The imperatives of maritime ministry, devt bank
By Udeme Clement
As the new administration commences, many stakeholders in the maritime industry are calling on President Goodluck Jonathan, to create a maritime ministry and a development bank to harness the enormous resources in the maritime industry in order to curtail capital flight from the country.
The stakeholders under the Indigenous Ship-owners’ Association of Nigeria (ISAN) are urging government to use the Cabtoage Vessels Finance Fund (CVFF), estimated at $120 million, to open a development bank that would attract wide investments from within and outside the country.
This, they said, is important as 90 per cent of global trade is by sea. Aside 90 per cent of Nigerian trade comes by sea while 80 per cent of the Gross Domestic Product is through resources from the sea.
Accordingly, the agitation for maritime ministry and a development bank to harmonise growth in the sector, which is the highest revenue generating source after oil and gas, has been lingering for years.
It would be recalled that in 2003, Nigeria provided $25m for shipping development, the same period Kuwait, a smaller country with a population of three million, provided $98m. It shows that resources from the Nigeria ’s coastal region are not adequately harnessed. Shipping is capital- intensive and most local ship-owners in Nigeria still operate with old vessels waiting on government intervention to replace them.
Government has instituted an aviation intervention fund of $500, gave manufacturers $500m and Nollywood $200m, while the same government is telling maritime stakeholders to share $120m with over 90 applications. Statistics from the Nigerian Maritime Administration and Safety Agency (NIMASA) show that over 90 ship-owners have applied for the CVFF, which could only purchase five vessels as the rate of $25m per ship. This implies that the fund is grossly insufficient.
The Chief Executive Officer, AL-Dawood Shipping Lines Limited, a member of ISAN, Captain Dada Olaniyi Labinjo, spoke on the imperatives of the maritime ministry and development bank in the sector. “The government is not aware of the losses it is incurring by not developing maritime. If the government were aware of the monumental losses it would act fast to harness the maritime resources through a ministry and development bank.
Government has also failed to recognise the maritime sector as critical to the economic development of the nation by not harnessing the large resources and potentials available to the country from the sea. The government is only satisfied with the revenue from hydro-carbon and the little revenue from fishing,” Labinjo stated.
“Following our persistent advocacy and drawing the attention of government to the huge capital flight as a result of not tapping the maritime resources, the government came up with the Coastal and Inland Shipping Act, otherwise known as the (Cabotage Act), with an objective of preserving the domestic resources of maritime trade for Nigeria .
The government went further to talk about local content in oil and gas with a view to also increasing indigenous participation. These are laudable steps, but we need to go further on implementation.
We need a maritime development bank because the regular banks are filled. Government recognised the need to satisfy the manufacturing industry and it created the Bank of Industry (BOI).
The same government created the Bank of Agriculture for farmers, government also created the Mortgage Bank for housing need. So, why is it difficult to create a maritime development bank? In other countries, government create a ministry to look after the maritime sector and also a national maritime development bank to provide incentives for players in the sector. Shipping is capital-intensive.
You cannot ask someone to buy a ship with $25million and pay back in three years because it is absolutely impossible. It shows lack of understanding.
Moreso, the issue of Cabotage Act has been lingering for so long. For instance, the law provides that all those who want to use ships within the Cabotage areas, that is our domestic waters should register with NIMASA. But our investigations revealed that not all the vessels operating in offshore and along the coast areas are registered with NIMASA according to the law.
Section 34 of the same Cabotage Act also provides that all those who want to use maritime services for the year must advertise for Nigerians to pick areas they have competence.
This area is not also fully complied with. The law also provides that any ship coming into Nigeria must comply with the Cabotage law before the Nigerian Ports Authority (NPA) allows such vessel passage into the country.
But often NPA neglects this area of the Cabotage Act, even as NIMASA grants waiver to foreign shipping companies without consulting local operators to find out whether they have capacity or not as it is done in Malaysia , Singapore and Belgium where Cabotage operates.