Nigeria’s indigenous shipping capacity still below expectation despite enabling laws

Over the years, the Federal Government has come up with several shipping policies and regulations geared towards developing shipping capabilities in the nation’s maritime industry, especially for the benefit of indigenous shipping companies.

However, poor implementation of these policies by the custodian agencies of government has been the greatest problem limiting the development of indigenous shipping business in Nigeria.

The policies and regulations so far enacted by the Federal Government include the National Shipping Policy Act of 1987-2003, the Coastal and Inland Shipping (Cabotage) Act of 2003-2007, the Cabotage Implementation Guideline of 2007, the Cabotage Vessel Financing Fund (CVFF) Guideline, the NIMASA Act 2007, the Merchant Shipping Act, and the Nigerian Oil and Gas Industry Content Development Act of 2010.

It is not in doubt that developing the nation’s shipping industry to favour indigenous players will go a long way in positioning the shipping industry to become a major catalyst for the promotion of economic development in the country.

Chris Asoluka, chairman, Oil and Gas Free Zone Authority, said that improving indigenous participation in shipping and enhancing local competitiveness would help not only in earning and conserving foreign exchange for the economy but also in developing local capacity that would position Nigeria to compete favourably in the global community.

According to him, “Improving indigenous involvement in shipping business would also help in building local tonnage and fleet needed for facilitating international trade in Nigeria. It would also help in accelerating the development of nation’s defence and security as well as in creating employment opportunities for the unemployed youths.”

It is not that regulations are not in place, but poor implementation has been a cog in the wheel of progress. For instance, the CVFF established alongside the Cabotage Act is collected from the 2 percent levy imposed on the total sum of any contract executed by a Cabotage vessel. The fund, which has accrued an estimated sum of $150 million (N28.8 billion), is yet to be disbursed to the six selected indigenous shipping firms to enable them build the needed capacity.

Also, NIMASA selected 21 vessels belonging to indigenous players for repair. This was part of the recommendations made by a committee set up by the agency in 2011 to interface between the indigenous ship operators and the agency towards identifying ways to encourage effective indigenous participation. However, the said repairs are yet to be carried out. All these contribute to failure of both Cabotage Act and CVFF to turn around indigenous shipping business in the country.

The Local Content Act is another good policy that is yet to be fully utilised to resolve the plight of Nigerian ship owners. Isaac Jolapamo, chairman, Nigerian Shipowners Association (NISA), who observed that Nigeria has not paid required attention to the maritime sector, noted that the nation was yet to get indigenous participation in the shipping sector right.

“One quick way of resolving the situation we have found ourselves in the shipping sector is by implementing the report of the Presidential Committee on Development of the Maritime industry which was set up in 2012,” Jolapamo stated, adding that there was need for the Federal Government to remove the waiver clause contained in the Cabotage Act. This, he said, would go a long way in addressing the plight of Nigerian ship owners whose businesses have been badly damaged and currently tied in over N500 billion loan from banks.

For the industry to move forward, Asoluka suggested a review of some of the legislations, especially the exercise of waiver power by the minister as contained in the Cabotage Act.

“There should be a review of vessel condition and age; financial and fiscal incentives; cargo preference and reservation clause; Cabotage and access to contract by indigenous players. Also, there should be modernisation and institutionalisation of NIMASA, which is the agency with the mandate of implementing Cabotage and building shipping capacity in the country,” he added.

But Idris Umar, minister of transport, informed that the Federal Government, in its effort to fully implement Cabotage Act to the benefit of indigenous players, is perfecting plans to ensure the disbursement of the long-awaited CVF Fund after concluding all the required due diligence and approval processes.

According to him, the government is also examining the draft policy guidelines as regards discouraging the granting of the ministerial waivers in Cabotage trade. This, he said, would produce an acceptable document that will facilitate effective implementation of the Cabotage regime in Nigeria so as to assist in building indigenous capacity in shipping business.

“The Federal Government is committed to assisting the indigenous shipping companies to grow capacity,” he said.

Uzoamaka Anagor