NIGERIA: Breaking Barriers Limiting Access To $380bn Global Seaborne Trade

LNG Port Harcourt. Image: Helderline.


Maritime transport is essential to the world’s economy as over 90 per cent of the world’s trade is carried by sea. It is, by far, the most cost-effective way to move en masse goods and raw materials around the world.

Apparently, all the import oriented nations across the globe, ferry their goods and raw materials by sea. In the third quarter of 2018, the global seaborne trade rose to 112 per cent, according to maritime sources.

Presently, the global seaborne trade estimated to be around $380 billion and it has been projected to rise to about $700 billion at the end of 2019, as export and import trade relations in the world is becoming extremely large.

As the global seaborne trade is increasing tremendously, unfortunately, Nigeria is not even listed among nations that actively participate in the global seaborne trade and this has been the situation for decades, since the decline of the first Nigerian National Shipping Line (NNSL).

Currently, Nigeria has no national fleet bearing its flag and all its cargoes are borne by foreign shipping lines. The country cannot claim to have a viable indigenous shipping fleet and this is a disappointing, considering that about 60 to 70 per cent of ship traffic to West and Central Africa are destined for Nigeria.

However, stakeholders said that for Nigeria to be an active player in the global seaborne trade, there is need to put everything in motion to ensure that there is as much local participation in it as possible and get more Nigerians into the global shipping business.

At a recent event, the Executive Secretary, Nigerian Shippers Council, Mr Hassan Bello, hinted that Nigeria had tried but failed to enter into international shipping, not necessarily due to the huge capital investment required, but because of inability to compete with foreign operators who had list of incentives from their home governments.

According to him, the NNSL was established to boost the image of the country by promoting the Nigerian flag, and improving the country’s balance of payment, among other objectives. He said that the company operated at a loss due to the modernisation in ship type coupled with evolving technology in the late 80s and 90s.

It was recommended that private sector should control the shipping business instead of government, whose control would lead to monopoly, non-economic choice of ships and routes, interference and lack of capacity to compete.

According to the International Maritime Organisation (IMO), over 90 per cent of world trade is borne by sea and the real time growth in world Gross Domestic Product in the last two decades is 73 per cent. Reports from these international agencies also tied global trade to shipping, emphasising that shipping was the lifeblood of the global economy.

The International Chamber of Shipping (ICS) and the United Nations Conference on Trade and Development (UNCTAD) estimated that the operation of merchant ships contributed about $380 billion in freight rates within the global economy, equivalent to about five per cent of world trade.

According to ICS and UNCTAD, there were over 50,000 merchant ships trading internationally, transporting every kind of cargo and some of the vessels could cost up to $200 million to build.

For Nigeria to be actively involve in the seaborne trade, the Nigerian Maritime Administration and Safety Agency in 2017 set up the Cabotage Compliance Strategy to create room for more indigenous shipowners to trade in Nigeria’s territorial waters. The agency said in line with the new strategy, it would no longer grant permission for foreigners to take on jobs that Nigerians were qualified to handle aboard vessels trading in Nigeria.

Speaking with Daily Sun via telephone, Managing Director of Kamany Marine Services Limited, Charles Okorefe, said that Nigeria does not have its national fleet to move cargoes. He said not just owning a national fleet but the one that is functional and well funded.

He added: “Nigeria is an import oriented country and in spite of that only foreign vessels bring all the imports to Nigeria and that is not something that can grow the economy. So Nigeria should develop the act of carrying its cargo. Even the UNCTAD Code of Conduct 40:40:20, Nigeria is not benefiting from it because it does not own its own vessels and yet it does has a lot of cargoes to be imported.”

According to him, In that case, because of cost of vessels, things like the Cabotage Vessel Finance Fund (CVFF) have to be activated with government support so that Nigerian shipowners can buy newer vessels, which is part of the issues affecting the industry.

He further explained: “Then you also talk about Nigeria’s major export crude oil. But Nigeria does not own its own vessels to lift its own crude oil and that is because of trade terms. Nigeria sells its oil on Free On Board (FOB) instead of Cost Insurance and Freight (CIF) trade term. What that means is that, it is the buyer that lifts the vessel that does pick the cargo and since Nigeria does not have vessels, of course they will pick their own people to come and lift the crude oil. But if it is CIF, that means Nigeria has responsibilities of carrying her cargo to whichever destination.

“What does that also cost, Nigeria does not earn freight from the movement of its own crude oil and Nigeria has never earned $1 dollar freight since 1968 because it does not own vessels to lift its own crude oil. Imagine that a nation that have vessels that is carrying her own crude oil to various destinations around the world, then she will earn freight but now we do not earn freight from crude oil exports.”

He hinted that there are lot of things that needs to put in place. He said on Cabotage vessels, NIMASA is still granting waivers.

He opined that, “If waivers are removed and indigenous vessels are doing trading only on cabotage of course you know that what means. There are lot of things we can look at and considered in this situation.”