Unlocking the Potential of Maritime Industry

The maritime industry is a key sector of the Nigerian economy. As an oil producing and exporting country, as well as a consumer nation, the country is a large market for foreign goods, owing to its population. In this regard, the maritime industry holds the key to the nation’s growth and development. Hence, to ideally unlock the potential in this sector, policies and programmes, that have numerous ways and capacity to boost the nation's economy, must be implemented.

Concerted efforts have to be made to address the problems militating against the industry's efficiency. Nigeria’s strategic location in Africa puts her at advantage in becoming the hub of shipping activities. The country is a coastal state, with extensive coastline and vast exclusive economic zone. It has inland waterways and large volume of various commodity, oil and gas exports. Therefore, if the vision of increasing local content participation in the Nigerian maritime industry is pursued vigorously, the sector will fall in tandem with Goldman Sachs’ 2003 report, in which it was predicted that Nigeria was one of the identified countries with the potentials to be like Brazil, Russia, India and China.

Neglected Activities that Could Generate Income
According to the Indigenous Ship Owners Association of Nigeria (ISAN), despite the country’s large export of crude and import of over 100 million tons of general cargo, no Nigerian flagged ship is currently plying international routes. Nigeria is also the only oil producing nation without a national fleet, whereas Angola, which recently joined the ranks of oil producing countries, has a fleet for her oil deliveries.

Some other shocking statistics indicate that Nigeria exports about 900 million barrels of crude oil annually, but foreign vessels earn the freight of about $2.25 billion, yearly, carrying the country’s crude with no freight earning benefits to Nigeria. This must be addressed if there is going to be a change of fortune in the maritime domain and Nigeria’s economy, in general.

Positioning to Reap Rewards
More opportunities await the country if it expands the coastal areas by dredging the waterways for future bigger vessels, such as the Post-Panamax Vessels, Triple-E Vessels, Ultra Large Crude Carriers, and Average Freight Rate Assessment Vessels; the list is endless. These vessels will increase the bulk movement of crude oil, petroleum products and other capital goods through loading of freight of about 18,000 containers. The major seaports in Nigeria are too small for all these listed vessels to load or discharge goods. Moreover, the sea depth of the Nigerian waterways is not deep enough for the navigation of these larger vessels. These setbacks will reduce the involvement of the Nigerian maritime industry in the vast international trade and key global economic participation.

Furthermore, the country’s gross domestic product (GDP) will also benefit, enormously, from the expansion of the nation’s navigable coastal areas. This will engender effective maritime competitiveness and significant trade participation of larger future vessels. It will create a more competitive and enabling environment through the encouragement of more private investors into the maritime business.

Multi-modal Transportation
Multi-modal transportation is another area that, if properly addressed, could be the key to unlocking the treasures in the maritime industry. Multi-modalism is the reliance of many modes of transport, from water transport to inland waterways. We also have the roads, the air and the rail. However, what is important is not so much multi-modalism, but the intermodalism. This is because there must be some connectivity. There must be some interface between these modes of transportation, so that, it will be a seamless transport system. Goods transported by sea should be able to get to the owner of the cargo through rail and road transport and vice versa. This multi-modal transportation will facilitate trade and commerce, revenue generation for government finance and development of related economic activities.

There is also the need to put up strategic infrastructure in dry ports. This will solve the lingering crises of ports congestion. Strategic ideas like this are long term solution to ports congestion because they will cut-off the dwell-time of cargo at the sea ports. The dry ports are also ports for consolidation of cargo and for export of cargo. The potential for dry ports is so enormous that, if well maximised, it will be so visible in the area of revenue generation and employment. The maritime industry also has a multiplier effect on the development of other economic activities, such as the freight forwarding, stevedoring operations, towage, pilotage, warehousing, marine insurance, banking, bonded warehousing and cargo handling, all of which depend on the industry for survival.

Post Reform Programmes
Actualisation of a post reform programmes, such as 24-hour ports operation, would also bring a lot of growth to the economy. Apart from speedy cargo clearance, it will bring the ports alive every minute. And with the clearing system being electronic, the Customs can also play their roles 24 hours. Even the traffic in the ports and within the ports areas will be impacted. Moreover, there will be shorter dwell-time for cargo, turnaround time for ships and the ports will become more competitive.

If there is 24 hours clearing operations, then, that will make the ports have the potential of being the best in West African sub-region. In addition, development such as this, in the maritime sector, will help in boosting the economies of major landlocked countries within the West African region, such as Mali, Niger, Burkina Faso and Chad. The potential of the maritime transport will also promote enhancement of industrial growth and development, tourism, International relations and peaceful co-existence.

The Nigerian Maritime Administration and Safety Agency (NIMASA) should be encouraged to effectively combat the menace of pirate and other illegal activities on the Nigerian maritime domain. Ensuring safety and security on the Nigeria’s territorial waters will boost foreign investment in this sector. The unrest and activities in the Niger Delta region are matters of concern to the maritime stakeholders and they need to be addressed by the government, in order to improve the gains from this sector.

Maritime Laws yet to be Implemented
The existing laws and policies in the maritime sector are right and potential exist for all aspects of maritime business, but the desired impact is yet to be felt because of a lack of implementation. In 2003, the government enacted the Coastal and Inland Shipping (Cabotage) Act. This law was, essentially, aimed at restricting the use of foreign vessels in Nigeria’s domestic coastal trade and operations. It was designed to promote the development of indigenous tonnage by empowering Nigerians to participate.

The Cabotage Vessel Financing Fund (CVFF) was also established to provide financial assistance to indigenous operators in ship acquisition and others. But ten years down the line, the cabotage law could not be, effectively, implemented, as participation of Nigerians’ shipping companies in marine transportation is yet to improve. If potentials of the industry is truly harnessed, the maritime industry can rank second, only to oil and gas, in terms of earnings in the short run and supersede the oil and gas sector, in terms of earnings and employment generation on the long run.

Benefits of Developing Local Capacity

  • Increased capacity will enable local companies to, effectively, demand participation right in lifting of crude oil, which currently forms over 90% of the nation’s external trade, but totally excludes indigenous maritime operators.
  • It will enable Nigerians to, quickly and effectively, take control of the maritime activities along the West African sub-regions, so they can become maritime authorities in the region.
  • An increase in effective participation of Nigerian owned vessels will also help to reduce foreign companies' influence, exorbitant charges and price fixing of freight rates which have inflationary tendencies.
  • Encouraging indigenous shop owning investment, even by non-shipping persons or institutions.
  • Improve our level of maritime technology and know-how.
  • As Nigerians acquire more clout and confidence, more joint venture partnership will be formed with foreign companies to create synergy, leading to exchange of technology, increased competition and efficiency.

Most maritime-related policies that are currently in existence, which are aimed at improving the efficiency of the sector, should be re-articulated in order to unlock the potential that the sector offers. More programmes should be developed to focus on reinforcing general maritime business, in terms of human capital and financial skills.

Taking lessons from other world-renowned maritime nations, such as Norway, USA and Denmark, more professional maritime networks should also be developed in order to allow would-be informal maritime entrepreneurs to acquire enterprises with specific skills and develop their social capital. It is essential to create a more competitive and enabling environment through encouraging private investors’ participation in the maritime business. This will contribute, greatly, to improving maritime sector efficiency and viability in Nigeria.

The Nigerian government should learn from the likes of Panama, UEA and other maritime nations, by contributing to the development of major maritime activities within the international seaborne trade.