A culture of widespread corruption across Nigeria’s business landscape has stilted the country’s socio-economic development, with a particularly negative impact on its trading and import-export market.
In this year’s World Bank Ease of Doing Business report, Nigeria ranked 182 out of 189 countries in the Trade across Borders section.
Go deeper with GlobalData
It takes an average of 298 hours and costs $1,077 to undertake border compliance import procedures in Nigeria, the report found, as opposed to an average of 160 hours and $693 for Sub-Saharan Africa countries. The OECD average is nine hours and $123 for import border compliance procedures.
Public opinion
Opinion within the country reveals a similarly bleak outlook.
According to Transparency International, 75% of people in Nigeria think corruption has increased between 2015 and 2016, putting the country in the bottom three worst performers on the continent. The vast majority – or 78% – are disillusioned with the government’s fight against corruption, and 43% of public service users admitted paying a bribe over the past year.
The country’s port sector is particularly susceptible to corrupt practices due to a mixture of legal, political and behavioural factors that allow corruption to thrive without any real consequences.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataThese underlying factors, as well as key improvements, were highlighted in a 2013 Corruption Risk Assessment report, prepared by the Nigerian Technical Unit on Government and Anti-Corruption Reforms (TUGAR) and co-financed by the United Nations Development Programme (UNDP) and the Maritime Anti-Corruption Network (MACN).
Following up on the report’s recommendations, in June this year Nigeria’s port sector launched a new set of standard operating procedures and an online platform to reform its major ports.
Illegal practices
The year-long risk assessment unfolded in four phases and covered six Nigerian ports, including Apapa and Tin Can in Lagos, Port Harcourt, Onne, Calabar and Warri.
At the time of the investigation, it was found that a minimum of 79 signatures from government officials were required to clear individual shipments for import. In Lagos, a staggering 142 signatures were needed to process a cargo shipment.
As a predominantly import-reliant economy with an underdeveloped local production, the ports represent the main gateway for the country’s trade.
Corruption thrives due to high competition to access these ports, but also due to the fact that most foreign companies doing business on the ground will often comply with local rules, traditions and expectations in order to avoid high import tariffs and promote their business.
Equally, there seems to be widespread misinformation and a general lack of awareness of port procedures. Despite a “high IT penetration” in Nigeria, which doubled since 2011 to now reach 46%, the assessors found that IT literacy among clearing and forwarding agents at the ports was very low.
The port personnel were found to have “broad discretionary powers and limited accountability” and “pressure from higher ranks to comply with established corrupt practices seems to be frequent”.
Moreover, although port agencies benefit from computers and internet connection, the “online submission of forms is limited and the use of electronic documents and signatures is uncommon”.
Similarly, no official channels for complaints of and whistle-blowers of corruption were available.
When it comes to the appointed watchdog, the Nigerian Ports Authority (NPA) oversees and regulates all port operations. Their legislative powers, however, overlap with other similar organisations that can exert their authority, creating confusion and obstructing implementation.
Relying on technology
Following the report’s publication, the ailing sector embraced a full reform of its operations.
In June this year, the Nigerian Government launched a set of standard operating procedures (SOP) and a Port Service Support Portal (PSSP) in order to standardise all cargo handling and import-export operations.
“Technology remains one of the most important ways by which we can control corruption, aside from ensuring that corrupt officials are made to face the consequences,” said vice president of Nigeria Yemi Osinbajo at the launch of the system.
The SOPs are expected to create a level playing field amongst agencies.
“Once these policies are in place, the country stands to gain significantly as gaps that allow for revenue loss through corruption will be fewer and narrower,” the UNDP predicts.
The SOPs will be listed on the Service Support Portal, which was installed by the Nigerian Shippers’ Council at a cost of N50million ($159,000).
The portal allows stakeholders to submit and track the status of complaints, enquiries and port service requests online and in real-time, the website explains. The data gathered by the system will also be used by authorities to investigate various agencies and their efficiency track records.
Investigating fraud
Beyond the technological restructuring, a special Anti-Corruption and Transparency Unit was set up by the NPA to investigate, identify and educate staff on fraudulent activities.
According to the UNDP, which continues to work with the Nigerian Government to fight countrywide fraud, international watchdogs are replicating this initiative in all the ports within the West African sub-region.
“The SOP and PSSP will not only streamline processes of port operations, but will serve as an important component of our renewed commitment to [drive] inclusive economic growth and development for the country,” Osinbajo said. “This will lead to more efficient port administration and make it easier to do business in the country.”
Although corruption erodes many other industries and institutions across Nigeria, tackling the problem in the country’s ports sector is an encouraging step forward, and one which, if replicated, could have huge economic consequences for the country.
As multinational auditor PwC points out, if corruption is addressed, Nigeria’s GDP could be $534bn higher in 2030.
