Nigeria’s Marine and Blue Economy Minister; Adegboyega Oyetola recently declared that “the era of indiscriminate waivers is ending.” He promised to “build Nigerian tonnage, support local employment, and give indigenous operators a fair chance.” These stirring words would be welcome, if they were new. Instead, they echo the rhetoric that has surrounded the Cabotage Act of 2003, for about two decades.
After more than 20 years of the Cabotage Act passage and its expected transformation prospects, Nigeria’s coastal trade remains overwhelmingly dominated by foreign ships, and the homegrown shipping industry is not more vibrant and succesful than when the law was passed. In reality, ending waivers will do little unless past failures are finally addressed.
The Coastal and Inland Shipping (Cabotage) Act, 2003 was meant to be protectionist and transformative. It explicitly reserves domestic shipping for Nigerian interests: “domestic coastal shipping [is restricted] to Nigerian-owned, Nigerian-crewed, and Nigerian-built or -flagged vessels.” In other words, any coastal voyage – whether ferrying oil, imports, or passengers – was supposed to be done by ships built in Nigeria, owned by Nigerians, and manned by Nigerian crews.
The Act even created a Cabotage Vessel Financing Fund (CVFF) to help local firms buy or build such vessels. On paper, this should have jump-started a national fleet of tankers, supply boats, coastal ships, dredgers, fishing trawlers and more.
In practice, however, Nigeria never had enough ships, yards, or capital to meet the law’s lofty goals. The waiver clause became the norm; often taken advantage of. As reported in various news platforms, whenever local shipowners fell short – “when local capacity is deemed insufficient” – agencies routinely granted waivers to foreign vessels. Over time, this strangled domestic growth. Experts point out that these waivers “have significantly limited the growth of Nigerian shipping companies, depriving them of critical opportunities in the domestic shipping space.” In short, a law meant to build Nigerian tonnage became a licence for foreign dominance and exploitation.
The Nigerian Maritime Administration and Safety Agency (NIMASA) was tasked with enforcing the Cabotage Act, yet its record of performance has been abysmal. Successive Directors-General have presided over more than two decades of idle vessel funds and unmet targets. In 2019, the NIMASA boss (at that time) Dakuku Peterside frankly admitted that “we have not done very well” in implementing the law.
He insisted that NIMASA alone “cannot achieve the aspirations, intents and objectives of the Cabotage Act” – a remarkable confession from the regulator itself. Prior to Dakuku, another Director General, Patrick Akpobolokemi had raised hopes by dusting-off the CVFF files, but he never disbursed it.
Industry insiders observed that under Akpobolokemi “the idle CVFF kept growing fat, while local operators grew leaner and leaner.” By 2017, no new Nigerian ships had been built with the fund’s help, even as Nigerian who owned fleets lamented lack of support. In fact, NIMASA’s own data show that by 2018 only 21 locally-built vessels entered service (down from 55 two years earlier), while 898 foreign-built ships plied Nigerian waters.
Poor enforcement was compounded by other failures. Industry lawyers warned that Cabotage stalled because of “lack of commitment by the Federal Government, banks’ failure to support indigenous shipowners, and conspiracy by importers and clearing agents.”
Without cheap financing or policy backing, Nigerian shipowners could not expand. A joint NBS/NPA report even found that between 2013–2016, 98% of coastal freight was carried by foreign vessels – a damning indictment of Cabotage’s impact.
Meanwhile, regulators at times seemed to undercut their own mandate. In 2012 the Petroleum Minister ordered that only tankers with Nigerian equity could lift national crude, but this directive was quietly nullified when producers cried “no Nigerian-owned tanker exists.” In short, nearly every powerful stakeholder in the chain has underperformed or looked the other way.
A persistent lament is the lack of Nigerian ships to do the jobs Cabotage envisions. The data confirm this scarcity. NIMASA’s own reports show there are about 200 vessels on the Nigerian Cabotage register, almost all of them second-hand acquisitions or small support craft. Many of these are not even built in Nigeria. Domestic shipyards – from Nigerdock to the few dry docks in the Niger Delta have struggled to turn out large vessels. One academic study found that 85% of Nigeria’s Cabotage fleet was built abroad, with only 15% built locally. By one analysis, overseas yards churned out 898 vessels for Nigeria in recent years versus just 55 local ships. In practical terms, this means Nigeria’s fleets are few, aging and ill-equipped.
The symptoms are all around us. 46-year-old coastal tankers from the 1980s still languish as Nigeria’s “fleet”, mostly sitting idle. As the Los Angeles Times reported in 2011, local owners’ ugly little tankers “mostly lie at anchor” while vessels flagged in Panama or elsewhere dominate oil export and import logistics. Dozens of Nigerian shipowners have since gone bankrupt, their ports calls siphoned by more modern foreign-flag competition. Even in offshore support, Nigerian-owned companies have only a handful of supply vessels or crew boats. When oil companies open bids, international players still have the largest fleets. The bottom line is that local ship capacity remains pitifully low, so promises of building a “Nigerian tonnage” ring hollow unless that capacity gap is closed.
Yet, the Cabotage Act’s ambition goes far beyond oil. It was designed to cover all commercial marine activity in Nigeria’s waters – from fishing trawlers and passenger ferries to dredgers, tugs and bunkering services. In theory, any seaborne activity originating and ending in Nigeria (or transiting through another country en route) should be on Nigerian ships. In practice, however, foreign players have muscle-in every niche. Foreign dredging firms dig Nigerian ports and water channels; foreign tug companies handle Nigerian cargo; foreign trawlers fish Nigerian waters. Nigerian entrepreneurs can point to no boom in coastal commerce despite the law’s intentions. As Nigerian content Development and Monitoring Board’s former boss; Ernest Nwapa lamented in 2015, Nigeria squandered a generation of talent by leaving shipping to foreigners – missing “opportunities to train and utilise youths especially from maritime communities of the Niger Delta.”
Nigeria’s maritime policies frequently contradict one other. On one hand, the government extols Cabotage and local content; on the other, agencies routinely cave-in to foreign pressure. Fuel importers, for example, have long worked around Cabotage by getting waivers or calling oil cargoes “shipments” to avoid coastal trade rules. Powerful port interests have little incentives to push national carriers. Even within government, agencies have been at odds: NIMASA soldiers on with enforcement drives while the NNPC and Customs often do business as usual with foreign charterers. This contradiction is baked into the system.
Loopholes abound. Some foreign companies register dummy Nigerian subsidiaries or rebuild their ships in African yards to claim Cabotage compliance. Powerful interests have been accused of colluding with officials: A Lagos maritime forum heard that “some powerful individuals in government are trying to frustrate the implementation of the law.” And the waiver clause itself is ripe for abuse.
The new minister OF Marine and Blue Economy; Adegboyega Oyetola insists waivers will end, but who will watch the watchmen? In the past, NIMASA handled waiver approvals with little transparency. Companies have learned to apply early and cite “no Nigerian ship available” as an automatic win.
Meanwhile, the foreign shipping lobby remains entrenched. Nigerian officials admit the country lost over $100 billion over five decades by letting foreign tankers haul its crude. Industry analysts calculate that each year Nigeria bleeds roughly 10% of oil revenue (about $6–7 billion) by using international charters. Yet foreign operators pay little consequence. Even when Oyetola vows reform, the existing fleet hardly notices – foreign ship captains go on business as usual. Without sharp corrective action, “ending waivers” becomes just another headline.
Nigeria’s coastal shipping will not transform on government declarations alone. Stakeholders – from NIMASA to banks to policymakers, must deliver concrete steps. Key priorities include: Audit and publicize all waivers granted by year and category to deter abuse. Disburse the CVFF with urgency and under public scrutiny. Fund and incentivize local shipyards through tax cuts and foreign partnerships. Sanction oil firms and freight agents who avoid Cabotage under dubious claims.
Above all, for the rhetoric to transform to action, the Federal Government must back words with action. Nigeria has waited 20 years for the Cabotage Act to work. Sadly, the Nigerian maritime industry and its stakeholders do not believe the hot hair currently being blown by the Minister and one can hardly blame them. They have travelled that route of deception many times in the hands of several ministers.
Enough of the lip service to Cabotage and its waiver clause.
