By Steve Agbota
Blessed with an extensive 852km Atlantic coastline along the Gulf of Guinea and a substantial maritime zone exceeding 46,000 km², Nigeria naturally holds significant allure as a maritime hub. The introduction of the Coastal and Inland Shipping (Cabotage Act) in 2003, followed by its enactment in 2004, ignited considerable optimism among stakeholders for a transformative era of indigenous shipping and expanded employment prospects for Nigerian seafarers.
Before its enactment, the Nigerian government had made several efforts at securing indigenous participation, the first of which was the adoption and domestication of the United Nations Conference on Trade and Development Code (UNCTAD 40:40:20) Policy in its 1987 National Shipping Act (NSA). However, the intense competition from foreign operators incapacitated many local operators and facilitated the reign of foreign dominance.
As a result, Nigeria incurred a capital flight of an estimated $9 billion in freight costs paid annually to foreign shipping lines. These foreign lines repatriate the money to their respective nations to create wealth and employment opportunities and build capacity.
Daily Sun learnt that these foreign liners are being protected by their governments because they have cargo reservations to keep them in the shipping business, which is one of the reasons why Nigerian shipowners can’t participate fully in the ocean economy.
To reverse this trend, stakeholders are canvassing for proper regulation and prioritisation of research and capacity development, which they said could unlock the full potential of the sector, thereby contributing to the country’s economic growth.
They argued that there is a need for the government to break the monopoly of the foreign liners through cargo reservations and protectionism, which will, in turn, give indigenous shipowners leverage to build capacity and compete favourably with their foreign counterparts.
They also called for the total implementation of sections 35-38 of the NIMASA Act 2007, as it has a lot of benefits for the shipping sector. This is even as they suggested that allocating more cargo to local shipowners would enable them to participate in the global shipping business.
The forerunner of NIMASA, the National Maritime Authority (NMA), effectively implemented such a cargo reservation and allocation programme from 1988 to 2000, when the scheme was suspended.
Daily Sun learnt that the implementation of the Act will position local shipowners to be the carriers of Federal, State, and Local Government cargoes generated through international trade, such as the importation of pipes for the Ajaokuta-Kano-Kaduna pipeline project, the Nigeria-Niger-Algeria pipeline project, the Kano-Maradi Railway project, importation of NPK fertilizers, shipment of NNPC crudes for offshore refining procedures, oil-related project cargoes belonging to the Federal Government and its development partners, including international oil companies, and cargoes arising from huge civil engineering constructions such as the Lagos-Calabar Coastal Highway, to mention a few.
Speaking recently at an event, a maritime expert, Dr Edmund Chilaka, said part of the benefits of implementing sections 35-38 of the NIMASA Act 2007 is that it would arrest the capital flight of an estimated $9 billion in freight costs paid annually to foreign shipping lines, saying it would expand NIMASA’s operational portfolios of strategic mandates for overall national development.
This is even as he said it would enable the reactivation of dormant sectors of the marine and blue economy, such as international cargo-carrying activities by indigenous carriers.
“The Act [will enable] Nigerian carriers [to] repatriate a substantial part of this cost when they participate in the carriage of federal, state, and local government cargoes in line with sections 35-38 of the NIMASA Act 2007,” he explained.
He added that there would be an expansion of Nigeria’s total maritime trade, earnings, ancillary development of other non-oil economies, and ultimately an increase in GDP in the country, among other benefits.
He said that the Act will enable the revival of comatose indigenous carriers and the maritime sector. In the new dispensation, many indigenous carriers will be licensed in readiness to carry Nigeria’s generated cargo annually.
Speaking with Daily Sun, a lecturer at the Nigerian Maritime University and also the Managing Director/CEO of Kamany Marine Services Ltd, Charles Okerefe, said the CVFF should be disbursed to enable indigenous shipowners to compete favourably with their foreign counterparts, saying the Nigerian shipowners do not have vessels, such as ocean-going vessels, which he described [as a] self-inflicted injury.
He said no one can blame the foreign shipowners for dominating the nation’s shipping business because they have developed capacity, which Nigeria has refused to develop.
“We have refused to develop capacity. The cabotage fund is there to assist indigenous ship owners in acquiring newer vessels. For over 20 years, it has still been talk and talk. Now Oyetola is saying he has given directives to NIMASA to start the process of disbursement of CVFF. Those are political statements.
“Because the question is, are the funds still there in the first place? Okay, and nature abhors a vacuum, there cannot be a vacuum. If you have project cargo to lift and you can’t lift it, will the person who has the capacity not go ahead and lift it? That is what is playing out.
“So, consider it a self-inflicted injury. We fail to develop the capacity to be able to compete and lift our own generated cargo. Don’t forget the UNCTAD code of conduct liner conferences, the 40-40-20 code, which led to the establishment of the National Maritime Authority in 1987. One of the standpoints is for Nigerian players to be able to lift at least 40 per cent of Nigeria’s generated cargo,” he explained.
According to him, Nigeria has failed woefully in that respect, saying the government should look inward and ask critical questions for the nation to be able to move forward.
“We cannot point fingers at the foreign ship owners who have developed their capacity to be able to play. Rather, we should blame ourselves. I think that is my response to that,” he added.
On why Nigeria has not yet implemented sections 35-38 of NIMASA Act 2007, he said non-implementation could not be the reason why indigenous shipowners were not competing favourably with foreign shipping lines, saying he did not entirely agree with that.
“The question is, [do] your indigenous ship owners [have] capacity? How many of them have ocean-going vessels that will be able to withstand the rigours of the seas and the oceans? They are not there. We have to tell ourselves the truth. So, our government is not doing its part that it promised to do by way of assisting indigenous players.
“So, everything that we are talking about here has to do with internal dynamics. Okay? NIMASA itself does not even seem to understand its mandates. NIMASA itself does not even understand their mandate in the shipping administration, which is why they play politics with virtually everything. NSDP program, the same thing. It is messed up because people want to profit from it to the detriment of the kids that are sent out for training overseas. So, it is a lot of rigmarole.
He suggested that the earlier the major stakeholders come together to deliberate on these issues, the better.
“Our minister of marine and blue economy, I don’t think he has a full grip of his mandate in that ministry. That is another issue. Up to now, there is no template. There is no roadmap for that ministry. And two years is almost gone. So, these are the interplays of forces that are causing our problems in the industry. And that is why we are not able to compete with the more grounded foreign operators,” he explained.
However, a stakeholder in the shipping business, Emmanuel Tadeyo, said the federal government must break the monopoly of foreign liners through local content law, adding that local shipowners must give adequate incentives and support to compete with the foreigners.
He said [it is] not that Nigerians can’t participate, but there is a high monopoly on the cargo, saying local shipowners must be empowered to participate in lifting project cargoes on behalf of the federal, state and local governments.
He said a lot of local shipowners have gone bankrupt and closed shops due to a lack of vessels to participate, which is why any country in the world must have cargo reservations for their shipowners, and Nigeria must not be an exception.