At the Nigerian Ship Registry Interactive forum in Lagos last week, the Director-General, Nigerian Maritime Administration and Safety Agency (NIMASA), Dr Dakuku Peterside, spoke on the ongoing reforms in the Registry. But stakeholders, who spoke on the sidelines of the event, identified policy somersault, involving periodic reversals of policies generally deemed to support the growth of the sector, as the major inhibition to the growth of the sector and economic development. In this report, OLUWAKEMI DAUDA examines the effects of policy somersault on the sector and the economy.
The importance of maritime, particularly the shipping industry in development, cannot be over-emphasised. The experience of developed economies with successful policies attests to the fact that efficiency and productivity is key to the competitiveness and growth of the sector and the economy.
Speaking on the sideline of the Nigerian Ship Registry Interactive Forum organised in Lagos, last week, by the Nigerian Maritime Administration and Safety Agency (NIMASA), stakeholders identified policy somersaults, involving periodic reversal of policies deemed to support the growth of the sector, as the major inhibition to development.
At the forum, NIMASA Director-General, Dr Dakuku Peterside, said the organisation began the drive to restructure the Registry by setting up a Committee on the Review of the operations of the Nigerian Ship Registration Office in February 2018. Parts of the terms of reference given to the committee, according to him, were to examine the status of the Ship Registry in line with international best standards and recommend improvements.
The committee, Peterside said, submitted its report last year with far-reaching recommendations grouped into short, medium and long-term measures.
“Immediately after, the Implementation Monitoring Committee was inaugurated on 20th August, last year, to chart a course for the implementation of the recommendations.
“Our goal, as a Maritime Safety Administration, is to create a world- class Ship Registry, which will be attractive to shipowners with the aim of maintaining the influence of Nigeria in evolving international commercial and regulatory environment for shipping.
“Nigeria operates a Closed Registry with about 2,725 active vessels of various capacities. In 2019, the International Maritime Organisation (IMO) ranked the Nigerian Ship Registry number two in Africa after Liberia (which operates an Open Registry) and 46 in the whole world. Our desire is to have Nigerian flag vessels involved in international commercial trade and that is why we are making every effort to build capacity and ensure that Nigerians acquire high-capacity vessels that will not only be involved in the lifting of our hydrocarbons but carry our cargos to other parts of the world.
“As you are all well aware, Nigeria operate a closed ship registry; however, most renowned ship registries in the world such as the UK Ship Register, today maintain a Second or International Register to attract tonnage while using the Closed Register to develop indigenous capacity and for domestic trade similar to our Cabotage regime.
“We are, therefore, considering establishing a second or international register to help grow our fleet and input our footprints in international commercial trade,’’ he said.
Between 2018 and last year, findings revealed that NIMASA attracted into its Register two high-index capacity vessels – Egina FPSO and MT Ultimate and there is no doubt that a lot more can be done by the agency to assist Nigerians in acquiring vessels and that is why it is making effort to disburse the Cabotage Vessels Finance Fund (CVFF) and partner the Nigerian Content Development and Monitoring Board (NCDMB) to drive capacity in the industry.
But a maritime lawyer and university don at the event agreed that policies were critical elements in determining the rate of growth, the levels of private investment and the magnitude of credit to the private sector. He urged NIMASA not to relent on its laudable efforts.
“Beside, NIMASA needs to create the rules and frameworks in which maritime traders are able to compete against each other. But it is sad that from time to time, the Federal Government has been changing these rules and frameworks, forcing maritime operators to change the way they operate, with unsavoury consequences to the economy.
“There are critical constraints in our country that impede the development of the non-oil sector. Some of the critical issues, which were also identified by the World Bank were inconsistency in government policies and competitiveness of our ports.
Alaka, therefore, called for urgent implementation of policies that would boost maritime/shipping development.
Other stakeholders also expressed worries that the various policies and reforms being adopted by the government in the last few years had not impacted the sector in terms of growth and development.
A senior official at one of the terminals at the Lagos port, who craved anonymity, said challenges facing the sector had continued to increase, owing mainly to poor policy implementation arising from the lack of political will to make them work.
The official complained about the inability of the Federal Government to ensure that many Nigerians were involved in lifting of its crude oil.
According to him, despite the Cabotage Law and the consistent efforts by NIMASA, the big maritime trade has, for several years, been dominated by foreign-owned shipping firms without a plan by the government to correct the anomaly.
Maritime trade
With a coastline of 852 kilometres bordering the Atlantic Ocean in the Gulf of Guinea and a maritime area of over 46,000 km2, Nigeria is, no doubt, a maritime destination.
Statistics have shown that a total freight cost of between $5 billion and $6 billion is estimated to be generated on export and import businesses yearly, while the maritime component of the oil and gas industry is worth an estimated $8 billion alongside sea-borne transportation, oceanic extractive resource exploitation and export processing zones.
But, inadvertently, the big maritime trade has, for several years, been dominated by foreign-owned shipping firms. As a result, the Federal Government in 2003 came up with the Coastal and Inland Shipping (Cabotage) Act, aimed at growing shipping through effective participation of indigenous vessels in the business.
The act restricted the use of foreign vessels in domestic coastal trade to grow indigenous tonnage. It also made provisions for securing jobs for qualified and upcoming Nigerian cadets being trained in various maritime institutions of the world.
Many years after, the act is yet to achieve its aim as many Nigerians still lack the capacity to acquire quality vessels to participate in coastal trade and foreign vessels still depend heavily on foreign seafarers for manning.
This is traceable to lack of affordable funding for vessel acquisition, owing to the inability of the Nigerian banking industry to develop a framework for financing ship acquisition, which has a long gestation period.
As a result, credit facilities received from banks by indigenous ship owners to fund vessel acquisition, usually come with interest rates that are in double digits, sometimes over 20 per cent. This makes it near-difficult for indigenous shipping firms to compete with their counterparts that operate with offshore loans of single-digit interest rates.
To bridge the gap created by insufficient vessel supply for shipping- related business, the Act further created certain clauses to accommodate granting of waivers of various categories to foreign-owned vessels in the event that Nigerians fail to produce the needed vessels or qualified manpower to man Cabotage vessels, own ship yards to build Cabotage vessels and acquire the specific vessels required for a particular Cabotage trade.
It is estimated that maritime industry can generate close to N7 trillion yearly because developing shipping comes with spin-off effects on other industries such as insurance, steel for the use of ship building and ship repair yards.
Unfortunately, over 80 per cent of Nigerian sea-borne cargoes are carried by foreign-flagged and registered vessels today because of the inconsistency in government policies over the years.
Efforts by NIMASA
Following the concerns, NIMASA recently rolled out plans to put an end to granting waivers to foreign-owned, manned, built and flagged vessels.
The new strategies are to address issues around growing capacity in ship building by encouraging the establishment of shipyards; creating affordable credit facilities to enable Nigerians acquire vessels; creating tax incentives for importing built vessels by Nigerians and building of qualified seafarers.
Peterside said the agency was engaging with the Federal Ministry of Finance and the Nigeria Customs Service (NCS) to create a special tax incentive for Nigerians bringing vessels into the country.
The plan would involve creating special incentives that can enable shipbuilding yards to bring in components for building vessels in-country, adding that the government is also determined to ensure that Ajaokuta Steel Mill and Aluminum Steel Company in Akwa Ibom State, come on stream to provide the needed raw materials for ship building yards.
“The current tax regime makes it impossible for Nigerian ship owners to compete with their foreign counterparts. For instance, foreigners bring in vessels for a short period and they have a special tax regime that enables them pay little to nothing for their vessels and crew to work and live in Nigeria, whereas a Nigerian is charged a full range of all tax applicable (14 per cent), making it near impossible for their vessels to compete,” Peterside explained.
He said NIMASA was determined to ensure that, in the next few years, certain categories of vessels (yet to be listed) are built in-country. This, he said, will end issues around bringing in various vessels with its attendant capital flight and job losses on the economy.
“NIMASA is engaging with the office of the Vice President on the possibility of creating incentives for shipyards. We believe it will encourage a lot of entrepreneurs to invest in shipbuilding. We are also working in partnership with the Nigerian Content Development Monitoring Board (NCMB) and have commissioned an audit of all shipyards in order to identify the level of support that will help revive them,” he said.
Ships cannot exist without cargoes to lift. Therefore, NIMASA is also working towards ensuring that ship owners have cargo support.
Stakeholders’ view
Stakeholders have commended the efforts of the NIMASA in addressing the shortcomings in shipping, especially in creating jobs for ship owners and seafarers.
Specifically, the Vice President, Association Nigerian Licensed Customs Agents by (ANLCA), Dr Kayode Farinto, applauded NIMASA for opening the Ship Registry and its plan to disburse the CVFF fund to boost the shipping sector.
“We are happy that NIMASA is set to help the ship owners with the CVFF fund and to find a single-digit interest rate to help raise money for the industry.’’
Conclusion
The stakeholders and the operators at the forum praised NIMASA for being on the right track to save jobs and create wealth for Nigerians and the economy at large. Therefore, they said, efforts should be doubled on consolidating on the laudable plans by the agency to ensure that milestones are achieved by it before the year comes to an end.
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