Nigerian Shipping Companies face risk of gradual extinction


One aspect of history which Nigeria and many other countries will not forget in a hurry is colonialism, the product of trans-continental trade.

The trade ushered in the use of merchant shipping and the bulk movement of people and materials in large vessels over long nautical distance, usually across continents.

During this period, merchant shipping was an exclusive preserve of the colonial masters and their allies, and as expected, nations ceremony suffered from the near zero impact to the Gross Domestic Product (GDP) as the benefits of import and exports handing went to the foreigners.

Nigeria, like many other countries in the West African sub-region could not participate in the lucrative business of merchant shipping and the trans continental trade even when she accounted for about 60 per cent of total shipment from the west coast of Africa to European countries.

By 1958, the revenue loss to the country by the non-participation in the shipping business became so appalling that a motion was passed by the then Federal House of Representatives urging the government to take urgent steps to redress the situation.

In 1959, the then Minister of Transport, Mr. R.A. Njoku announced to the House, the incorporation of the Nigerian National Shipping line (NNSL), which took off later with four second- hand ocean going vessels.

Despite the establishment of the National Carrier, the dominance of developed Nations in the shipping industry of developing nations continued, with the former amassing expertise and mounting barriers to discourage new entrants into the lucrative shipping business.

Irked by this state of affairs, developing countries came together and by 1965, they formed a pressure group under the auspices of the United Nations to create what is known today as the United Nations Conference for Trade and Development (UNCTAD). Under UNCTAD, these countries were able to formulate strategies to break the monopoly of international shipping business through a cargo lifting policy later known as UNCTAD 40, 40, 20 in 1994. The policy was aimed at reserving 40 per cent of cargo through-put of nations to indigenous shipping lines.

It was the UNCTAD lifting policy that gave birth to Nigeria Shippers Council in 1978 and the National Maritime Authority in 1987, although it has since changed name to Nigeria Maritime Administration and Safety Agency (NIMASA). The two bodies were put in place then to implement the nation’s shipping policy in line with UNCTAD’S decisions.

This development set the stage clearly for Nigeria’s increased participation in Merchant Shipping activities and between 1980 and 1997, there was an emer-gence of seven indigenous shipping lines that served as National Carriers. These companies, including the NNSL had a total of about 39 vessels.

While the Nigerian Shippers council was estab-lished to create a balance of interest between providers and consumers of shipping services so as to shield Nigerian Shippers from the exploitative tendencies of the shipping companies, NIMASA was established primarily to promote the growth and development of indigenous shipping, although it has regulatory role as its secondary function.

Since 1997, there has been steady decline in ship acquisition by the Nigerian Shipping lines. The NNSL which alone had 27 vessels in its fleet became liqui-dated and the Nigerian Unity line which replaced it had only one vessel which was later sold as scrap.

Although by the year 2000, a total of 122 registered shipping companies were in Nigeria, they depended mostly on chartered vessels to carry their own share of UNCTAD cargoes. Many of them, however, were mere portfolio firms that depended on the sales of cargo allocation papers to foreign carriers to remain in business.

The No 4 Burma Road of the present NIMASA headquarters then was a beehive of business activi-ties as cargo allocation papers exchanged hands freely for millions of dollars. This trend continued until the former Minister of Transport, Dr. Kema Chikwe abol-ished the cargo sharing policy and this made nearly all the shipping companies to close shop.

Today Nigeria can no longer carry even 1 per cent of her UNCTAD approved 40 per cent of cargoes and this has impacted negatively on nations economy.

The last official research carried out to determine the economic implication or the regrettable trend to Nigeria was in 1996 when Nigeria paid a total of $6.2 billion to foreign shipping operators for the lifting of crude oil going by the assumption that the country pro-duced 1.7 million barrels per day or 229,779 tons per day at a freight rate of $90 per tons for 300 days of op-erations. Apart from revenue loss, there was losses in term of employment opportunities with the attendant social problems.

The economic implication of foreign dominance in the shipping sector will be better appreciated if we compare merchant shipping in Nigeria to that of Singapore, an equally maritime nation. The country had the same pre-degree with Nigeria in term of shipping.

Today, Singapore with a population of 3 million people now has over 100 merchant vessels in her national fleet and about 30 shipping lines.

In the past, precisely in 1979, the Federal Govern-ment, through the then National Maritime Agency, intervened to rescue the indigenous shipping companies from going underground. It then established a Ship Acquisition and Ship Building Fund (SASBF), which the Nigerian ship owners assessed to the tune of over $100 million. But many of the beneficiaries refused to pay back and government failed in its attempt to build the needed capacity among the ship owners.

In 2003, when the nations inland and coastal shipping law, also known as cabotage law, was enacted, the country established a Cabotage Vessels Financing Fund, into which a percentage of contract sum executed by vessels operating in the country’s inland water is being deposited after collection by NIMASA. The fund is, like SASBF, aimed at developing indigenous shipping capacity. The fund, as at last count has over $120 million in a bank account with accruing interest since 2004.

But NIMASA continue to hold on to the money, although the agency once said it was awaiting the approval of the Federal Ministry of transport to commence disbursement from the fund having carried out audit to determine five beneficiaries that are still waiting to enjoy the benefit of the fund.

To Captain NIyi Labinjo, it is not only stupid but criminal for Nigeria to concede all her export activities in terms of shipment to foreigners.

According to him, the volume of goods available for shipment in Nigeria is enough to engage indigenous ship owners adding that they have by now acquired capacity for shipping across deep oceans and across continents if they had been encouraged.

‘‘Nigeria produces 2.5 million barrel of crude of oil a day and all your indigenous shipping companies are dying. It is not only stupid, but criminal. Nigeria import general goods and what have you is import oriented country. Our impute is 78 million tons and all the indigenous shipping companies are dying, using the figure, if everything comes from Europe, it will cost us $30 per tons and $30 multiplied by 80 mil-lion tons will give you $2.4 billion. And if everything comes from Asia, it is $65 per ton and multiply that by 80 million tons, it will give you N5 billion. Are you saying your country is generating $5 billion of freight and you have no contribution? Look at what we are generating in freight also from oil and gas, all goes to foreigners and by the time you put them together it is a case of a farmers son dying due to starvation.”