Maritime Policy & Management

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Efficiency and productivity of Nigerian seaports in

the pre and post concessioning periods

Ogochukwu Ugboma & Kayode Oyesiku

To cite this article: Ogochukwu Ugboma & Kayode Oyesiku (2020): Efficiency and productivity of
Nigerian seaports in the pre and post concessioning periods, Maritime Policy & Management, DOI:
10.1080/03088839.2020.1837975

To link to this article: https://doi.org/10.1080/03088839.2020.1837975

Published online: 04 Nov 2020.

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MARITIME POLICY & MANAGEMENT
https://doi.org/10.1080/03088839.2020.1837975

Efficiency and productivity of Nigerian seaports in the pre and

post concessioning periods
a
Ogochukwu Ugboma and Kayode Oyesikub
a
Department of Transport Management and Operations, School of Transport and Logistics, Lagos State University,
Ojo, Nigeria; bDepartment of Transport Management, Faculty of Social and Management Sciences, Olabisi
Onabanjo University, Ago-Iwoye, Nigeria

ABSTRACT KEYWORDS
Seaports pose as important connectors of value chains in the international Port efficiency;
trade of nations, therefore operational port efficiency is a critical contributor concessioning; Stochastic
to a nation’s international competitiveness. In order to support trade- Frontier model; port
oriented economic development, port authorities have increasingly been productive resources;
Nigerian seaports
under pressure from stakeholders to improve port operational efficiency by
ensuring port services are provided on an internationally competitive basis.
The main objective of port concessioning and/or deregulation policies is
enhancing greater port operational efficiency by engendering a more com­
petitive market and commercial approach to management. This paper uses
Stochastic Frontier Production and inefficiency models to evaluate the port
efficiency and productivity of the major Nigerian seaports using panel data
from 2000 to 2017 which covers the pre and post concessioning periods. The
results show improvements in the average efficiency of the ports from about
51% (pre-concession) to about 60% (post-concession). There were improve­
ments in cargo throughput, turnaround time and cargo handling equipment.
Albeit these improvements, there are still challenges of dearth of skilled
manpower, inadequate infrastructure, congestion, operational bottlenecks
etc. It is therefore important the government and stakeholders in the mar­
itime sector collaborate to evolve policies through regulations, guidelines
and legislation to achieve efficient, effective and competitive ports to attain
desired economic growth.

1. Introduction
Maritime mode of transportation has for centuries played an essential role in the carriage of
materials, goods and people in the context of trade among nations and regions, and has without
doubt played an important role in creating economic development and prosperity. Tongzon (1995)
opined that the cost of maritime transport is very competitive compared with land and airborne
transportation costs However, there are some negative aspects of waterborne transport which
include but not limited to longer travel time as a result of relatively low ship speed, congestion in
harbours resulting in longer turnaround time as well as poor linkage and integration with other
forms of transport and distribution as deduced from Liu (2008).

CONTACT Ogochukwu Ugboma ogochukwu.ugboma@lasu.edu.ng Department of Transport Management and

Operations, School of Transport and Logistics, Lagos State University, P. O. Box 0001, LASU Post Office, Ojo (Main Campus), Lagos-
Badagry Expressway, Lagos 102101, Nigeria
This article is a revised and expanded version of a paper entitled Efficiency and Productivity of Nigerian Seaports in the Pre and
Post Concessioning Periods presented at World Conference on Transport Research - WCTR 2019 Mumbai 26–31 May 2019. This
study formed part of my thesis studies for the degree of philosophiae doctor (PhD) at the Olabisi Onabanjo University, Ago-Iwoye,
Ogun State, Nigeria, which has been further developed and revised after the completion of my thesis.
© 2020 Informa UK Limited, trading as Taylor & Francis Group
2 O. UGBOMA AND K. OYESIKU

The Nigerian economy accounts for about 70% of all seaborne trade in the West African sub-
region due to the huge population of the country, yet her seaports’ operational profile ranks low in
efficiency among maritime nations of the world as reported by Five Star Logistics (2008). Over the
years, business at the Nigerian seaports was bedevilled with so many difficulties, for instance,
turnaround time for ships was too long and usually calculated in weeks, sometimes months,
depending on the cargo being loaded or discharged. There was dearth of infrastructure and the
decay of existing ones, cargo-handling plants and equipment owned by the Nigerian Ports
Authority (NPA) were few and mostly unserviceable, and dwell time for vessels in ports was
prolonged due to poor port management leading to port congestion. Corruption soared high
among labour contractors and various service providers, Nigerian seaports were rated as one of
the costliest seaports in the world. There were too many government agencies with over-lapping
roles with the presence of heavy human traffic inside the ports. Several grounds in the port premises
and quay aprons were dilapidated and abandoned. The numerous failed road sections inside the
ports stalled movement of goods within port grounds. There were complaints of untraceable or
missing cargoes being regularly lodged against the NPA, security inside the orts was compromised
by the activities of miscreants as theft and pilferage became rampant. The ports were also
characterized by dominant use of road transportation for the movement of cargoes from the
ports, though train lines exist, they were obsolete and out of use making the concept of inter­
modalism non-existent and neglected. Many shippers responded to these problems by diverting
their cargoes to other countries like Cotonou in Benin, Freetown in Sierra Leone, Tema in Ghana
and Douala in Cameroon for transshipment to Nigeria in smaller vessels.
To curb this development, as stated in Leighland and Palsson (2007) research, the federal
government of Nigeria embarked on a massive infrastructure concessioning programmes in
September 2004 as these port problems were far beyond the financial resources of NPA since
they involved capital projects and huge finances. These reforms include ensuring that Nigerian
seaports are made efficient in its operation; the cost of port services to port users should be made to
decrease, the Federal Government should be freed from the costs it incurred developing or
managing port operations since these can be commercialized as in other developed maritime
nations of the world, also private sector participation was targeted by the Federal Government as
one way to inject new blood into the maritime sector and even take its fortunes to higher levels
without committing the lean resources of the public sector which should be channelled to providing
basic amenities to the citizenry as suggested by Badejo (2000). The Nigerian seaports concessioning
plan was globally seen to be plausible with the involvement of the World Bank as the international
body to monitor the project, CPCS Transcom of Canada as concession bid managers and Royal
Haskoning of Holland as the consultants. The Haskoning study, as it is referred to, established some
of the major challenges prevalent in the port operations and subsequently recommended the
“landlord’ model approach. By July 2006, twenty long term port concessions were awarded with
some more in progress resulting to six major ports as reported by Leighland and Palsson (2007).
Since the concessioning took effect from 2006, the pre-concessioning period covered in the study
were the years from 2000 to 2005, while the post-concessioning period were from 2007 to 2019.
Since the takeover of ports by private operators in 2006, as reported in a Ships and Ports article
on April 14, 2010, there had been improvements in some areas (from what it used to be in different
aspects) of port operations for instance, cargo throughput increased from 280,000 in 2006 to
545,000 in 2008, vessel turnaround time reduced from 170 hours to 59.4 hours, but generally, the
ports cannot be said to be operating at maximum capacity. Whilst, efficiency measurement reveals
the best performers from which under-performers can learn, productivity measurement has the
additional advantage of identifying which components of productivity lead to progress or retro­
gress, for example, technical change and/or efficiency change refers to how seaports improve their
efficiency from one year to the other while technological catch-up or change refers to how seaports
are able to be technologically innovative in order to catch-up with the frontier and hence, be
productive from one year to the other. This study will fill that gap by contributing to literature on
 MARITIME POLICY & MANAGEMENT 3

the productivity and port operational efficiency of Nigerian major ports using the Stochastic
Frontier model which is a quantitative method that will be useful for ports of developing countries
like Nigeria and in Africa.

2. Review of literature
Privatisation, in its ‘purest’ form, involves the sale of state assets to the private sector. However,
Errunza, Muzumdar, and Sy (1998) in their research identified that privatisation also encompasses
increases in the level of private sector participation in ports by means such as transferring control or
management of a state-owned enterprise to the private sector (through leases, for example). Thus,
in the case of ports, a range of means of achieving privatisation exists, from the leasing of container
terminals to private operators, a practice that is obtained in Nigeria, to the establishment of joint
ventures through to innovative ‘public–private partnerships’ as recently developed in planning at
the port of Rotterdam. Notwithstanding the different forms, the trend towards privatisation is
attended by a burgeoning literature that extols the virtues of port privatisation. This literature
according to Lethbridge and Ra’anan (1991), ranges from academic analyses to private consultancy
reports, to documents from international agencies like the World Bank.
The concept of port privatization has over recent decades become significantly extensive. Many
ports around the world have benefited from private sector intervention. Transfer of property rights
which is a unique form of privatization practiced by many countries like Nigeria in the form of
concessioning has brought about positive growth in GDP in some countries like China; however,
for countries like Russia, they are still counting their woes. Many scholars believe that there are no
best practices for private finance of port investment. Private sector participation still remains
a formidable area in rapid evolution, not only in the port sector but for all public infrastructures.
The increased use of private investment is a necessary complement to privatization. Port privatiza­
tion, in its broadest sense, addresses the fundamental question of the type of institution that should
control the port sector. The arguments for private control of operations and private ownership of
assets other than land are well established. The argument for private control of administration is
not. The issue to be resolved is which mechanism is most effective for development of the port
sector? Should it be a tree market guided by profit and subject to minimal regulation or a public
body guided by public interest? Further still, some researchers are of the opinion that states do not
need to transfer seaport property rights in order to benefit from private sector expertise as the
specific nature of port investment, and the key objective of ports to facilitate trade, may be counter-
productive.
The study by Gómez-Ibáñez and Meyer (1993), on the international experience with transport
privatization highlighted that the argument behind privatisation is the general belief that the private
sector is intrinsically more efficient than the public sector. These advantages of private ownership
can be attributed to the discipline imposed by the need for profit maximization, which means that
a firm may have stronger incentives to be more cost conscious, efficient and customer orientated
than a public enterprise. Private sector investors and managers have greater financial incentives to
act in a commercial manner than their public sector counterparts, and ‘inefficient private enter­
prises are automatically eliminated by market forces. Also, privatisation is said to increase the
efficiency with which resources are allocated, by eliminating the distortions associated with deci­
sion-making processes in the public sector. However, in the developing economies there may be an
element of ‘coercive isomorphism’ in the spread of port privatisation, as the World Bank and IMF
make privatisation a precondition for funding.
Port efficiency is vital for trade facilitation as ports are the major gateways for international trade.
In line with UNCTAD (2014), in volume terms, nearly eighty per cent of world merchandise
transits by ocean. For several developing countries, this figure surpasses ninety per cent, therefore,
port efficiency significantly affects the capability of a country to participate in international trade. It
follows that ports serving developing countries should operate with efficiency for them to integrate
4 O. UGBOMA AND K. OYESIKU

into the global economy effectively. Akpghomeh (2008) analyzed the Nigerian seaport security
control and management and concluded that privatization of the seaports could enhance security at
the nation’s ports. Oyesiku and Ndikom (2008) opined that the challenges of port administration
and development in Nigeria with the view that there was managerial incompetence and labour
policy problems occasioned by undue government interventions. For them these are the factors that
have hindered the operational efficiency, performance and development of adequate infrastructural
facilities in the port industry.
Productivity and efficiency are quite significant in performance measurement. However, these
two totally different concepts have erroneously been treated as the same in most of the literature.
The productivity of a producer is often loosely described as the proportion of output(s) to input(s).
This definition is extremely clearly capable of explaining any condition of one output and one input.
However, in reality, it is more likely that production has multiple outputs and inputs, accordingly
productivity here would refer to Total Factor Productivity, which as deduced by Coelli et al. (1998)
is a productivity measure involving all factors of production. In other words, efficiency can be
defined as relative productivity over time or space, or both. For example, efficiency can be divided
into intra- and inter-firm efficiency measures. The inter-firm efficiency measure involves measure­
ment of the level of utilization of the firm’s own production potential by computing the productivity
level over time relative to a firm-specific Production Frontier that refers to the set of optimal
outputs given the various level of inputs. In comparison, Lansink, Zhu, and Demeter (2001) felt that
the inter-firm efficiency measures the performance of a selected firm relative to its best counterpart­
(s) within the trade.
Extant literature has shown that researchers have become increasingly interested in the study of
port efficiency and productivity following port reforms and devolution in the world ports. These
researches are mainly on western ports of developed countries. Some of these researchers have
measured efficiency of the ports using Data Envelopment Analysis and Stochastic Frontier Models.
Some of those that applied Stochastic Frontier Analysis to port efficiency include: Liu (1995) in
respect of the technical efficiency of twenty eight UK ports using a set of panel data from 1983 to
1990 with a translog functional form of the Stochastic Frontier Production. Banos, Coto, and
Rodriguez (1999) studied the allocative efficiency of twenty seven Spanish container ports from
1985 to 1997. Notteboom, Coeck, and Van Den Broeck (2000) measured the technical efficiency
thirty six European and four Asian container terminals by means of Bayesian Stochastic Frontier
Models using cross sectional data from 1994. Coto-Millan, Banos-Pino, and Rodriguez-Alvarez
(2000) in respect of the economic efficiency of twenty seven Spanish ports using panel data between
the periods 1985–1989.
Estache, González, and Trujillo (2002) research was based on the efficiency gains of port reform
of eleven Mexican ports from 1996 to 1999. Cullinane, Song, and Gray (2002) explored the technical
efficiency of fifteen major container ports in Asia using a Cobb-Douglas functional form and an
unbalanced panel data from 1989 to 1998. Cullinane and Song (2003) studied the productive
efficiency of two Korean and three UK container terminals using an unbalanced panel data from
1978 to 1996. Tongzon and Heng (2005) analysed the average efficiency of twenty five selected
container terminals around the world with a cross sectional data from 2000. Barros (2005) looked at
the economic efficiency of five Portuguese ports using panel data from 1990 to 2000. Cullinane and
Wang (2006) used the maximum likelihood estimating model to measure the technical efficiency of
seventy four European container ports with cross sectional data of 2003. Gonzalez and Trujillo
(2008) in respect of the infrastructure efficiency of nine Spanish container ports using the Distant
Function model of panel data from 1990 to 2000. Yan, Sun, and Liu (2009) assessed the efficiency of
the world’s major container ports using panel data between the period 1997–2004 with hetero­
geneous and time-varying production frontiers.
Early studies on port efficiency primarily targeted partial productivity measures (e.g. vessel
turnaround, crane or yard productivity). Later research supported a lot of comprehensive strategies
that examine the general efficiency of the terminals. A formidable stream of papers use Data
 MARITIME POLICY & MANAGEMENT 5

Envelopment Analysis (DEA) and Stochastic Frontier Models (SFM) to estimate overall terminal
efficiency. Notteboom, Coeck, and Van Den Broeck (2000) introduced a Bayesian approach to SFM
with an application to terminals in thirty six European instrumentality ports.

3. Methodology
For some decades now, production frontier estimation and efficiency measurement in ports have
been done by two methods namely; the Stochastic Frontier Analysis (SFA) which is the econometric
approach and Data Envelopment Analysis (DEA), a linear programming technique. These two
methodologies have their peculiarities from which arises their advantages and disadvantages. The
Stochastic Frontier distinguishes noise effects from the inefficiency effects, whereas the Data
Envelopment Analysis envelopes both noise and inefficiency effects as inefficiency. While the
Stochastic Frontier confuses the effects of bad functional specification of both technology and
inefficiency as inefficiency, Data Envelopment Analysis is less sensitive to these effects but is
sensitive to the type of returns to scale applied. The main advantages of DEA on the one hand
are its inability to impose a priori functional form on the data and handling of multiple input and
output processes easily. On the other hand, the disadvantages include that in the event of random
noise, the estimated frontier and efficiency measurement could be contaminated. In essence, since
DEA does not make assumptions on error terms, it does not allow for hypotheses to be contrasted.

3.1. The Stochastic Frontier model

The Stochastic Frontier Production Function for panel data can be written as
Yit ¼ expðxit β þ Vit Uit Þ (i)
where Yit denotes the output for the i-th industry (i = 1,2, . . ..,N) in the t-th time period (t = 1,2, . . . .,
T); xit denotes the (1 × k) vector whose values are functions of inputs for the i-th port in the t-th
time period; β is a (1 × k) vector of unknown parameters to be estimated; Vit s are the error
components of random disturbances, distributed i.i.d. N(0, σ2) and independent from Uit. Uit s are
non-negative random variables associated with the technical inefficiency of production. This study
uses a Stochastic Frontier production function model of Battese and Coelli (1995) to investigate the
relationship between port productive resources and efficiency in which it is formalized technical
inefficiency in the production function of Stochastic Frontier for panel data. The equation of the
regression of effects of inefficiency on the variables that explain inefficiency is shown in Equation
ii as
Uit ¼ Zit δ þ Wit (ii)
where Zit is a vector of explanatory variables; δ is a vector of unknown scalar parameters; Wit is
truncation of normal distribution, N(0, σ2), such that the point of truncation is such that point of
truncation is—Zit δ.

4. Data
According to Wang, Cullinane, and Song (2005), the input and output variables ought to reveal the
objectives and procedures of port production as accurately as could be attainable. A port seemingly
is more likely to utilize state-of-the art, expensive equipment to enhance its productivity if its
objective is solely to maximise output. On the other hand, if a port’s major objective is to maximize
profit, it will then be willing to use cheaper equipment. What this means is that the definition of
variables for efficiency measurement of the port will be dependent on the port’s objectives. It thus
means that if the main objective of a port is to maximise its profits, then employment or associated
6 O. UGBOMA AND K. OYESIKU

information on labour should be counted as an input variable. However, if the target of a port is to
increase employment, then employment ought to be accounted for as an output variable. Hence, the
main objective of a port in this research is the minimization of the use of input(s) such as equipment
and labour assuming a given level of cargo throughput that is handled annually.
From orthodox economic theories, as noted by Perloff (2004), inputs to any sort of production
system can typically be classified as capital, labour and/or land. This is often the case for certain
circumstances governing port productivity that depends crucially on the competent use of labour,
land and equipment. This research therefore, adopts the number of equipment, quay length,
number of employees and turnaround time as suitable variables for the input measure, while
cargo throughput serves as the output measure. According to Cullinane (2002) these variables
represent the mainstream efficiency physical input variables under capital and labour respectively
which are very important in measuring port efficiency and productivity. These port variables are
presented in Table 1. It shows the mean values of cargo throughputs (imports and exports) of non-
oil commodities handled in the ports under study for the period from years 2000 to 2017 while
Table 2 shows the cargo throughput.
For all the ports an average of 8.6 million metric tonnes of cargo were handled at the terminals.
Other details include; the average quay length (1,904.25 metres), number of cargo handling
equipment (95), turn round times in days (7) and number of operational staff (764).
Table 2 shows the port cargo throughput for the six ports under study from 2000 to 2017. It is
observed that Delta and Calabar ports which are in the eastern part of the country recorded low
volumes of cargo throughput than the other ports yet the ports are seen to be efficient. This is
because in reality these ports are quite underutilized due to inaccessibility to these ports and
more importantly due to shallow draught of 5.9 m and 6.4 m respectively. Therefore, few vessels
call at these ports and shippers prefer to ship cargoes through LPC and Tin Can ports in Lagos
then truck the cargoes by road down to the eastern part of the country—a cumbersome and
expensive venture. Calabar port does not have good rail and road connection though it is
equipped with the extra facility of an export processing zone (EPZ) located within port grounds,
with additional provision of 34 hectares of land for expansion purposes. Its cargo handling

Table 1. Distribution of port attributes (all ports; years 2000−2017).

Variable Obs Mean Std. Dev. Min Max
Cargotrupt 108 8,580,833.898 7,577,473.693 300,124 2.79E+07
Quay_length 108 1904.2475 1021.460713 174 5,172
Equipment 108 95.27777778 58.57973771 1 221
Turnrtime 108 6.761144578 4.024441964 1.82 22.54
Staff 108 764.1111111 828.3953674 129 4,103
Source: Author’s data analysis

Table 2. Port Cargo throughput in metric tonnes.

PORTS 2000 2001 2002 2003 2004 2005 2006 2007 2008
LPC 11,008,278 11,461,451 11,754,539 11,875,265 12,294,640 13,432,106 17,921,386 14,814,965 17,427,096
Tin Can 3,937,863 5,116,325 4,754,507 5,293,402 4,693,860 5,461,002 7,399,531 10,303,260 12,807,920
Delta 1,836,660 1,855,200 2,042,959 1,886,085 1,565,588 2,222,758 1,162,404 1,515,592 1,913,148
Rivers 4,683,519 5,690,287 5,301,882 5,531,097 4,963,818 5,660,759 3,001,019 3,112,518 3,488,791
Onne 7,166,436 9,056,487 10,182,079 2,645,719 2,158,548 2,554,328 2,546,759 4,500,291 3,222,663
Calabar 300,124 324,866 399,595 481,062 752,910 857,726 1,600,989 2,210,989 1,914,120
PORTS 2009 2010 2011 2012 2013 2014 2015 2016 2017
LPC 18,914,876 19,052,750 22,808,353 19,957,705 20,344,118 20,622,804 20,250,771 19,055,385 18,909,238
Tin Can 13,541,016 14,461,638 16,242,256 15,268,897 16,134,153 17,550,530 16,407,133 15,316,244 15,520,925
Delta 2,605,101 1,923,258 8,478,359 6,987,533 10,361,746 10,199,169 7,829,862 6,726,511 6,015,333
Rivers 5,141,451 5,808,533 7,501,468 5,574,653 4,935,944 6,253,275 4,457,785 3,546,745 3,462,425
Onne 3,385,455 2,921,727 26,249,274 27,580,642 24,773,387 27,964,251 26,314,828 23,896,730 25,836,246
Calabar 1,721,249 1,594,277 1,875,667 1,723,195 1,732,286 2,361,898 2,127,259 2,277,477 2,159,099
Source: Nigerian Ports Authority Handbook of Port Statistics.
 MARITIME POLICY & MANAGEMENT 7

Table 3. Efficiency and turn round times in pre and post concession era.
Ave. efficiency (%) Ave. Turnrd_time (days)
Before_Concsn After_Concsn Before_Concsn After_Concsn
Ports (2000–2005) (2006–2017) (2000–2005) (2006–2017)
LPC 64.27 78.94* 14 5.13*
Tin Can 41.6 61.54* 7 4.01*
Delta 36.86 45.60* 5 3.48*
Rivers 72.56 44.19 13 6.8*
Onne 67.4 73.34* 6 2.14*
Calabar 26.28 49.24* 3 5.18
Source: Author’s own calculation. * signifies improvement in value after concession.

capacity has been put at 1.5 million tonnes while the infrastructures were designed to accom­
modate vessels of 8,000 GRT to 15,000 GRT. However, apart from inaccessibility problem,
Calabar port has the problem of shallow draught which hampers the entrance of big ships.
Thus, year-round navigability of the port’s channel is not assured and, at 96 nautical kilometres
from the fairway buoy, it is a considerable dredging challenge to surmount. This problem has
militated against the growth of cargo throughput for the port, which ordinarily, should be an
investor’s haven due to its strategic location as a feasible gateway for the south-south, south-east
and north-east markets of Nigeria. Calabar port is strategically located to be able to service the
North-East and the North-West, but the link roads to the area from Calabar is bad. Articulated
vehicles cannot ply the route.The draught limitations mean that ships drawing heavier draughts
of 7 metres and above, for example, are restricted from calling at the port. Delta port faces the
same challenges coupled with security concerns and piracy prevalent in the Niger Delta region.
From the table, it is seen that there is differential use of the ports, for while Lagos ports and
Rivers ports are the most patronized, Calabar and Delta ports are not, leading to tilted profile of
patronage which overstretches the facilities, encourages widespread corruption and inefficiency
in these busy ports. In 2017, about 66.6% of the ports witnessed a dwindling of cargo throughput
due to high exchange rate, though there was improvement in the turnaround times which was as
a result of concerted effort of the management of Nigerian Port Authority to improve port
infrastructure and aid implementation of Federal Government’s Executive Order on Ease of
Doing Business.
In estimating the effect of turnaround times on port operational efficiency, Table 3 shows the
distribution of the average turnaround times of these ports. Calabar and Delta ports exhibit
efficiency after concessioning but Calabar shows longer turnround time after concessioning.
Though the increase is marginal, this effect can be associated to the fact that the port is under­
utilized which is caused by heavy siltation of the channels making navigation of vessels a difficult
task. Secondly these delay causative factors inherent in Calabar port explain the high ship turn­
around time, scarcity of skilled manpower, lack of storage facilities, inadequacies of berths,
deliberate attempt by port workers to extort money from port users and the issue of government
agencies’ functions like Customs in issuing clearance to vessels when they call at berth. Oftentimes,
there are cases where vessels are berthed for three days without clearance from the appropriate
government agency thereby incurring demurrage.

5. Results
In line with the cardinal objectives of this study, Stochastic Frontier Analysis regression presented
in Table 4 shows the relationship between port productive resources and its subsequent efficiency
indices. The productivity model is based on Cobb–Douglas specification which links output (i.e.
volume of cargo throughput) of a port to its input resources or the number of port equipment, its
8 O. UGBOMA AND K. OYESIKU

Table 4. Regression output Stochastic Frontier productivity model.

Variable Coef. Std. Err. t-stat p value
Equip 0.23672238 0.0192 12.304 0.0000
quay_length 1.01932884 0.0517 19.686 0.0000
Staff −0.73480913 0.1902 −3.862 0.0001
_cons 11.8411150 1.00918 11.733 0.000
Model fitting information
0.00000
2.20810
0.00035
1.48597
1.48597
4216.73662 714,598.101 0.006 0.9953
σ 1.48596626 0.14415555 10.308 0.0000
No of Obs. = 108
Log-likelihood = −121.2122
Dependent variable: ln(Cargo throughput). Significant p values in bold.

terminal area (proxied by quay length) and quantity of labour resource (proxied by number of
operational staff).
In ideal productive environment, the productivity or a port should be 100%. But this is hardly
achieved owing to inefficiency in resource use, measurement error and other random variations. In
examining the effect of port productive resources on efficiency, a null hypothesis which states that
there is no significant effect of port productive resources on efficiency is tested using the regression
analysis of the Stochastic Frontier model. Thus from Table 4, the explanatory variables are observed
to be statistically significant as their p values are all less than 0.05 (our alpha level of significance).
The result is consistent with Cobb–Douglas productivity model.
The productive resources are therefore as follows number of equipment (0.23672238), total
length of quay (1.01932884) and number of operational staff (−0.73480913). Therefore the esti­
mated productivity model has reasonable explanatory powers which has been adopted for testing
the null hypotheses which states that there is no significant effect of port productive resources on
port efficiency. Subsequently, the null hypothesis is rejected as the port productive resources are
statistically significant with p ≤ 0.05.
The frontier productivity model, apart from producing estimates of productive inputs captures the
value of efficiency or inefficiency as part of its output. The efficiency values for all ports are then
regressed as dependent variable against the determinants of port productivity. To assess the determi­
nants of efficiency and hence the relative operational efficiencies of the ports, a Tobit model is used in
estimating the efficiency values obtained from the productivity model in Table 4. The Tobit analysis is
ideal in cases where the dependent variable has values that range between 0 and 1. The efficiency
values range from 0 to 1. Thus, in the Tobit regression analysis, various input variables were tested
namely: number of equipment, number of operational staff, ‘concession effect’ (a dummy variable
capturing regimes of pre and post concession introduction) and ship turnaround times (proxy for
overall level of service at the port). The results of the Tobit model is presented in Table 5.
It shows the results of the efficiency model, it is noted that only two variables significantly
affect efficiency levels of Nigeria’s seaports: Concession policy introduction (0.9001) and ships’
turnaround times (0.04817). The other variables: equipment and staff are not significant.
Although these variables do not directly impact on efficiency in the present model, probably
because they lack skilled manpower to operate these sophisticated equipment but the concession
policy brought about investments in more facilities by private operators and these improved
efficiency levels. The improvement in port’s level of service as a result improved the turn round
time of vessels visiting the ports. This may explain the global effect of concession policy and turn
 MARITIME POLICY & MANAGEMENT 9

Table 5. Tobit regression: efficiency model.

Variable Coef. Std. Err. t-stat p value
Equip 0.07139777 0.11233125 0.636 0.5250
Staff −0.00770537 0.19149463 −0.040 0.9679
concessn_effect. 0.90098503 0.27167298 3.316 0.0009
turnrd_time 0.048174928 0.16781344 2.871 0.0041
_cons 7.13420739 1.11903530 6.375 0.0000
0.78609005 0.05348665 14.697 0.0000
Model fitting information
No of Obs. = 108
Log-likelihood = −127.2515
Dependent variable: efficiency. Significant p values in bold.

round time variables in the Tobit model perhaps masking the direct effect of equipment and
staff.
Therefore, in addressing the null hypothesis, which states that there is no effect of port concession
policy on port efficiency and productivity, we therefore reject the null hypothesis as concession policy
and ships turn round time were found to have statistically significant relationship with port efficiency
with p ≤ 0.05 . These significant variables are policy pivots which needs to be focused on. However,
the implication is that concession policy is favourable to attaining port efficiency and measures which
reduce turnaround time should be maintained in order to sustain efficiency levels at the ports.

6. Conclusion
The aim of this paper was to evaluate the port operational efficiencies and productivity of the
major Nigerian seaports using panel data from 2000 to 2017 which covers the pre and post
concessioning periods. The research was conducted using the Stochastic Frontier Production
and inefficiency models. The Privatisation and Commercialisation Act of 1999 (PCA) listed
the sea ports as one of the sectors to be commercialised to achieve efficiency. The concession­
ing of the ports to the private sector which was based on the landlord model came into effect
in 2006 under the auspices of the NPA as the lessor as well as the regulator under the
supervision of the Federal Ministry of Transportation, then the Bureau of Public Enterprises
established by the Privatisation and Commercialisation Act as the confirming party. The
concession was supposed to make the ports more efficient, to some degree as shown in the
study, the ports have improved in efficiency from what it used be before 2006 especially in the
areas of increased productivity, improved turnaround time, cargo handling equipment strict
monitoring of labour, control of extortion and reduction of damages to cargo but there still
exists many challenges to overcome which include but not limited to scarcity of skilled
manpower, ageing infrastructure, capacity issues, scarce technological advancements and so
on. Nigeria, with over 8,000 km of navigable inland and coastal channels, handles between
40% and 60% of cargo movements in the North and Central African sub-regions is a virtual
goldmine to many European and international investors who may be looking to win contracts
in the maritime sector. That is why the current administration of the Nigerian Port Authority
(NPA) is collaborating with Belgium’s Port of Antwerp to boost the potentials of its six
seaports to bolster its role as a leading maritime hub in West Africa.
Although Data Envelopment Analysis which is a non-parametric technique can measure multi­
ple output measures of seaports bearing in mind its limitations and Stochastic Production Frontier
model which assumes that a port’s output is a single measure, further research can consider
improving on the methodology of this research by developing a hybrid model that integrates the
advantages of Stochastic Frontier Analysis and Data Envelopment Analysis.
10 O. UGBOMA AND K. OYESIKU

Disclosure statement
No potential conflict of interest was reported by the authors.

ORCID
Ogochukwu Ugboma http://orcid.org/0000-0002-6849-4620

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