12 NIgERIA
18 April 2014
►LAgos: A bird’s eye view over Nigeria’s commercial capital and busiest port. Inset, Cecilia Muller, vice-chair of the MACN.
Photos: AfrItrAMP
Plan is hatched to tackle
Nigerian ports corruption
The Maritime Anti-Corruption Network is working with local authorities
in a bid to curb a complex problem
Paul Berrill London
An action plan to counter corruption in Nigeria’s ports will be put
into operation this year by one of
the West African country’s main
anti-corruption agencies in conjunction with the Maritime AntiCorruption Network (MACN).
The plan, backed by the MACN,
which was set up to counter bribery and extortion within shipping, is a first response to a report
it initiated into corruption at six
main Nigerian ports in co-operation with the United Nations Development Programme (see story
below).
The MACN says the key to cutting corruption is “to reduce red
tape in the cargo and vessel clearance process [and] to engage all
stakeholders”.
Corruption is closely linked to
inefficiency that results in bottlenecks, often caused by cumbersome manual cargo handling and
vessel clearance processes. However, the MACN argued: “We believe there are possibilities in Nigeria to turn the challenges with
corruption into opportunities to
accomplish more efficient operations.”
A major step forward would be
to implement a new Nigerian Integrated Customs Information
System. However, more quickly
achievable, practical steps need to
be put in place first, stresses Cecilia Muller, vice-chair of the MACN
and legal counsel for anti-corruption and foreign trade controls
at member company AP MollerMaersk.
A key aspect of the work in 2014
will be to foster buy-in, through
additional agency personnel
training and policy workshops
aimed at ensuring top-level commitment. Once these policy and
capacity-building measures are
in place, additional resources will
be sought to create a transparent
and efficient complaints-handling
mechanism.
“Now is where the challenge
starts,” said Muller. “It is crucial
we can follow through with implementing concrete improvements
to make port calls easier for our
captains. Success lies in engaging
local stakeholders to take ownership of anti-corruption actions. If
that is maintained, then it is more
likely the improvement measures
will be implemented.”
TuGar co-ordinaTion
The anti-corruption moves will be
implemented by Nigeria’s Technical Unit on Governance and
Anti-Corruption Reforms (TUGAR), which led the work into the
report. It is tasked with monitoring and co-ordinating action with
other anti-corruption and port
agencies.
“If we can see by the end of
the year that some processes
have been made clearer, we know
what to expect and there is a forum where we can complain, so
we know things are followed up
if there is wrongful behaviour —
that will be a success,” Muller said.
A longer-term aim is for Nigeria’s main government anticorruption unit, the Independent
Corrupt Practices Commission, to
help port agencies develop prointegrity reforms. It is hoped the
commission can exercise powers
to issue standard operating procedures, anti-corruption policies
and compliance standards, as well
as improve co-ordination between
the port agencies.
The Nigerian Customs Service
has already developed Pre-Arrival
Assessment Report and One Window Clearing Systems that could
help overcome cargo clearance issues.
Muller accepts, however, that
deep-rooted social problems need
to be addressed to motivate people
to change their behaviour when,
as the report says, low civil servant
salaries encourage corruption and
gifts are often considered acceptable or even expected.
“Who are we to say [to government] that you are not paying your
civil servants enough?” Muller
said.
The MACN, however, can communicate that trading benefits
will come to Nigeria if the government gets its house in order, she
adds.
As well as continuing to support the Nigerian pilot project, the
MACN aims to start new collective
actions in other locations.
“The MACN is striving to find
new solutions to combat corruption in other hot spots, as we do
not believe one solution fits all,”
said the organisation. But it adds
that what lessons are learnt in Nigeria will be invaluable in developing new projects, particularly
in creating the necessary partnerships.
discretionary powers of port staff a big issue
Weakly enforced codes of conduct, poor systems for investigating complaints and no effective
way to protect whistle-blowers
were among the main complaints
in a report into widespread corruption at Nigeria’s ports.
Wide discretionary powers
held by port-agency staff who
can inordinately delay processing
documents, as well as regulatory
burdens and poor infrastrucuture,
were also highlighted — adding
to temptations to demand bribes
or make facilitation payments to
overcome delays.
Practices at the ports of Lagos
(Apapa and tin Can), Port Harcourt, Onne, Calabar and Warri
were investigated last year in a
project led by Nigeria’s technical
Unit on Governance and AntiCorruption reforms (tUGAr). It
has a co-ordinating role with other
government agencies tackling
corruption.
Nigeria is rated as a high
corruption-risk country by transparency International but its performance has improved in recent
years since setting up a number of
agencies to counter the problem.
the country is looking to cut its
dependence on oil and gas, which
bring in some 95% of foreignexchange earnings, and so needs
to reduce barriers to international
trade caused by high levels of
inefficiency and corruption. the
two often go hand in hand.
Some 80% of cargo being
cleared through the ageing
automated system used by
Nigeria’s Customs Service was,
until recently, triggering manual
clearance processes.
EfforTs madE To cuT quEuEs
Common complaints about technology downtime causing delays
and higher demurrage charges
are a factor in importers negotiating facilitation payments to jump
queues.
Clearing agents sometimes
deliberately enter wrong data, it is
claimed, to trigger manual clearance on which they can negotiate
payments or avoid paying official
charges.
Demurrage costs are borne
by importers even if the delay is
caused by an agency failing to
perform its functions.
“this provides a huge incentive for clearing and forwarding
agents and port users to offer and
pay facilitation money to avoid
paying huge demurrage costs,”
the report stated.
It also highlights massive redtape issues, with 74 signatures
needed at Onne between the point
a ship enters and leaves the port.
At Lagos the figure is 142.
facilitation payments provide
incentives to agency personnel to
delay processes so that customers feel compelled to negotiate
or offer gifts. Inadequate equip-
ment, such as pilot cutters and
tug boats, also create queues and
incentivise payments.
Delay-induced demurrage
charges can accumulate so heavily that cargo owners abandon
goods, while a weak auctioning
system allows “favoured persons”
to buy them cheaply.
“the rules need to be changed
to ensure that importers pay
demurrage only where delay has
resulted from their action or inaction,” the report stated.
But it adds that there is no way
to report corruption to an independent agency, with complaints
often being referred to those
being accused or their immediate
superiors.
their own
{ In words
{
“Success lies in engaging local [Nigerian]stakeholders to take ownership of anti-corruption actions. If that is maintained, then it is more likely
the improvement measures will be implemented.”
“
cecilia muller / Ap MOLLeR ANd
MARItIMe ANtI-CORRuptION NetwORK
Market Analysis
Shipbrokers
split on
secondhand
vessel price
prospects
“If you come round in 10 years’ time and there’s two
Lamborghinis parked outside then you can assume
we are doing alright.”
“
john hearn /
CO-fOuNdeR, LOdeStAR MARINe
►divided: A sampling of China-based
brokers throw up pricing split. Below,
Clarkson Asia’s Martin Rowe.
Photos: BlooMBeRg And BoB RUST
Some are looking for any sign of softening in secondhand prices as
some charter rates take a beating — but others say asset prices have
decoupled from earnings
Bob Rust Beijing
“
A sampling of leading China-based brokers on the
pricing outlook late last week turned up opinion
ranging from a pessimistic wait-and-see to a conviction that the present market is driven by speculators
and beyond rational prediction, with no linkage remaining between asset prices and charter rates.
There are, in any case, no signs of a rout yet and several brokers point out prices that have risen quickly
will tend to fall more slowly.
“It is not the stock market,” said one broker, who
points to strong seasonal effects in secondhand sales
and thinks charter rates normally need to come down
for 45 days or more to bring on a fall in secondhand
prices.
But failed sales may be becoming more common,
such as that of a 2004-built panamax whose Japanese
owners pulled their ship this week when it only attracted an offer of $20m ahead of a required drydocking.
Even the optimists admit that pricing has sobered.
“We are confident that the dry bulk market will
continue to recover for the rest of this year. We are
still pretty bullish about 2014,” said sale-and-purchase (S&P) broker Martin Rowe, who heads Clarkson
Asia in Hong Kong.
“But if you are about to chuck down $20m for a
ship, the fact that the BDI [Baltic Dry Index] is back
around 1,200 could give pause,” he added, referring to
last week’s rate, which had sagged significantly by the
time TradeWinds went to press. “I do not think you
can point to any lower prices yet. What you can say
is that the bid-offer spread has probably narrowed.”
Prices increased too quickly from the second half of
last year and now sellers are adjusting their expectations.
“We are seeing, perhaps, a slower rate of acceleration in secondhand prices, which is not unexpected,”
said Rowe. “Sellers are coming off [a] price expectation that may have become unrealistic.”
Another S&P man in Asia, Tasos Papodopoulos of
Intermodal Shipbrokers in Shanghai, says the effect
is seen very clearly in the number of potential buyers showing up for inspections. A few months ago, a
five to 10-year-old panamax might have drawn 10 to
15 owners’ representatives to kick the tyres. Now, he
says, the turnout may be five to seven.
Papadopoulos sees the market stabilising around
the last-done level for a couple of months and points
to a number of factors at work in addition to current
low spot rates.
First, many buyers are already “out of the game” after satisfying their appetite for vessels.
But there is also a lot of tonnage coming in, some
from Japan after the close of the Japanese financial
year in February, and others from Europe.
He points to pre-advices from Japanese owners on
five to 10 modern supramaxes and a similar number
of modern panamaxes so far.
“I also have a feeling that the Greeks may be entering the S&P market on the seller’s side,” he said.
CLARKSONS ASIA’S MARtIN ROwe: we ARe SeeINg, peRhApS,
A SLOweR RAte Of ACCeLeRAtION IN SeCONdhANd pRICeS,
whICh IS NOt uNexpeCted. SeLLeRS ARe COMINg Off [A] pRICe
expeCtAtION thAt MAy hAve beCOMe uNReALIStIC.
Those who did well in speculative buys a couple
of years ago will be trying to take profits. He points
to one Greek owner who bought a pair of 2004-built
panamaxes in 2012 for something over $13m per ship
and who may now try to turn them around for $20m
to $21m each.
But the strongest views are those of the market mystics, who see pricing in the current market
as driven by irrational forces and, in effect, unknowable.
As they did in the period from 2005 to 2008, “market makers”, including Greek stock-listing projects,
big speculative buyers and US fund players, have had
the effect of uncoupling asset prices from charter
earnings, says yet another well-placed but modest
broker who asks not to be named.
“This market is not a traditional shipping market
anymore,” he said. “It is not a supply/demand market.
This market is about ships as commodities. The big
boys — Oaktree [Capital Management], Blackstone,
Frontline — can make things happen, fire up the market and then run away.
“As shipbrokers, we should be happy for this market.”
Traditional Greek, Taiwanese or Hong Kong owners doing business on principles they have followed
for generations will do fine but speculative fleet deals
may hit the rocks in the unpredictable pricing environment.
“We give them our opinion: If you want to play,
come along and play while the market makers are
still here,” said the broker. “But make sure you find a
good partner.”
Meanwhile, some in the pessimistic camp admit
they have gone a step too far at times in their belief
that prices may settle at a level beneath last done.
One S&P man reveals a couple of recent one-vessel
transactions where he lost a ship that he had expected
to win for his client at a slight discount to last done.
“But there is always one wild man who comes in at
the last minute,” he said wistfully.