Falling fortunes of Nigeria’s maritime sector

The Nigerian maritime sector is facing crises.

The crises include poor access roads, high shipping charges, multiple cargo handling charges and astronomically high customs duty.

The inconsistencies in government policies have also over the years scared stakeholders away from the nation’s seaports, which has added to the multiple extortion points along the ports’ corridors.

Interestingly, the government had hoped that the sector would bridge the revenue gap created by subsidy removal and rise in the price of crude in the international market.

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The government hinged its hope of reviving the economy on the fact that the maritime industry is strategic to the growth and development of many nation.

Three years ago, one of the plans by the Economic Recovery and Growth of the immediate past regime was aimed at diversifying the economy.

This initiative was taken as a result of the fluctuating price of crude oil in the international market. This impacted negatively on the nation’s revenue.

Recall that ex-President Muhammadu Buhari in January, 2023, signed the N21.83 trillion 2023 Appropriation Bill into law. The budget which was possibly the nation’s highest, as well as Buhari’s last budget, was based on a N10.49 trillion revenue, N11.34 trillion deficit and N8.31 trillion budgeted for debt servicing.

A breakdown analysis of the budget done by Nigeria’s civic tech organisation, BudgIT, showed that from the total revenue of N10.49 trillion, independent revenue had the highest share of N2.62 trillion, non-oil revenue had N2.43 trillion, while N2.23 trillion would be gotten from oil revenue. Retained revenue from GOEs was N2.42 trillion, and other revenues would generate N794.13 billion.

Also, of the N21.83 trillion total budget, recurrent expenditure had the highest allocation of N8.33 trillion, representing nearly 40 per cent of the budget. This, according to the budget, included a personnel cost of N5.02 trillion, overhead cost of N1.11 trillion, statutory deductions of N967.49 billion and pension, gratuity and retirees benefits at N854.81 trillion.

Interestingly, again Nigeria’s public debt for 2020 hit N44.6 trillion in the third quarter of 2020. This represented a 2.9 per cent quarter-on-quarter decline when compared to N42.84 trillion recorded in the second quarter of 2922, according to the Debt Management Office (DMO).

Worried by the trend, the current federal government decided to take a second look at the maritime industry by creating the Ministry of Marine and Blue Economy.

But there are mounting concerns that the Nigerian maritime sector is dwindling due to some economic indices.

One area the Minister of Marine and Blue Economy, Olugboyega Oyetola, should consider immediately as a major revenue alternative to oil is the blue economy.

Rear Admiral Daniel Atakpa, the Chief Staff Officer (CSO), Naval Training Command (NAVTRAC), at a retreat for 42 officers on cyberattack, held in Lagos recently, said the blue economy was an evolving maritime ecological concept aimed at the sustainable exploitation of ocean resources for economic growth, citizens’ well-being and national development.

Admiral Atakpa, aptly referred to as Mr Blue Economy because of his vast knowledge in the subject, said Nigeria stood to gain immensely if it adopted and implemented a credible strategy for harnessing the resources of the blue economy considering that the country was strategically located within the resource-rich Gulf of Guinea.

He urged the participants not to only see the training for only cyberattacks on financial institutions, but to situate it in line with emerging security threats in the maritime sector.

Atakpa said Nigeria was situated in the Gulf of Guinea and that if Nigerians did the math right by using one nautical mile as the equivalent of 1.852 kilometres, the country’s maritime space (290 square kilometres) was about one third of “our land area (924 square kilometres).

“In other words, Nigeria’s maritime space is the sum of the land areas of the following states and Abuja, the Federal Capital Territory: Niger (76,363 sq km), Borno (70,898 sq km), Taraba (54,473 sq km), Kaduna (46,053 sq km), Lagos (3,343 sq km) and Abuja (7,315 sq km).”

He further said that the blue economy incorporated the emerging sectors of marine biotechnology, deep sea mining, off-shore renewable energy and eco-tourism, adding that the ocean resources were embedded in the Gulf of Guinea, a major natural endowment; which according to him, means that Nigeria is ignorantly sitting on a blue economy with massive economic potential for the country if properly harnessed.

He added that it had become expedient for Nigerians to be worried about the dwindling land-based resources and rising global population, coupled with the quest for a greener and cleaner energy source.

Ironically, this rich marine biodiversity is not harnessed by all the relevant government agencies saddled with the responsibility.

For instance, the Nigerian Maritime Administration and Safety Agency (NIMASA), with the duty of registering the number of vessels operating in the nation’s waters, as well as documenting the state and number of Floating Production and Storage Offloading (FPSO), does not have an accurate record.

A few days ago, an offshore drill facility, Majestic Rig, belonging to Depthwize Nigeria Limited, capsized at Ovhor in Warri, Delta State, trapping some workers who were onboard.

The corpses of four persons, including a Britton, were fished out from the scene while many others sustained injuries.

Days later, NIMASA, an agency of government saddled with the responsibility of safe shipping and cleaner ocean, announced that the oil drilling rig known as Majestic, acquired by Seplat Energy Limited under Seplat/NNPCL joint venture, had been operating illegally in the country.

It said in a statement that its initial findings confirmed that the ill-fated rig was Panama- flagged and had been operating on Nigerian waters since 2016 without requisite approvals from the agency.

It further said the ABS-classed inland water drilling, 232 feet long barge, with a rated drilling depth of 30,000 feet, collapsed where it was being towed from N04, 30:34/E00543:57 enroute Ovhor 21 that belonged to SEPLAT Oil field in Delta State.

It added that it had initiated contact with the Clean Nigerian Associate, a conglomerate of all International Oil Companies (IOCs) responsible for the cleaning of Tier 2 oil spill, to establish the level of spillage at the scene of the incident, and that the agency was in communication with officials of SEPLAT Energy Limited, charterers of the ill-fated rig, who are expected to officially report the incident within 24 hours in line with the provisions of the Merchant Shipping Act 2007.

But findings by Daily Trust on Sunday revealed that this is not the first time such an incident would be happening on the nation’s waters.

A Floating Production, Storage and Offloading facility, known as MT Trinity Spirit, exploded on Wednesday, February 2, 2022, causing panic in the Escravos area of Warri South Local Government Area of Delta State.

It was later discovered that the FPSO, a Liberia-flagged vessel, had been for long decommissioned, but somehow some persons in the maritime sector towed it from the West African country to Nigeria, where it operated for years before the unfortunate incident occurred.

At the time of the incident, maritime expert, Captain Warredi Enisuoh, wondered how the vessel which was decommissioned in Liberia could find its way to Nigeria and be drilling at the same time.

More so, it is evident that the absence of a strategic maritime economic blueprint, flawed institutional framework, maritime insecurity, lack of data, as well as withheld Cabotage Vessel Financing Fund (CVFF), are the bane of the maritime economy.

Across Africa, fishing is a major economic activity in the oceans, lakes, rivers and fish farms.

According to a UNDP report, fishing – which is a major source of income for fishing communities on the continent – employs about 12.3 million people between the ages of 15 and 64 years either as full or part time.

The shipping sector is also not without its problems, as the sector is dominated by foreign shipping lines.

Maritime expert, Prof Eugene Nweke, said freighting cost for a 40ft box from China to Nigeria was $8,500; while to Ghana and Lome were $3,500 and $3,000 respectively.

He said on Ease of Doing Business, the 2017 report of the World Bank ranked Nigeria at 145 among 185 countries.

While on Trading across Border, which is an indicator for measuring a country’s ports’ effectiveness, same report ranked Nigeria very low, at 183 out of 185 countries.

He said on Import Cargo Clearance Out of the Ports, the number of import cargo subjected to physical examination stood at 68.7 per cent.

He further said, “On Insurance Policy Premium, the insurance premium stands 1.5 per cent compared to Europe, Asia and America cumulatively at 0.55 per cent. Poor transportation network results in the high cost of doing business at the ports and overall cost of goods and services. High Shipping Company and Terminal Handling Charges (THC) – the Annual Freight estimated cost is between $ billion and $6 billion.”

Acting National President of the Association of Nigerian Clearing Agents (ANCLA), Dr Kayode Farinto, said the organised private sector was battling with the inconsistencies in the foreign exchange (forex) market.

He noted that while importers could not access forex from the Central Bank of Nigeria (CBN) window, the only option open to them was the parallel market.

He said, “Before now, every Bureau De Change (BDC) operator was given about $2 million. If you multiply this by over 200 operators, the amount will be colossal.”

By and large, the stakeholders are happy with the recent creation of the Ministry of Marine and Blue Economy.

A former Executive Secretary of the Nigerian Shippers’ Council (NSC), Barr Hassan Bello, advised the minister to prioritise efficiency, while the founder of the Nigerian Association of Government Approved Freight Forwarders (NAGAFF), Dr Boniface Anirbonam, harped on training and revitalisation of the Council for the Regulation of Freight Forwarding (CRFF) to make it functional.

The Chief of the Naval Staff, Vice Admiral Emmanuel Ogalla, while handling over six patrol boats built for the fisheries department of the Ministry of Agriculture at the Nigerian Navy Dockyard Limited, expressed concern over the increasing rate of Illegal Unreported and Unregulated Fishing (IUU) on the nation’s waters by foreign fishing trawlers.

He said Nigeria had been battling issues of IUU fishing activities perpetrated by foreign fishermen who, according to the CNS, are exploiting West African waters.

Nigeria has been losing over $70 million annually to illegal fishing, according to the House of Representatives, which said it included loss of license fees, revenue from taxation and the value that could have been accrued from legitimate fishing to local vessels.

Daily Trust on Sunday learnt that the construction of the six boats locally by the navy for the Ministry of Agriculture demonstrates the existing collaboration and synergy between both institutions of government, as well as commitment to promoting food and environmental security in Nigeria.

The wrangling between regulators of the nation’s backwaters, National Inland Waterways Association (NIWA), and those belonging to the states, like the Lagos State Waterways Agency (LASWA), has further contributed to the loss of lives in different mishaps.