Need for maritime action plan – the new order
Nigeria requires a practical and holistic plan to address myriad of challenges facing her maritime industry and to harness the potentials for the benefit of the nation. The sector is vast and highly untapped despite years of persistence and several proposals to revamp it. It is an employment driven industry and can overrun oil and gas contributions to gross domestic product of this country. These opportunities are wasting. The challenges are enormous and multifaceted. They relate to poor institutional framework, Access to Credit, Financing, Obsolete or ineffective Laws, Poor Infrastructure, Human capacity, Lack of political will to engineer fundamental reforms.
POLITICAL ADMINISTRATION IN MARITIME SECTOR
There is no doubt that leadership and governance drives vision. It brings focus and efficiency for the execution of fundamental objectives of any State. In face of argument against bloated government agencies and need to cut cost, The Maritime Sector is too large to be managed by one Minister and should be regarded as a necessary exception. The sector is managed by an array of parastatals, directorate, inspectorate, registries. The vast nature of the sector and the required expertise to drive both the fiscal, legislative and enforcement regime is massive. The Shipping Sector alone deserves a Minister just like the Aviation. Nigeria requires political leadership in form of a Minister for Maritime Development or whatever the name shall be. He shall be solely dedicated to maritime sector like the Petroleum to deploy the necessary political leadership, engage in maritime governance design, carry out effective oversight functions and implement critical government policies relating to shipping and ports development or as the case may be. Government needs more than lip service to opening up alternative sources of revenue generation for the nation. Aviation is an important and critical sub sector. Maritime holds more for Nigeria as a coastal state with 150 nautical miles and about a 100 more to add. A senior level officer in the rank of a Minister should be appointed to engineer the development of the sector.
CABOTAGE AND LOCAL CONTENT
In the last 10 years, there has been new laws introduced to develop capacity and maximize the potentials of the Maritime sector; Cabotage Act 2003, NIMASA Amendment Act 2007, Nigerian Content Development and Monitoring Board etc. The general opinion of industry stakeholders is that the laws are just good on paper because the infrastructure to make the laws work is not there. There is also lack of finance to make the infrastructure available. So, what needs to be done to address this issue in the industry where majority of Nigerians are still not participating. The Cabotage and local content regime are landmark legal developments and have been recognized as a fundamental tool in restricting coastal trading to the citizens of Nigeria. Without disregarding the concerted efforts of the regulators such as NIMASA, the current capacity is below average. How can we translate the objectives of the law to implementable framework, How can we improve the operational environment for local operators to enhance their participation and businesses? What about the fiscal regimes that affect indigenous operators within the current implementation framework. Many operators still rely on foreign partners to execute simplest of tasks. The leakages in the rules which favour foreign enterprise should be critically assessed and blocked. Why is it easy to use foreign owned or registered vessel to execute contracts while the acquisition framework for such types of vessels by indigenous are constrained by tax, import duties, tariffs, concessions, interest rate on borrowed finance inflicted by national agencies, financial institutions etc. What about Fair Trade and Competitiveness?
MARITIME FINANCING
Shipping Sector requires long term funding. Credit financing is shrinking. The CVFF cannot fund all projects. This is where the active role of financial institutions has become utterly necessary. But it will require developing confidence in the sector to attract the lenders and investors. The financial system must be strengthened to encourage long term financing. The idea of Maritime Development Bank was mooted sometime ago. Should it be revisited? What is the applicable interest rate? what are the banking framework for credit financing in the maritime sector? What are the possible palliatives? We need urgent solutions.
SHIPPING, OIL AND GAS, OCEAN POLICY
It is obvious from the work of the various government committees and legislative inquiries so far, that the Oil & Gas industry is in a complete mess; no accountability, no transparency, governance failure, etc. Can one talk about Shipping, Oil and Gas Transport which thrives on maritime sector without recourse to government interventions? It is expected that the Nigerian government will have to construct an entirely new and institutional framework for oil and gas regulation and transportation. The need for Ocean Policy and Regulations for Nigeria cannot be overlooked particularly with the current trend internationally among coastal states and all the increasing focus and attention on the oceans. Our deep-sea exploration activities (for oil and natural gas) and generally transport and fishing are a pointer in that direction. Nigeria is yet to maximize the potentials of her membership of International Sea Bed Authority. The enactment of the requisite Ocean Policy Law in Nigeria has become necessary to harness the potentials.
CABOTAGE VESSEL FINANCING FUND (CVFF)
These ancillary rules to the NIMASA Act brought so much hope when it was introduced. The implementation is not working. Several Models have been contemplated yet the goal is farfetched. Why is this so? What are the constraints? Why are the companies not accessing the funds? The rules have been reviewed a couple of times still no feasible implementation. Why is there contribution of 2 % to the fund without value? Are there constraints with the Banks which now serve as the WAREHOUSE for the funds? What roles has these primary lending institutions played? Who has benefitted, How Much has accrued in the lush fund, Where is the Fund? What possible innovations can be introduced? The Stakeholders need to discuss this. Corruption is an issue but something has to be done. There must be the political will to ensure strict adherence to the rules governing disbursement of the funds. The funding is required to help the industry grow, workable ideas are required to boost local content and cabotage administration.
INVESTMENT ISSUES
Shipping requires long term funding hence government intervention is required to boost investors understanding of the market, the potentials, concessions, incentives etc. The stock exchange has an advocacy role here prospective indigenous investors. The capital flight occasioned by pull of capital by foreign investors from local maritime businesses interest dealt a serious blow to growth seen by emerging local brands such as Japaul etc. Foreign and local Investments are also dwindling. The IOCs are divesting. The delayed passage of the Petroleum Industry Bill, affects investment decisions of the international oil companies.
REFORMS WITHOUT ACTIONS!
The last major reform was in late eighties. It gave birth to NSP Act No 10 of 1987. Since then volumes of reports from several committee works are hardly implemented and often times are incoherent and haphazard. The most recent is the Presidential Committee on Maritime Sector reforms inaugurated by the President in 2012. The recurring lack of commitment and discipline of execution in government reform initiatives results in inconsistency in efforts. For instance the recommendation of the Cabotage subcommittee of the Presidential Committee has laudable themes. It touched on critical areas of shipping, shortage of qualified and competent manpower to run vessels, significant discrimination on the employment of Nigeria indigenous vessels, paucity of shipyard operators, non-accessibility to funds etc. On Human Capital, the committee observed that most graduates of Maritime Training Institutions in Nigeria are half baked and lack sea time experience, the Academy is faced with the challenges of inadequate professional teaching staff, Poor remuneration of Staff. There is even lack of training vessels. These are pertinent issues which need to have been resolved through policy formulation and strict implementation or directives. Had proactive actions on some of the key recommendations been taken, the maritime sector would have become adjusted to providing the required economic support in the wake of the current challenges in the Oil and Gas Sector.
VALUE PROPOSITION OF MARITIME ACTION PLAN
It is realistic for the maritime industry to contribute significantly to nation’s GDP. USA, Germany, Canada, Netherlands, other coastal countries maximize their maritime potentials. Reforms and policy formulation are usually associated with the basic objective of making positive impacts and this is the way to go. These expected impacts will only be realizable if the entire actors; operators, legal, regulatory, institutional have the basic appreciation and respond strategically to the emerging situations. This is desirable and very much needed in Nigeria. This underpins the need for Maritime Action Plan. The MARITIME ACTION PLAN (MAP) will entail drawing up an implementation plan around 2 core areas or more; (i) Executive and Administrative – such as strategies for inter-agency cooperation and institutional framework reforms, (ii) Legal and Legislative Activities – such as drafting legislation and engagement of legislature. An expedited action is required on the Legal and Legislative Activities, particularly the review of Critical Bills for transformation of the maritime sector. This will include but not limited to Review of Maritime Operations Coordination Act of 1992 to stop crude theft, Review of Ports and Harbour Bill to attract investors, Review/Drafting Cabotage Amendment Bill to enforce local content, review and passage of the Petroleum Industry Bill as well as the necessary advocacy to highlight the Petroleum Industry Bill. These and other matters form the basis of ‘MAP 2015 and Beyond’ initiative, the framework for a NEW ORDER in the Maritime Sector.
Victor Akazue Nwakasi & Adebola Sobowale