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Why Nigeria’s $7bn shipping potential remains untapped

Why Nigeria’s $7bn shipping potential remains untapped

The maritime industry in Nigeria is very green and vast. With its long coastline, unique location, large oil and gas deposit, large and growing population, among others, Nigeria is well-positioned to transform its ports into attractive destinations for both regional and globaltrade.

The maritime sector provides vast window of business opportunities in several related activities that offer commensurate returns on investments to the potential investors.

The range of available business opportunities include; Port and Terminal operations, shipping, stevedoring, ship brokerage services, marine insurance, ship chandling. Others are warehouse, logistics, maritime law, and consultancy, among others.

Despite these numerous business opportunities in the Nigeria’s maritime space, investors have not really taken the opportunities that abound in the sector, especially in the shipping sub-sector.

However, the shipping sector also remains the most effective way to move complex goods and raw materials around the world. This also makes it one of the highest employers of labour and revenue earner.

The Federal Government is also looking at other sectors outside the oil and gas industry in a bid to ensure its drive to diversify the economy is achieved. And one sector that the government is looking to unlock its potential is the shipping industry which in deed offers huge potential that if effectively harnessed can earn massive revenue for the Federal Government.

Without doubt, the Nigerian shipping industry holds the prospect of generating trillions of naira annually into the government coffers, but sadly, this potential remains untapped.

Presently, Nigeria is said to be losing an estimated $7 billion in revenue annually due to its inability to harness its potential in the shipping industry. Asides, Nigeria is also reputed as the highest importer of Norwegian fish.

Daily Sun investigations revealed that Nigeria is not taking full advantage of its offshore maritime potential.

These include services that involves movement of cargos such as wet cargo like petroleum products as well as the shipping of bulk cargos such as rice, cement, among others.

Daily Sun learnt that in offshore marine cargo business, Nigeria is not having more than 15 to 16 per cent participation in terms of market share. “In the real shipping of cargo, Nigeria does not have more than 4 to 5 percent of the business,” an industry source told Daily Sun.

At the recent stakeholders’ meeting hosted by Royal Norwegian Embassy, in collaboration with Innovation Norway, Nigerian Norwegian Chamber of Commerce, and The Norwegian Seafood Council, and which held in Lagos, the Chairman, Shipowners Forum, Mrs Margaret Orakwusi enjoined the Nordic country to assist unlock the vast opportunities that abound in Nigeria’s maritime market.

Orakwusi said although, at present Nigeria may not be taking full advantage of its potential in sea trade, there are however vast opportunities for investors who would want to invest in unlocking these dormant potential.

“There is huge revenue of over $7 billion yearly in shipping, but we have relied heavily on importation of goods and exportation of crude oil. The oil is even currently exported as Free on Board (FOB), because we don’t have a national fleet. This is an opportunity for investor,” said Orakwusi.

“It holds a huge revenue base, high job opportunities, and foreign exchange earner. But it is so underdeveloped.

We also have huge market for tourism in the sector, but tourism is almost zero harnessed in Nigeria. There are so many things that are so attractive in (maritime) tourism,” she added.

Citing infrastructure deficiency as part of the problem stiffling the growth of the maritime sector, she demanded that the Federal Government fix the ports access roads, and make the Eastern ports business-friendly.

While speaking with Daily Sun, Advisory Head/CEO, Kamany Marine Services Limited, Charles Okorefe lamented the huge loses associated with Nigeria’s inability to utilise its maritime potential for national growth. Okorefe faulted the $7 billion loses figure to the untapped shipping market, saying that figure is overtly conservative.

He added: “As a matter of fact, the nation loses more than that only from the leakages in the nation’s Cabotage trade where lack of adequate enforcement of the letters of the Act and the unabated granting of waivers to foreign operators constitute a major Achilles heel to the expected huge returns from that sector.

Foreign ship owners still dominate Nigeria’s maritime trade in all ramifications and that constitutes a huge capital flight to the nation’s economy.

“Aside from this, the continued utilisation of Free on Board (FOB) rather than Cost Insurance and Freight (CIF) in the carriage of the nation’s crude oil constitute another major drain on Nigeria’s Shipping trade. FOB in our case simply indicate that the buyers of Nigeria’s crude also reserve the right to nominate the vessels to freight the commodity.

Nigeria as such, does not earn any freight from all the crude oil she exports. This trade term needs to be reversed in favour of CIF so that the nation can begin to earn sizable freight from her massive crude oil export,” he added.

Okorefe also listed another major problem as the high tariff charged by Nigerian ports and the gross under-utilisation of other Nigerian ports in favour of Lagos ports saying these trends were responsible for huge revenue losses in the nation’s shipping trade.

He therefore demanded that the Delta, Calabar, Port Harcourt old ports be revamped so as to attract ship owners, charterers and other cargo interests so as to boost the nation’s revenue base outside the Lagos ports.

Said Okorefe, “Other nations create official policies, implement and enforce them. In the US for instance where Cabotage legislation found it’s roots since the passage of the Jones Act in 1920, the law has never been observed in the breach. Necessary sections are usually imposed on identified offenders. Nigeria would need to learn how to implement and enforce her laws especially in the maritime industry.

“Also, the nation shipping sector would need to identify her nitche market or area of comparative advantage. The Phillipines for instance take Seafaring as her nitche market and their nationals constitute about 20 per cent of world Seafarers. The letter remits a minimum of $7 billion to their nation’s economy on annual basis. This equals the same amount Nigeria is said to be losing annually,” he added.

According to him, reduction in tariff may also have the positive effect in the drastic reduction in the activities of smugglers. Adding that what Nigeria loses to smugglers in terms of revenue is unquantifiable but definitely way over $7b annually.
Source: Sun New Online