Why NIWA should administer the Cabotage Vessel Financing Fund
By Lanre Badmus
When Nigeria passed the Inland and Coastal Shipping (Cabotage) Act into law in 2003, a provision was made for the establishment of a Cabotage Vessel Financing Fund (CVFF) to support indigenous businesses and Nigerian citizens grow their capacity in the carriage of the country’s maritime trade. Over the last 17years, succeeding Director Generals of the Nigerian Maritime Administration and Safety Agency (NIMASA) have regaled industry operators with promises of disbursing accruals from the Fund, yet not a single USD or Naira has been disbursed to the frustration of prospective beneficiaries. The recent excuse is that parties are trying to resolve the interest rate or commission on the accrued funds; clearly this is not the way matters of this nature are handled in other climes.
The CVFF is meant to grow the per capita water transport infrastructure stock of Nigeria, enhance domestic trade and enable indigenous operators access foreign markets. The main accrual to the Fund is the 2% surcharge on carriage contracts performed by vessels engaged in domestic or inland shipping in Nigeria. It is important to stress that this 2% surcharge comes from the payment for the use of the vessel; it is more like a contributory or toll tax that a vehicle owner has to make while crossing an interstate expressway, highway, tunnels or bridge. The surcharge is deducted by the consignee and paid to government from the freight invoice of the ship-owner for the use of Nigeria’s waterways.
The NIMASA establishment Act of 2007 made very clear its role of promoting and regulating matters of maritime safety, security, marine pollution and maritime labour. The Agency is also charged with the responsibility of implementing the Merchant Shipping Act (2007) as amended, and the Cabotage Act 2003. Among its functions (Sections 22 and 23 of the NIMASA Act) is the development and regulation of matters relating to merchant shipping and seafarers, however NIMASA has little to do with waterborne transport infrastructure.
Until the Nigerian constitution along with its subsidiary legislations is amended, the Supreme Court by its recent pronouncement has affirmed the status of the NIWA as the agency with the responsibility to improve and develop inland waters for navigation in Nigeria. For emphasis, the NIWA extant legislation declared navigable waterways in Nigeria to include rivers and their tributaries, distributaries, creeks, lakes, lagoons and intra-coastal waterways – excluding waters declared to be approaches to ports under or pursuant to the Nigerian Ports Authority Act.
The NIWA establishment law (including the composition of its board) recognizes its role in waterborne transport infrastructure development. Part III of the NIWA Act states that “it shall be the functions of the Authority to (a) provide regulations for inland navigation; (b) ensure the development of infrastructural facilities for a national waterways network connecting the creeks and the rivers with economic centers using the river-ports as nodal points for intermodal exchange; and (c) ensure the development of indigenous technical and managerial skill to meet the challenges of modern inland waterways transportation”.
Without reliable waterways infrastructure, there can never be efficient water transportation or shipping. The waterways provide the space and connections to other modes for physical distribution of goods and persons. As Nigeria’s flag and port state administration, NIMASA is to focus on the integrity of the vessel and safety of those onboard the vessel (crew and passengers) as well as those living or working near bodies of water from hazards or harmful external threats, it is not established to provide waterways infrastructure (fixed installations, structures and networks) that facilitates the movement of goods and persons. To put in context, the Federal Road Safety Corps (FRSC) is the federal agency on road safety administration; however the development and maintenance of federal roads is the responsibility of the Federal Ministry of Works and its agency, the Federal Road Maintenance Agency (FERMA).
With huge water bodies connecting about 28 States of the Federation, better use of inland water transportation will enable Nigeria leapfrog her economy into the first ten leading economies in another decade. The country’s estimated 3,800km of navigable waters available all year is able to transport over 50% of perishable, manufactured and heavy goods currently being moved on Nigerian roads. The cargo transported on the Rhine River in Western Europe, which is about 1,300km long, was 292 million tonnes in 2022 alone.
The under-performance of inland waterways in Africa generally has been linked to historical and institutional neglect. The biggest challenge for waterways underdevelopment in Nigeria has been poor funding, in strong contrast to the huge financial allocations committed every year to land infrastructure (road and rail). Since 2014 when the Federal Government announced a water transport infrastructure plan detailing the construction and rehabilitation of thirty-two waterborne infrastructure projects comprising eleven river ports and twenty-one jetties, very little has been heard or seen regarding its actualization till date.
The new Ministry on Marine and Blue Economy would largely be ineffective without significant and sustained investments in waterborne transport infrastructure. Clearly, the current system of annual budgetary allocations is insufficient to bridge the huge infrastructural gap needed to expand and improve the country’s marine economy. The CVFF, which is a contribution paid by operators involved in domestic or inland shipping, should be made to serve and promote their interests.
The unending controversy over the non-disbursement of the CVFF that has culminated in the long neglect of domestic shipping, ship building and water routes, demands that a new course of action is adopted by the supervising authority. A good start will be to sponsor an amendment to the extant Cabotage Act, whereby the CVFF is repurposed as a vehicle for waterborne transport infrastructure development and its administration placed under NIWA. But before transferring such a responsibility to NIWA, its current operating structure should be rejigged and populated with requisite professionals. This would accelerate Nigeria’s transition into a leading maritime nation, both in content and culture.
Lanre Badmus is a member of the World Association for Waterborne Transport Infrastructure (PIANC)
