How will you rate the Nigerian Maritime industry last year?
The Nigerian maritime industry remains a very critical sector of the economy, because almost over 90% of our trade, (I’m talking of international trade now) is handled by the maritime industry. Of course, there are still issues as to how fast we can leverage technology to improve efficiency in that space, and how far we can also ease the logistics, especially at our major ports, getting in and out of the ports. Issues of procedures, issues of dispute resolution, and those issues are still very much there. The good thing is that we are hoping that under the present administration and new leadership in the various agencies around the maritime sector, things will change. We hope to see an improvement in all those areas, particularly the processes such as cargo clearance processes, export processes, automation of the process, leveraging technology. Those are the things that remain a major issue in that sector.
What will you say are the primary obstacles faced by the private sector in the maritime industry last year?
Well, the primary or the major constraints faced by the private sector remain issues around trade facilitation and ease at which you clear cargo. That has been an issue. There are also issues around uncertainty surrounding the international trade process. There are issues regarding monetary policy into trade policy space. All the issues of 43 items, how that disrupted a lot of processes and created all manners of confusion. Again, we also had issues of dispute resolution between the private sector and the Customs; between the private sector and some other stakeholders in the port, especially on the public sector side. Those issues are there. Then, of course, the exchange rate situation made international trade extremely very difficult, because international trade is about foreign currency. So there was the problem of the depreciation of the currency, which made imports very expensive. There was also the issue of liquidity in the forex markets; that is, the ease with which you can get foreign exchange. That was also a major issue. So those are macroeconomic issues that compounded the problem of trade for the private sector last year.
So should we expect a positive turnaround this year, particularly now that the Federal Government consider it necessary that the private sector are also represented in some parastatals like the Nigeria Customs Service Board? How will this help the private sector?
Well, before now, the private sector has been represented, so it’s not particularly new. But the principle is that because the private sector is a major stakeholder in maritime sector activities, representation on the Boards of all these key maritime sector parastatals are very important for purposes of getting the right kind of feedback and for purposes of ensuring inclusion and the whole process of managing that space. So for me, it’s a very good thing. At least the private sector through this representation will be able to convey (I’m talking about private sector representatives now) the perspectives of the private sector to these various institutions at the highest level. And I’m sure that will help to improve the relationship and interface between these agencies and the private sector.
What’s your take on the current monetary policy of the Federal Government?
The current policies are driven or are anchored largely on economic reforms. We have had one major monetary policy around foreign exchange. This is about unification of the exchange rates. The whole essence of that – first was to improve transparency in the foreign exchange space. Also remove the problem of exercise of discretion. Also eliminate corruption in the process of trying to get foreign exchange and above all was to also attract more inflow of foreign capital into the economy. This is because under the previous dispensation, I mean, you are asking people to bring in their foreign exchange into the economy at N450. Not many people are willing to bring in Forex. You are asking exporters to export and you are saying that when they bring their dollar, you give them N450 for each of the dollars they brought. Again, that also created a lot of problems for exporters. So this reform was to eliminate all those issues. Are we there yet in terms of what it should be? Quite not yet, but I think it’s work in progress. We are seeing the effect of that generally on the inflation situation. But going forward, our expectation is that it will ultimately improve the liquidity in the foreign exchange market. It’s already beginning to show improvement on the transparency of the transactions. It’s beginning to impact positively on government revenue; so far, so good, but it can be better. I’m sure that the CBN is committed to making it better especially after clearing, as soon as they are able to clear the backlog of foreign exchange mature obligations.
Another issue that stakeholders, particularly importers have also hammered on is the issue of exchange rate for duty purpose from the Nigeria Customs Service, which is on a very high side and as a result of that, import has also dropped because of the high duty. What’s your perspective towards this?
I think the responsibility of fixing the exchange rate for the computation of import duty should be left to the fiscal authorities. This is because the monetary authorities are not operating in the trade policy space. So, they may not fully appreciate the significance or the implications of just varying this exchange rate for the computation of import duty. And in order to ensure more certainty and also to build some more confidence in the international trade policy, to ensure stability, it is good to have a regime of exchange rates for the computation of import duty that will be stable for a long time. This doesn’t have a distortionary effect, unlike what you have in the foreign exchange market. So, I think we should not be saying that because the Naira has been floated to a large extent and that as soon as there are changes in the foreign exchange market, it should reflect in the rate for computation of import duty. I think that idea should be dropped. We need stability in that space. And because of the implication of business for trade, my suggestion would be that this thing, that decision should be left to the fiscal authorities and not with the CBN. This is because of the ramifications of the impact.
Currently, the inflation rate is rising. What does this curtails for the economy?
Well, high inflation is injurious to the economy, generally. It hurts businesses. It increases production costs. It reduces purchasing power. It affects profitability. It affects capacity utilization. It affects a whole lot of things. And above all, it makes people poorer. And when there is too much poverty, you have a whole lot of social tension in the economy. So, it’s not a good thing at all. Unfortunately, the key drivers of inflation are not things that we can fix very quickly. One major driver is the exchange rate. Exchange rate is driven by our capacity to fund the foreign market. It’s driven by our capacity to generate foreign exchange. It’s driven by our capacity to manage demand for imports. Those are not things you can fix very quickly. Then, of course, we have the issue of energy costs. You know, high cost of diesel, high cost of PMS, high cost of aviation fuel, high cost of gas. Those things also drive inflation. Fortunately, under the current reforms, we are beginning to see a lot more interest in refining our petroleum products domestically. So, if our importation of petroleum products is less, perhaps we could see an impact on energy costs because of the forex implication of importing these petroleum products. So, I think with that, we should see some improvement. Then if the government is able to do a lot more in the area of fighting insecurity, all these bandits and things that are creating problems for food supply, because food inflation now is almost 34 percent. It is huge. So those are the factors driving us. If the government can have a good handle on those key drivers of inflation, I think that should be helpful.
The Minister of Marine and Blue Economy and the Minister of Transportation met with the CG of Customs particularly as regards the issue of scanners. The Minister moved for PPP arrangement for the usage of scanners. Do you think it’s a good way to go?
It’s a good way to go because businesses require specialized skills. Those specialized skills are not necessarily within some of these agencies. And then, it is better for the agencies to concentrate on their core functions. Their core functions are about generating revenue, it’s about trade facilitation. For those things that require highly specialized skills that the private sector can’t deliver efficiently, I think it is better outsourced under the overall supervision of the Nigeria Customs Service. So, I think it will help. The more private sector expertise you can bring on board in this whole process, the better. It’s not only in the area of scanners, anything technology. You can bring in a lot more private sector expertise and even private sector capital. Why not? It will help to ease the process and promote efficiency.
Last year, we had that over 7,000 overtime cargoes across the port with vehicles. How do you think the issue of overtime cargoes can be resolved?
I don’t know how they are handling it at the moment. So I’ll not be able to comment on that.
Please, let’s look at the just-opened Customs e-auction. Do you think this is a good way to go?
It’s a good way to go. I mean, the current CG is very passionate about leveraging technology in all aspects of the operations, because he appreciates the value of technology in promoting efficiency. Even the outcomes in terms of revenue generation and trade facilitation, a lot can be improved through the leveraging of technology. So, within the general concept of leveraging technology, I think it’s a very good thing and I think I see him as somebody who is very passionate about using technology to improve the process.
Can you also speak about the transparency of the process?
Let me just say generally that I’m sure of the fact that the Nigeria Customs Service is leveraging technology to improve the entire process and make it seamless for all service users.