Corruption on sea routes. This costs Nigeria $204 million per year

By Marek Grzybowski

Corruption in Nigeria’s maritime trade costs the country PLN 182,300. USD on average for one sea delivery according to a Danish analytical company. The report details the results of a study prepared by QBIS, a company dealing with the assessment of the socio-economic effects of corruption in the transport of goods by sea.
As a case study, the effects of direct and indirect costs of corruption on the delivery of goods by sea in the private sector, lost profits to the government and costs to Nigerian society were taken.
“Government officials taking bribes for routine tasks or ‘coercive’ corruption cause economic damage in the form of ship delays and higher commercial costs, impact the well-being of seafarers and expose them and others to the risk of criminal prosecution,” say the authors of The Cost of Maritime report Corruption to the Industry and Society” developed as part of The Maritime Anti-Corruption Network.
– Since 63% of Nigerians, or 133 million people, are classified as poor, the vast majority of Nigerian families do not have a budget surplus. Increased import costs due to corruption are likely to reduce household demand and make basic goods less accessible to the average Nigerian family, the report notes. If there is no improvement in the fight against corruption, the authors of the report predict that retail prices of grain and gasoline will be 1-2% higher.

Pay like grain
In the case of corruption on sea routes, the saying that “you have to pay for grain” is true. In a scenario describing corruption cases so far, where all bribery requests are complied with without resistance, the study found that corruption increases trading costs by PLN 147,000. USD for delivery of grain by ship and over 187 thousand USD for transporting gasoline. These goods were taken into account because food and gasoline account for about one-third of Nigeria’s imports.
Corruption in ports also has an overall economic dimension and drastic budgetary consequences. It states that “maritime corruption results in an annual reduction in GDP of USD 204 million and an annual reduction in revenue collected by customs services of USD 42 million.”
There are also significant social impacts. Corruption in maritime trade means that approximately 235 people are employed full-time in maritime goods trade in Nigeria. This means less economic activity in ports, forwarding and transport handling goods delivered by sea.

Drowning corruption
The effects of effective fight against corruption were also analyzed. The study shows that a zero-tolerance approach to bribery during ship clearance has tangible results.
Damage caused by corruption reduces shipping costs through seaports by approximately 62%. Reducing the costs of corruption by approximately PLN 114,000. USD per delivery, maritime corruption bills are reduced by approximately USD 100 million per year. As a result, the negative economic impact is reduced by USD 230 million.
– By saying no to offshore corruption, Nigeria’s GDP could increase by approximately USD 130 million per year. Customs revenues will increase by USD 28 million per year. Reducing corruption in ports may contribute to the creation of 147,000 jobs. full-time job positions, the report states. This could be the result of greater sales and economic activity across the supply chain in Nigeria.

Positive actions by the Nigerian government
MACN notes the positive actions of the Nigerian government. It is concluded that the combined efforts of business and government have reduced corruption in Nigeria. It has been noted that over 90% of corruption cases are now resolved within 24 hours. Before 2019, it took seven to ten days for a single case. Currently, the average time to resolve a bribery issue is between one and eight hours.
– What is impressive is that 98% of escalating incidents were successfully resolved and the remaining 2% were referred to the authorities for clarification of protocols – emphasizes MACN.
MACN (Maritime Anti-Corruption Network) has been investigating the effects of corruption in maritime transport for over ten years. Data is collected directly from operators and forwarders as well as government institutions, including customs. Corruption is being investigated in the port and maritime transport sectors.
It is noted that detailed breakdowns of the direct costs of corruption have so far been documented. However, there was a lack of a comprehensive assessment of its overall financial impact on maritime business and society. So far, indirect costs, such as extended delivery times of goods by ship and delays in transhipment, have not been analyzed so thoroughly.
– Although it is easy to dismiss attempts to reduce corruption, I am personally convinced that thanks to greater transparency, digitalization and better management, corruption in ports has decreased over the last decades – notes Jan Hoffmann, Head, Trade Logistics, UNCTAD on the social networking site, who praises the inquisitiveness authors of the QBIS report.
– I still remember that as a sailor I saw the standard currency of a pack of Marlboros and a bottle of Johnny Walker having to change hands before we could open the hatch covers. It may still happen, but it happens less often today, emphasizes Hoffmann.
A new study, The Maritime Anti-Corruption Network, from Danish consulting firm QBIS, quantifies the value of corruption in USD to the private sector, government and society. Hidden indirect costs resulting from corrupt practices throughout the maritime supply chain were also identified. The study took into account import costs, from sea transport to the price of the goods to the final consumer, excluding profit. At the same time, hidden indirect costs resulting from long lead times, delays and additional fees in the form of bribes were taken into account.