Inland water transport: Untapped goldmine for investors

Nigeria is naturally endowed with over 10,000 kilometres of navigable inland waterways that provides immense business opportunities yet to be tapped by potential investors writes AMAKA ANAGOR.

Water is one of the natural resources Nigeria has and the fact that she has the opportunity to service most landlocked countries like Burkina Faso, Chad, Niger and Mali. The country has two main rivers-Rivers Niger, which is the longest river in West Africa and 11th longest in the world, and River Benue. The two rivers are joined together at Lokoja in Kogi State.

The nation has a transport route between the hinterland and urban areas through the lagoon and delta creeks. With the capacity of Nigeria’s inland navigable waterways of about 10,000km and an extensive coastland of about 852km, the country has huge potential to move goods and passengers from the coast to the hinterland by water.

Despite these potentials, Nigeria’s water transport system is yet to become an alternative means of transportation to road and air, such that passengers and cargoes can be move to their destination through waters.

Government effort

The federal government has in the last five years allocated over N67.9 billion to the National Inland Waterway Authority (NIWA) for the development of inland water transportation across the country. A breakdown of this allocations to water transportation system shows that in 2012, over N11.7 billion was allocated for projects such as the procurement of about 45 passenger ferry boats; construction of River port at Lokoja and Idah Jetty in Kogi, Baro in Niger, Oguta in Imo, Degema Jetty in Cross River, Okrika Jetty in Rivers, Yenagoa Jetty in Bayelsa.

Other projects include channelisation and dredging of Iyere River; Itu-Ikpa-Okpoto-Odiok-Atlantic Ocean, Oguta and Excravos, Ondo–Ogun including Makurdi River port and among other projects. In 2011, over N15.9 billion was allocated for NIWA out of which the sum of N15.1 billion was reserved for capital projects, which basically was a continuation of construction of the above mentioned river ports as well as dredging and acquisition of passenger ferries and security boats.

Available statistics further disclosed that close to N21 billion was budgeted for the inland water transport in 2010 out of which, N20 billion was meant for different capital projects like construction and rehabilitation of river ports as well as the dredging of the channels.

In the 2009 budget, over N13 billion was allocated to the authority for further development of the water transport sector in the country. However, about N6.1 billion was budgeted in 2008 for the sector out of which over N5.5 billion was set aside for the capital projects such as dredging of waterways and building of channels buoys and among other projects.

The five-year budget allocation put together, analysts say the budgetary allocations have been inadequate for funding and implementation of most of the proposed capital projects like river ports and jetties towards the development of the nation’s inland water transport.

Lagos State Government has done a lot in funding infrastructure development in water transportation, but the state is yet to have enough water and car ferries, said Kayode Abdulaziz Olowu, managing director of Multimodal Transport Technology, a water transport operator. Currently, he noted Lagos has unused jetties that were built during the old urban-rural development project by the Federal Government while some were built by the state government.

To further develop water transport in Lagos, the Lagos state Government is concessioning those abandoned jetties for people to develop and run. Also, already built jetties in places like Ikorodu, Badore, Osborne and among others are being taken over by two Turkish firms and another from South Africa that are looking to stake millions of dollars in the Lagos waterways, yet more people especially indigenous investors should do same.

Opportunities for investors

One of the viable business opportunities in Nigerian inland water transport is boat building, and this has the potential for creating multiples of direct and indirect jobs for Nigerian youths. Although, Nigeria currently has old boat builders, there is need for them to build new boats with modern technology.

Rather than the old models, industry analysts said boat builders need to build lighter boats so that it can be cheaper to build and easy to navigate through the water. There are clear indications that the need for locally built boats will increase in the nearest future, if Nigeria is able to make water transportation an alternate means of transportation apart from road and air.

Also, facility management and jetty operations are other viable opportunities for investors. Here, potential investors need to buy into the business of managing water transport infrastructure that is being built in different parts of the country by government.

Checks have shown that private investors are tapping into the opportunities provided by the water transport infrastructure that are being built by government. The Federal Government in the middle of last year commissioned the N4.6 billion rehabilitated Onitsha River port, which is currently being under-utilised due to lack of terminal operator to manage the already port facility as well as ferry and barge operators to ply the route.

People need to invest in buying of ferries and passenger boats that will ply the waters, invest in buying of barges and craft that will move cargoes from the seaports in Lagos or Port Harcourt through the inland waters to the importers, said analysts. This is why industry close watchers believe that Nigerian water transport business may find it difficult to grow if more private sector investors do not key into the business.

Furthermore, there are other untapped business opportunities in the water transport and they include dockyard services/management, dredging works, engineering construction, fishing and hydropower generation. Others include hydrographic survey, irrigation, oil and gas exploration including support services, recreation/sporting, and-winning, transportation (runs and cruises by modern inland river crafts), tourism, underwater engineering services, and water supply.

Confronting issues

Apparently, the growing Nigerian inland water transport business is being confronted by several issues and bottlenecks that hinder the growth of the business and they include cultural issues, multiple taxation and limited operational timing.

Findings have shown that the cultural and attitudinal patterns of Nigerians are the major issues confronting Nigeria’s inland waterway business. Obviously, due to reasons like security and safety concerns, many Nigerians are skeptical of boarding ferries and moving on the water. To most Nigerians, water transportation is reserved for people from the creeks and others in the riverine areas, who are assumed to know how to swim if boats or ferries capsize.

Another issue impeding the growth of Nigeria’s inland water transport business is the issue of multiple taxations that are imposed on water transport operators by the federal and state governments. Confirming this, Ganiyu Tarzan Balogun, CEO of Tarzan Marine, an operator in water transport business in Lagos, affirmed that multiple taxes and levies that operators pay to both state and federal waterways authorities, not only impede the growth of water transport business by making the business unprofitable to investors, but had made many operators to close shop due to high operating costs.

“Since the bombing of Atlas Cove near Tarkwa Bay, the Nigerian Navy has limited the timing of operation for commercial boat operators on Lagos waters,” he opined. The Navy said it is a security measure, and this acts as a bottleneck to the growth of inland water business. All these make water transport business expensive and unattractive in Nigeria.

According to the management of NIWA, issues such as slow response from oil and other associated companies in payment of their dues and tariffs, overlapping areas of jurisdiction and conflicts of duties between NIWA and other agencies of the Federal Ministry of Transport like Nigerian Maritime Administration and Safety Agency (NIMASA), Nigerian Ports Authority (NPA) and State Governments have drastically affected activities as well as revenue generation efforts of the Authority.

Operational challenges

The rising rate of insecurity on Nigerian waterways is one of the major reasons why people find it difficult to use water transportation to get to their destinations. Severally, water transport has been disrupted by illegal activities of some restive youths living along the coastal areas. This is aimed at interrupting the operations of oil and gas service companies through piracy and kidnapping, illegal bunkering, pipeline vandalisation and grounding of socio-economic activities in riverine communities and all these make water transportation unsafe for commuters.

This security concern discourages potential investors from tapping into the viable business opportunities, which the Nigeria’s water transport provides. However, investment apathy on the part of the foreign and local investors is one of the factors limiting the development of Nigeria’s inland waterway. This is because investors are still skeptical about providing passenger boats and cargo barges, and people are also skeptical about going on the water due to the issues of piracy and safety on the waterway, said Kayode Abdulaziz Olowu.

Inland water transport business, Olowu added, is a capital intensive business. It takes millions of dollars to acquire modern ferries, passenger boats, barges and craft. This is why lack of access to cheap funding is one of the biggest challenges limiting the growth of water transportation in Nigeria because government is not stimulating enough drive for people to invest in water transport business, he opined.

Other challenges include short supply of the required manpower and professionals needed to implement the regulatory functions effectively as well as those needed to operate the water transportation equipment and infrastructure that are being built by government.

Stakeholders’ views

According to Tayo Fadile, public relations officer of NIWA, river ports business is supposed to be private sector driven but the rate at which the private people are investing into the business is still very low. It is the mandate of the government to build facilities like ports but it is left for the businessmen to make the ports functional by investing in boats and barges acquisition.

Using the Onitsha River port as case study, he said: “We have appealed to private investors to come and invest in the port. We have also set an example by allowing our ferries to ply the Lokoja to Onitsha waterway. We have done our part, which is to develop the port and it is not NIWA’s business to buy barges and tugboats that will move passengers and freight using the port. The private sector should now step in to make most of the already built river ports functional.”

An operator, Taofiki Balogun, chairman/CEO of Fiki Bal International Incorporated, called on government to assist the water transport operators with incentives by ensuring safety, training, regulation and infrastructure renewal to encourage better services on the waterways.

Owing to the difficulty boat operators experience in getting fuel to operate their boats, which made them to resort to buying fuel in jerry cans, he noted that other business people should step in and build petrol stations around water fronts to enable easy access to fuel.

In his own view, Kayode Abdulaziz Olowu noted that the Federal Government has not given much consideration to the development of water transport business in the country.

“If an operator has a license that is assured by any state government to run a ferry transport and the operator also has the required capacity to run water transport business, government can borrow the operator fund at zero or 5 percent interest rate. By so doing, a lot more people will get interested in the water transport business because access to cheap funding is available to them but now there no access to fund becomes very reluctant in investing in the business,” he explained.

Currently, a lot of companies are stocked in various financing glut for marine transportation business, because they cannot move forward due to lack of funding to grow their businesses.

Way forward

To further develop water transportation in the country, more private investors should tap into the business opportunities provided by the business. Aside from funding water transportation in Nigeria, government also needs to make access to cheap funding available to intending operators in order to encourage people into the business and to less operating cost as well as passenger fare.

Also, there is need, analysts say, for government to encourage people who want to build boats in Nigeria by giving them the necessary incentives so as to create employment in the industry.