currently the closest port to the Northeast, making it strategically positioned for economic activities. It’s unfortunate that Douala, in Cameroon, has as its primary market the Northeastern part of Nigeria. Consequently, cargo passing through Douala results in revenue leakage from Nigeria to Cameroon. Calabar, besides its proximity to the northeast, is also close to commercial hubs like Aba and Onitsha. The pertinent question is: what percentage of Nigeria’s cargo is directed towards the northeast, northwest, and southeast—the primary and secondary markets for eastern ports? The cost and inconvenience endured by importers in these regions to retrieve containers from Lagos underscore the potential gains of investing in Calabar’s dredging.
Considerable existing businesses, such as Olam, Larfarge, and Niger Mills, rely on Calabar to service markets in the north and southeast. However, draft limitations hinder them from utilizing Calabar’s full potential. With increased dredging, these companies could optimize their plant capacities, avoiding the need to discharge cargo in Lagos before transporting it to Calabar, thereby reducing costs.
Moreover, the dormant state of Tinapa, intended to be a thriving business resort, is attributed to the lack of a functional port. The situation is similar for the Calabar Free Trade Zone, operating at less than 30% capacity due to underutilization. Businesses, including; General Electric, Anclot Metal, Adax, and Chevron, have relocated due to the port’s inability to support their aspirations. A dredged Calabar can serve as a hub, connecting landlocked neighbours like Chad and Niger, potentially increasing revenue for Nigeria.
The absence of a permissible draft in Calabar has hindered Nigeria from becoming a regional hub, unlike ports in Lome, Dakar, and Tema that serve neighbouring countries. By dredging Calabar, Nigeria could establish itself as a strategic hub for Niger and Chad, contributing to increased revenue and regional influence.
Beyond financial gains, the social benefits of dredging Calabar are substantial. Employment opportunities for artisans, event organizers, mechanics, and panel beaters would surge. The port’s activities would create a ripple effect, generating employment and contributing significantly to the GDP. These social benefits, though challenging to quantify financially, are invaluable and contribute immensely to the nation’s overall well-being.
Considering all these benefits, the dredging of Calabar, whatever the cost, promises substantial returns on investment and socio-economic advancements for the nation. Exploring funding options, including the use of ecological funds, could be a viable step toward realizing this transformative project.
As Nigeria and the rest of Africa prepares for the African Continental Free Trade Agreement (AfCFTA), there are concerns that the freight benefits of having a regional trade will be lost as a result of lack of regionally owned ships. How should Nigeria and the rest of the regional states address this?
When contemplating Africa’s involvement in a free trade agreement, I often find myself questioning the logistics behind it. While policies and tariffs can be appropriately aligned, the pivotal factor driving the success of the AfCFTA lies in transportation. The vision of AfCFTA should not involve witnessing long queues of trucks at borders, as currently observed, rather it should focus on employing intermodal transport, encompassing rail and sea routes.
Intra-regional trade within Africa has been hindered by complex logistical arrangements, leading to lower trade volumes compared to transactions with the rest of the world. To illustrate, the convoluted process of reaching neighboring countries, such as Chad from Nigeria, often involves flights to and from Europe, leading to unnecessary stress and complexity. Moreover, for goods requiring timely delivery, especially perishable items transported in refrigerated containers, the current options of road or lengthy sea routes are impractical.
To enhance trade facilitation, there is a need to encourage short sea services, an aspect currently dominated by foreign entities. Emphasizing the importance of regional Cabotage becomes crucial. Drawing parallels with the 1928 Jones Act in the U.S. and China’s utilization of restrictive trade measures for internal capacity development, Africa should establish a cabotage regime. This regime would require multinational shipping companies to identify with specific hubs, allowing local short sea service providers to transport goods within the region.
In West Africa alone, 18 out of approximately 25 countries are accessible by water, so this highlights the significant impact a well-implemented cabotage regime could have. This approach not only guarantees investment in the capital-intensive shipping industry but also ensures that vessels remain busy, making funding more accessible. Under a cabotage regime, local players can efficiently transport cargoes from identified hubs, thereby developing indigenous shipping capacity.
In essence, placing emphasis on the shipping side of the ACFTA is crucial for its success. A well-structured shipping strategy is fundamental in ensuring the timely delivery of goods to their intended destinations, thus contributing significantly to the accomplishment of the AfCFTA.
As 2023 winds down, how would you appraise port business activities from the point of view of a seaport terminal operator in Calabar?
In a broader context, the economy tends to fluctuate alongside changes in exchange rates. The recent increase in exchange rates has, in general, led to a slowdown across various industries. While we in Calabar are not exempted from these challenges, our primary obstacle lies in the government’s inability to dredge the channel, a limitation that hinders the port’s growth and optimal utilization of its potential.
Moreover, the condition of the road leading out of Calabar is severely deteriorated. This poses a significant challenge for our clients as it makes the evacuation of cargo exceptionally difficult. The poor road condition not only impedes our ability to mobilize sufficient trucks but also imposes additional costs on our clients. To address this challenge, we have implemented incentives in the form of discounts, resulting in revenue losses for us.
I am grateful that the President, in his acceptance speech after the primaries, pledged to dredge the Calabar channel. The Minister of Marine and Blue Economy seems to be aligning efforts to ensure the realization of this crucial dredging project. This development is paramount for trade facilitation along the Calabar corridor.
Simultaneously, urgent attention is required for the road network out of Calabar. The current scenario, where trucks can be stranded in a particular location for up to four days, is detrimental to business operations. Consequently, intervention is needed, and the means of such intervention warrant consideration.
