By Samson Echenim
Nigeria's maritime sector performance for 2019, like the global maritime business in the year, evidently points to the negative, but factors that drove the local sector downward are not same as those that helped the global maritime performance dip.
As usual, lack of enforcement of maritime related policies remain a bane of the industry in Nigeria, in addition to myriads of controllable factors such as poor seaport access roads, absence of truck parks and ineffective traffic management around the ports, especially, the country's busiest ports in Lagos.
Lack of adequate enforcement of Cabotage regulations by relevant authorities allowed continued trading on Nigeria's cabotage waters by foreign vessels during the year. However, the situation is expected to change in favour of local operators, as regulators begin a process to end the waiver regime.
Although with little improvement, international oil companies (IOCs) still dolled out freight contracts to foreign vessels worth millions of dollars, where a few indigenous shipowners who managed to add up one or two vessels to their fleet still scramble for jobs.
Shipping
A number of importation restriction policies, especially those bothering on food products played a role in slowing down importation in 2019.
For instance, ENL Terminals, a major handler of food and other bulk cargoes reported severe cut in the port's annual tonnage by over 50 percent from about 4.5 million tons to 2 million tons. The terminal in Apapa Port reported just 35 percent of capacity utilisation in 2019, blaming the federal government's policy restrictions on food items.
The closure of the border led to more importation and exportation through the seaports, but the ports were not prepared for the cargo overflow, with freight forwarders and licensed clearing agents constantly complaining of congestion at the ports, especially towards the end of the year.
Vicky Hastrup, chairman, Seaport Terminal Operators of Nigeria (STOAN) raised the alarm over congestion at the ports in Lagos, calling on Customs to auction overtime cargoes which have led to congestion at the ports.
To corroborate her position, Pacific International Line (PIL) South Africa, also issued a statement, raising the warning importers about the long ship waiting time before berth which it said was caused by cargo overflow at the ports due to border closure and worsened by lack of cargo handling equipment by terminal operators.
Shipping in Nigeria was also badly affected by very bad port access roads, which brought a herculean haulage process that more than tripled cost of freighting containers from the Lagos ports from N250,000 in 2018 to N750,000 by November 2019.
However, the rehabilitation of the port access roads, especially, the Mile 2-Apapa end the Oshodi-Apapa Expressway to Tin Can Port, Liverpool Road and Creek Road, which is expected to be completed in 2020 will help improve access to the ports. This in turn will provide quicker access to cargoes and improve rate of clearing to reduce cargo dwell time by almost 50 percent from about 21 days currently obtained.
While food imports are expected to remain restricted, exportation of agricultural products are expected to edge up in 2020, as local farmers aided by government subsidy produce more for export. The deliberate export growth policies of the federal government are also expected to help deepen export activities at the ports.
Cabotage trade
Perhaps the most improved area of the maritime sector in 2019 is Cabotage trade which appeared to have caught some regulatory attention.
Nigeria’s apex maritime regulator, the Nigerian Maritime Administration and Safety Agency (NIMASA) reported cabotage trade growth by 32 percent
"Nigerian wholly owned ships and other vessels operating in the country’s cabotage waters increased by 32 percent," according to Dakuku Peterside, director-general of NIMASA. Dakuku also reported that NIMASA's strategy to “stop waivers on manning for prescribed categories of officers in vessels engaged in the cabotage trade has increased the number of Nigerians onboard vessels by 7,000."
“We have started a process of cessation of granting of waivers which all of us agreed has been abused over time. In the area of manning, we have put in place what we call the new cabotage compliance strategy,” he maintained, adding, “We are going to create incentive for those who are going to build vessels in-country."
Also, the subsector witnessed a landmark judgement that saw the IOCs paying two percent of their contractual freight value with indigenous ships to NIMASA when it was ruled by a federal high court sitting in Lagos, June 14, 2019 that oil drilling platforms are caboatge vessels. The judgement delivered a judgement in favour of NIMASA in the case involving Seadrill Mobile Unit Nigeria Limited and the Federal Ministry of Transportation (FMOT), which defined offshore oil drilling as a cabotage trade and oil rigs as cabotage vessels, confirmed NIMASA’s right to collect fees from drilling operations. Dakuku l said the judgement was “yet another landmark attempt by the judiciary to set the record straight and boost implementation of our Cabotage law, while generating opportunities for jobs.”
Interesting, the Cabotage industry appears to be really poised for 2020, to become the most active industry in the sector with the Cabotage Vessels Financing Fund (CVFF) ready for disbursement to indigenous shipowners next year. The fund which is over N44 billion is expected to help ship owners acquire vessels in 2020 to stir up myriads of business activities in the cabotage environment next year.
In addition to the CVFF, Dakuku, the NIMASA had informed in November that the agency was working with the Bank of Industry (BoI) to establish credit facilities within the threshold of single-digit interest for acquisition of vessels for local shipowners and other operators in the country’s maritime sector. Specifically, the credit facility predicted at eight percent, is meant to help in the procurement of maritime assets to put operators in a position to compete favourably with their foreign counterparts. These interventions will no doubt impact positively on cabotage trade when they come on stream in 2020.
A joint committee made up of officials of the Nigerian Maritime Administration and Safety Agency (NIMASA), shipowners, bankers and technocrats in the maritime sector have been described as a game changer.
Also a joint committee of maritime technocrats, investors and regulators set up to develop blueprint for cabotage business development under the leadership of a former NIMASA DG, Temisan Omatseye is expected to come up with its recommendations in 2020. The committee met with various strata of maritime operators to determine the industry's challenges and possible ways to solve them. It was praised by leading operators as a "game changer."
Mkgeorge Onyung, president of Shipowners Assocaiation of Nigeria (SOAN) said would find a lasting solution to the hydra-headed challenges of growing Nigeria’s maritime industry. According to him, the committee will among other responsibilities, come up with ways to make the indigenous shipowners take over cabotage trading completely.
He said, “For 15 years the Cabotage Act has been with us without effect, but now we thank God that NIMASA has admitted that there must be a limit. It (NIMASA) has issued marine notices about some ships that will be banned in the next five years.
"The committee also has bankers, and we are engaging all stakeholders in this committee. So, for cabotage, I cannot say what happened in the past but what we are saying now is that we as shipowners, NIMASA and other members of the committee, we are going to make cabotage work. That is a national assignment and it is a game changer.”
Maritime security
Piracy and sea crimes, including vessel hijack and crew kidnapping were on high in 2019 around the Gulf of Guinea and extending to Nigerian waters, especially off Lagos and Bonny, with several vessels coming into the country affected this year. With the International Maritime Bureau (IMB) reporting Lagos as the most volatile in the middle of the year, the attack on Nave Constellation in which 19 crews were kidnapped in December was a major blow for Nigeria. Also, there were reports of cargo theft onboard vessels on the water and at the ports, which appeared more rampant in 2019 than ever before.
The country scored a significant mark this year when it successfully enacted the Suppression of Piracy & Other Maritime Offences Act (SUPMOA) 2019, but the gains of the anti-piracy and sea crime law are yet to manifest, as not even one suspect has been tried under the new law.
The Act gives effect to the United Nations Convention on the Law of the Sea (UNCLOS) 1982, the Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation (SUA) 1988 and its Protocols.
Unfortunately, Rotimi Amaechi, Nigeria's minister of transportation confessed that he boycotted International Maritime Organisation (IMO) council meeting and election, where Nigeria lost out in the Category C election, due to a major piracy incident that had taken place off Bonny where 18 Indians and one Greece national were abducted on-board Nave Constellation, a Hong Kong flagged crude carrier. Nigeria had lost the Category C seat to Kenya. Amaechi said the situation had been very worrisome, particularly with the fact that foreign shipowners were now engaging security guards in ship while bringing cargoes to Nigeria.
"I am even more worried considering that Nigeria has now become the number one piracy country in the world against Somalia that held the record over the years," he said.
However, 2020 brings an array of hope as the country has received her first special mission vessel under the Deep Blue Project, a maritime security programme meant to tackle piracy and other sea crimes.
The delivery of the vessel signaled the adoption of the $195 million equipment to be delivered by an Israeli firm, HLSI Security Systems and Technologies Limited, to fight piracy with trained naval officers on-board. The country therefore, expects improved maritime security, which may lessen cost of shipping into the country.
Flag state control
Putting its regulatory powers on flag state control in force, the NIMASA in 2019 set up a committee to determine its flag state regulation and guides for ship registration. The development was one of the positive traits found in Nigeria's maritime industry this year, but whether the agency is able to run an effective registration remains with a huge question mark.
“For professionals in the industry, we doubt the sincerity and competency of the current management and board of NIMASA to carry this important reform through to conclusion,” Jossiah Wassa, a maritime engineer had said, after the committee submitted its report in October.
In order to achieve success and attract overseas vessels and shipowners to the Nigerian ship register currently being put together by a committee, the register must meet world class standards and existing international frameworks, a first class marine engineer, Wassa has advised.
Such international frameworks include UNCLOS requirements, UN Conditions For Registration of Ships and several International Maritime Organisation’s requirements. Wassa said the committee must not cut corners, but come up with a register transparent and globally competitive to be able to generate revenue and spur economic activities in the country’s maritime industry.
“Above all, the Nigeria Ship Registry should be open in its operations, equip professionals for tonnage measurements, create revenue stream, generate maritime related economic activities among others,” Wassa said.