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CBN, Council move to block $4bn leakages at port

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CBN, Council move to block $4bn leakages at port

 …bars shipping firms from local FX market

 

Central Bank of Nigeria (CBN) and the port economic regulator, Nigerian Shippers’ Council (NSC) have introduced Disbursement Accounts (DAs) following an annual loss of $4 billion (N1.4 trillion) in the port industry to shipping agencies, New Telegraph has learnt.

They have also blocked all the shipping agencies operating in the country from sourcing foreign exchange in the local market to settle charges incurred by their vessels locally.

The apex bank said that such charges to be covered by the DAs were those being collected by the Nigerian Ports Authority (NPA), Nigerian Maritime Safety and Administration Agency (NIMASA), ship chandelling costs and other local shipping costs.

It was learnt that failure by the shipping agencies to comply with the CBN and NSC order would lead to sanction as contained in United Nations Conference on Trade and Development (UNCTAD) minimum standards for shipping agents.

Investigation by this newspaper also revealed the UN agency had said in its Article 6 that national authorities should ensure that the rules are complied with.

It noted that non-compliance should lead to appropriate disciplinary measures such as temporary suspension to operate as shipping agent or cancellation of authorisation to operate as shipping agent in the country.

Stakeholders comprising importers, exporters, customs brokers, freight forwarders and ship chandlers have complained that they had been losing $4billion to the shipping agencies annually for several years.

Following the complaints, the CBN and the council said that all shipping agencies must open Disbursement Accounts (DAs) from where they would carry out operational costs for their multinational principals in overseas. Already, CBN has set up investigative teams to ascertain that there were no such accounts being operated by any shipping agency in the country.

The banking watchdog said that the move was in line with Article 4 of the UNCTAD minimum standards for shipping agents all over the world.Executive Secretary of the council, Mr. Hassan Bello, explained at a meeting with the CBN representative and shipping industry stakeholders in Lagos, that maintenance of a disbursement account as provided by UNCTAD minimum standards for shipping agents would stop the agencies from going to the local market to source foreign exchange to settle charges incurred by ships locally.

Bello said that the DA charges were usually in foreign exchange since it was assumed that the principal must have wired the funds to the disbursement account of the agent in foreign exchange. According to him, it was left for the shipping 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.

Bello said that in Nigeria, the practice was however, completely different. He noted that shipping agents apply to transfer all incomes to their principal, while at the same time applying the CBN for forex at interbank market to service local costs.

The CBN Deputy Director, Foreign Exchange Management, Trade & Exchange Department, Mr. A.S. Jibrin, said that apex bank was interested in policies that would grow the shipping industry and the national economy. Also a former Director, Shipping Services of NSC, Mrs Dabney Shall-Holma, said the Disbursement Account would go a long way in improving the contributions of the shipping sector to the country’s gross domestic product (GDP).

Shall-Holma said that the shipping sector’s contribution to the country’s GDP was low, saying that it was not good that shipping operators were not contributing enough to the economy.

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