Repositioning Nigerian maritime business as alternative revenue earner
The recent slump in the price of crude oil has further heightened the clamour for the Federal Government to diversify the nation’s economy from being dependent on crude oil revenue, to earning revenue from other sectors. In view of this, the nation’s maritime business with its untapped potentials, is capable of accruing the desired revenue into the federation coffers if properly harnessed, writes AMAKA ANAGOR-EWUZIE.
The maritime sector vis-a-vis the seaport plays a vital role in the movement of crude oil, refined petroleum products, import and export of goods from one point to the other. Meaning that without shipping and seaport facilities to receive import and export cargoes, it would be difficult for such cargo to get to the designated points.
Statistics show that over 80 percent of global oil trade is transported by ships, but in Nigeria, it is 100 percent. Also, Nigeria as an oil producing and exporting country, and an import dependent economy, has been rated as the fastest growing economy in West African sub-region with a very large market for foreign products.
Findings equally reveal that the shipping arm of the maritime sector, which is estimated at over N2 trillion, has remained a goldmine yet to be tapped. The port business on its part is worth over N3 trillion in Customs revenue and revenues generated by terminals, private sector investors, Nigerian Ports Authority (NPA), Nigerian Maritime and Administration Agency (NIMASA) including other agencies of government.
Olisa Agbakoba, a renowned maritime lawyer, believes that the Nigerian maritime sector if adequately structured can generate N7trillion to the Federal Government coffers and create numerous jobs. While Rotimi Amaechi, minister of transport, who described the shipping sector as the second revenue earner for the government, said the sector has the capacity to generate over N500 billion into the federation coffers.
These glaring facts further buttress the point that the nation’s shipping and seaport businesses, have the capacity to create lucrative opportunities for wealth and jobs for both government and Nigerians.
Alarmingly, the sector, which is supposed to be the hub of shipping activities in the sub region, owing to its strategic location and nearness to land-locked countries, is yet to play its role in the national and regional economic sphere due to negligence.
Currently, port business is at its lowest ebb because Nigerian seaport has lost greater percentage of its volume to ports in the neighbouring countries, where it is easier to do business without restrictions. Container trade statistics show that volume from Asia to West Africa decreased to over 10 percent in 2015 as notable shipping liners withdrew their services into the region.
Further findings show that Nigeria’s currency, the naira, has subsequently fallen to record low against the US dollar, leading to stalled construction contracts and international investment including reduced consumer demands. And these factors have led to fall in container volume and reduced vessel traffic.
Confirming, Tony Anakebe, a maritime analyst, observes that importers were finding it difficult to access foreign exchange to import goods due to the restriction placed on forex by the Central Bank of Nigeria (CBN), thereby, resulting to sharp drop in the volume of imported goods.
Port business, he noted, was also hindered by the clearing bottleneck that made it difficult for containers to be moved out of the port in due time. “We had problem with scanning of containers due to the bad state of the machines and this makes the Nigerian Customs Service (NCS) to carry out 100 percent physical examination.”
According to Jonathan Nicole, president, Shippers Association of Lagos State, people diverted their cargoes to ports in the neighbouring countries and this led to massive loss of government revenue due the above-mentioned shortcomings.
“The CBN policy restricted Nigerian port from making progress such that a lot of businesses were closed and the remaining ones were forced to reduce staff strength to cut cost. We lost about 40 percent of our cargo to policy of forex restriction. The auto policy is another monster that has emptied our ports and we are yet to see made-in-Nigeria vehicles as projected,” said Nicole.
Advising the government to reverse these anti-progress policies, he notes that further slowdown in economic activities would make it difficult for Customs to meet the N1 trillion revenue target for the year, as most Nigerian billed goods are being diverted to Cotonou, Ghana, including Cameroun, where such goods are smuggled through land borders.
Furthermore, there is the need to grow the nation’s shipping business by encouraging more Nigerians to benefit from it. Industry close watchers believed that the efforts put in this regard by the Nigerian Maritime Administration and Safety Agency (NIMASA), the regulatory body, saddled with the responsibility of ensuring safe shipping, is yet to yield good result and the shortfall could be blamed largely on lack of fund to acquire the needed platforms, corruption as well as lack of trained personnel.
Commenting on this, Oluwole Akinyeye, head, maritime unit of Olisa Agbakoba Legal (OAL), who opined that Nigeria has the tendency of being highly prone to pirate attacks and this impact negatively on the nation’s shipping business, says that there is need to secure the nation’s territorial waters to grow the maritime sector. The National Assembly, he said, needs to pass the Nigerian Maritime Security Agency Bill, to enable NIMASA perform its function.
In building capacity among local ship owners, the accumulated N52 billion in the Cabotage Vessel Financing Fund (CVFF) established after the passage of Cabotage Law in 2003 and put under the custody of NIMASA, needs to be effectively disbursed to deserving shipping firms to acquire ships for cabotage trade.
“NIMASA needs to release the money accumulated in the Cabotage fund to finance and empower local ship operators, which is the original reason for setting up the fund. Disbursement of this fund to credible shipping firms can help the nation’s economy especially in the wake of dwindling crude oil price so as to help reduce the pressure on government in terms of wealth and job creation for Nigerians,” said Adewale Ishola, a ship operator.
Ishola, who is also the former president of Association of Master Mariners, lamented that due to low shipping capacity, Nigeria is now the only member of Organisation of Petroleum Exporting Countries (OPEC) that does not lift her own crude oil, as a result of which, the nation loses lots of revenues as capital flight to foreign owned vessels.
While urging the Federal Government to implement the recommendations of the maritime committee that was set up in 2012 by former President Goodluck Jonathan, Ishola notes that disbursing the available N52 billion Fund to the six companies listed years back by NIMASA as beneficiaries and using the fund to repair the over 20 vessels of the shipping firms that were shortlisted for repair by the agency, will go a long way in reviving the industry.
For him, the fleet of seafarers, numbered 2,600, who benefited from the ongoing Nigerian Seafarers Development programme (NSDP), which NIMASA is currently training overseas, would be gainfully employed if Nigerians start developing fleets.
To correct these anomalies and reposition the maritime sector to yield the needed revenue, the current government needs to refocus NIMASA to discharge its core maritime safety and local capacity development responsibilities.
It can also build fleet among indigenous operators by supporting local shipping businesses, and empowering them through access to cheap finance for vessel acquisition.
The National Assembly also needs to review all the existing maritime policies such as Cabotage Act, Local Content Act and Nigeria’s Ocean Policy, and also pass into law, bills that include Ports and Harbours Bill, Transport Commission Bill and Maritime Zones Bill that are pending to help address critical issues militating growth in the sector.
AMAKA ANAGOR-EWUZIE