IMPACT OF PORT CONCESSION IN NIGERIA

1.1 Introduction

Port concession is a practice that permits Apapa Seaport franchisee the right to finance, build, own, improve, upgrade, maintain or operate a public infrastructure, and charge users for the cost of services, for a limited period of time. Port operations and development in Nigeria began in the mid-19th century, long after taking off from the sea of commercial origin. The opening of the Lagos lagoon in the early 1900s marked the first effort towards providing facilities for ocean-going vessels. The efficiency of ports is a multiple of what it was before the concession. There is no waiting time for ships as they come in Apapa Seaport; each docks immediately and starts the discharge as compare to what use to happen back 2004, 2006 till when the improvement sets in (Barnabas, 2015)

As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitation of the study and Definition of technical terms.

1.2 Background of Study

A port is a location on a coast or shore containing one or more harbors where ships can dock and transfer people or cargo to or from land. Port locations are selected to optimize the access to land and inland water, market demand, and sheltered from the wind and waves. The use of the sea as a means of transportation in Nigeria dates back to the 15th century (1485), when the Portuguese sailed in Lagos with their ships mainly to trade in artifacts in Benin City. In the days before the independence to date, the marine industry of the nation is characterized by the domination of foreign ships and / or carriers in developed market economies of Western Europe and America. To control this scenario, subsequent developments have led to the opening of the ports in Apapa and Port Harcourt, roll in the creation of the Nigerian Ports Authority (NPA) through the provision of Harbours Act 1954 to charge and discharge as well maintain and develop the ports (Njoku, 2009).

The efficiency of ports is a multiple of what it was before the concession. There is no waiting time for ships as they come in Apapa ; each docks immediately and starts the discharge as compare to what use to happen back 2004, 2006 till when the improvement sets in (Barnabas, 2015)

According to Barnabas (2015), with all the improvements in the investment taking place, we are moving towards a situation of a significant impact. ” These are the words of Dr. bright Samsudeen Usman , Minister of National Planning , when the President of the supervision and implementation National Council Committee on Privatization , made a visit to the port facilities around Apapa in 2013.

This view is widely held by Nigerians who remember the very bad condition of seaports in the nation before concession. When the past is juxtaposed to this, it becomes clear that the concession port is one of the best policies were formulated and implemented in Nigeria since 2000 AD; No, since independence. (Barnabas, 2015)

It is in the kernel that is unlocking the potential of this maritime country. Today, our ports are increasing in productivity and efficiency, and are encumbered by circumstances that the government is struggling to repair. Today, port operations can be said of very high quality, but it has not always been like this for our country. (Barnabas, 2015)

Barnabas asserted that in the beginning before the concession of the ports to private operators in 2006, to do business in the nation's ports was a hellish experience laced with a myriad of problems, some of which were:

The turnaround time for ships was too long, and companies have been preparing for weeks if not months of endless waiting before their cargo could be loaded or unloaded.

Most of the few facilities handling merchandise belonging to the NPA were moribund, so that the transport companies had to hire these facilities from private sector sources, resulting in additional costs. The residence time of goods in ports was so long that the cargo overtime filled most active seaports and led to congestion gigantic port. Work for ship work was controlled by a mafia that controls the dockers' unions and had no qualms providing less than the hand of paid work.

Many local ports that could have been put to good use have been abandoned, giving less options maritime companies. In the sections of the highway ports, massive windows were the norm rather than the exception, and this has done nothing to reduce waste of working hours caused by the movement of the snail-like goods to and from the ports. The resulting congestion leads to shipments to become found as if they have suddenly disappeared into thin air, and in such cases, NPA often seemed impotent make the return of such cargoes fled, to the chagrin of people ‘worker business.

Consequently porous entry points, also known as dangerous miscreants wharf rats swarmed ports also earn their daily bread, leading to predictable misfortune tales on the part of responsible business people. Thus it happened that the clocks rang and welcomed humanity in a new century, the maritime sector in Nigeria, which accounted for 70 percent of all seaborne trade in West Africa, and supported business needs a fifth of the black race, was still rich delay; and ports were classified as some of the most inefficient in the earth.

In fairness to the federal government, there was no lack of trying that the planned maritime system was in a hopelessly chaotic and inefficient state. The government had long made sincere efforts to make the whole harbor area, but there was something missing. In 1955, the previous situation where there was multiplicity of the port authority and the massive duplication of functions gave as the Nigerian Ports Authority (NPA) has been streamlined. But this reform has brought his own problem – that of over-concentration and control of the government accountable. The result has been increased inefficiency and corruption.

However, before improving Apapa seaport, at the end of 2004, the Nigerian federal government implemented one of the most ambitious programs ever undertaken concession port. The success of this program is the result of the vision and determination of the government, and the need to address the massive gaps in the sector, which have been strongly inhibit economic development (James et'al 2007). One of these ports in concession by the federal government was the Apapa Seaport.

The Apapa Seaport, formerly known as Lagos port complex is the largest port in Nigeria. In terms of size and activity, the port is the most important in which its annual cargo traffic of over 30 million tonnes representing approximately 55 percent of port activity in Nigeria and 25 percent of the countries members of the West Total Economic Community of African States port activities. (Alan et al, 2007).

Port operations and development in Nigeria began in the mid-19th century, long after taking off from the sea of commercial origin. The opening of the Lagos lagoon in the early 1900s marked the first effort towards providing facilities for ocean-going vessels. The Apapa Seaport in the southwest has been reserved for development in 1913 the construction of the first four deep-water spaces 548.64m port began in 1921. The four berths were then extended downstream in 1948 with the construction of an additional 762m of the age of the berth. On the eastern side of the country, the discovery of coal in Enugu led to the construction of the port of Port Harcourt, which opened in 1913.

Despite these developments, the lack of coherent policy framework impeded progress was necessary. In recognition of the importance of ports in the economic development of Nigeria and the need for a coordinated operation and management of port activities, Nigerian Ports Authority (NPA) has been designed and implemented in 1954 to address some of infrastructural and institutional weaknesses. In essence, the NPA was responsible for providing infrastructure services and support for the operation of the seaport in Nigeria and facilitating maritime transport in the country. In the first ten years, NPA made efforts to further expand the two ports and ports inherited -Apapa Seaport Harcourt. He supervised the construction of six berths at 943m, added to those already existing in the Apapa Seaport, while four berths with a total quay length of 506m have been added to the facilities in the port of Port Harcourt.

However, with the advent of globalization, it has become obvious that the government lacks the resources and management expertise necessary for the proper functioning of a modern seaport. To these, in May 2000, a technical workshop was organized by the Federal Ministry of Transport and the Bureau of Public Enterprises (BPE), in collaboration with the World Bank on achieving greater private sector participation in the provision of port services. In 2001, His Excellency President Olusegun Obasanjo ordered the privatization of the NPA be strengthened. In 2003, the National Council on Privatisation (NCP), the top political body on sector reforms in the country with the BPE that its secretariat started the investment process involving the private sector and the expertise in Nigerian ports with the objectives of increasing the efficiency of port operations, the cost of reduced port services to end users, to eliminate the flow of funds from limited government resources, to stimulate activity and accelerate economic development, and make Nigeria the hub for freight and international trade in West Africa. This led to the full implementation of the concession contract of the port in 2006 (Marine International Business 2007).

Recognizing the new paradigm shift, the management of NPA has taken urgent measures to provide the major infrastructure that responds to pressure requiring the operation of port activities for maximum productivity and income generation. However, the brick walls of not understanding the situation of APM receive the necessary support from the government coupled with the fact that the incessant interference, politicking and corruption had exposed the organization to abuse. Other challenges that drove in the house – reforms include: discouragement due to age and poor infrastructure / superstructure, which was due to difficulties of the Authority to access funds for projects fixed assets; the factory and the insufficient availability of crafts; poor access to the port; vandalism aids to navigation port by undesirable elements; non-competitive environment leading to complacency in any respect; and bureaucracy and external interference in the day to day operations (Marine Business International, 2007).

Therefore, in Apapa Seaport where the research was carried out, the activities that was conducted is to know the Impact of Port Concession in Nigeria.

1.3 Statement of Problem

The potential of Nigeria to achieve sustainable economic growth and development are no doubt due to its rich and diversified basic resources. Unfortunately, despite Nigeria's huge investments in the public's investment returns was less than 0.5% per year since 1960. So to remedy the poor performance of public enterprises, the federal government revisits privatization ideology that is hinged on reforms, including the concession of the port, which can have serious consequences for Nigeria's economy if well guided.

In the 1990s, Nigerian ports showed very low levels of efficiency, which resulted in long lead times for vessels and increasing the residence time of the containers. It often took weeks to unload and reload a ship instead of 48 hours considered standard in other regions such as Asia. Furthermore, the workforce was bloated and unproductive, the cargo was subject to massive flight levels, and port charges were excessive. Perhaps worst of all, the port infrastructure required substantial renovation and rehabilitation, and this investment would require substantial external financial support, the federal government was reluctant to provide given the existing operating inefficiencies in the sector.

Apapa Seaport Terminal, which handles over 90 percent of imports in the country is managed by three major operators; AP Moller, Dangote and sunflower under the 2006 concession agreement with the federal government. Despite this, the Nigerian ports still seems to be performing below expectations with case delay of cargo, congestion and poor ship turnaround times. More than four years after the granting of full operating license to terminal operators in Apapa Seaport for managing terminal operations, investment and maintenance of the structure and the equipment port, one can only expect a positive change in all performance indices.

1.4 Aim and Objectives of Study

The aim of the study is to assess the impact of port concession in Nigeria as regards Apapa Seaport. Specifically the following are the objectives of the study to:

1. Determine the role of the management style in the administration of the Apapa Seaport after concession
2. Assess the impact of port concession on port congestion
3. Review the effectiveness of the concession on freight compensation
4. To determine the role of the concession on freight handling efficiency
5. Propose possible solutions to make more efficient concession

1.5 Research Questions

The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:

• What is the role of management style in the administration of the Apapa Seaport after concession?
• AIDS concession port in reducing port congestion?
• Is the port concession improved efficiency in freight compensation?
• Is there a significant time difference in terms of cargo handling with the concession of the port?
• Does the research intends to answer these fundamental issues and efforts will be made to solve in the context of research?

1.6 Research Hypothesis

In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.

Hypothesis One

• H0: The management style has no significant relationship in the administration of Apapa Seaport after concession
• H1: The management style has a significant relationship in the administration of Apapa Seaport after concession

Hypothesis Two

• H0: Concession port does not improves the efficiency of cargo clearing and handling
• H1: Concession port improves the efficiency of cargo clearing and handling

1.7 Significance of Study

The recommendation of the study is hopefully contribute to a more competitive Apapa Seaport in terms of better management and a better administration of the port in the West African region. It is believed that the economy of most developing countries such as Nigeria, are highly dependent on maritime transport system, while it is also responsible for the development of a transport system. This is because the effective port and cargo handling system will encourage shipping companies, importers and exporters to make full use of port facilities in the nation's seaport. Therefore, the concession is a global phenomenon. It is often rooted in the culture longtime globalization; Thus Nigeria cannot afford to stay away from the global market where capital goods mainly channeled through the ports.

1.8 Scope of Study

This study work is restricted to the period of the study only. The research focuses on concession and it’s importance in the development of maritime industry in Nigeria. Consequently, the study is restricted to the performance of Apapa Seaport after the concession exercise.

1.9 Limitations of the Study

During the course of this study, many things militated against its completion, some of which are:

1. Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
2. Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this establishment to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
3. Research material: availability of research material is a major setback to the scope of the study.
4. Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
5. Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

1.10 Definition of Terms

• Implication: An implication is something that is suggested, or happens, indirectly.
• Port: A port is a virtual point where network connections start and end. Ports are software-based and managed by a computer's operating system.
• Concession: Concession is something that is allowed or given up, often in order to end a disagreement, or the act of allowing or giving this: Both sides involved in the conflict made some concessions in yesterday's talks.
• Economic: Economics is the study of how humans make decisions in the face of scarcity.
• Transportation: It is an act, process, or instance of transporting or being transported. Any device used to move an item from one location to another.