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Opinion: Clarion Call To Reform Nigeria’s Shipping Sector


Mrs Bisi Akodu

 BY Bisi Akodu

Ngozi Okonjo-Iweala, Finance Minister and
Coordinating Minister for the Economy, stated late last year that Nigerians
should henceforth view the country as a non-oil producing nation and explore
other sources of revenue. She made this statement as a result of the global decline
in the price of oil.

Between June and
December 2014 oil prices plummeted 60% from $115 per barrel to $48 per barrel.
At the meeting of the Organization of Petroleum Exporting Countries held on
November 27, OPEC failed to reach agreement on production curbs. This event
together with other global trends in the oil market sent prices tumbling and
the rest, to coin a phrase, is history.
Macroeconomics states that when there
is surplus supply in a commodity prices automatically fall, hence most
countries have adjusted their fuel prices downwards in sync with the decline in
the price of oil. It is ironical that the best we could do in Nigeria was a N10
per liter reduction, where countries such as Ghana, Zambia, South Africa and
Tanzania have made reductions that are far more reasonable, adding economic
value that will impact positively on their currency.
and financial analysts in Europe, the United States, China and other countries
are looking at the effect of the decline in oil prices on their economies. However,
it does not take an economic analyst to conclude that the worst hit will be the
oil producing nations amongst which is Nigeria.Nigeria along with Saudi Arabia,
Canada, Iraq, Kuwait, UAE, Venezuela, Russia and Libya produces 85% of the
world’s oil. Nigeria will be more hard hit because we operate an
import-orientated economy to the extent that we import fuel and other refined
petroleum products.
Nigeria has long depended on oil revenue
to the detriment of neglecting other vital sectors of the economy. Our
dependence on oil has made us blind to economic reality and has given us false
hope for Nigeria’s future, which is bleak. If we are to turn around our economy,
we must turn around our thinking and explore alternative revenue sources. Ours
is an import dependent economy that gives rise to the flight of foreign
exchange. Unfortunately, our maritime cabotage regime has done little to
prevent this due to weak structures and regulations. Nigeria’s ship owners are
moribund with no incentive or finance to play in the big league with foreign
vessel owners; hence, they have been excluded from the lucrative opportunities
in Nigeria’s oil and gas industry.
the years the maritime industry has been totally neglected. Nigeria’s shipping
sector is estimated to be capable of generating N7 Trillion annually. However, in order to tap revenue from this
sector there will need to be an overhaul of policy, institutional, regulatory
and legal framework. We need to develop a new national shipping policy.Nigeria’sshipping
policy dates back to 1987 when the Nigerian Shipping Policy Act, No.10 of 1987
was enacted following Nigeria’s ratification of the United Nations Code on Trade
and Development (UNCTAD). UNCTAD was to adopt the 40: 40: 20 code which covers
ship acquisition, cargo sharing and shipping activities. Under the code 40% of
the total volume of cargo traffic and revenue was reserved for indigenous
Nigerian carriers, 40% was reserved for carriers of cargo originating in
destination countries and 20% for recognized third flag carriers. If
implemented this would have gone a long way to correct the imbalance in
shipping trade as it affected Nigeria. The purport behind the Nigerian Shipping
Policy was to develop a vibrant shipping industry that would generate revenue
for Nigeria and Nigerians.
pursuit of developing our maritime industry, the Nigerian Maritime Authority
(NMA) was established to co-ordinate and implementNigeria’s National Shipping
Policy. NMA’s successor the Nigerian Maritime Administration and Safety Agency
(NIMASA) when established in 2007 had no defined purview regarding Nigeria’s
Shipping Policy, though it was mandated to promote and develop indigenous
commercial shipping in international and coastal shipping trade, and regulate
and promote maritime safety, security, marine pollution and maritime labour.
The Merchant Shipping Act, 2007 was enacted to provide for merchant shipping
and related matters. This Act was to be implemented by NIMASA and lays down a
list of regulations for ships operating in Nigeria regarding licensing,
registration, certification and penalties for non-compliance with the Act.There
exist multiple government agencies in the maritime industry with duplication of
functions. There is an urgent call to re-organize these agencies for better
function and output.
has approximately 60 legislative enactments comprising its maritime and
shipping laws. There are also critical Bills before the National Assembly such
as the Ports and Harbour Bill, the Petroleum Industry Bill, the Maritime Zones
Bill etc. that if passed will have positive impact on the shipping sector. Of
importance also is the need for an Oceans Act for Nigeria to harness the
resources due to it as a sovereign coastal state. Now is the time to pass these
Bills into law and lay out a strategic plan for reforming the maritime industry
in the shortest time possible.
is the life-wire of international trade and Nigeria is positioned to be the
commercial hub for Africa. A developed maritime industry implies a boost in
international trade, development in port linked flows and all the associated
ancillary services. We have a plethora of stakeholders in the sector that have
largely been uncoordinated often working at a tangent in uncontrolled
confusion. Our ports are not yielding their full potential and are now being
abandoned for ports in Benin Republic and Togo due to the multiplicity and level
of various official and private sector port charges. The low volume of traffic
at our ports is a deep concern to Government.
Nigerian Shippers Council (NSC) the economic regulator for the shipping sector
was established to provide a forum for the protection of the interest of
shippers in matters affecting the shipment of imports and exports to and from
Nigeria and to advise the Government on sundry matters related thereto. As
economic regulator the NSC has the task of dealing with a plethora of stakeholders
as its functions include, the structure of freight rates, availability of
shipping space, terms of shipment, class and quality of vessels, port charges,
entering agreement with Conference and Non-Conference Lines, the Nigerian Ports
Authority and other bodies on matters affecting ship owners’ interests.
the powers of the NSC were the
subject matter of an action instituted against the NSC at the Federal High
Court by a group of shipping companies, challenging the NSC’s
power to issue directives to shipping companies. In response to the suit filed
by the shipping companies, the NSC in a counter-claim sought a declaration that
the Shipping Line Agency Charge (SLAC) unilaterally imposed by the shipping
companies on Nigerian shippers is illegal. The Federal High Court dismissed the
case of the shipping companies and held that the NSC has power to issue
directives as the economic regulator of the ports. A similar suit filed by the
Terminal Operators against the NSC was also dismissed. These decisions stand as
a watershed in Nigeria’s maritime law and is a clarion call for Government to
prioritize its attention towards improving the sector and turning it into a
“cash cow’’ for the nation.
reformed Nigerian Shipping Policy will have to review local content and
formulate an action plan for shipping reforms that will involve Nigerians. We
can learn a lesson from Malaysia .Seaborne transportation is a key facilitator
of Malaysia’s trade-oriented economy. This is underlined by the fact that an
estimated 95 percent of the country’s trade is carried via seaborne means. Malaysia
has the world’s largest owner-operator of LNG tankers. Two of its ports, Port
Klang and TanjungPelepas are in the list of the world’s top 20 container ports
by way of throughput volume handled. Malaysia is a country that gained
independence the same year as Nigeria. It should be noted Malaysia has
exclusive control of its domestic maritime industry.
conclusion,the potential Nigeria’smaritime industry is massive. To tap into
this huge revenue source will requires a total overhaul of legislation,
institutions and regulatory framework. TheNigerian Shipping Policy Act, the
pilot law of the maritime industry, must be revised and re-branded to align
with global maritime trends. A review of all legislation on maritime law is
mandatory if we are to reform this sector to our advantage.The creation of a
new ministry that will exclusively handle maritime matters is needed. A
Maritime Ministry would unburden the Ministry of Transport and allow for better
efficiency in the maritime industry. The NSC, as economic regulator of the
shipping sector, has a big role to play in the future of shipping and allied
services and can be further empowered by Government to fulfill its mandate in
this regard.
Bisi Akodu is a partner at OAL and heads the
Corporate/Commercial & Public Sector Group of the Firm.
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