Operators worry over vessel import tax, competition

Many stakeholders in the Nigerian maritime industry are worried about the import tax imposed on new vessels. They say this may put them at a competitive disadvantage among other African countries in a free market. A former Director General of the Nigerian Maritime Administration and Safety Agency, Mfon Usoro, observes that whereas aircraft brought into Nigeria are registered at zero per cent duty, a shipowner is required to pay 14 per cent of the cost of a new vessel as tax.

According to her, this makes people still patronise a temporary importation route because it is cheaper for them than to pay tax and register their vessels in Nigeria. On AfCFTA, Usoro, who spoke at a public lecture recently, said the fear of operators was that of competitiveness. She said, “If you are charging import tax on a Nigerian flagged vessel at 14 per cent of the cost of the vessel and above, South Africa charges zero import tax. “For the Nigerian flagged ship, there is a multiplier effect on everything that is dependent on that trade or vessel. It means the operational cost in South Africa is low; everything is low. So, they cannot compete with Nigeria who is already setting the shipowner up for failure. “So, we are afraid that the business that should come to us will go to other countries that are competitive.” She added, “The point is not about dumping because there are ways we can stop the goods from coming in.  It is competitive pricing. If you want us to buy goods from Nigeria instead of buying from Togo, if your goods are more expensive than those of Togo, why should we buy from you? If your port charges are higher than Togo port charges, how will your goods be competitive?” In addition to this, operators also decry the lack of conducive environment in the maritime sector. The President, Seaports Terminal Operators Association of Nigeria, Mrs Victoria Haastrup, says, “I am suffering; my people are suffering because of the enabling environment that is just not there. “When a ship comes from China, Europe and anywhere in the world, when it berths, you cannot be sure of when it will be able to discharge and go back. And time is of essence to ships. You know what that is costing the importers and the charterers. “In other parts of the world, there is automatic digitisation. Right from the control room, ships are being discharged; you don’t see a single human being. “You sit in your house, log onto the Internet and you can clear your goods without going to the ports. But that cannot happen in Nigeria.” Analysts lament that apart from lack of full automation, the poor condition of roads linking the ports result in trucks spending months on the road trying to access the ports. Stakeholders in the productive sector of the economy had for years reportedly been reluctant to embrace trade pacts that would open the Nigerian market to competition from outside. The high cost of doing business in Nigeria, according to them, is bound to make them vulnerable when pitched against operators in low-cost business environment. Nigeria occupied the 146th position out of 190 countries in the 2018 World Bank Ease of Doing Business rankings. This was even as Ghana, Nigeria’s close neighbour and competitor in the African market, ranked 114, while Cote d’Ivoire ranked 122, Togo ranked 137. Other countries that will compete with Nigeria in the free trade market are Rwanda, which ranked 29; Kenya, 61; Senegal, 141; Egypt, 120; Mozambique, 135 and Jamaica, 75, among others. While reacting to President Muhammadu Buhari’s signing of the pact on July 7, the Director General, Manufacturers Association of Nigeria, Segun Ajayi-Kadir, said, “We shall work together to prevail on the government to do its bit by providing the conducive atmosphere. The infrastructure challenge that constitutes supply constraints should be removed.


Source: Punch