Nigeria: Expanding maritime trade

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As trade and the number of imports into Nigeria continue to rapidly increase, Lagos-based port operators are working to keep up with the rise in associated cargo containers. According to statistics from the Nigerian Port Authority (NPA) released in June, container throughput stood at 73,865 twenty-foot equivalent units (TEUs), a 24.6% increase compared to the same month in 2011.

Lagos’ two main ports, Apapa and Tin Can Island, which are managed by a total of five operators, have made substantial investments in port infrastructure, effectively reducing turnaround time to less than 60 hours. However, while upgrades and modernisation of handling equipment continue, room for expansion is beginning to reach its limits.

In a bid to accommodate continued growth, state and federal authorities are under pressure to address more structural issues, including lengthy Customs procedures and the congested road network around the ports. “Given the continued growth in containerised imports into Nigeria, it is important that structural solutions are proffered by all stakeholders to cope with future volumes – not only within the port itself but the road or rail network that leads to and from the port,” Jan Thorhauge, the managing director of Maersk Nigeria, told OBG.

As such, with the objective to achieve 48-hour cargo clearance in mind, the number of agencies operating in the port was reduced from 15 to six in October 2011. However, overlap of government authorities and a lack of human resources to inspect and process the high variety of cargo continue to cause clearance delays, which are exacerbated by the long and frequently changing list of banned imports. At present, the average duration from container arrival to clearance at the Lagos Port Complex can take up to 30 days.

Efforts have also been undertaken to resolve road congestion, which is primarily due to the long queue of trucks parked alongside the port’s main access road waiting to offload empty containers. Until recently, truck drivers were accustomed to waiting between three and seven days on the side of the road before being allowed into the port.

A presidential directive was issued in June stating that deliveries could take place only overnight, while daytime deliveries were limited to bonded terminals outside of the port area. Meanwhile, the management of the ports and the NPA were urged to arrange pre-set times with trucking companies to improve efficiency.

The move was widely criticised by a number of industry associations. The Association of Maritime Truck Owners in particular complained about the lack of off-dock facilities. While some port operators have started to expand to inland facilities, issues such as access to land, transportation from the port and duplicate Customs clearance procedures have hindered further investment into off-dock operations.

Despite such ongoing difficulties, a number of improvements to the ports have been tabled to improve operations. Much-discussed efforts to increase port capacity saw a breakthrough earlier this year when the NPA and the Lagos state government entered into a 45-year agreement with Singapore-based Tolaram Group for the construction of a new deepwater port, located 65 km east of Lagos.

While a number of deep-sea port projects have been discussed in the past, Tolaram’s Port@Lekki is the first to take the step toward development. The first phase of the project, valued at some $1.5bn, will consist of a container terminal with a capacity of 2.5m TEUs and cater to vessels of up to 10,000 TEUs. Construction work on the port will begin in October and is expected to be complete by early 2015.

While Tolaram is confident that growth in the domestic market, estimated at 15% for the next 10 years, will ensure the need for additional capacity, it is also looking to raise Lagos’ regional position as a centre for maritime trade, despite increasing competition in the region. In recent years, neighbouring countries such as Togo have invested heavily in deep-sea port capacity, banking on well-developed infrastructure links with Ghana and Nigeria and less-cumbersome Customs procedures.

In addition to expanding onshore capacity, Nigeria has needed to improve offshore security. Pirate attacks across the Gulf of Guinea have increased in number and force over the past 18 months. Acknowledging the growing threat, the Nigerian Navy has stepped up its patrols, partnering with the US under the African Partnership Station initiative, an international scheme focused on in-country training to improve security and safety in the continent’s waters. In June the federal government allocated N12.14bn ($76.34m) for increased security of maritime transportation, which will include the purchase of six security boats to better patrol its territory.

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