Tackling corruption in maritime trade
17th October 2023By Martin Benderson, Associate Director, Collective Action & Partnership Development, Maritime Anti-Corruption Network (MACN)
In today’s highly interdependent world economy, business and societies depend on the efficient clearance of vessels and goods in ports worldwide to function, develop and prosper. More than 80% of world trade is transported by sea and via ports, and any business that is part of global supply chains does, to some extent, rely on ports for import and export. Every day, vessels and cargos enter ports, and the processes involve numerous stakeholders across several jurisdictions, resulting in multiple interactions with government officials, including Customs.
The port is an administrative monopoly over an essential public service that businesses depend on to function and prosper. This creates a breeding ground for ‘coercive’ corruption, where government officials may extract bribes from companies for performing routine processes during, for example, vessel and cargo clearance. Maritime corruption of this kind increases trade costs and ultimately impedes economic and social development, particularly in low- and middle-income countries, where trade costs are already the highest.
Why tackle corruption in ports?
Corruption comes with a cost to business and societies. The impact of corruption in ports has been documented in several studies and through data collected by the Maritime Anti-Corruption Network:
- Increasing the cost of trade: Studies from Southern Africa have shown that bribes represent up to a 14% increase in total shipping costs for a standard 20ft container and that shipping companies are actively avoiding “corrupt ports” by taking longer and less direct routes to less corrupt ports. This adds to the costs of trade, adds to fuel costs and greenhouse gas emissions, and creates increased congestion and delays regionally.
- Causing delays: Corrupt demands usually come with a threat of delaying the cargo and vessel. Bribes in ports result in slow-moving clearing queues, ultimately leading to delays.
- Facilitating illegal activities: Corruption at borders and ports is also likely to facilitate a wide range of illegal activities, such as smuggling of people and goods, tax evasion, and cross-border crimes.
- Lowering productivity, and slower growth: Firms that pay bribes not only spend more time and money dealing with the bureaucracy, but also suffer from the indirect costs, such as lower productivity, slower growth, employee theft and more expensive access to capital.
- Endangering the wellbeing of seafarers: Rejecting and challenging corrupt demands can place the safety of seafarers, the vessel and its cargo at risk, and in particular, has a negative impact on the wellbeing and mental health of seafarers. The captain and crew are put under tremendous pressure when facing corrupt demands from port officials, who can arrange for the delay and detention of a vessel at considerable cost to their employers.
The strategy of the Maritime Anti-Corruption Network
The Maritime Anti-Corruption Network (MACN) is an award-winning industry-led collective action initiative, working in partnership with industry, governments and civil society to eliminate corruption and promote inclusive trade across the maritime supply chain. With over 190 companies from the maritime industry in its membership, MACN represents more than 50% of the total global shipping tonnage used to transport cargos along sea routes.
Since its inception, MACN has pursued a comprehensive strategy, addressing both the supply and demand sides of bribery and corruption. The strategy consists of two fundamental approaches: one approach focuses on strengthening MACN members’ corporate anti-corruption programmes; the other approach is external-facing and focuses on engaging with government stakeholders to improve, for example, clearance procedures, regulatory frameworks, and integrity in ports worldwide.
In the MACN Collective Action programmes, governments, the shipping industry, and civil society are engaged in finding constructive solutions to challenges that influence the entire maritime supply chain. The MACN Collective Action approach has proven to be efficient in countering corruption in challenging environments such as Argentina, Bangladesh, Egypt, India, Indonesia, Nigeria, Pakistan, and Ukraine.
Public-private collective action to reduce corruption in Nigerian ports and terminals
In Nigeria, MACN has been working with the Convention on Business Integrity (CBi), a nonprofit organization promoting ethical business practices, transparency, and fair competition in the private and public sectors. Since 2012, both entities have been collaborating with government partners on a series of initiatives aimed at strengthening integrity and improving the operating environment in Nigeria’s maritime sector. Over the years, this partnership has enabled port users in the private sector to demand, track, and ensure greater compliance with policies and laws at Nigerian ports and terminals.
Similarly, it has helped the Federal Government of Nigeria (FGN) to strengthen its capability to establish compliance systems and collaborate with the private sector and civil society, through collective action to implement initiatives that lead to cultural shifts in behaviour and actions necessary to improve compliance and efficiency at ports and terminals. All of these are intended to directly improve trade flows in and out of Nigeria and support socio-economic development. At national level, slow cargo delivery, delays, cargo diversions and high demurrage charges at seaports are estimated to have cut Nigeria’s economic growth by USD 14.2 billion, based on estimates by the African Centre for Supply Chain (ACSC, 2021).
Using industry data to identify and address corruption
In 2019, MACN and CBi introduced an Anti-Corruption HelpDesk for the maritime private sector and vessels calling at Nigerian seaports and terminals. The objective of the HelpDesk is to empower and support companies to reject corrupt demands during vessel or cargo clearance by providing a real-time incident resolution and accountability mechanism. If a government authority makes a corrupt demand, the Local HelpDesk team can intervene on the vessel’s behalf by escalating the issue to the relevant government agency tasked with integrity oversight. Such real-time cooperation between private and public sector actors has proven to be a highly efficient means of tackling corrupt demands.
The HelpDesk is an innovative tool in which government agencies, and international and local maritime industry players, collaborate to monitor and enforce their integrity and anti-corruption compliance standards. The innovation aspect of the HelpDesk lies both in the way it can provide real-time support, and in its multi-stakeholder approach. When it was launched, the HelpDesk was the first real-time support mechanism in the world, giving companies much-needed support when operating in a high-risk market.
The data collected by the Local HelpDesk team in Nigeria shows that more than 90% of corruption incidents are solved within 24 hours and that the average case resolution time is 1-8 hours. Prior to the HelpDesk operation, case resolution took up to 7-10 days. For shipowners, the operational costs (staying in port, being delayed, processing paperwork) have therefore been reduced from approximately USD 150,000 to USD 20,000 per port call. The evidence from the data therefore suggests that the HelpDesk is not just an effective resolution mechanism, but a strong corruption-prevention tool. The Government of Nigeria has been using HelpDesk data to benchmark its performance in fighting corruption, recognizing the link between the benefit of improving trade flows and preventing corruption.
Inter-Agency collaboration to enforce anti-corruption in ports
On International Anti-Corruption Day, 9 December 2020, the Vice President of the Federal Republic of Nigeria launched the new Nigerian Ports Process Manual (NPPM) in a bid to promote transparency, and to eliminate bottlenecks and illegal demands in the nation’s seaports and terminals by making standard operating procedures (SOPs) for vessel and cargo clearance fully transparent across all government agencies involved.
Subsequently, to ensure diligent enforcement and compliance with the NPPM, the Federal Government of Nigeria established an inter-agency Port Standing Task Team (PSTT). The key objectives of the PSTT are to monitor and enforce compliance by all government agencies and private sector stakeholders with the provisions of the NPPM, and help remove corruption risks and increase transparency in port operations, in line with international best practices as laid down in the NPPM. In practice, this means that the PSTT ensures that port officials strictly adhere to SOPs and carry out physical checks on board vessels and in ports and terminals during vessel and cargo clearance operations – where necessary, providing real-time responses to complaints regarding corrupt demands from port officials and private sector actors, or breaches of SOPs and NPPM timelines.
The PSTT is an innovative inter-agency collaboration which includes key agencies, such as the Independent Corrupt Practices and Other Related Offences Commission (ICPC), the Department of State Services (DSS), the Nigerian Shippers’ Council (NSC), the Nigerian Ports Authority (NPA) and, recently, the Nigerian Customs Service (NCS). The PSTT’s mandate has made it possible to dismantle corruption networks at port corridors and investigate breaches of standard operating procedures. As part of its functional initiatives, the PSTT has enforced joint boarding of vessels by NCS and other government officials to improve joint accountability. Each agency has defined timelines to board vessels and carry out its functions. This has improved transparency, cut inspection times, and ensured that officials must board vessels together and complete their inspection within 90 minutes of boarding, or formally request an extension of time.
For the Nigerian Customs Service, the PSTT has been a win-win solution as it has helped increase port efficiency. NCS has strengthened its dispute resolution mechanism at the command levels in order to be able to manage issues arising in the process, with a view to eliciting procedural compliance to facilitate trade. The commitment by the Nigerian Customs Service to engage in the PSTT and enforce compliance with standard operating procedures has also been noticed by the private sector. Since its formation, MACN has hosted an anonymous incident reporting system, allowing maritime industry players to submit reports on the corrupt demands they face during port operations in any port worldwide. This mechanism gives MACN data at stakeholder level in ports and shows a clear downward trend in the incidents involving Nigerian Customs which are reported by the private sector. That downward trend is particularly evident following the launch of the PSTT in 2020, and up to the present date, with an 86% decrease in such incidents, and only four reported in 2023 (see Figure 1).
For the maritime industry and port users in Nigeria, the establishment of the PSTT and HelpDesk has been a game changer. It has empowered the maritime private sector to reject, report and record corrupt demands, and reduces the costs of not participating in corrupt practices, which has further incentivized business to join MACN and CBi’s Collective Action Initiative in Nigeria. It has further galvanized much-needed trust between the private and public sectors in Nigeria and improved the public-private dialogue on integrity, ethics, and regulatory challenges in trade.
Outcomes and Impact
The anti-corruption solutions adopted by the Nigerian Government are the result of several years of engagement by MACN and CBi with the Office of the Vice President of Nigeria, Federal Ministry of Transportation, Nigerian Shippers’ Council, Independent Corrupt Practices Commission (ICPC), Technical Unit on Governance and Anti-Corruption Reforms (TUGAR), and other key governance agencies. Through this multi-stakeholder process, MACN and CBi, and our partners from the government, business and civil society sectors, have achieved the following:
- Strengthened compliance: The Port Standing Task Team ensures full implementation of the NPPM and compliance with standard operating procedures (SOPs). It promotes integrity in Nigeria’s maritime sector by dismantling corruption networks at the ports and terminals.
- Institutionalized sector-wide reforms: The Vice President Office’s Executive Order No. 001 of 2017 on the Ease of Doing Business requires all government agencies, including port agencies, to publish their SOPs, application procedures and timelines, redress mechanisms, and consequences for process delays. It has institutionalized ongoing reforms and promoted transparency.
- High-level support: The Federal Government has provided significant support through the Office of the Vice President of Nigeria, which has incentivized other government agencies to engage in the initiative.
- Anti-Corruption Toolkit: MACN and CBi have contributed to the development of anti-corruption measures, including the SOPs, the Port Service Support Portal (PSSP), Compliance Learning Management System, the NPPM, and the establishment of a Grievance Reporting Mechanism implemented through the MACN HelpDesk.
- HelpDesk implementation: MACN has launched and operationalized the HelpDesk, which complements the PSSP. The HelpDesk enables port users to report, track and resolve incidents of corrupt demands in real time. This initiative has increased stakeholder capacity for anti-corruption management and reduced the cost of doing business. The use of the HelpDesk and the Nigerian PSSP has increased over time, with over 800 vessels using the HelpDesk since its launch.
This Collective Action Initiative shows that it is possible to address systemic corruption when building strong alliances between the public and private sectors. For MACN, the initiative is a best-practice template to fight corruption through collective action. The following lessons, in particular, stand out:
- Government support is key to achieving sustainable change: The tone from the top has been instrumental in ensuring oversight for compliance of agencies that operate in Nigerian seaports.
- Data is key to highlighting gaps and measuring progress: Identifying the key players with leverage, and engaging the government with a solution-driven approach and evidence-based data to show which corruption challenges are systemic, has been successful.
- Overcoming trust barriers: It can take a long time to build trust between the public and the private sector, and for companies to report systemic integrity risks without fear of retribution. It is important to have a strategy and identify the right stakeholders, including the local private sector, who can drive change.
- Link integrity training to the organization’s strategy: Building capacity for both the public and the private sector helps to incentivize a change of behaviour. Training should be linked to an organization’s strategy and reform measures to be effective.
- Engage civil society: Civil society engagement is needed to keep public-private partnerships mutually accountable and ensure the sustainability of the project.
These lessons highlight the importance of collaboration, transparency, and long-term strategies to tackle corruption and improve the efficiency and integrity of seaport and terminal operations in Nigeria.
 Sequeira, S. and Djankov, S. 2009. ‘On the Waterfront: An Empirical Study of Corruption in Ports’ 2009, 2.
 Sequeira, S. and Djankov, S. 2009. Op. cit.
 Igbanugo, H. and Gwenigale, R. (2011) ‘Assessing and Minimizing Customs-related corruption risk in Sub-Saharan Africa’s Ports’. Accessible online at https://www.martindale.com/matter/asr-2504265.Assessing-and-Minimizing-Customs-Related-Corruption-in-SSA-Ports-July-2011.pdf.
 Chene, Marie (2013) ‘Literature review on corruption at ports and border points in Southern Africa’, U4 Anti-corruption Helpdesk.
 Jenkins Matthew, 2018, The Relationship between Business Integrity and Commercial Success, Norway, U4 Anti-Corruption Resource Centre, p. 4-9.