Business

Nigeria sidelined from $14trn global seaborne trade –Experts

By Steve Agbota                                    [email protected] 

Although shipping serves as a critical engine driving global trade, Nigeria remains a peripheral player in the vast maritime industry.

Today, with more than 90 per cent of the world’s trade flowing through the seas, global GDP has surged remarkably over the past two decades.

The value of international seaborne trade has now surpassed $14 trillion.

Yet, despite the enormous potential, Nigeria is conspicuously absent from the ranks of nations engaged in this lucrative market; a situation that has endured for decades, ever since the downfall of the Nigerian National Shipping Line (NNSL).

Shipping experts note that global seaborne trade is experiencing remarkable annual growth, facilitating the movement of a wide array of goods, both exports and imports, across the globe. Ironically, Nigeria, a major import-dependent economy, is missing out on the humongous foreign exchange the shipping sector is synonymous with and this stems from lack of active local participation in international shipping.

Consequently, all of the nation’s cargo is handled by foreign shipping lines, leaving Nigeria at a disadvantage in the thriving market and starving it of the much-needed foreign exchange.

Unfortunately, Nigeria has never earned $1 in freight since 1968 because it does not own vessels to lift its own crude oil or to move both export and import cargoes. Nigeria is currently heavily reliant on oil exports, making the economy vulnerable to fluctuations in oil prices. Industry watchers insist that seaborne trade could help Nigeria diversify its economy by supporting the development of new export industries such as agriculture, manufacturing, and tourism.

Speaking with Daily Sun, a maritime expert/author, Dr. Edmund Chilaka, attributed Nigeria’s inability to participate in global seaborne trade to a lack of proper leadership.

“We have a square peg in a round hole, and that is the situation. And that is the reason why we cannot implement the policy. In the Nigerian Maritime Administration and Safety Agency (NIMASA), policy section 1(1) says that a law was passed to increase Nigeria’s participation. The agency was supposed to increase Nigeria’s participation in international shipping, and that is by helping the indigenous carrier, but they are not doing that.

“If NIMASA, on a yearly basis, was helping the indigenous carrier at least to carry the saddles… sections 35 to 38, by now they would have grown. But from 2007 till today, NIMASA has not generated one ton of cargo for the indigenous carrier. So that is the reason,” he said.

Speaking on the way forward, he said NIMASA should immediately reactivate the allocation of Federal Government cargo for indigenous shipping lines to carry the import of fertilizer, project cargoes, and chemicals. He disclosed that there are so many things the Federal Government imports, saying the indigenous carrier should carry those cargoes imported by the Federal Government, which will increase the nation’s participation in international seaborne trade.

According to him, if indigenous carriers are carrying the Federal Government’s imported cargoes, Nigeria’s fleet will grow.

“You don’t have to set up a national shipping line. There are indigenous carriers that can charter ships and carry Nigeria’s cargoes. Once they do it for one year, two years, three years, four years, they would begin to participate. So NIMASA should do what the law requires them to do in sections 35 to 38 of the law,” he added.

Also speaking with Daily Sun, a lecturer at the Nigerian Maritime University and the Managing Director of Kamany Marine Services Ltd, Charles Okerefe, asked:

“First and foremost, how friendly is Nigeria’s port system in terms of driving international trade? And what exactly are you exporting apart from crude oil, which we do not even have control over? The major problem is that our manufacturing sector is weak. Besides, how competitive are the products we export, both in terms of the products themselves and the way they are packaged? How competitive are the prices in the international market? These are the factors.

“We are not competitive because our costs of export are expensive when you factor in things that take place before these goods are shipped through the port. The situation is always expensive. Until very recently, you would find that raw materials, before they got to the port for export, had already started depreciating in value, maybe because they spent too much time before they were shipped,” he added.

However, he said these products lose nourishment content, such as cashew nuts and cocoa beans, by the time they get to their final destination. He hinted that the products are either rejected or undervalued, saying this is the recurring issue Nigeria has been facing.

He asked how efficient and friendly Nigeria’s ports are in terms of export cargo and what manufacturing goods Nigeria is exporting. He noted that other countries, such as Ghana, export products like yam, which they package very well and do well in the international market.

“Does Ghana produce more yam than Nigeria? The answer is no! But how well are we packaging our products for export? So we still have a very long way to go. We have the resources, the manpower, and everything it takes, but we are not yet competitive because our methods are not up to international standards, especially in terms of packaging for our exports.

We still have a lot to learn.

“Then there’s the loss of value in terms of nourishment content. Sometimes, because these commodities spend so much time in containers before they reach their destination, some of them have already started growing, which is unacceptable in the international market. So we still have a very long way to go.

“The way forward is to go back to ourselves, possibly reinvent the wheel by packaging products properly for export, and making our export processes cheaper so that our goods can be competitive in the international market. When your costs outweigh the selling price, it becomes an issue for your buyers.

He said there is a need for the country to put its house in order by packaging its export products properly to gain acceptability and ensure they are sold at competitive prices in the international market, so Nigeria can become competitive.

An expert, Uduak Promise, said that presently Nigeria cannot claim to have a viable indigenous shipping fleet, which is disappointing because about 70 percent of ship traffic to West and Central Africa is destined for Nigeria.

She said Nigeria has failed to enter into international shipping not only because of the huge capital investment needed, but also because of its inability to compete with foreign operators who receive numerous incentives from their home governments.

“I’m an expert in shipping, but I decided to remain private for obvious reasons. Our government is not serious about diversifying the nation’s economy away from oil. All they do is make loud noises about diversifying the economy from oil, but no action.

“We have everything to be among the top 20 nations in international seaborne trade, but political will and policy formulation are weak and lacking. Do you know why? The government believes that the sector is generating revenue, which is why they’ve relaxed. Meanwhile, the shipping subsector of the maritime industry has the capacity to bail this country out, but the government is shortsighted. If not for the respect I have for your paper, I wouldn’t say anything about the issues affecting the nation’s maritime industry,” she lamented.

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