The key to diversifying Nigeria’s economy could lie in fixing its ports

Image: AP Photo/ Sunday Alamba
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Nigeria has long talked about diversifying it’s economy, but there’s typically been more rhetoric than action.

A decades-long dependence on oil—its biggest export—has proven costly as Nigeria’s economy, once regarded as one of the world’s most promising, has been badly hit by the crash in commodity prices. With revenues down and local oil production hobbled by militant attacks, the country slipped into its first recession in two decades. Now, as it is increasingly being forced to back up its economic diversification rhetoric with action, the presidency is focusing on one issue: fixing its local ports.

Earlier this month, Yemi Osinbajo, Nigeria’s acting president, signed an executive order (EO) “on the promotion of transparency and efficiency in the business environment.” In the absence of Nigeria’s president Muhammadu Buhari who is receiving treatment in London (for the second time this year) for an undisclosed ailment, Osinbajo is in charge as acting president.

To that end, the government is ordering the removal of any non officials from around the ports. Typically, businesses have had to use local touts who work as fronts for customs officials, soliciting and collecting bribes. The government is also merging import and export records across ports with the collected data shared with Nigeria’s  National Bureau of Statistics every week to boost transparency. The new order mandates that Lagos’ Apapa port, Nigeria’s largest, should begin 24-hour operations within the next month.

Amy Jadesimi, managing director of Ladol, which operates an oil & gas logistics facility at Lagos ports, said the presidency had set the right tone in order to help private companies scale one of the major hurdles of doing business in the country.

“What we need to see now is how the civil servants apply these new rules,” says Jadesimi. “Politically-connected people and rent-seekers have been able to manipulate civil service in how these rules and laws are applied in the past.”

Easing bottlenecks around the ports is a priority for Nigeria’s government. Infamous for its terrible congestion, importers and exporters often face long delays to export or import goods, as processes at the ports have been bogged down by red-tape and corrupt officials.  ”The government understands that this is part of the problem,” says Jadesimi. “They have gone right to the heart of the matter.”

In fact, some Nigerian businesses use the expanding sea ports of neighboring Benin and Togo to import items and then drive them across the land borders where there’s less congestion. This likely costs Nigeria revenue from duties and levies. Since 2013, there’s been a downward turn in the number of vessels berthing at Nigeria’s ports.

If successfully enforced, the new executive order should result in smoother processes at the ports, encourage business and patronage with exports becoming a more attractive and less stressful proposition for local businesses. Crucially, Osinbajo also ordered that each port in the country dedicate an export terminal for agriculture produce. Over the years, agriculture has been touted as a possible alternative export to solve Nigeria’s dependence on oil but produce have often been caught up in the problems at the ports.

The increased urgency to improve the fix the ports and generally make it easier to do business in Nigeria is linked to the country’s lowly rankings on recent World Bank Doing Business reports. In last year’s report, of the 10 areas measured by the World Bank, Nigeria ranked in the bottom half in eight, including starting a business and trading across borders.