Why War Risk Insurance Still Hurts Nigeria Despite Piracy Decline – Bello

Barr. Hassan Bello is a former Executive Secretary of Nigerian Shippers’ Council (NSC). He was recently inaugurated as one of the Governing Board members of the Nigerian Ports Consultative Council (NPCC). Shortly after his inauguration, he sat with News Diet for this thrilling interview where he dissected several pertinent issues in the Nigerian maritime sector.

Bello explained how port operations and other aspects of transportation declines without accountability. He equally gives reasons for the persistent War Risk Insurance (WRI) premiums in the country despite piracy decline.

Also find his appraisal of the nation’s Cabotage regime even as he underlined the consequences of the allure of easy petroleum sector money on Cabotage trade development.

Excerpts:

Congratulations on your inauguration into the NPCC Governing Board; how can the NPCC help elevate the operations of the Nigerian maritime industry, especially at the seaports?

The NPCC has got its work cut out for it. The most important thing is to be a pressure group, exerting pressure on service providers and users so that we achieve what we have always wanted to do – which is efficiency. A port is only as good as the cargo it can attract.

Now, there must be a relationship with the economy. What is the contribution of the maritime industry to the economy? What is the Gross Domestic Product (GDP) growth? After the last data issued by the National Bureau of Statistics (NBS) there has been a debate as to whether it is really reflective of the entire industry. This is because the NBS data is mostly a cash flow from the transport sector, which is not the best.

Transportation drives the economy. When an economy is sluggish, inefficient, or dull, that means the economy will reflect the same thing. So what Nigeria needs at the moment is the second wave of port reforms. Recall that there was a port reform in 1980s and 90; but there has been a pause.

How about the seaport concession exercise that occurred in 2006?

Yes, it’s a reform of course. It was excellent to have done that. However, we have witnessed a pause. When there is a pause in a reform process it stalls development. Once you’re on a reform route, you have to go with it in a methodical approach with measurable goals and frequent appraisals.

We should look at the transport infrastructure because it is very important for the nation to be efficient. If there is good infrastructure, the port will be efficient. That’s hard infrastructure.

Meanwhile, there is also a need for soft infrastructure planning. The digital thing we are talking about, as well as policies are the soft infrastructure which are crucial to having more efficiency. The question is – what are the components of this port administration? What are they trying to do?

Have you ever seen how a port system is graded in Nigeria? I don’t think you have seen it because there is no assessment. We should be able to appraise and say Port A is the best port in this region because it meets certain variables. Port B is the second, based on so many other criteria. We have to start rating the ports and this improves the competition. Without competition, everybody will behave the same way and there is a high tendency for monopoly.

There should be an agency, probably the Nigerian Shippers Council, that will rate these ports. Perhaps this can be done together with the strategic bodies like the NPCC. This will give every operator the impetus to strive to improve her services.

Does the absence of rating for ports and periodic assessment contribute to the corruption and inefficiencies at Nigerian seaports?

Of course, it is one of the factors. What we have at the moment is endemic corruption but technology is that light that will shine on the corrupt, and everything will disappear. Like the cockroaches and rats running freely in a dark room, corruption will flee as soon as you shine the light. The light is digitalisation and technological innovations.

Looking at the professionals and regulatory agencies in the maritime sector, how would you rate their practice?

In Nigeria, we have a transport industry driven largely by the informal sector. This means you can do anything and get away with it. Non-state actors can block a street. Haulage operators can use rickety trucks because we are not strict with standards. So, it doesn’t matter for a cargo truck to travel from Lagos to Kano and spend 17 days. Nobody cares. In other countries, such practice isn’t the norm and someone would have to pay a fine or suffer punishments for such delays.

On the bright side, the Nigerian Ports Authority (NPA), for example, is working towards making export processing simplified and standardized. They should please keep on with this.

The Nigerian Maritime Administration and Safety Agency (NIMASA) is now focused on disbursing the Cabotage Vessel Finance Fund (CVFF) to enable Nigerians acquire vessels. The primary reason NIMASA was created is for developing domestic shipping. Nothing more pretentious. They also have the responsibility of training the cadets.

On the inland waterways, the National Inland Waterways Authority (NIWA) is the golden egg in the nation’s maritime industry. The Mississippi River generates over $151billion annually for the United States of America and provides over 585,000 jobs; how about the Onitsha river or Baro river? Mississippi river is a major transportation route with barges moving over 589 million tonnes of cargoes annually. In Nigeria, it is one thing to have barges, but a totally different matter to optimize their operations.

The primary reason Cabotage failed was because everything was concentrated on the coast even though the law is for inland and coastal shipping. Operators and regulators were not smart because they only looked at the coastal services in the petroleum sector for easy money through supply vessels. The bigger potential of inland waterways transport was neglected.

Decades ago, in Nigeria there was trading from Kebbi State, Yawuri to Onitsha and other major waterways transport and trade routes.

During your tenure as Executive Secretary of NSC, the Council hosted Global Shippers’ Forum (GSF) on the issue of war risk insurance (WRI) and other unfair shipping charges. Some charges were removed but the WRI has not been removed despite the drastic decline in piracy. What solution would you recommend for Nigeria?

Yes, we did engage global shippers in Abuja and it is unfortunate that some of the issues are still prevalent today. NSC was able to host that summit because it explored partnerships. I recall that Dangote, BUA and several other major Nigerian shippers were at that summit.

The best strategy is to bring stakeholders together. To achieve anything as a regulator, if you are able to bring stakeholders together on an issue, you can go and sleep over that matter. They will do everything for you.

Foreign ships wouldn’t offend top shippers because they don’t want to lose their cargoes. It is when you bring these top shippers together that the foreign shipping lines will get disturbed. I will advise that we revisit that approach and try to host global shippers again.

One of the problems is that surcharges are imposed on our country without giving the nation an opportunity to negotiate. We should start by carrying out an investigation to know all these surcharges. The focus of the summit in 2020 anchored by Shippers’ Council was congestion charges as the shipping lines were going to increase by over 400%. We said no and they backed down because we had gotten all major stakeholders onboard in the fight.

We told GSF what was happening and stressed that it was against international trade to introduce charges that the consumers knew nothing about.

What we should be doing is to come together to stand against these charges; but firstly – we must make our ports efficient, transparent and digital. Make the ports non-contact.

Why should somebody get to the port to a clear container at this stage? You don’t have to do that. That’s what we addressed during my time at Shippers’ Council. We started appraising the port terminals and at the early stages the best operator was at 40% compliance to automation.

However, one of the seaport terminals improved to about 90% automated processes. At that time, if you walked into the terminal you will not see anybody there because of the level of automation.