Evaluation of Nigerian ports post-concession performance

Concession has been acknowledged as a valuable tool for port authorities to retain control of ports and shape the supply side of the terminal market, in the absence of full privatisation. This study empirically examines the influence of transfer of port operational services from the public to the private sector, through concession contracts on operational performance in the context of the Nigerian port industry. It extends the work of Liu (1995) and others on the comparative performance of public and private ports in the UK and other countries, by extending the study to the Nigerian ports concessions.
The Nigerian port reform was borne out of the belief that the transfer of port operations from the public to the private sector will improve the efficiency of the ports, by instigating competition among the various terminal operators. The Nigerian port concession involved the delineation of six Nigerian ports into 25 terminals and awarded to terminal operators. The objectives of the study include, among others; the benchmarking of pre- and post-concession efficiency, to determine sources of efficiency change and to determine factors responsible for the improvement of Nigerian port performance.
A positivist approach is adopted, using quantitative data that involves outputs and inputs related to the port‘s production function. Theoretical underpinnings of privatisation and performance, as well as empirical evidence from countries, were presented and discussed. The variables of the research were analysed using non-parametric DEA and the Malmquist Productivity Index to determine the efficiency and the sources of productivity change respectively. This study introduced a novel idea, by adopting a concentration index in measuring the level of competitiveness of ports. The conceptualised theoretical model of operational performance was solved using a two-stage multivariate regression, to determine the factors responsible for the improvement of the Nigerian ports‘ efficiency.
The results of the analysis suggested that the productive performance of the ports under consideration improved after the transfer of terminal operations to the private sector, though not in all the ports. Indicating that the wholesale concession of the ports is not the best after all, some ports would have been better left under public ownership. The driver of the improved efficiency after concession, is scale efficiency (increased throughput levels), rather than technical efficiency. Therefore, the post-concession Nigerian ports performance is influenced by the scale of production and change of ownership. The delineation of the ports into terminals has not ushered in the expected competition among and within the ports.