Nigeria: The Unplanned Economy (Part 25)

By Ikenga Chronicles January 21, 2018

Nigeria: The Unplanned Economy (Part 25)

— Baron Roy

Drowning the Seaports (iii)

Recall that we reported that the Republic of Benin controls the bulk of the consumer goods imported by Nigeria? This did not happen by some stroke of luck; the government of that country has an economic team that consistently monitors the goings-on in the Nigerian Maritime Trade. There is a suspicion that there are external forces that ensure that the Nigerian Establishment makes deliberate decisions that undermine the economy but directly favours some foreign entities. There are verifiable reasons to support this assertion.

The Autonomous Port of Cotonou had since been concessioned. Of course, the Nigerian seaports are mostly under concessioned, but the efficiency has been held down by the overwhelming NPA management and other uneconomic and uncompetitive policies.

The Cotonou Port is highly efficient. We shall discuss the success of the ports under sundry subheadings.

Access Roads
The access road from the Seme Border by Nigeria is a 6-lane carriageway. A super carriageway that expands to 8-lanes towards the city and to 14-lanes as it approaches the Seaport. With the fantastic access, there is free movement to and fro the ports, and towards Togo, Nigeria and Niger Republic. With the fantastic access roads alone, the Cotonou Ports stand head and shoulders above any port in Nigeria. With this alone, they corner the maritime trade in the subregion.

There is a 437km (1000mm gauge) railway line extending from the Cotonou Port to Parakou. There is an ongoing extension of the railway to Niger Republic to be completed this year. Other ongoing projects include from the Cotonou Port to Togo and Burkina Faso. The railway from the port is paramount to the effective operations of the Cotonou Port. The railway line from the Apapa port is as good as nonexistent! With the Cotonou Port Railway, the port outshines the Nigerian seaports in all ramifications.

Tariff Regimes
The duties paid in the Cotonou Ports are phenomenal! The Nigerian Government increased duties on vehicles from 10% to 70%! The Cotonou Ports retained the 10% duties on vehicles. Since 2015, the official number of vehicles meant for the Nigerian market imported through the Cotonou Ports increased to 450,000 units per annum as against about 150,000 units. The car importation via the Nigerian Ports dropped by 70%!

Consumer Goods
The Nigerian Government banned the importation of 41 items. The Cotonou Ports simply reduced the tariff on those items. In fact, there are special concessions made for goods meant for the Nigerian market! The Nigerian importers pay far leas duties than Niger and Burkina Faso!

24 Hour Operations
The Cotonou Ports operate 24 hours. The Nigerian Ports do not.

Let’s stop here for a while.

The city of Cotonou has provided quite a lot of incentives for the ports to thrive. There are cheap but good hotels, good security, fantastic road networks, and port administration. The more the Nigerian government makes life unbearable for the port users, the more the Cotonou ports eases the pains.

The ports in Cotonou are so efficient that the Republics of Niger and Burkina Faso route 90% of their imports through the Cotonou ports! The Nigerian ports do not even begin to compete!

The Cotonou ports declare a handsome yearly profit after all expenses; the staff are paid, port expansion funds are sourced from the income, and the budget of the Republic of Benin is mostly sourced from port activities! But that is not all.

Over 80% of the port activities in the Cotonou Ports are directly linked to the Nigerian market! Over 75% of the port users (importers, agents, etc) are Nigerians. The major foreign firms at the ports are Lebanese; and the bulk of their activities are meant for the Nigerian market! But this is not the worst.

The Nigerian market consumes 18 million eggs per day. Nigeria produces 6million eggs per day, and imports 12 million from Cotonou!

Benin Republic imports as much Rice as Germany; Germany has 80 million citizens compared to 10 million people in Benin. The World Bank posits that 80% of the rice imported by Benin Republic gets into the Nigerian market.

Imported frozen poultry products are banned in Nigeria. Almost 100% of all eateries and hotels in Nigeria depend on imported frozen poultry. Benin Republic imports an equivalent of the consumption of Britain in poultry products and sends almost 100% of the imported frozen poultry to the Nigerian market!

Tomato paste, spices, electronics, and sundry items, are imported via the Cotonou ports, and the bulk goes directly into the Nigerian market!

The Cotonou ports were built to handle a capacity of 2 million tonnes of goods per annum, they handle well over 4 million tonnes per annum. Benin Republic itself consumes less than 300,000 tonnes of their imports! And 300,000 tonnes for Burkina Faso and Niger. 3.4 million tonnes are sent to Nigeria, with neither the Nigerian ports, the Nigerian government nor the people earning any value from the maritime trade! It gets worse;

The importers from Niger Republic, often route their goods through Niger, then re-import same for the Northern Nigeria markets through the Northern borders! Imported rice, frozen food products, vehicles, and other consumer items, are far cheaper up North than in the South! This is an open secret, and the Customs Northern Command, is well aware of this. Yours sincerely carried out the Northern survey. And it is right on the money.

But one might want to ask a question: How do those imports get into Nigeria despite the Nigerian Customs?

The Benin Government provides a very enabling environment! Then the Nigerian Customs, police, military, and others on the Nigerian side simply do the needful. There are thousands of routes from the Benin side to Nigeria, stretching about 1,000km from the Seme Border in Lagos to Sokoto in Northern Nigeria. Don’t ever be fooled by the numerous checkpoints; they are of very little consequence. And there are thousands of other routes unknown to the authorities! There is the FREE flow of goods and services between Benin Republic and Nigeria; and the Nigerian government gets nothing from these activities. The Benin Government, customs and other security outfits earn the bulk on the Nigerian side.

Is this corruption? Maybe when one centralizes all activities, one chokes enterprise, and the natural inclination of man is to ease his pains and make things happen. This is one of the very examples of how the Decree 24 (or 1999 Constitution) encourages corruption. You can’t fight that even if given a thousand years.

Be it known this day, that most importers and clearing agents, have since moved their businesses to Benin Republic. They pay taxes, and help the economy to boom in our 37th state. While Benin thrives, alongside the Ghanian and Cameroonian ports, the Nigerian economy takes the heat. This is how we undermine ourselves, with a total lack of vision and over centralization! We create jobs, wealth and development in Benin Republic while we actively undermine ours! Restructuring is a MUST or we burst!

I say junk the 1999 decree called constitution!

(To be continued)