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Averted Labour Strike Saves Nigeria N5.6bn Daily Losses



The timely intervention of the federal government in averting the proposed indefinite strike by workers in the country saved Nigeria daily losses of about N5.8 billion, LEADERSHIP Sunday checks have revealed.

It was gathered that barring the last minute cancellation of the industrial action called by organised labour, Nigeria’s economy would have witnessed a more sluggish recovery as key sectors of the economy were on the brink of a total shutdown.

Experts who spoke to our correspondents on what would have been the negative effect of the strike recall that in the last three decades, the whole country had been brought to a standstill, with no time limits, whenever the Nigerian Labour Congress (NLC) embarked on nationwide strikes.

According to them, if the strike was allowed to take place, with all the major labour unions offering to take part, the all-round effect would have hurt the growth of the national economy.

In the Maritime sector, it was learnt that the Nigerian ports would have recorded a daily loss of over N5 billion if the strike had taken place.

This is in addition to N648 million that may have accumulated daily as demurrage on goods trapped in the ports, a cost usually borne by importers.

The development would have further fuelled inflationary pressures on the economy given the already high costs incurred by importers through the inefficiency in the management of ship and cargo traffic at Nigerian ports.

The loss at the Nigerian Ports would have been in respect of import duties, special taxes and dues, terminal charges and fees collected by the Nigerian Ports Authority (NPA) and other statutory agencies operating at the wharf.

Importers and freight forwarders said their major concern was the extra costs arising from the demurrage charges, which would have been imposed on cargoes when the strike eventually ends.

Even though the delay is no fault of theirs, terminal operators have consistently slammed demurrage charges to cover the additional delays caused by strikes.

The N5 billion daily loss comprise the N1billion generated daily on import duties by the Apapa and Tin Can Port command of the Nigeria Customs Service and other customs formations across the country and N200 million by the NPA, as well as dues collectable by Standard Organisation of Nigeria (SON), National Agency For Food Administration and Safety Control (NAFDAC), Nigerian Agricultural Quarantine Service (NAQS), among others.

However, freight forwarders had been warning of rising shipping costs that are not just putting pressure on cost of consumer goods but driving shipping and cargo traffic to ports in neighbouring countries, especially Cotonou Port in Benin republic.

A clearing agent, Collins Chukwudi, who spoke to our correspondent said if the strike was not called off at the dying minutes by the leadership of the organised labour, the ultimate winner would have been ports of neighbouring countries.

“The unfortunate truth is that while our ports would be groaning, Cotonou port would have been booming. It is going to be business as usual for some importers that have lost faith in Nigerian ports. They will only deepen their patronage of other ports, while more importers will join them,” he said.

Another importer, Kelvin Pius, commended the federal government for engaging the labour union, saying the strike would have plunged Nigerian Ports into another round of crisis.

Pius said, “The first strike In September led to congestion at the terminals and demurrage for importers. This strike, if not called off, would have added to the already depressed port environment and lead to another round of congestion, but kudos to the government for nipping it in the bud early,” he said.

Also, the botched strike equally saved the nation about N800 million daily that would have been lost to flights cancellation from the eight domestic airlines operating in the country.

This is excluding the loss which would have been incurred by those involved in aviation and allied services such as catering services, cab services, airport eatery services and other ancillary services at the airport terminals across the country.

The active participation of members of the National Union of Air Transport Employees (NUATE); Air Transport Services Senior Staff Association of Nigeria (ATSSSAN); National Association of Air Pilots and Engineers (NAAPE) and Association of Nigerian Aviation Professionals (ANAP), which indicated intention to join the strike would have totally grounded the nation’s aviation sector, as all aviation workers had been directed to withdraw all services and join other Nigerians and stakeholders to proceed on the nationwide strike.

With an estimate of a domestic airline losing about N100 million per day, the eight domestic airlines operating in the country would have lost about N800 million if the strike had commenced.

Already, foreign airlines had earlier been exempted from being affected by the strike action due to existing Bilateral Air Services Agreement (BASA) arrangements Nigeria had with foreign countries whose airlines operate into the country.

Justifying their position on international airlines, President of Air Transport Services Senior Staff Association of Nigeria (ATSSSAN), Comrade Illitrus Ahmadu, said before the November 6 deadline, the industry unions were not unmindful of existing Bilateral Air Services Agreement (BASA) arrangements Nigeria had with foreign countries whose airlines operate into the country.

Ahmadu stressed that the issue at hand was a domestic one, which should not be allowed to affect international airline operators.

Analysing what could have been the consequences of the strike, former chairman of Society of Petroleum Engineers (SPE), Nigeria Council, Dr. Saka Matemilola, said the strike was ill timed because it was coming at a time the country was recovering from economic recession that nearly crumbled the government.

Matemilola noted that the action would have also constrained oil production even as Nigeria is struggling to meet with two million barrels per day crude production and itching to take advantage of the recovering oil prices, which is hovering around $72 a barrel after crashing to $40 per barrel.

“Certainly it would not have been a good time for the economy because the Nigerian Union Petroleum and Natural Gas Workers (NUPENG) had indicated its willingness to join. What this means is that the sectors value chain will be virtually shut. Although that may not directly affect crude oil production, in the long run the entire industry would be affected in one way or the other”, he said.

In his reaction, managing director of Cowry Assets, Johnson Chukwu, said the country’s economy would have relapsed because the entire transport, especially land transportation would have collapsed.

Chukwu explained that because the entire goods and services sectors relied heavily on land transportation, it was obvious that manufacturing, down to logistics and distribution, would have been compromised.

He said: “What we would have experienced is that petrol service outlets would be shut, transportation would be disorganised and even the financial sector would be affected as workers would not have means of going to work. Although we cannot possibly put a figure to this but it will have short and long term negative effect on the entire economy”.

Chukwu added that the potential secondary effects of a strike affect establishments which are not on strike, but are dependent on the striking establishment.

This, he noted, would have led to the shutdown of petroleum products holding facilities.

According to executive secretary of Depot and Petroleum Products Marketers Association (DAPPMA), Mr. Olufemi Adewole, about 750 million litres of petrol would have been shut down because of NUPENG’s involvement.

Adewole stated that this would have had a major ripple effect on the economy because the scarcity would have been overwhelming and recovery would have taken a longer time and may have likely crept into the New Year.

Also, the director-general of LCCI, Mr Muda Yusuf, has commended the government and the leadership of labour unions for averting the planned strike by the labour unions.

The DG told LEADERSHIP Sunday that if the strike had taken place, it would have disrupted the entire economic activities and a lot of people in the informal sector who live on daily income would have been affected.

“Conferences and meetings that have been scheduled would also have been affected and, at the end of the day, it is the citizens that will bear the brunt of the strike,” he said.

Yusuf added that the chamber was optimistic of a truce at the end of the meeting between the two parties.

He stated: “The demand of labour is very simple; that the report of the tripartite committee be submitted to the president, and I listened to the Secretary to the Government of the Federation yesterday saying they are ready to take the report and follow through from there.

“Since that is what the labour has been clamouring for, our appeal is that it should show some understanding and allow the process to go through”.

Also speaking, the president of NACCIMA, Iyalode Alaba Lawson, noted that the country would have been put at a standstill if the strike had commenced as earlier planned by the unions.

She said,. “The country’s economy, which is just recovering and trying to stabilise, would have been made to suffer. The citizens would have also been affected if the nationwide strike had commenced. Everyone involved in this should be commended. I don’t want to imagine what Nigerians would have gone through if an agreement had not been reached.

“Every sector would have been made to suffer, while Nigerians would also have been made to go through some hardship. Now that an agreement has been reached, I want to appeal to everyone involved in this matter to fulfil their parts, especially the federal government. It should do everything humanly possible to honour whatever agreement it has reached with the unions in order for us not to go back to square one.

“Also, the NLC should look at other means of resolving disputes whenever they arise, instead of embarking on nationwide strike, as this will only mount pressure on an economy which we are just trying to stabilise”.