Still on indigenous ship ownership in Nigeria

According to the Nigerian Maritime Administration and Safety Agency (NIMASA), not less than 10,908 vessels belonging to foreigners called at Nigerian ports between 2016 and 2017, carting away about US$16.2billion. The NIMASA attributed this to lack of capacity on the part of Nigerian ship owners to capacity to effectively compete.

This is even as the Executive Secretary of Nigeria Shippers’ Council, Mr Hassan Bello who doubles as chairman, Nigerian Fleet Implementation Committee (NFIC) called for special incentives to investors in order to encourage indigenous ship acquisition and fleet expansion in Nigeria.

The shocking statistics on high influx of foreign ship into Nigerian and the attendant huge revenue drain was contained in a document obtained from NIMASA by this newspaper. According to the document, in 2016, 2,047 vessels called at Nigerian ports with Dry Cargo Import while 987 vessels did Dry Cargo Export.

The total amount carted away in these transactions was $3.7billion. In the same year, 2,468 vessels imported and exported Wet Cargoes worth $3.8billion.

In 2017, a total of 1,967 vessels came into Nigerian ports with Dry Cargo Import while 1,145 vessels did Dry Cargo Export with a total of $4.3billion freight paid by Nigerians. On wet cargoes imports and exports, 2,294 vessels called at the port with $4.2billion lost as freight.

Indeed the quantum of revenue that is lost to foreign shipping interests call for worry, especially in a nation with great maritime potentials and huge population.

Nigeria as a cargo-owning nation generates more than 70% of the cargo throughput in West and Central Africa but presently, the sector is characterised by the domination of foreign flag vessels especially those of developed market economies of Western Europe and America.

At a 2012 Maritime Sector Presidential Retreat, Nigeria’s former Minister of Finance, Dr. Ngozi  Okonjo-Iweala had lamented that the country loses over ?2 trillion annually in capital flight to foreign countries following the inability of the indigenous ship owners to fully participate in lifting of the over 150 million of cargoes from the country including crude oil exports. 

Over the years, Nigerian ship owners have had to contend with militating factors, such as accessibility to capital, stringent international maritime rules and standards that are enforced by governments in the exercise of flag, port and coastal state jurisdiction. There is apparent failure on the part of government policy and legislations to grow indigenous participation in the shipping sector is a case in point. 

There has been an attempt through legislation to support indigenous participation in shipping, that is, the Coastal and Inland Shipping Act (Cabotage Act) of 2003, which is aimed at promoting the development of indigenous tonnage by empowering Nigerians to participate in Shipping. 

The Act restricted the use of foreign vessels in Nigeria’s domestic coastal trade and operations. However, poor implementation and application of a waiver clause in the Act led to the defeat of this objective. 

Closely related to this is near absence of special financing arrangements to support the growth of indigenous shipping. For example, after many years, a Cabotage Vessel Financing Fund (CVFF) established as part of the Cabotage Act to provide financial assistance to indigenous operators is yet to be disbursed. 

The same sorry tale also applies to the report of the 2012 Presidential Committee on Development of the Maritime Industry whose broad recommendations that could have helped deepen indigenous participation in the maritime sector were never implemented.

Government has also failed to provide other incentives to support indigenous investments in the shipping sector.

We take special note of the recommendations of Mr Hassan Bello in his capacity as the chairman of Nigerian Fleet Implementation Committee.

He identified zero import duty on vessels, as well as tonnage tax as topmost among the various incentives that are required for the growth of indigenous fleet in Nigeria.

Other incentives he listed are:  “Shipping Sector Support Fund, Real Sector Support Fund -2% per annum /9%,Waiver of export tariff for use of Nigerian vessels, waiver of tonnage tax, Right of first refusal for National Carriers in the procurement process for cargo, issuance of Work permit only upon verification of unavailability of ratings or officers”.

Other incentives that were advocated   by the Shippers’ Council boss include, “a very strong safety administration system and procedures in support and protection of the registered ships, a systematic approach to the establishment of merchant shipping security and administration that provide confidence in shipping trade and understanding of the international shipping community”.

According to Bello, other deliberate steps that should be taken by the government include Change of Nigeria’s crude oil policy from Free On Board (FOB) to Cost Insurance and Freight (CIF) as well as the Corporate Affairs Commission (CAC) to adopt zero duty for ship finance registration.

While the above suggestions are good, we are however skeptical that these are mere suggestions that may never be taken. There have been countless such recommendations, white papers and suggestions from committees in the past. 

For Nigeria to change its narrative as a non-ship owning maritime nation, its indigenes must own ships and participate actively in shipping.