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Exploring Carrot and Stick Approach To Address Nigeria’s Shipping Woes

Exploring Carrot and Stick Approach To Address Nigeria’s Shipping Woes

By Kenneth Jukpor

In a bid to ensure continuous growth and inclusiveness in the maritime sector, maritime stakeholders will utilize the carrot and stick managerial principle to address the multiple issues in the sector.

This was one of the recommendations agreed as Nigerian maritime stakeholders converged in an event to mark the 2020 World Maritime Day (WMD) celebrated annually by the International Maritime Organization (IMO), with this year’s theme, “Sustainable Shipping for Sustainable Planet.”

Carrot and Stick approach of motivation is based on the principles of reinforcement. It was introduced by a philosopher, Jeremy Bentham, during the industrial revolution.

This theory is derived from the old story of a donkey, the best way to move him is to put a carrot in front of him and jab him with a stick from behind.

Speaking at the conference, the Director General of Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Bashir Jamoh proposed Jerome Bentham’s Carrot and Stick approach of motivation, noting that NIMASA and other stakeholders should seek to address the root causes of challenges like piracy, marine litters, among others.

Under the carrot approach, he disclosed that the agency has already initiated talks with the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) to develop Small and Medium-sized Enterprises (SMEs) in fishing, marine litter management and other businesses and vocations around the maritime domain.

He also opined that deepened investment in developing Nigerian seafarers via enhanced service delivery and equipment at the Maritime Academy of Nigeria (MAN) Oron, would also serve as a good motivation for human capital development in the sector.

Meanwhile, he maintained that the Deep Blue Project as a comprehensive maritime security architecture would be the stick approach to be utilized for apprehending defaulters in the nation’s shipping sector, especially pirates.

The NIMASA boss proposed this managerial model while presenting a paper titled; “Enhancing maritime security for sustainable cities and communities”

While the partnership efforts with SMEDAN is seen as a welcome development for the sector as maritime stakeholders have proposed the approach of inclusiveness to tackle the menace of piracy in the country, there is a need to clarify what kind of existing businesses or start-ups would benefit from the fiscal incentives.

Although the venture would ensure sustainability of maritime businesses in Nigeria and curb illicit vices in shipping, several aspects of maritime businesses would classify as SMEs and contend for the intervention fund. The onus would be on NIMASA, SMEDAN and possibly other maritime agencies to draw up plans to develop a list of businesses that categorize as SMEs in need of such fiscal incentive or loans.

Following the downturn induced by COVID-19, the Federal Ministry of Transportation revealed last week that it was seeking a package of tax incentives for the sector.

Dr. Bashir Jamoh, who conveyed the Ministry’s position to the Minister of Finance, Hajiya Zainab Ahmed, in Abuja, reiterated the commitment of the Minister of Transportation, Hon. Rotimi Amaechi towards ensuring massive tax reduction or elimination to spur activities in the sector.

The proposed incentives include zero import duty for brand new vessels imported by Nigerians or Nigerian shipping companies for use in foreign or domestic trade; 0.5 per cent only import duty for vessels aged between one and five years intended for use in foreign or domestic trade; and one per cent only import duty for vessels aged between five and eight years intended for use in foreign or domestic trade.

There was also a proposal for zero import duty for parts or components imported by Nigerian shipyards for local ship building, which will be for an initial period of four years after which it can be reviewed by government. All these are expected to give the sector the vibrancy it needs for growth.

While fishing communities in coastal areas in the Niger-Delta region should be primary beneficiaries in the targeted SMEs development, other maritime operators such as freight forwarders, ship owners, manning agents, stevedoring companies and ancillary services providers in the maritime sector, among others also classify as SMEs.

Pending clarification from the Director General of NIMASA, Jamoh, on how best this

In his contribution at the summit, the Managing Director of Sea Transport Group, Mr. Aminu Umar identified seafarer’s development as one of low hanging fruits to transform Nigeria’s shipping sector.

Noting that India and Philippine have calved a niche by specializing in the development the world’s best officers and ratings respectively; Umar stressed that it was high-time Nigeria channeled its youthful population towards a specific aspect of seafarers development.

“There is a need for a policy strategy in the development of seafarers. What did Philippines and India do to develop seafarers and how can we replicate that system in Nigeria? In the cadre of seafarers, there are rating and officers. Phillipines realized that they could have comparative advantage in training ratings and they focused on it. They improved on the educational system and training with emphasis on the ratings. Today, Philippine is the world’s largest supplier of ratings. India decided to focus on the officer cadre and they focused their training on officers. Indians represent more than 80 percent of officers scattered abroad on ships and onshore. These nations have established specific institutes to suit their goals. Nigeria can emulate these strategies.” Umar said.

According to him, one o f the problems in the nation’s maritime sector are that most of the MDAs focus on revenue generation while their Acts talk about capacity building.

“MDAs should have trust in the integrity and capabilities of Nigerian ship owners, particularly on cargoes that should be carried by Nigerians. In most cases, government agencies are the first to say that indigenous ship owners don’t have integrity and capabilities to do top jobs. This perception has to be removed in order to stimulate growth in the shipping sector,” he stated.

He equally assured that ship owners in Africa, especially the Gulf of Guinea (GoG) have complied with the 0.5% sulphur limit set by the IMO earlier this year.

Umar also noted that the dwindling participation of indigenous operators in shipping is because the business requires long term funding which are unavailable in the country, adding that the federal government should make the several avenues finances accessible to ship owners, especially the Cabotage Vessel Finance Fund (CVFF).

However, the Chairman of Nigerian Ship-owners Forum, Barr. (Mrs.) Margaret Orakwusi advocated for a sustainable blue economy strategy that should be people-centric with ocean-centric investments.

Orakwusi who was represented by Mrs. Obiageli Obi, stated this while presenting a paper titled, “Sustainable and Equitable use of blue economy”.

Noting that such blue economy strategy must be all inclusive and governed by public and private processes, she said; “Policy formulation process should include consultation in order to outline-the nature Regulatory and reform recommendations where existing frameworks are not considered. Policy framework should encompass all the sectors but identify high priority areas. it should highlight emerging issues, opportunities and challenges, such as untapped opportunities in Aquaculture, Offshore Ocean Energy, Blue biotech and Tourism.”

“The Policy will require government to create the conditions and environment that allow people to have quality jobs that stimulate the economy while not undermining environmental sustainability. It should be a transformative policy with workable policy instruments that will strengthen or increase social, economic and environmental linkages and reform current governance arrangements. In order to create a more harmonious and integrated approach a few fundamental changes maybe required in the way the oceans are currently being handled. It must be well-informed, precautionary and adaptive.”

Also speaking at the summit, the Senior Special Assistant to the President on Sustainable Development Goals (SDGs), Princess Adejoke Orelope-Adefulire described the maritime sector as a huge and growing industrial sector that should remain safe and secured.

Her words: “We must capitalize on our available local resources and invest in infrastructure and machinery that would be economically and physically resilient in line with the aspirations of SDGs 7, 9, 13 and 14.”

“Nigeria is blessed with natural resources in water and soil, which in nature, is free and abundant. We need to utilize our resources optimally to counter balance the effects of climate change by turning our problems into opportunities, as one natural innovation carries various benefits for all.”

She reiterated that it is pertinent to pay close attention to the nation’s untapped local potentials to provide basic needs to all by turning waste to wealth for sustainable consumption and production, using the integrated SDG strategies.

The crux of the summit on the need to optimize the potential of the nation’s maritime industry and one of the top strategies would be the development of SMEs in the sector.

It is true that the engagement with SMEDAN to develop a framework to support SMEs is commendable; nonetheless, industry observers are hoping this doesn’t end as a text book approach that never materializes.

There is no doubt that the maritime industry is pivotal to Nigeria’s attainment of the United Nation’s SDGs, however, the country must put in place deliberate measures to optimize its enormous maritime potentials.

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