An Evaluation Of Nigerian Ports Post-Concession Performance
Concession has been acknowledged as a valuable tool for port authorities to retain control of ports and shape the supply side of the terminal market, in the absence of full privatisation. This study empirically examines the influence of transfer of port operational services from the public to the private sector, through concession contracts on operational performance in the context of the Nigerian port industry. It extends the work of Liu (1995) and others on the comparative performance of public and private ports in the UK and other countries, by extending the study to the Nigerian ports concessions.
The Nigerian port reform was borne out of the belief that the transfer of port operations from the public to the private sector will improve the efficiency of the ports, by instigating competition among the various terminal operators. The Nigerian port concession involved the delineation of six Nigerian ports into 25 terminals and awarded to terminal operators. The objectives of the study include, among others; the benchmarking of pre- and post-concession efficiency, to determine sources of efficiency change and to determine factors responsible for the improvement of Nigerian port performance.
A positivist approach is adopted, using quantitative data that involves outputs and inputs related to the port‘s production function. Theoretical underpinnings of privatisation and performance, as well as empirical evidence from countries, were presented and discussed. The variables of the research were analysed using non-parametric DEA and the Malmquist Productivity Index to determine the efficiency and the sources of productivity change respectively. This study introduced a novel idea, by adopting a concentration index in measuring the level of competitiveness of ports. The conceptualised theoretical model of operational performance was solved using a two-stage multivariate regression, to determine the factors responsible for the improvement of the Nigerian ports‘ efficiency.
The results of the analysis suggested that the productive performance of the ports under consideration improved after the transfer of terminal operations to the private sector, though not in all the ports. Indicating that the wholesale concession of the ports is not the best after all, some ports would have been better left under public ownership. The driver of the improved efficiency after concession, is scale efficiency (increased throughput levels), rather than technical efficiency. Therefore, the post-concession Nigerian ports performance is influenced by the scale of production and change of ownership. The delineation of the ports into terminals has not ushered in the expected competition among and within the ports.
1.1 Background to the Research
The last decade has witnessed significant changes in the ports in Sub-Saharan Africa. The 31 countries with ports in the sub-region have either improved legislation or policy oversight, restructured, or embraced private participation in an attempt to reform the ports. The ports in the sub-region are gradually moving away from being publicly operated to engaging the private sector in terminal operations through concession contracts. Most container ports have been a concession, while the specialised ports and terminals are either privately owned or leased. International and local companies participate in the operation of a vast number of ports, even in relatively small ports and in competing terminals at more major ports.
Countries in Sub-Saharan Africa have embraced reforms, as ports play a role in the global trade logistics chain, which impacts heavily on the cost of many exported and imported goods. The belief is that the reforms that improve efficiency will lead to a reduction in total logistics costs. It also impacts positively on the overall competitiveness of economies of reforming countries (Estache, González, & Trujillo, 2001). The most commonly used tool to engage the private sector in the port industry is a concession contract. It is a public–private partnership (PPP) of a contractual nature and has been a favourite means worldwide of instigating port development. It provides new opportunities for injecting private capital, by adopting a market orientation approach. A common feature of reforms is monitoring and evaluation. The focus of ports in post-reform monitoring is partial productivity indicators. The partial indicators, though useful, can be quite misleading, as they do not generate the same ranking for all the ports. As a result, the port authorities have limited information to implement some of the regulatory mechanisms that require consistent estimation of efficiency gains (Trujillo &Nombela, 2000). Hence, the need for a study that reflects the joint effects of all inputs and outputs in the measuring of absolute performance.
Nigeria ports play a significant role in international trade in the sub-region; over 90% of traded goods are carried by sea. The Nigeria economy accounts for over 70% of seaborne trade in the West and Central African sub-region due to its vast population (Fivestar Logistics, 2008). Therefore, assessing the productive efficiency of Nigerian ports after concession is crucial to the implementation of port reforms of other countries in the subregion.
Port development in Nigeria has a chequered history. However, the history of modern ports administration can be traced to the Port Act 1954. The Act gave impetus to the establishment of the Nigerian Ports Authority (NPA) in April 1955, as a public corporation. It was owned wholly by the Federal Government of Nigeria (FGN) and charged with the responsibility to operate and regulate seaports in Nigeria (Mohammed, 2008). The importance of ports as a catalyst for economic development was recognised in the first national development plan (1962-1968). The plan earmarked Nigerian ports for development; it provided for the expenditure of £45 million for the improvement of facilities at Lagos and Port Harcourt ports (Akinwale &Aremo, 2010). The Nigerian Civil War (1967-1970) constituted a major setback for port development in Nigeria due to the closure of Port Harcourt port to foreign traffic. Lagos port was left to supply port services in Nigeria. As a result, the then military government enacted a decree empowering the NPA to acquire the private ports in the Eastern part: Warri port operated by John Holt transport, Burutu port owned by United African Company (UAC) and Calabar port by five different operators.
The global changes in the port industry, coupled with the economic downturn of the 80s, triggered infrastructure obsolescence and decay. It became evident that the government had no resources, or the managerial ability, to run a modern port successfully (Razak, 2005). In addition, the trend worldwide was that governments were disengaging from port operations and restricting activities to regulation and providing an enabling environment for the private sector to operate, providing the impetus for change. The option of transfering port operations to the private sector through concession contracts then became imperative. The policymakers realised that maintaining the status quo would lead to further decay of the ports and losing the competitive edge among ports in the sub-region. Therefore, the introduction of the private sector in port operations in Nigeria was embraced, as it has been acknowledged that private operation of ports will encourage greater flexibility, efficiency and better services to port consumers. It brought to the fore the disengagement of government from the activities that could be more efficiently performed by the private sector.
1.2 Statement of the Problem
During the 1990s and prior to concession, Nigerian seaports were considered inefficient and unsafe due to massive cargo thefts (wharf rat phenomenon) and among the most expensive ports in the world. Also, the ports in Lagos were notorious for congestion that led to the continuing imposition of congestion surcharges and the high cost of imports, resulting in long turnaround times for ships and increased container dwell times (Leigland & Palsson, 2007). Instead of the international standard of 48 hours ship turnaround time in most Asian and European ports, as observed by Ducruet and Merk (2012), it took weeks to load and unload ships in Nigeria ports. There were also problems of over bloated workforce, excessive port charges and too many agencies involved in cargo clearing. In addition, the port infrastructure and superstructure had become obsolete and in a state of disrepair and in need of rehabilitation. The government was unwilling to provide the enormous financial outlay required in financing the restoration of port infrastructure due to existing operational inefficiency and corruption, therefore the need for external financing became apparent. In order to mitigate these problems, government decided to introduce the private sector, to bring in expertise in the operation of the ports through concession contracts.
These massive reforms were undertaken in the belief that the reforms that improve operational efficiency of ports are likely to bring down total logistics costs and in turn improve the competitiveness of the Nigerian economy. The most valuable tool for bringing cost-cutting efficiency gains and improvements in the overall performance of the ports is the introduction of some form of competition. Competition can be introduced into the ports through ex-ante or ex-post approaches (Estache, González, & Trujillo, 2002). Ex-ante relies on the auction of rights to operate the port, or in the port while ex-post is competition between ports, or between terminals within the port. The Nigerian port concession is articulated to involve these two types of competition.
As a result, the Nigerian government embarked on the most extensive infrastructure port reforms that have taken place worldwide. It culminated in the handing over of port operations, through concession contracts, in 2006 (Ocean Shipping consultants, 2008; Palsson & Leigland, 2007). The primary objective of the Nigerian ports‘ concession is to attract investment, lower tariffs, improve service delivery to the consumer and in the end improve the overall performance of the ports. However, six years after handing over the operation of Nigerian ports to the private sector, in what is described as the most ambitious port reform that has taken place worldwide, no study has examined the overall impact of the concession to ascertain if the ports are on the path to efficiency. Though there are some studies that have dealt with some aspects of the Nigerian ports‘ concession such as Akinwale and Aremo (2010), which examined concession as a tool to manage the crisis at Nigerian ports. Oghojafor, Kuye, and Alaneme (2012) studied concession as a strategic instrument for efficiency and Okeudo (2013), looked at the efficiency level of Onne port after the reform. However, all these studies have only employed a piecemeal approach to studying the Nigerian port reform programme and none have evaluated the outcome of the concession programme holistically. That being the case, the research question is: Has the massive reform that took place during a short period improved the performance of Nigerian ports? That is what this study investigates and provides a model for future evaluation. To put it succinctly, the study investigated the underpinning questions: ―Does the transfer of the operation of a whole nation‟s ports from the public to the private sector, through concession contracts, have an influence on the performance of the ports?
1.3 Research Questions
Focusing on the Nigerian port sector, the study examines the relationship between privatisation through concession contracts and performance. The study focused on 20 concessions for six Nigerian ports (Apapa, Calabar, Onne, PH, TCIP and Warri), which are representative of port infrastructure concessions in 2006. On average, these concessions have been in operation for 6 years.
The research concentrated on investigating these questions:
- Are ports with terminal operations in the hands of the private sector more efficient than those in the public sector?
- Are ports that are under intense intra-port competition more efficient than those that are not?
- What factors influence port operational performance?
- What role does ownership of port institutions play in influencing operational port performance?
1.4 Research Aim and Objectives
The aim of this research is to study the port concession programme and its influence on the efficiency of Nigerian seaports, as well as benchmark the operational efficiency of the ports, to determine which operators are making efficient use, of resources allocated to them. In other words, the research examined in-depth, the post-concession operational performance of Nigerian ports to ascertain whether the ports are on the path to efficiency. The study addressed the aim by focusing on these specific objectives:
- To measure and examine the efficiency trend of Nigerian seaports;
- To evaluate pre- and post-concession Nigerian ports‘ efficiency;
- To examine the overall performance of Nigerian ports from productivity and efficiency change perspectives;
- To determine the competitiveness of Nigerian seaports after concession;
- To determine the factors that influence Nigerian ports‘ operational performance;
- To assess the impact and port users‘ perspective on the concession programme;
1.5 Significance of the Study
The result of this study is significant and can have some important policy implications.
Nigeria is a major force in international trade, with 70% of goods coming to the West, and Central Africa destined to Nigeria. Out of which 80% of the traded goods are transported by sea (UNCTAD, 2009). Therefore, the study of port performance is crucial to the sub-region. The World Bank African infrastructure country diagnostics (2008) assessment of ports in Sub-Saharan Africa ranked Nigeria as the top reformer Vagliasindi and Nellis (2009). The PPI database put the total private sector investment in Sub-Saharan African ports at $1.3 billion, with 62 percent related to the container terminals and 32 percent to multipurpose terminals, with little in the bulk cargo facilities. Nigeria accounts for 55 percent of the total private sector investment in the sub-region and the biggest single deal is the container terminal Apapa in Lagos, Nigeria, which attracted over $300 million. These transactions further attracted $1.7 billion in royalties to governments in the sub-region with over $1billion associated with the Apapa terminal concession (Ocean Shipping consultants, 2008). Also, Nigeria is the only country to concession all her ports in one scoop and the pace of concession (20 concessions within a year) is unprecedented worldwide (Ocean Shipping consultants, 2008). Therefore, it becomes imperative to study the outcome of the programme that attracted such huge investment in the sub-region. The study will also be crucial for governments in the sub-region seeking to embrace port concession, to learn from the successes and mistakes of Nigeria. Globally, the study of the Nigerian ports concession is a good example to demonstrate the effects of national port concessions on port performance.
In addition, there are many studies on seaport efficiency measurement, as evident from the surveys of DEA studies by Panayides, Maxoulis, Wang, and Ng (2009); González and Trujillo (2009) and a synthesis by Wang, Song, and Cullinane (2002). The surveys analysed over 26 journal papers on efficiency measurement from 1993-2006. It could be argued that to increase the efficiency of ports, the results of other research can be applied directly. However, as observed by Hall (2002), studies from different countries are hardly comparable, due to the timeframe, entities, the structure of ports, or the countries‘ social systems differ. However, there are no port efficiency studies devoted solely to productive efficiency, or the effect of privatisation on the operational performance of the Nigerian seaports, despite its strategic position trade-wise, in the sub-region. Hence, the motivation for this study to fill this identified gap. It makes the study crucial to all maritime players.
1.6 An Overview of the Nigerian Economy and Seaports
……in the complete materials
The study evaluated the performance of Nigerian ports two years before concession (2004-2005) and five years after concession (2006-2010) to determine the influence of concession on efficiency. Although the study is still ongoing the studypresented preliminary results based on the investigation so far on the subject. The efficiencies of six Nigerian ports were evaluated using the DEA Window Analysis in combination with panel data for a seven year period and a window length of four. The result revealed a fluctuation in efficiencies over the period with a remarkable increase in efficiency in 2006 the year the terminal operators took over the operation of the ports. This may be attributable to the drastic reduction of the ports labour force than the activities of the private operators. It is also observed that none of the investigated ports achieved a hundred percent efficiency for the period under review though Apapa port with an average of 84% is the most efficient while Calabar was the least with 20.44% efficiency level. It is significant to note that cargo throughput and ship traffic has increased considerably after the concession. That is an indication that Nigerian ports are regaining the traffic lost to neighboring countries ports in the pre-concession era. Finally, to fully appreciate the gains of the reform the policy makers should conclude all aspects of the reform. The data presented is a result of an initial investigation where a more complex analysis will be presented into a further publication.
An Evaluation Of Nigerian Ports Post-Concession Performance
The complete material will be sent to you in just 2 steps.
Quick & Simple…
Make payment of ₦3,000: through USSD Transfer, Bank Mobile App, ATM Transfer, or POS Transfer to:
|Account No.: 0811003731|
|Name: Samphina Academy|
|Account Type: Current|
Or Click Here to pay with Debit Card
|FOR CLIENTS OUTSIDE NIGERIA:|
|Click Here to pay with Debit Card ($15)|
|GHANA – Make Payment of 60 GHS to MTN MoMo, 0553978005, Douglas Osabutey|
Send the following details through Text Message or WhatsApp Messenger | +234-8143831497
- Payment Details
- Email Address
- An Evaluation Of Nigerian Ports Post-Concession Performance
The complete material will be sent to your email address after receiving your payment information | T & C Apply
You may also like:
An Evaluation Of Nigerian Ports Post-Concession Performance
This research material “An Evaluation Of Nigerian Ports Post-Concession Performance” is for research purposes and should be used as a guide in developing your research project / seminar work. For no reason should you copy word for word (verbatim) as samphina.com.ng will not be liable for any who copied the material.
The aim of providing this material is to reduce the stress of moving from one school library to another all in the name of searching for research materials. This service is legal because, all institutions permit their students to read previous projects, books, articles or papers while developing their own works. According to Austin Kleon “All creative work builds on what came before”.
samphina.com.ng is only providing this material “An Evaluation Of Nigerian Ports Post-Concession Performance” as a reference for your research. The paper should be used as a guide or framework for your own paper. The contents of this paper should be able to help you in generating new ideas and thoughts for your own research. Use it as a guidance purpose only.
How to defend your research work
This is a general guide on how to defend your research work:
1. Prepare For Questions:
If you are preparing for questions that may be asked during your defense, then your answers will flow smoothly and effectively. This will prove your knowledge on the subject e.g “An Evaluation Of Nigerian Ports Post-Concession Performance“, and strengthening your argument. Ask friends and family, read your work for them to listen to your presentation, and write down questions. You may be lucky the panel will ask you those you have already prepared on.
2. Strong Summary:
Summarizing your chapters will help keep your audience focused because it is easy for a mind to drift, so providing summaries will ensure your panel will follow along, even if they lose focus for a brief moment. Visual aides, such as graphs and power-point presentations can be very helpful. If you are going to use these, make sure you will practice your presentation with them.
3. Be Confident in Your Research Work:
Not knowing your topic “An Evaluation Of Nigerian Ports Post-Concession Performance” inside out will cause you to struggle and ultimately fail with your defense. You need to know the subject from every angle to ensure you are fully prepared for any question that may come your way.
Reinforce your findings to conclude your defense. The finale of your presentation should focus on proving the work that has been done. You may need to recap on what has changed and remained unchanged, if is necessary.
5 . Listen:
Before you get defensive or recite a particular answer, make sure you truly understand the question being asked. Being a good listener is an important quality, because providing an inaccurate or off-topic answer will also weaken the validity of your paper.