Ports Delays, Compliance Bureaucracy and High Cost Threaten Trade Growth

According to the World Bank’s 2020 Annual Ease of Doing Business Report, Nigeria ranks 179 out of 190 countries in the ease of trading across borders. Furthermore, the report reveals that it is easier to trade across borders in 39 sub-Saharan African countries compared to Nigeria.  

The trade across border indicator measures the time and cost associated with the logistical process of exporting and importing goods. Specifically, it measures the time and cost (excluding tariffs) associated with three sets of procedures. They include documentary compliance, border compliance and domestic transport within the overall process of exporting or importing a shipment of goods.

A review of Nigeria’s trading across border index reveals that it takes 8 days and 10 hours to ensure border and document compliance when exporting from Nigeria. Among 13 lower-middle-income countries in sub-Saharan Africa, Nigeria has the fourth highest time for border and document compliance check when exporting. The time spent in ensuring border and document compliance when exporting from Nigeria is only better than Angola (10days 20 hours), Ivory Coast (15days) and Cameroon (11days 4 hours).  

Further review of the index shows that it takes 15days and 2hours to comply with all border requirements when importing. This time data is the third-highest for 15 sub-Saharan African countries that were reviewed. 

Also, Nigeria’s border and document compliance cost of USD 1641 when importing is the third-highest of the sub-Saharan countries reviewed. On the other hand, the cost of ensuring border compliance when exporting from Nigeria ($1028) is only better than Tanzania ($1450), Angola ($1065) and Cameroon ($1289). 

The time and cost of border and document compliance limit the rate of export and import in Nigeria. Without access to international markets, Nigeria must produce most goods themselves and at a higher cost, which pulls resources away from areas where it holds a comparative advantage. The delay and high cost of export do not also permit low-cost producers to expand their output well beyond local demand, thereby limiting business opportunities. 

Comparison of Nigeria’s Indicators of Trade Across Border Ranking with other Lower-middle income countries and Rwanda

Delays at Nigeria’s borders are caused by inefficient border administration that stem from general mismanagement, undeveloped transport infrastructure and corruption. Business operators constantly complain about dealing with too many government agencies and illegal clearing agents that frequently make corrupt demands of arbitrary fees during port calls. 

Most often, their reasons for these arbitrary fees are related to alleged irregularities of documentation (e.g. yellow fever certificates, crew contracts) or operations (e.g. ballast water discharge documentation, onboard practice in general). When such practices are challenged, threats of heavy delays are the result.

Experienced importers know with which agencies to deal and the standard process, but the inexperienced are assessed randomly by agents. They are told to bring unnecessary forms and forced to pay bribes. Since most imported shipments can remain at the port only for 21 days before shipping companies start imposing expensive, daily demurrage charges, many customers are compelled to pay fees higher than the statutory rate to clear their goods.

These kinds of practices undermine the confidence of foreign and local port users, thereby reducing the rate of investments in Nigeria that has to do with border trade. Also, the high cost of importation due to delays and arbitrary charges affects business profit and the rate at which commodities are bought.

Speaking at a webinar, the Director-General, Lagos Chamber of Commerce and Industry, Dr Muda Yusuf. delays and the cost of border trade operations can be reduced if manual processes are automated. He noted that the manual examination of cargo creates bottlenecks that lead to arbitrary demand for money and time delay. The theme of the webinar was corruption in the cargo clearance at the Nigeria port. It was organized by the Convention for Business Integrity and the Maritime Anti-Corruption Network.

The DG also advised the federal government to set up a fast and effective dispute resolution team around the issue of valuation and classification of cargo which creates a bottleneck at the port. He noted that this team should be set up in a manner that it will be respected by all stakeholders in the port including regulatory agencies and security agents.