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Terminal Operators Lose N75bn to Naira Fall

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Seaport
  • Terminal Operators Lose N75bn to Naira Fall

The continuous adjustment in exchange rates, loss in the value of the naira against major foreign currencies and forex scarcity have all combined to bring about loss of revenue for terminal operators, who since the 2006 concession agreement have been paying their dues in dollars, ANNA OKON writes

Terminal operators at the nation’s seaports have lost N75bn to currency adjustments due to the loss in value of the naira against major foreign currencies.

This is due to the fact that the operators pay their concession dues and meet other obligations in dollars.

It was gathered that the loss in the value of the naira coupled with the scarcity of dollars had overtime led to an increase in expenses and put a huge pressure on the income of the operators.

According to a 2017 report by Akintola Williams Deloitte, the foreign exchange challenges that Nigeria is facing as a result of the fall in global oil prices are further pronounced for terminal operators as a large part of their costs, including equipment and maintenance costs, lease fees to the Nigerian Ports Authority and operational costs are in dollars.

The report noted that in order to take care of their costs and dues, the terminal operators had to constantly source for dollars from the parallel market at very high rates.

Confirming this, the spokesperson for the Seaport Terminal Operators Association of Nigeria, Mr. Bolaji Akinola, who spoke to our correspondent on behalf of the operators, said that they were currently spending three times the amount they paid 10 years ago as dues owing to the continued fall in the value of the naira.

“In 2006 when we took over operation at the various terminals in the port, the exchange rate was N125 to the dollar. Now, it is about N400,” he stated.

He added that for every one dollar paid out, an operator lost N275.

“About 85 per cent of our commitments are in dollars. The tenure of the concession agreements ranged from 15 to 25 years and the estimated revenue to government is $6.54bn (N2.6tn) over the period,” Akinola stated.

Due to the challenges, the concessionaires have made several appeals to the government, asking to be allowed to pay their dues in naira.

In response to their pleas, the Managing Director, NPA, Ms. Hadiza Usman, said that the agency would take a second look at the dollar payment policy during a general review of the concession agreement.

She said, “We will look into the dollarisation of payments. This will not be clear until we do a realistic review of the concession agreements.

“Some of our obligations that we pay in dollars, we are looking to see how we can stop paying for everything in dollars. As we review the inflow of dollars, we will also review the outflow of dollars.”

Meanwhile, 83 per cent of port revenues are said to be received in naira from clearing agents; these include terminal handling charges, storage charges, customs examination fees, and others, while the remainder of the revenue is received in dollars, including stevedoring charges from shipping companies.

In addition to exchange rate fluctuations, the Central Bank of Nigeria’s restriction of importers of 41 select items from accessing foreign exchange through the official foreign exchange window as well as the 2014 hike in the import duty of vehicles affected the volume of cargo at the ports, resulting in further revenue loss to operators and government.

According to analysts at Deloitte, between 2006 and 2016, the port business was adversely impacted by the rise in Consumer Price Index or inflation, with the CPI rising to over 177 per cent since 2006, adding that foreign exchange fluctuations also impacted the value of the terminal handling charges with over 224 per cent forex depreciation between 2006 and 2016.

They argued that although the naira value of the THC increased from N31,850 in 2006 to N80,000 in 2016, the THC dollar value equivalent decreased from $232 in 2006 to $180 in 2016.

A maritime expert with the Lagos Chamber of Commerce and Industry, Mr. Vincent Nwani, suggested that since the terminal operators were earning part of their revenue in dollars, they should pay the appropriate dues in dollars to the proportion of that revenue, while settling other obligations in naira.

He said in order to do that, they had to go back to the original agreements that they signed with the Federal Government, adding, “In some of those agreements, there may be clauses that the price of foreign exchange should determine the dues.

“They collect some fees in dollars; they don’t have to pay all their fees to the government in dollars.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Business

Osinbajo, Others Launch Smart Card Factory in Lagos, First in Sub-Saharan Africa

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It’s the first in sub-Saharan Africa and one of the three such cutting-edge facilities on the continent, with top prime global certifications for smart card manufacturing and it is based in Lagos, Vice President Yemi Osinbajo relished yesterday afternoon while touring SecureID company’s premises, and affirmed Nigeria’s extremely bright economic future, which he said cannot be aborted despite current challenges.

According to him, “the economic future of our nation is extremely bright. Yes, we have challenges today and they may look daunting. But let me assure you that these issues will be resolved. The march of this nation to its manifest destiny as Africa’s leading economic power will not be aborted. We are more than able to overcome.”

An impressed Osinbajo said the Buhari administration in “following the recommendation of the Presidential Economic Advisory Council, has determined that manufacturing will be our main focus in bringing about dynamic growth, jobs and exports. This will mean retooling our business environment for greater competitiveness, especially with the take-off of the African Continental Free Trade Area agreement.

“We are rethinking our tax regimes, sorting out external and internal trade issues, getting our regulatory authorities; SON, NAFDAC, and even Customs, to see their roles more as business facilitators rather than policemen or revenue generators. Our environment must be friendly for local businesses first, foreign investments will follow enthusiastically.”

SecuredID Smart Card- Investorsking

Commenting on the efforts of the administration to position the country as a leading economic beacon on the continent, the VP also stated that the Buhari administration was ramping up efforts in improving the country’s infrastructure and digital space.

He said, “aside from the work we are doing with other infrastructure such as rail, roads and power we are committed to a plan of democratizing broadband connectivity. Our program, which we have reiterated in our Economic Sustainability Plan, is broadband connectivity for all by 2023.

“The Federal Ministry of Communications and Digital Economy launched the National Broadband Plan which is designed to deliver data download speeds across Nigeria of a minimum 25mbps in urban areas and 10mbps in rural areas, with effective coverage available to at least 90% of the population at affordable prices by the target date. Broadband connectivity is as important as electricity in the digital age, unlike electricity we do not have to make several mistakes before getting it right.”

While commending the efforts of the founder and Managing Director of SecureID, Kofo Akinkugbe, VP. Osinbajo described the SecureID facility as a place of history, innovation and creativity.

He said, “This world-class manufacturing facility is reputed to be the first certified smartcard manufacturing plant in sub-Saharan Africa, the only smart card production and personalization plant in West Africa and one of only six on the continent and one of only 80 in the world.

“The facility serves 21 countries across Africa and is fully certified by major commercial card companies – VISA, Verve and MasterCard. SecureID has shown that this country can be at the cutting edge of development in technology and digital enterprises. The world in which companies like SecureID operate, providing comprehensive end-to-end payment, identity management and digital security solutions is one that thrives on innovation.”

Continuing, the VP said, “the company has in these few years of her existence provided notable innovative offerings to the financial services sector, telecommunications, government, education, healthcare and private enterprises. Equally remarkable is the fact that with this facility, the company can produce all the payment cards, SIM cards, loyalty cards and the various identity management cards (residency cards, voter registration cards, drivers’ license and national identity cards) required here in Nigeria, with the capacity to spare.

“Congratulations also for your successes in getting the certifications that will help to meet the demands of customers, such as Global System of Mobile Applications (GSMA), Visa International, MasterCard Incorporated, Verve, Card Quality Management (CQM), and ISO 9001/2015 for Smart Card Manufacturing and Personalization of credit and debit cards.

“In particular, we must also congratulate SecureID for earning the GSMA certificate last year; this is a world-class security requirement for SIM card manufacturing and personalization. Your rapid expansion is also worthy of commendation, especially as you have added a number of subsidiaries, one of which is the digital arm of the business: SID Digital, while the other is involved in transport payment infrastructure. This has put the company in good stead to provide services ranging from identity management to tax collection, school management systems, health management systems, digital cards for the banks and, of course, e-ticketing for all forms of transportation, including road, rail and water.”

Speaking earlier at the event, the founder of SecureID, Kofo Akinkugbe, highlighted the significance of the Vice President’s visit, noting that the VP has come to see some of the much-touted potential being realized. She added that SecureID was a good entrepreneurial story of an abiding faith in God and the nation, proving the viability of investing and staying in the course.

Akinkugbe commended the federal government for establishing institutions and agencies to support and encourage start-ups, MSMEs and other enterprises that had offered assistance to the company.

SecureID- Investorsking

The representative of the Governor of Lagos State, the Anglican Bishop of Lagos State, Humphrey Olumakaiye, alongside other top government functionaries, also attended the event.

Accompanying the Vice President was the Minister of State, Ministry of Foreign Affairs, Zubairu Dada; Deputy Chief of Staff to the President, Office of the Vice President, Ade Ipaye; and the Economic Adviser to the President, in the Office of the Vice President, Adeyemi Dipeolu.

Laolu Akande
Senior Special Assistant to the President, Media and Publicity
Office of the Vice President

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Bayelsa, Akwa Ibom Partners Ibom Air

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Ibom Air - Investors King

The Bayelsa State Government has opened partnership discussions with its Akwa Ibom counterpart on the use of the new domestic carrier, Ibom Air to start commercial flight operations at the Bayelsa International Airport.

Speaking as the leader of a high-powered delegation from Bayelsa at a meeting in Uyo, the Akwa Ibom State capital, the Deputy Governor, Senator Lawrence Ewhrudjakpo, noted that the choice of Ibom Air was informed by proximity and good bilateral relations between the two states.

Ewhrudjakpo, in a statement by his Senior Special Assistant on Media, Mr. Doubara Atasi, explained that Akwa Ibom has proved itself as a dependable neighbour to Bayelsa in so many ways over the years, which must be reciprocated “in the spirit of give and take”.

He expressed optimism that the partnership deal would soon be sealed for the airline to commence flights to and from Bayelsa, Lagos and Abuja, describing the two routes as the highest in traffic for the people of the state.

The Deputy Governor assured Bayelsans and members of the public of the present administration’s commitment to ensure smooth operations at the state airport, which is adjudged to be one of the best in the country by the Nigerian Civil Aviation Authority (NCAA).

According to him, the state government was applying the business principle of, “starting small to grow big,” by going for a 50-Seater aircraft in its present deal with Ibom Air to promote socioeconomic activities in the state.

Ewhrudjakpo, who likened efforts for acquiring the operational licence to Nelson Mandela’s “Long walk to Freedom”, however, added that government, had plans to do business with other airlines in the near future.

“Basically, we are here to discuss how we can have mutually beneficial partnership with your airline, IbomAir. And our target is on any of your aircraft that has the capacity of about 50 seaters because we don’t want to start too big,” he said.

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PayPal Acquires Happy Returns Logistics Business

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paypal

PayPal announced that it’s acquiring Happy Returns, a returns solution provider that offers online shoppers access to easier ways to send back unwanted merchandise to retailers without having to box it up and ship it themselves.

The company today offers a network of over 2,600 drop-off returns locations in the U.S., including those in over 1,200 metros and in every U.S. state.

It also has relationships with hundreds of brands that have been using its returns software and reverse logistics services. The company says it will continue to offer its returns experience to online retailers and shoppers as a part of PayPal.

Founded in 2015, Santa Monica-based Happy Returns’ value proposition was to take some of the overhead and cost out of the returns process for online retailers. Because online shoppers can’t inspect items they buy directly, online retail tends to see higher return rates, especially in apparel. Happy Returns found that online items are 3 to 4 times as likely to be returned than those purchased in-store, for example.

Meanwhile, today’s retailers have to compete with giants like Amazon and Walmart, both of which enable returns more easily for their customers by way of their large brick-and-mortar footprints — Amazon with Whole Foods other locations, and Walmart with its own stores. In fact, the foot traffic that offering an Amazon returns desk or locker system in-store has led retailers like Kohl’s and Stein Mart to embrace the enemy by catering to shoppers with Amazon returns in their own stores.

Today, the Happy Returns solution offers a combination of software, services and logistics that allows retailers to manage their returns through their own retail stores, by the carrier, as well as through Happy Returns’ “Return Bar” locations. These are found in physical retail stores like Paper Source, Sur La Table, Cost Plus World Market, and others. The service has been used by several digitally native brands, including Everlane, Rothy’s, and Parachute Home, among others.

Happy Returns has also been closely working with PayPal throughout its history, it notes. And notably, PayPal made a strategic investment in the business in 2019, as part of an $11 million financing round.

Following the deal’s close, Happy Returns will continue to work with retailers and shoppers both on and off PayPal’s platform, it says. The company’s co-founders, David Sobie and Mark Geller, and its full 120+ team will join PayPal and will report to Frank Keller, VP Consumer In-Store and Digital Commerce at PayPal.

PayPal is not disclosing the deal terms. To date, Happy Returns had raised $25 million in funding.

“This is an incredibly exciting milestone for our company, and it would not have been possible without the hard work and dedication of our entire team,” an announcement on Happy Returns’ website reads. “We are so proud of what our team has accomplished and are grateful for the tenacity, creativity and empathy Happy Returns employees bring to work each day. We are confident that the best is yet to come, and are looking forward to our next chapter as part of the PayPal organization.”

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