NIGERIA Time for new expectations Protecting the interest of Nigerian Shippers Interview with: Mr. A.B. Sarumi, Managing Director November 4th, 1999 Contact: Shippers' Towers 4, Park Lane, Apapa P.M.B 50617 Ikoyi, Lagos, Nigeria Tel: 234 (1) 5451799 - 234 (1) 5452983 - 234 (1) 5451354 Fax: 234 (1) 5452906 Email: nsc@shipperscouncil.com.ng Could you give us a brief background on, how and why, the Nigerian Shippers' Council came into being ? By the mid seventies it became obvious that developing countries were not getting their own share of the economic gains that should accrue to them with respect to internationally generated trade, particularly the sea-born aspect of that trade. At this time they had no ships but they had the cargo and their cargo was being carried by other countries, particularly developed countries at their own terms and at their own rates. So, you, as the owner of the cargo had nothing to say concerning conditions of freighting , and you had nothing to say concerning the prices you paid - particularly the freight that you paid. It was not a very healthy situation. It simply meant that our imports were going to be lower priced because the aspect of transportation was going to be a very high cost element. In fact it was as high as 30% of the cost element which simply meant that import coming into our country was going to come at inflated prices. Our export too was going to be less competitive. A U.N.C.T.A.D conference therefore advised developed countries to set up shippers councils. Shippers councils generally are, if you take what happens in developed countries, a private sector initiative. It is the shippers that gather themselves and have a bargaining power with providers of shipping services. But as with everything in developing countries it is the government that is in the vanguard of providing most of these. So this is how we came into existence and since that time we done several things, such as negotiate freight rates, either singly or in concert with all our members. We are members of the Union of African Shippers Council. We negotiate freight rates with them and all other tariffs that are charged by other providers of shipping services. Particularly ports authorities as a way of ensuring that the shipper which is the importer or the exporter pays a fair price for the services that are being rendered to him. We also come in and protect by way of acting as their own tradesman in case of losses and damage to their cargo. In this case we interact not only with the carrier which is the shipping line but also with the ports authorities, the marine insurance, the freight forwarders etc. We do programs of enlightenment because we discovered that in the developing countries people go into the import. export trade without really being professional or particularly prepared. Ignorance, above all, we discovered is part of the problem. So we go into programs of enlightenment, where we arrange seminars, workshops, training programmes on import. export contract procedures, conditions of freightment, marine insurance, freight forwarding etc. We discovered that as part of that ignorance there is a lot of litigation resulting from the delivery damages to cargo, jettisoning cargo in case of rough seas and general average issues on such other things. We discovered that the law courts are not totally as exposed as they should be particularly to international conventions guarding the ones that guide the conditions of the issues of carriage of goods by sea. So we also carry our enlightenment programs to the law courts particularly in Nigeria by updating the judges and the lawyers, if you like the Bench and the Bar with respect to the latest in terms of various conventions concerning carriages of goods by sea. We are members of the International Maritime Organization ( I.M.O ), we are members of UN.C.T.A.D, we are members of the W.T.O and most of whatever goes on here and most of what ever goes on there we try to bring them down here. We try to domesticate and encourage putting into national legislation which ever ones are necessary as a way of ensuring that we do what we do. In terms of shaping trade here is in consonance with what is done in other parts of the world because after all, we are member of the international committee of nations, and we cannot be any different. However, if you are talking in terms of domestic trade, yes, we could be different. But when it comes to foreign trade we definitely could not be any different from what happens in other parts of the world. So, these are basically the duties we perform for our members. Our membership is strewn down to Nigeria and they consist of importers of finished goods from other countries of the world. Of course they consist also of exporters of non-oil commodities who process wood, coal, rubber, cotton, palm kernel or if you like oil palm products. They are all our members and our structure is such that these members all over the whole place are represented by various committees and they interact with us on a monthly basis, bringing to us their problems and we in turn give them opinions or solve the problem for them as will. How would you rate your relations with the private sector? They are the people we are serving. First the private sector gather the importers and exporters. We serve them through organized groups like the National Association of Chambers of Commerce, Mines and Agriculture, the Manufacturers Association of Nigeria and other organized private sector associations just like the ones I have just mentioned. They are the people we generally serve. There was a time in Nigeria when a lot of importation or exportation was done by government - importation in terms of what we used to call essential commodities ; government was importing them as a way of lowering prices so by that time government was also a part of our members. Exporting the product in the sense that the producers sell the products to government's marketing board who exports them. So, within that period government was also a major member of the council. But these days, as a result of free trade, government has taken their hands off importation as well as exportation. We are serving the private sector. You mentioned the fact that when Nigerian Shippers Council was set in the mid seventies there was a need to build an indigenous fleet. How successful have you been in that respect? In the initial period, part of our program was to encourage the building of the Nigerian fleet , but after a while that was exorcised from our duties and passed on to a sister corporation, National Maritime Authority. So it became their duty through a cargo tax system to encourage the building of a national fleet. We have not been successful. Not, because there wasn't enough money, but because either we did not have the managerial skills or there was too much interference from government - the national line was still run by a government appointed management. The failure was because government took too much part, and you know, anything that is government hardly moves which is the reason there is today a privatization cry. So, one would love to believe that the reason the creed did not last was because it was being run by managers who were themselves being controlled by the government. But I think there is a new orientation to say let private sector access the funds and buy the ships themselves ; this is still in the formative stage. But there is a change of mind? There was a little bit of experiment on it which failed. Failed in the sense that it wasn't the right people that had access to the fund which is part of the military heritage. You only needed to be a military commander, or a retired general, whether you knew about shipping or not, you had access to that fund and you took the money and was not accountable whether you bought a ship or not, or bought the wrong one. But there is a new thinking now. The funds should be managed by a bank. Anyone who wants to access the funds will then go to the bank with the evidence to run the vessel successfully and profitably as well. The long and short of what one wants to say today is that we still don't have national fleets that we can refer to and that creates a lot of problems for us here to the extent that we are unable to provide. There is presently a strong privatization wind in Nigeria. To what extent is the maritime industry concerned by this process? The only thing that is government about us is that we were set up by government through an act of parliament. Otherwise funding comes from the private sector and our services are to the private sector. So you should expect that our sympathies are with the private sector. But over the years we have come to the conclusion that certain providers of shipping services are still having too much of government control and therefore are not very efficient. One of them is the Ports Authority. We think the port has to be privatized. But we also recognize the fact that in Nigeria, privatization has come to be seen as giving what belongs to all of us to a small group of influential people. Each time you talk of privatization everybody says "oh ! you want to sell the wealth of the land to a few groups of people, the inner circle, people in power". No they won't do that. What we are suggesting from our own council therefore, is private participation as opposed to total privatization. What we mean is that the major area where we find inefficiency as far as our members are concerned is that the issue of stevedore services, discharge and the load of cargo. We believe that the if the Ports Authority still continues to be the landlord of the port that will allow the private sector to handle the discharge and the loading. In this way they are likely to motivate the dockers better, they are likely to invest more in equipment, particularly when that private sector represents a group of those who are stakeholders in the port. Cargo is central to everything. If there is no cargo there is no ship, if there is no cargo there is no port, no freight forwarding , no marine insurance so the owners of the cargo, the owners of the ship, the freight forwarders should form themselves into a consortium and approach the ports authorities, lease the areas of the terminals for a period of time and handle the discharge and loading. That way the Ports Authority still remains the landlord and no one can talk about selling national assets to any group of people. What are the guidelines of your policy based on the aspirations of Vision 2010? Our own vision which has been the same from the word go, is that we want cargo to be carried safely, securely at the lowest possible operational cost. Once we do that, import will no longer be too expensive, and our export will find a ready market in a highly competitive trade world. This is our main pivot. We also are trying our hands on one thing, we don't want to wait for the future. The future is here now. We want to go on the internet, we are already on the internet but we don't have a web site yet. We are able to access the internet for basic information which we can download and give to our members to assist them in making commercial decisions. It will assist them in letting them know where they can get the best freight, from whom they can get the best freight as far as the carriers are concerned etc. It assists them to know where is the best market for their own products or the best prices for what they want to buy from abroad. It will enable to know about the movement of their cargo. This is a part of our vision that is short term, not a long one. We are not waiting for 2010 in this regard. As a matter of fact, we are already getting there. We are fully computerized and we are about to have our own web site on the world wide web. Through this, the world will have access to what potentials there are for import and export. Who are the people? We just established a program of shippers registration whereby we know where they are anywhere in the country. We know them and can pass information to them and obtain inquiries from them which we also can pass to the world. Part of our vision also is to carry our services to the grass roots. I read somewhere that by the year 2025 we will probably have 250,000,000 inhabitants. That's a huge market . So what we are trying to do is to reach every nook and corner of the country. It is a little difficult for people to come to the coast but they still want to trade and this is expensive for them. So part of our vision is to see created in every part of the country inland clearing depots. If you like, dry ports. This is one thing on which we are trying to work closely with Nigerian Ports Authority and Nigerian Railways. We are also working closely with road haulers since they carry quite a lot of cargo to and from the ports. What opportunities do you foresee in the shipping and maritime industry for potential investors ? Secondly, how would you rate your level of corporation with international maritime organizations ? With respect to level of investment into opportunities, it is tremendous. You can feel it is mostly untapped. I have just mentioned the issue of the ports' terminal operations. You probably would have noticed also from the map of Nigeria how colonial our rail lines still are. They were designed to evacuate Nigeria's products for the colonial master. There is tremendous opportunity for furnishing other networks, particularly the east-west lines and I believe that there is a lot in this regard that the investor can do. The freight is there to carry anyway. Today the rail carries less than 0.05% of the freight that is moved within Nigeria. The reason is that the tracks are obsolete and the rail lines do not form a good network. I am sure that there is a lot that anyone who is interested in this can do . There is also the need for inland depots within the country. This is an area in which investors can come in. Not everybody will want to gravitate towards the coast. If you look at the Nigeria coast line, you will see you have people shuttling as far as 2000 miles to get to the coast sometimes just to clear one container. A group of people who are depot operators, inland port operators can load all this once and let people do the clearance. If so just in the same manner they can put their export, send it to such depots and then the forwarder can then bring it to the coast. So you don't need to come over. There is tremendous amount of opportunity there too. There is also the issue of road haulage. I am sure you have seen some of the trucks. From what we discovered from our census, the average age of trucks in Nigeria today is about 20 years,. The place is crying for renewal of fleets. hat measures has the government taken to create awareness about investment opportunities available for foreign investors in the transportation sector and in the maritime industry in particular? As you know Nigeria has just been reborn, we went into slumber and closed our doors to international communities. The national rebirth is only four months old and we are opening the doors now. As for the transport sector, we have been going round to various countries since the new administration came about telling what opportunities they are. We just came back from a tour of the US. We were invited by Secretary Slater to Atlanta and we have also been to some other African countries where we were able to showcase the things we have. We started with US but we will be going to Europe. Next week, we are going to London for two weeks during which we hope to meet some investors, particularly potential investors in the transport sector. Before the end of the year we will be traveling again to Europe and as you know Europe knows Nigeria better than other parts of the world which is why we left Europe and went to America first. The response we got in US was tremendous, most encouraging. We got lots and lots of promises of people who are coming. The department of transport in the US has been encouraging delegations upon delegations to come and talk to us on areas of possible investments. As for the other question you asked regarding our relationship with International maritime bodies, I would say it is beautiful. It was not in the past. In November 1995 we were actually removed from the I.M.O council because of our human rights record. That was the year we killed some critics among us. But the international community is warming up to us again. We just finished two or three types of technical arrangements with the I.M.O, we just finished a seminar on piracy. It was a beautiful seminar. Nigeria and other African countries just signed a memorandum of understanding for ship inspection for purposes of controlling pollution and insure that our ships and other ships that pass through our shores operate according to international standards of operations in terms of safety, crew and other regulations concerning navigation. As Managing Director of Nigeria Shippers' Council what has been your most challenging and rewarding experience? The most challenging one is being able to get the ship owners who show an unconcerned attitude about the quality of service they give to consumers of their services and the prices they give. In the past they couldn't be bothered what it was. We went into headlong battle with them. They said we had no right to do that that it is a free trade. We said yes, free trade but there is a fair price for everything. We went to court but we are out of court and we are discussing. Today we have got to a point where we are talking to ourselves not only in terms of what they charge for shipping into and out of Nigeria, but also the quality of services that they provide to our members. I believe that we want to congratulate ourselves on the result, otherwise it was such a terrible situation. The battle was fierce and almost shook the entire foundation of shipping into Nigeria. It was an achievement to get back to the negotiating table because we can't do without each other. We have the cargo they have the ships. The cargo needs ships just like ships need cargo. Also there has been the ability to enlighten our members to expose them to what is happening in the whole world and to let them know that their trade impacts directly on Nigeria's economy. Their activities also impact on the foreign exchange reserves.   Read on   © World INvestment NEws, 2000. This is the electronic edition of the special country report on Nigeria published in Forbes Global. June 12th 2000 Issue. Developed by AgenciaE.Tv