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By Steve Agbota
Twenty-two years after the enactment of the Coastal and Inland Shipping (Cabotage) Act, Nigeria’s coastal trade remains firmly in the grip of foreign shipping lines.
The worrisome development, described as shameful and economically spiteful by experts, drains the economy of more than $100 billion annually, just as it locks out indigenous shippers from getting a slice of the lucrative cabotage trade.
The law, crafted to empower indigenous shipowners, was expected to revolutionize Nigeria’s maritime industry by reserving the transportation of goods and services within the nation’s inland and coastal waters exclusively for vessels owned, crewed and flagged by Nigerians.
But 22 years on, the intent of that legislation remains largely unfulfilled. Instead of building local capacity and creating thousands of maritime jobs, the country’s coastal shipping trade is still firmly under the control of foreign shipping lines, which continue to repatriate huge earnings offshore.
Stakeholders who spoke to Daily Dun said the culprit is well-known; the poor enforcement and indiscriminate waivers.
The Federal Ministry of Transportation, they argue, has routinely granted waivers to foreign vessels, effectively undermining the spirit of the Act.
Another sore point, they noted, is the Nigerian National Petroleum Corporation (NNPC), which continues to engage foreign vessels for crude oil and product lifting instead of giving preference to local operators as the law envisages.
However, findings revealed that implementing the Cabotage Act requires certain categories of vessels for lifting crude oil and refined petroleum products, capacities that many Nigerian shipowners currently lack. To address this gap, the Act empowers the Minister of Transportation to grant waivers at their discretion. Unfortunately, this provision, meant as a temporary measure, has become a major loophole, resulting in over $100 billion in annual capital flight and the loss of millions of potential jobs to foreign vessels.
Confirming these annual losses, the Joint Body of the Nigerian Seafarers’ Professional Groups, in one of its events, said the nation’s maritime industry loses over $100 billion annually to the Federal Government’s inability to implement the Cabotage Act.
The group even lamented that 80 per cent of Nigeria’s well-trained seafarers are out of jobs as foreign seafarers dominate the seafaring jobs due to the non-implementation of the Act.
The Secretary General of the Merchant Seafarers Association of Nigeria, Captain Alfred Oniye, said there is a need to implement the Cabotage Act to create more jobs.
He added that most of the jobs that belong to Nigerian seafarers are being occupied by foreigners, adding that the implementation of the Cabotage Act is enough to generate over $100 billion for the maritime industry yearly because it will open channels of opportunities in the industry.
“Implementation of the Cabotage Act is enough to create jobs for over 15,000 Nigerians because the ships would be built here and owned by Nigerians. The Act stipulates that the vessel must be built in Nigeria, wholly owned by Nigerians, and wholly crewed by Nigerians,” he added.
Sadly, after 22 years, stakeholders lamented that the nation’s coastal and inland shipping trade has been dominated by foreign-owned ships.
Daily Sun learnt that most of the vessels that lifted the first set of crude oil to the Dangote Refinery are foreign vessels, while the indigenous shipowners do not own vessels to engage in those shipments.
Also, stakeholders said that for Nigerian shipowners to compete favourably with their foreign counterparts, the NNPC — which is the biggest employer of marine assets that feed the import of petroleum products into Nigeria and service the export of crude oil — must provide the contracting tonnages that would enable Nigerians to invest in vessel acquisition.
It can also become an enabler by providing those contracts of carriage that would make vessel acquisition a more bankable investment in Nigeria.
Speaking with Daily Sun, an expert in the coastal shipping trade, Edmund Chilaka, said the major failures of the Cabotage Act revolve around lacklustre implementation by the Federal Government through NIMASA.
According to him, first, the waiver regime was short-circuited when it allowed foreign operators to gain easy waivers that were, in addition, poorly monitored and audited.
“These waivers that ought to have been scrutinised and processed in line with the law to give preference to indigenous operators were not even reviewed by the Minister of Transportation as stated in the law. So, if the waivers that ought to be scrutinised and approved by the Minister of Transportation were not even presented to him or her for review, who has been signing them?
“The former transport minister in the Buhari administration said that he never signed or authorised any waiver for eight years. So, who hijacked this ministerial responsibility and has been performing it unlawfully for eight years? Hence, these are the salient questions that should be interrogated to attain a useful post-mortem assessment of the entire Nigerian Cabotage Act.
“Second,” he said, “critical aspects of the law, such as the CVFF, were not faithfully implemented as well, and this denied indigenous operators the empowerment to compete against foreign operators, as envisaged by the law.”
In retrospect, he added that many other deviations and procedural flaws concertedly emasculated the law, justifying the clamour and resentment by Nigerians.
Going forward, he said a major review of the Act and its implementation so far is necessary to discover loopholes and block them to achieve the full benefits of a robust Cabotage industry.
Meanwhile, an expert and lecturer at the Maritime University, Charles Okerefe, said: “As you can see, it has always been promises and promises of disbursement of CVFF and implementation of the Act for over 20 years, and that thing has still been there. Of late, the new minister and NIMASA raised the hopes of stakeholders that they were going to disburse the funds, but they are not doing it.
“So it is like a big deficit, and when you say Nigeria is losing a lot in terms of not implementing the Cabotage, it is true because we are still giving room for foreigners to operate freely without the input of Nigerians. Even the funds in the Cabotage, the CVFF as it stands, what we hear, several million dollars, is a scratch,” he said.
According to him, the money is not going to do much even when disbursed, but why not disburse it to see how those who benefit will be able to play in the industry so that foreign domination will, to a large extent, be reduced, and then Nigeria will start earning on its own.
“So these are the issues. The government has to be sincere. There is a lot of insincerity on the part of the authorities in terms of their decision to disburse or not to disburse. You raise hopes, and you dash the hopes of the key players in the industry.
“So there is no trust anymore, you know, and it is affecting the industry negatively because when an indigenous player cannot benefit from the funds, where do they expect them to get the funds with banks charging double-digit interest? Nobody will be able to afford to buy such vessels. So this is the issue,” he explained.
He said the way forward is for the government to walk the talk by implementing the disbursement of the funds, at least to those who will be deemed as initial beneficiaries, saying they will begin to see the difference of indigenous players taking their place in the industry.
He added that the government has to show a lot of sincerity in its decision to disburse the funds.
Also, Head of Research at Sea Empowerment and Research Centre (SEREC), Eugene Nweke, expressed deep concern over the continuous failure to fully implement and enforce the Coastal and Inland Shipping (Cabotage) Act, 2003, despite its strategic intent to empower Nigerian maritime operators, create employment, and retain revenue within the domestic economy.
He said over two decades after its enactment, the Act’s objectives remain largely unrealised, adding that the result is an alarming scale of economic leakage and dependency on foreign vessels for local shipping operations.
“While estimates vary across stakeholders and studies, Nigeria is believed to be losing between $9 billion and $100 billion annually due to weak implementation of the Cabotage Act, covering lost freight earnings, expatriate employment costs, and capital flight in the oil and gas maritime logistics chain.
“The Nigerian Ports Consultative Council (NPCC) has cited annual maritime revenue losses exceeding $9 billion. Independent industry assessments, including those by professional maritime associations, put the figure closer to $50 billion annually. Some stakeholders project the broader economic impact to be as high as $100 billion per year when indirect losses, uncollected taxes, and lost investment opportunities are factored in,” he explained.
He said that while figures differ, the magnitude of the losses is undeniably massive and detrimental to national economic growth, maritime sovereignty, and employment generation.
He said there is a need to step up enforcement capacity within NIMASA, including the provision of adequate vessel tracking and compliance monitoring systems.
He added that persistent abuse of waiver provisions has converted a temporary measure into a perpetual loophole, and that inefficient management and disbursement of the Cabotage Vessel Financing Fund (CVFF) deny indigenous operators access to vessel finance.
He urged the government to amend the Cabotage Act to tighten waiver provisions, introduce transparency clauses, and strengthen penalties.
He explained that political will remains the most decisive factor in rescuing the Cabotage regime from perpetual stagnation, saying effective implementation demands a leadership resolve that transcends vested interests and short-term political considerations.
He added that Nigeria must consciously prioritise its maritime economic sovereignty not as a slogan but as a policy imperative tied to national growth and security.
