A Review of the Nigerian Energy Industry

Higher export surest way of increasing Nigeria’s GDP – Sarumi

27 September 2015, Lagos  – Former Managing Director, Nigerian Ports Authority and Chairman, International Sea and Trade and Investment Convention (ISTI) 2015, Mr. Adebayo Sarumi, in this interview with Festus Akanbi, spoke on sundry maritime trade issues including the potential of the nation’s export market to significantly boost Nigeria’s Gross Domestic Product and the forthcoming convention where experts drawn from Africa and beyond will chart the way forward for export business

Adebayo-Sarumi, former NPA MD
mR. Adebayo Sarumi, former NPA MD

What is your assessment of Nigeria’s participation in international trade?

We have placed too much emphasis on imports trade with little or no reference to exports. International trade is both in and out. Any country that does not handle both sides can never make it. It will be perpetually in debt to other countries. You have probably heard of what they called balance of trade. It’s about bringing in and sending out, and we all know the repercussions if we do otherwise. You have inflation imported into the country and your young men are jobless because your factories are not producing. You are taking other people’s goods and that is precisely what is happening now and we have seen the repercussions of it. We thought this is the best time to now focus at export trade. As far as Nigeria is concerned, import trade takes over 85 per cent of trade while export trade only takes 15 per cent. Most of the export is crude oil and some agricultural produce. We believe Nigeria has a lot to export and we are encouraging people to export and facilitate exports. When you talk of facilitating exports for purpose of trade, then you are talking in terms of taking your own goods either from your farm base or from your factory gate overland into the port and also waiting in the ports are ships that are going to take them to where you are going to be able to sell them.

Is that all about export business?

Of course, in between this chain that we are drawing out are also so many nuances: export financing and quality control. We are still talking about the ship that will take goods. Ships that are used to bring imports are not the same ships that are used to take out exports because they differ.

Ports that have been specifically designed for imports are different from ports that are designed for exports. Let me give you an instance. If you want to export 1000 tonnes of pineapple today, which Nigeria is able to have, even before it reaches the farm gates it has lost its contents and quality. From the farm gates, you will probably require the kind of overland transport that is climate controlled and specifically, the goods should reach where it is going at minimum moisture, at a certain minimum low quality of infestation. But if you don’t have the right type of logistics to move from the farm gate up to where you are going, you have already lost them and when they get to the ports you have to be sure they will be alright before the arrival of the ship that will take them and this must also be climate controlled in terms of infestation.

Do we have the required vessels for this?

I need to point out that there is a specific type of ship that is designed to do the job. They are available all over the world but they don’t come to our shores because they don’t take us serious and because we don’t take ourselves serious too. When we are ready, they will start coming and this is what it’s all about. Now it’s time for us to start thinking how to embellish our export trade not only from the point of view of productivity but from the point of view of logistics and from the point of view of quality control. This is what our convention is all about. It’s going to be an annual convention and we are likely to take it from one country to the other. It’s not specifically limited to Nigeria but because the people who are starting it are from Nigeria, we want to be able to launch to all other African countries. Our focus is on the region of Africa and what Africa can do for the rest of the world as far as export trade is concerned.

How adequate are the facilities at our ports?

The facilities are totally inadequate. This is what we want to call attention to. It is totally inadequate because people have not really invested in the ports. You invest only in business you know people will come and use and conversely, you don’t invest in services you know people will not come and use. So, that is where we are starting. Most containers you see around Nigeria are all dry containers. You can’t expect dry cargo to take farm produce like banana, and pineapple. When you go to our markets like Orita merin and Gege markets in Ibadan, you will see a lot of wastes including tomatoes and bananas that are spoilt whereas if they we have climate controlled vessel, we can still send those produce  abroad and they will be okay.

There are two issues involved when it comes to export business. You have to talk about production of export materials, then production of processed goods, which one are you strategically focusing on because you have been talking about raw produce?

We talk of both. Ordinarily, I hear people talk of production for export. Before you can produce for export, you have to have a gestation period that lasts so many years. For example, when our textiles factories were working what Nigerians had against them was the quality of the yarns. If ordinarily, the quality of what is produced is not acceptable locally, do you still want to export it? Usually, most countries of the world that want to export, what they do first is to produce for local market and then whatever forms of problems you have would have been fine-tuned before they are ready for export. So if you see us talking mostly on primary products that is because we are talking from our point of view of where we are strong.

To what extent will you say government has been supportive?

To some extent, I will say government is not supporting. Do you think the door that is locally produced in Nigeria can match the door that came from Turkey? However, if the Nigerian producer has been producing that door for so long, that door will soon match the imported ones. We are doing two things together but initially, we want to look at areas of core competences which are the raw materials or primary products but that does not mean we are not going to talk about export as well. We will talk about that one as time goes on but produce first for factories. Let the products of your factories be acceptable first by your own people. Let them be large enough to satisfy the local market and import substitution is very important.

How can we strategise to achieve a stage where we produce in quality that attracts outside market?

Ours is maritime and logistics. We are talking about international trade. Trade is moved on ships and through other forms of transportation including air. It is possible for us to produce flowers in large quantity here and for the flower to be flown by air every day. The aircraft will leave here by night and will still be fresh by the time it gets to London the following morning from where it is sent to all the flourish around London.

We are not pretending to go into the issue of infrastructure. We all know about the issue of light. If you understand that we are focusing on the area of export trade from the point of view of logistics and logistics means overland transportation and sea transportation. You either go by land or by sea. That is our area of focus, so don’t let me pretend as if we are taking care of everything.

Giving the fact that this initiative is coming at a period of slump in oil price and the attendant need for alternative source of revenue, to what extent can maritime business be relied upon for the higher returns?

When we are able to provide the needed infrastructure for efficient and effective export of our products, the products themselves will reach the market at lower prices and the lower the prices of export products, the more acceptable that products for the importers from the other end because if you take too much from importer from the other end, then you will have a situation where he will not buy from you again. But if everything is taken care of as we were saying, by the time the products reach the world market, it will not be too expensive and that means you will have a ready market because the man will be asking you to bring more.

The other way is what he gets back. He gets foreign exchange, so rather than we running after dollars, the way we do now, we will just be bringing in that same foreign currency and that was what I mean when I talked about balance of trade.

We believe that maritime and logistics arm of this business can be done in such a way that the export products will be cheap in the market where it is taken to, so also in the same manner, it will fetch money back. Within the export process and the logistics process, we can introduce the issue of quality control and this will become a gateway in preventing disasters.

The logistics side can also embellish the quality of export through the use of climate-controlled containers. There are certain kinds of overland transport facilities that are specifically produced for that type of service and even, we can then let the ship owners know that when they come to Nigeria, it is also possible to lift few containers of either mangoes or tomatoes or something like that so when you are coming, come with refrigerator or something that has facility where everything can be controlled until it gets to the destination.

Who are those people being expected at your convention?

We are expecting quite a number of people from Africa and the world in terms of delegate participation. In terms of speakers, we have invited participants from organisations including the African Development Bank, the African Import Export Bank, Nigerian Export Import Bank, and we have commercial banks in Nigeria. Most importantly, we will be expecting National Association of Chambers of Commerce, Industry Mines and Agriculture. We are also bringing agencies responsible for standards in Nigeria and this includes Standards Organisation of Nigeria and National Agency for Food Drug Administration and Control. We are also expecting delegates from European Commission and the Nigerian Ports Authority. We also invited the Comptroller of Customs. We will also be looking at case studies of good export business. We want them to share experiences. Organisations like Olams, the Indomies and so on. They will share their experience. We are also going to have terminal operators. So, there will be participation from exporters, the financial sector and also regulators. In terms of trade facilitation, we are not leaving anything behind. We have Department of UK Investments and then the Nigerian Investment Promotion Council. It cuts across the value chain.

Are you factoring the qualities of goods being produced by various countries in terms of the different levels of developments in this effort?

As they say in diplomatic language, our focus is the south south trade. We are talking about people whose products are not on our own level yet. When they say south south, it means people who are within certain level of development. It is a diplomatic language for emerging economies as the case may be. If a man is producing doors and I’m not satisfied with the products, I can’t ask him to start importing his products to Turkey but he can export his products to Congo. Who knows, maybe Congo does not do its own as good as the one from Nigeria and when people from Congo see our own, they might still see it as superior to their own. Our number one focus is the region of Africa and beyond and other places of the world that are at our own level of development.

Our number two focus is the issue of GDP. GDP will increase once we increase the level of our export. We have realised that one of the things that gave Nigeria’s GDP boost is nollywood. The next thing is music by the likes of Dbanj, Tuface. In the past, we were all hooked to Soul Train which had American artistes but now our music is now being exported and our GDP is now increasing because we are also exporting services.  I found myself in Brazil at a night club where they were dancing to Fela music. I got up and I started dancing the way we dance Fela here and my friend who took me there introduced me as Fela’s senior brother. That is one of the exports I was talking about.

So your GDP increases the more you produce for other people while you take less from other people. So anything export increases production. It allows you not to consume other people’s products but they consume your own, the GDP will naturally increase. It means Nigeria will be able to move away from the paltry 15 per cent exports to as much as 30 per cent.  Import substitution itself naturally leads to GDP even if you don’t export, stop importing and use locally, your GDP will naturally go up even without producing. When you now produce and export, you are even bringing more foreign exchange, so not only is money inside not going out, the money outside is coming in. The moment your money inside does not go out but you are getting money through your export, your GDP will rise. The moment you are no longer buying bread from outside because your wife has started producing bread for your consumption, it means the money you give to her for housekeeping will remain in the house. Then, if she is able to produce some much bread after feeding you and your children whom she sells to the neigbours, she is getting additional money to the one you gave her.

We have started producing what we were not producing before. I no longer listen to foreign music again. Dbanj, Tuface, Davido, those are the ones I listen to now. I was in a wedding in America recently and Davido was the rave of the moment that is how GDP is taken care of. Stop importing. Consume what you produce locally and the next step is start exporting.

How do you intend to track the implementations of whatever you arrive at, at the convention?

Initially, we did not want to involve government in this effort. We have contempt for government agencies but we now realised there is nothing we can do. We have to bring them in. Like I said earlier, we may start to bring containers and it is not government that will do that, it is the private sector and this is why our attention is focused on the private sector.

When we realised we cannot do it alone, this is why we are approaching it from three levels. The first is regional approach. African Development Bank is taking active part. I’m using ADB as the apex, so that the communiqué we have here is not only for Nigeria. We will take it to them and it is something they are going to use to let the whole of Africa know what we have arrived at.

The second approach has to do with our trading partners-the US agencies and a few other European agencies will now know that Africa is ready for business. They also can take that one back to their various governments and industries including various trade groups and sell the idea to them.

Also, at the national level, the agencies that are working with us include the Nigerian Export Promotion Council and the Nigerian Investment Promotion Council.  Nigerian Shippers Council is coming, so also NIMASA. We are expecting the Vice President to join us and we are also expecting the governor of Lagos to join us.

Globally, Customs supposed to be trade facilitating agency and not necessarily as income generating agency alone. Why is the Nigerian customs not living up to the billing as trade facilitator?

They will be at the event and I believe they are coming to tell us how they are going to engage in trade facilitation at the event. I think Nigerians are being unfair to them. They are working. I think the major problem Nigeria has is everybody pay more attention to imports with less attention to exports which is why we are coming up with something like this for us to start thinking of export.

Did you factor other groups like the Indigenous Shippers Association in your programme considering their grouse that foreign ship owners are still gaining undue advantage?

We are factoring them into the programme. We have two of them now. We have the NISER, and one other. They are my friends. They make the mistake of all of them thinking that because they were indigenous ship owners they should all go and carry crude oil. We have been talking about export, why can’t they think of how they would be useful in this line instead of struggling for a piece of action in crude oil lifting. Let me give you an instance. In the eighties , I was a manager in the Apapa port and about that time, two guys came around and approached us and said they wanted to bring in ship that would be exporting to Lome in Togo, Accra, Tema in Ghana as well as Abidjan, Cote d I’voire. They started with converted trawlers.  As a way of encouraging them, the Apapa quays had to be structured to accommodate their trawlers.  What they carried were the produce of the Nigerian industry which they bought in Oke Arin area of Lagos and we designed a process of rolling these items into their small ships. Ship owners can be encouraged to participate in export if they can only reason.

Why can’t Nigerian ship owners devise such a method? Are you saying they don’t need Nigerian products in the neighbouring countries of Abidjan and Conakry? What the typical Nigerian ship owner is after is to participate in the lifting of crude oil.

A typical vessel for crude oil lifting costs $100million and Nigerian banks will tell you they don’t have that kind of money. The next thing is that they will want to lift finished products. Nigerian ship owners can make it if they can start thinking about how to make impact in regional trade. Who says they can’t carry goods from here to Douala? Even passengers, who says they cannot do that, But I’m sure they are coming to the convention and they will contribute very well.


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