En­sur­ing Min­i­mum Stan­dards for Ship­ping Agents

Ero­mosele Abio­dun writes that the in­tro­duc­tion of dis­burse­ment ac­counts by the Nige­rian Ship­pers Coun­cil will have a mul­ti­plier ef­fect on the mar­itime in­dus­try and the econ­omy as a whole


The func­tions of the Nige­rian Ship­pers’ Coun­cil (NSC) as port eco­nomic reg­u­la­tor in­clude: the pro­vi­sion of guide­lines on tar­iff set­ting in or­der to guide against ar­bi­trari­ness; mon­i­tor and en­force stan­dards of ser­vice de­liv­ery to en­sure avail­abil­ity, ac­ces­si­bil­ity, af­ford­abil­ity, sta­bil­ity, pre­dictabil­ity and ad­e­quacy of ser­vices.

Oth­ers are: to en­cour­age com­pe­ti­tion and guard against the abuse of mo­nop­oly and dominant mar­ket po­si­tions; per­form me­di­a­tory role among stake­hold­ers; es­tab­lish ac­ces­si­ble and mod­ern dis­pute res­o­lu­tion mech­a­nism; reg­u­late mar­ket en­try and exit; pro­mote ef­fi­ciency in the pro­vi­sion of port ser­vices.

It also has the man­date to min­imise high cost of do­ing busi­ness and pre­vent its in­fla­tion­ary ef­fect on the Nige­rian econ­omy; en­cour­age pri­vate sec­tor in­vest­ment in the port sec­tor; mon­i­tor and en­sure com­pli­ance by all par­ties with the pro­vi­sions of the Port Con­ces­sion Agree­ments.

In line with its man­date, the ship­pers coun­cil has over the years made ef­fort to en­sure that stake­hold­ers in the mar­itime sec­tor are not tak­ing ad­van­tage of by ship­ping com­pa­nies in terms of pay­ing the ap­pro­pri­ate price for ser­vices.

In con­tin­u­a­tion of its cru­sade against sharp prac­tices in the mar­itime sec­tor by ship­ping com­pa­nies, the NSC last week an­nounced that it was work­ing with the Cen­tral Bank of Nige­ria (CBN) to com­pel all ship­ping agen­cies to open dis­burse­ment ac­counts (DAs) from where they will carry out op­er­a­tional costs for their multi­na­tional prin­ci­pals over­seas.

The apex bank and the NSC said this was in line with Ar­ti­cle 4 of the United Na­tions Con­fer­ence on Trade and De­vel­op­ment (UNCTAD) min­i­mum stan­dards for ship­ping agents all over the world.

The Ex­ec­u­tive Sec­re­tary of the NSC, Mr Has­san Bello ex­plained dur­ing a meet­ing be­tween the CBN rep­re­sen­ta­tive and ship­ping in­dus­try stake­hold­ers in La­gos that main­te­nance of DAs as pro­vided by ‘UNCTAD Min­i­mum Stan­dards for Ship­ping Agents’ stops the agent from go­ing to the lo­cal mar­ket to source foreign ex­change to set­tle charges in­curred by the ves­sel lo­cally.

This is just as some agents have dis­closed that Nige­ria loses $4bil­lion (N1.44 tril­lion) an­nu­ally for not in­tro­duc­ing the dis­burse­ment ac­count for all ship­ping agents.

Such amount, the agents stressed, could bring about a lot of mul­ti­plier ef­fect in the in­dus­try and the na­tional econ­omy.

Dis­burse­ment Ac­count The DA process is the send­ing of port call and port cost data be­tween an agency sys­tem in or­der to cor­rectly as­sign port costs to the cor­rect port call, ves­sel and voy­age and im­port this data into the data base. How­ever, in­te­gra­tion be­tween sys­tems is re­quired.

Ex­plain­ing how the process works, a cus­toms agent, Ogungbemi James, said: “All ac­tive and in­ac­tive ves­sels of the op­er­a­tor are han­dled through the process. Users are as­signed with spec­i­fied ves­sels to sim­plify the task. Ves­sels are shared be­tween two dif­fer­ent op­er­a­tor com­pa­nies us­ing ves­sel shar­ing in the ap­pli­ca­tion. DA shar­ing fea­ture al­lows other ship owner/ man­ager to ac­cess a par­tic­u­lar DA.

He de­scribed DA as an es­ti­mated cost for car­ry­ing out all port ac­tiv­i­ties.

“Stan­dard for­mats are pro­vided for the agent to sub­mit the pro­forma. Agents can raise ad­di­tional pay­ment re­quest (APR) for added ex­penses even af­ter pro­forma ap­proval. Dis­burse­ments are all ex­penses that the agents made for the ves­sel in a port. Think of port du­ties, load­ing and un­load­ing costs, tugs, pro­vi­sions, etc. In ocean ma­rine in­sur­ance poli­cies, the term dis­burse­ments re­lates to all ex­penses of the ship­ping com­pany be­fore the start of a jour­ney, such as the costs for bunkers, pro­vi­sions, in­ven­tory, out­go­ing port du­ties, among oth­ers,” he ex­plained.

Charges to be Cov­ered Bello, who was rep­re­sented at the meet­ing by the Di­rec­tor, Le­gal Ser­vices of the Coun­cil, Mr Sa­muel Vong­tao, iden­ti­fied such charges to be cov­ered by the DAs as those col­lected by the NPA; Nige­rian Mar­itime Safety and Ad­min­is­tra­tion Agency (NIMASA); ship chan­delling costs and other lo­cal ship­ping costs.

Bello said such charges were usu­ally in foreign ex­change since “it is as­sumed that the prin­ci­pal must have wired the funds to the dis­burse­ment of ac­count of the agent in foreign ex­change.”

He added that it was for the agents to make such pay­ments in cur­rency that was trans­ferred to the dis­burse­ment ac­count rather than go­ing to the in­ter­bank mar­ket to source for foreign ex­change.

He said that it was wrong that in Nige­ria the prac­tice was com­pletely dif­fer­ent, adding that, “ship­ping agents ap­ply to trans­fer all in­comes to their prin­ci­pal while at the same time ap­ply­ing to CBN for foreign ex­change at in­ter­bank mar­ket to ser­vice lo­cal costs.”

The CBN Deputy Di­rec­tor, Foreign Ex­change Man­age­ment, Trade & Ex­change Depart­ment, Mr. A.S. Jib­rin said the idea of the meet­ing with the stake­hold­ers was to en­sure that the DA en­joys the sup­port of those in the ship­ping in­dus­try.

Jib­rin ex­plained that what the CBN set out to do was to lis­ten to the stake­hold­ers on the DA, adding that the apex bank was in­ter­ested in poli­cies that will grow the ship­ping in­dus­try and the na­tional econ­omy.

He said de­ci­sion on the pol­icy could not have been taken with­out hear­ing from those in the in­dus­try.

Jib­rin said he was happy about the con­sen­sus opin­ion ex­pressed at the meet­ing that the DA should be in­tro­duced.

A for­mer Di­rec­tor, Ship­ping Ser­vices of NSC, Mrs. Dab­ney Shall-Holma said the DA when in­tro­duced will go a long way in im­prov­ing the con­tri­bu­tions of the ship­ping sec­tor to the coun­try’s gross do­mes­tic prod­uct (GDP).

Shall-Holma while not­ing that the ship­ping sec­tor was nearly ab­sent or too low in terms of GDP con­tri­bu­tion, said it was not good that ship­ping op­er­a­tors were not con­tribut­ing enough to the econ­omy.

Stake­hold­ers’ Views Dur­ing the meet­ing, stake­hold­ers were dis­mayed that DA was yet to be in­tro­duced in the coun­try con­sid­er­ing the time that the idea came up.

Par­tic­i­pants said the CBN and the NSC should move as fast as pos­si­ble to en­sure that the pol­icy takes ef­fect in Nige­ria.

Among those who spoke in favour of hav­ing the DA in place were founder of Na­tional As­so­ci­a­tion of Gov­ern­ment Ap­proved Freight For­warders (NAGAFF), Dr. Boni­face Aniebonam; Pres­i­dent of As­so­ci­a­tion of Nige­rian Li­censed Cus­toms Agent (ANLCA), Iju Tony Nwabunike; a mem­ber of the Nige­rian Eco­nomic Group, Dr. Ikenna Nwosu; Pres­i­dent of Nige­rian Ship Chan­dlers As­so­ci­a­tion, Dr. Martins Enebeli and for­mer Pres­i­dent of NAGAFF, Dr. Eu­gene Nweke, among oth­ers.

The stake­hold­ers main­tained that it was wrong that the ship­ping agents were sourc­ing foreign ex­change lo­cally to set­tle NPA, NIMASA and other dues when they ought to have been sent such money from their foreign prin­ci­pals over­seas.

Aniebonam said it was even sad that while this was the case, Port and Ter­mi­nal Mul­tiser­vices Lim­ited (PTML) was col­lect­ing il­le­gal fees from cus­toms agents as a con­di­tion for al­low­ing cus­toms agents have ac­cess into their premises for clear­ance of goods in their ter­mi­nals.

He said PTML had been boast­ing of reg­is­ter­ing 10,000 cus­toms agents who al­legedly paid N8000 each for ac­cess cards to be al­lowed into their PTML ter­mi­nals.

It was gath­ered that the NSC had last year given its po­si­tion on the dis­burse­ment ac­count to the CBN dur­ing the review of the new Forex Man­ual.

The CBN had April this year in­formed the NSC of its ac­cep­tance of its po­si­tion on DA.

The meet­ing of Tues­day with stake­hold­ers, it was gath­ered, was to con­firm that the coun­cil’s po­si­tion on the mat­ter “has the buy-in of all stake­hold­ers” so as “to mit­i­gate the im­pact of the pro­vi­sion on busi­nesses and at­ten­dant likely out­cry of op­er­a­tors.”

Coun­cil of­fi­cials said the lat­est move by the CBN ap­pears to be the best chance to in­tro­duce the DA in line with global best prac­tice in the op­er­a­tions of ship­ping agen­cies in Nige­ria.

The meet­ing in­volv­ing stake­hold­ers and the CBN, ac­cord­ing to the coun­cil was im­per­a­tive, “to avert any pos­si­ble out­cry of non-in­clu­sive­ness, from the in­dus­try, when the prac­tice is even­tu­ally en­shrined in the CBN’s Forex Man­ual.”

It is ex­pected that the coun­cil will hold sim­i­lar meet­ing with stake­hold­ers in Port Har­court to cover ship­ping agents in that area.

UNCTAD Stan­dards for Ship­ping The ob­jec­tives of Ar­ti­cle 1 of the United Na­tions Con­fer­ence on Trade and De­vel­op­ment (UNCTAD) min­i­mum stan­dards for ship­ping agents all over the world in­clude: to up­hold a high stan­dard of busi­ness ethics and pro­fes­sional con­duct among ship­ping agents, to pro­mote a high level of pro­fes­sional ed­u­ca­tion and ex­pe­ri­ence, es­sen­tial to pro­vide ef­fi­cient ser­vices.

Oth­ers are: to en­cour­age op­er­a­tion of fi­nan­cially sound and sta­ble ship­ping agents, to con­trib­ute to com­bat­ing mar­itime fraud by en­sur­ing im­proved ser­vices by bet­ter qual­i­fied ship­ping agents, to pro­vide guide­lines for na­tional au­thor­i­ties/pro­fes­sional as­so­ci­a­tions in es­tab­lish­ing and main­tain­ing a sound ship­ping agency sys­tem.

Has­san Bello

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