Floods affecting manufacturing sector – Festus Mbisiogu

Executive Officer, Diamond Logistics Limited, Festus Mbisiogu, has revealed that the current floods rocking the nation are hampering the delivery of manufactured products to the desired destinations.

Festus said that this delay in delivery has increased the cost of logistics, stressing that it would be difficult for Nigeria’s economy to grow, if the situation persisted.

Speaking on Business Morning, a Channels TV programme, he said apart from being into logistics, he is also into manufacturing, saying: “some of the trucks that we sent to other parts of the country like Abuja, Kaduna, Jos has been on the road for more than one week, some three weeks because of this flooding and that hampers logistics. With this, it is too difficult for an economy like Nigeria to grow.”

He added that importers no longer consider it wise to send their cargoes to Nigerian ports because the total cost of clearing is not affordable, noting that Cotonou and other neigbouring ports are not only attractive but affordable.

His words: “The present administration has just woken up to their responsibilities by detecting some of these things that are happening in our waterways. These things have been dwelling for a very long time. There is this committee that was set up, and it is working tirelessly to ensure that they discover why we are having this theft. The indigenous ship owners complained two days ago that they alerted the nation of what was ahead of them. In the sense that Dangote Refineries is about to commence operation by the middle of next year and Dangote fertiliser is also coming on board.

Cabotage law was created to protect the indigenous ship owners in the country by giving them that access to dominate the maritime sector. Now, they are complaining that they don’t have the financial capacity to compete with the foreign ship owners.”

“There is this intervention fund from this financing firm from the government which is about 250 million dollars that the government proposed to give to these guys, but they have not had the access to the fund, which is why they are complaining that the government should look, that something is coming up next year. So, they are asking government to disburse this money to them for them to compete.

In fact, what they are doing is to alert the government that this is what is coming up, and if they do not take proactive measures, foreign ship owners will make the money and take it to their country. So, it is a welcome development and I pray that government will listen to their call. Their fear is that, if Dangote refineries take off next year, the fertilizer too is ongoing. There are a whole lot of activities in that maritime sector and with those activities; they won’t have enough fleet to compete with these foreign investors. So, they are telling government, if you don’t do anything, these guys will dominate and the essence of this law will be defeated.”

“If you look at the rating from the International Maritime Sector, It shows us that Nigerian waterways are safer now compared to previous years. That is why I said the present administration seems to be doing well in that regard because it is in their regime that we started the discovery of oil thefts and some of the things happening in waterways.”

Speaking further, he said: “Why some foreign ships prefer other countries, like the neighbouring border countries, is as a result of the congestion that is going on here in our country. Let me digress. When you talk of logistics, you are discussing the inflow of goods, services from the original place to the final destination and to meet the company’s objectives or customer’s needs.

“These are the essence of logistics. Now, the essence is being hampered because of so many things that are going on at the seaports. These factors are congestion at the seaport here. As a shipper from China, I found out that if we want to ship our consignment to Cotonou, the charges are about 1 to 2 thousand different, they may charge 7,000 dollars, but sending to Cotonou, they may charge 5,000 dollars. The reason why they have these charges is because it takes them almost two months to have access to their empty containers because of this bureaucracy, because of these difficulties hampering the logistics session. So, these are the factors. There are so many of them.”

If the government does not take proactive steps now, a whole lot will happen. As I speak to you now, many importers do not consider it wise to send their cargoes to our ports, they prefer Cotonou ports. Reason is because it takes them almost two weeks to transfer that container to the private bonded terminals. And also after clearing this container from that bonded terminal, the kinds of agencies that stop them on the road are so many. It is frustrating for them.

While at Cotonou, you will pay a lesser duty. If the cost of clearing is about N7 million in Nigeria, at Cotonou, if you convert it to Nigeria currency, it is about N3.5 million or N4 million, that is about a 30 percent discount from the total cost of clearing it here in Nigeria. So, most of them prefer doing their business there at the detriment of our national economy development.

“That is why government needs to pay attention to our logistics in the maritime sector and try to do more research to find out the impediments. The maritime sector, the revenue as of 2021 to 2022 is about N1.3 billion from the customs. Almost 28% of our national budget is what they contributed. In the logistics industry, they are the highest employer of labour after agriculture. All over the world, if any country pays attention to the logistics sector, honestly speaking, it will attract more in flow of foreign investment and also bring in more dollars because of the effectiveness. Let me give you more insight.

For us businessmen, we factor in the cost of bringing in these containers down to our final destination. As I speak to you now, the cost is going so high, very high. As I said before, Let me use China and Dubai where we domicile as a case study. They have good roads, where these ports are located, a specific area is mapped out for this holding base of these empty containers. That has been structured, but over here in Nigeria, we do not have that structure. You can see somebody who has bonded a terminal far almost how many kilometres from the seaport and accessing this terminal where the container should be kept will be too difficult for them to convey their container to that place.

So, the system is faulty from the beginning, it wasn’t well planned, that is why the bonded terminals or the holding berths are scattered all over. So, we need to re-plan. That is why some people are calling for creation of additional ports either in the South-East and so on. It can help to decongest Lagos because attention is focused on Lagos. Lekki free zone should also help to decongest what we are passing through in Lagos.”