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Can NIMASA drive Cabotage regime when 90% of vessels is foreign owned?

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Since the inauguration of what industry watchers see as new Nigeria Maritime Administration and Safety Agency (NIMASA) following the appointment of Dr. Dakuku Peterside, almost five months ago, part of the reforms many stakeholders expect to see include the empowerment of Nigerian vessel owners to gain from the 13 year old Cabotage Act.

But up till now, foreign firms own about 90 per cent of the vessels in the country, while the local operators are groaning under poor utilization and insufficient capital to buoy their capacity.

It would be recalled that the Cabotage Act also established the CVFF, which is under the custody of the Nigeria Maritime Administration and Safety Agency (NIMASA). The current situation of the fund, which is currently estimated at N100b, suggests that it has failed to live to its billing as no indigenous shipping company has drawn from it.

The Coastal and Inland Shipping Act, otherwise known as the Cabotage Act was enacted in 2003 in order to restrict the use of Foreign Vessels in domestic coastal trade to promote the development of Indigenous tonnage and to establish a Cabotage vessel financing fund and for related matters.

Nigeria aspires to be amongst the top 20 largest economies by the year 2020, according to the economic policy of Vision 2020 and successful implementation of the Cabotage Laws in Nigeria is critical to the success or otherwise of the plan because of the important role shipping plays in not just the movement of goods and services around the country and the revenues collected as tax from companies in the sector.

Again, the CVFF is derived from the two per cent deductions from all contract value on ships operating within the nation’s coastal and inland waters under the Coastal and Inland Shipping Cabotage Act 2003, to enable indigenous ship owners acquire ships that would enhance their ability to partake in the coastal and inland region.

Recent discovery by Business Hilights include the fact that key agencies of government that should drive the deal have not shown clear seriousness on full implementation of the law due to reasons bordering on personal benefits, as some government officials rely on Section three of the law (which granted certain waivers), to enrich themselves.

According to the regulation, Section three, sub-section nine of the Cabotage law reads: “The Minister may on the receipt of an application grant a waiver to a duly registered vessel on the requirement for a vessel under this Act to be wholly owned by Nigerian citizens where he is satisfied that there is no wholly Nigerian owned vessel that is suitable and available to provide the services or perform the activity described in the application,”

Such requests are always routed via NIMASA to the minister. This process made some officials of the agency to be involved in the deal, which also involves to the ministry of transportation.

A maritime expert who pleaded anonymity in an interview recalled that “Inside the Cabotage law, section three of the law provides for waiver clause to enable foreign shipping companies trade on Nigerian waters. Some officials of the agencies rely on this clause, get grants and secure waiver for them,”

“What they are supposed to do was that before granting a foreigner the waiver, the officials must first enquire if there is any local counterpart that could render the same service, but the situation is not like that, rather, they just collect the money and facilitate the waiver at the expense of local vessels”.

While noting that the CVFF fund is not really the matter on ground, but the need to guarantee jobs for Nigerian vessels through the effective implementation of the Cabotage law, the expert argued that the fund is mean to support indigenous operators to acquire vessels, but some of the existing vessels are not even getting jobs, with a number of them scrapping away on the deep ocean.

According to findings, the earlier NIMASA gets serious with ensuring full implementation of the Cabotage law such that vessels that are Nigerian owned are getting jobs, the better the name of Peterside will be in gold prints as the DG that drove Nigerian shipping to the promise land.

Industry experts say the best bet for early gains from the Act is for the government to structure access to CVFF in such a way that if you want to buy a vessel, you should approach your bank with 10 per cent of the value of the vessel that you want to get, the bank can put in about 20 per cent of the money.

This model according to them, this will make the Cabotage Fund guarantee for the 70 per cent balance while the bank will be diligent in monitoring that project because they have put their money where their nose is. Analysts say if Nigerians are able to bring in good quality vessel, tonnage in the Nigerian shipping industry will rise.

Only recently, the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, had said the Cabotage law has been grossly violated and at best, not fully implemented, as foreign interests have dominated both the operations and the accruing revenues to the loss of the country.

He decried that “Out of about 600 ships that operate within our waters, only about 60 of them are owned by Nigerians and are mostly idle, in violation of the Act”.

According the CBN chief, the industry is losing as much as N2t yearly from the anomaly.


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