Improving Nigeria’s Maritime Revenue Via Cabotage

 The word Cabotage coined from a French origin ‘caboter’ meaning ‘to sail along a coast’, is the transportation of goods or passengers between two places in the same country by an indigenous transport operator. It originally applied to shipping along coastal routes, port to port, but now applies to aviation, railways, and road transport as well. According to the black’s law dictionary, Cabotage was defined as a nautical term from the Spanish denoting strictly navigation from cape to cape along the coast without going out into the open sea. 

Maritime Cabotage on the other hand is often referred to as short sea shipping which is concerned with the transportation of goods and/ or passengers between ports of a given group of countries within a specific economics group and maybe by way of coastal ships, ferry services and ports services such as togs, dredgers, maintenance and repairs of crafts, pilotage launches, bunker and supply of vessels etc.

Nigeria is with a coastline of about 870km and about 3,000 kilometers of inland waterways with varieties of natural resources which includes: petroleum, natural gas, tin, columbite, iron ore, coal, zinc, limestone, lead and in reserve, the country had about 22.5 billion Cubic Meters of crude oil, 3.5 trillion cubic meters of gas and 42.7billion Cubic Meters of Bitumen (Cabotage Implementation Guidelines, 2007) which ensures the existence of Cabotage in Nigeria.

The Nigerian Cabotage law came into existence. By this premise, Nigeria became the first country in the West and Central African sub-region to enact Cabotage Law which was signed into law on the 30th day of April, 2003. This eventually placed Nigeria as the 41st country in the world to operate Cabotage Law.

At a recent maritime stakeholders summit, the Deputy Director, Cabotage Services, Capt. Sunday Umoren noted that NIMASA was actively collaborating with other sister agencies in order to ensure that Cabotage yields desired results in the nation.

He stressed that effective implementation of the Cabotage would lead to the growth in the revenue generated by NIMASA into the federal coffers, highlighting the major functions of the Cabotage to include training of manning officers and empowering indigenous ship-owners

However, he lamented that the major challenge facing the Cabotage in Nigeria has been the absence of platforms for the NIMASA officers to utilize in their quest to monitor and check operations on the nation’s territorial waters.

While NIMASA is in dire need of vessels to carry out its functions, over 20 vessels in the inventory of Global West have been seized by the Economic and Financial Crimes Commission (EFCC) as a result of ongoing investigations on the former NIMASA Boss, Patrick Akpobolokemi and Government Ekepmupolo.

“These vessels should be owned by Nigerians, registered in Nigeria and manned by Nigerians. Anything short of this means that the Cabotage hasn’t been fully addressed” Umoren said.

Capt. Umoren revealed that the agency was working on the release of the Cabotage Vessel Financing Fund (CVFF) which has led to controversy as to who gets how much each stakeholder should get and the genuine reasons for the disbursement of funds.

As the regulatory authority for the implementation and enforcement of Cabotage in Nigeria, Capt. Umoren noted that NIMASA was working on the release of the Cabotage Vessel Financing Funds. NIMASA, as Sections 22 and 29 of Cabotage Act 2003 requires Cabotage Vessels to be registered by the Registrar of Ships in the Special Cabotage Register, domiciled in NIMASA. The Minister in compliance with Section 30 of Cabotage Act created an enforcement unit for the regime with the Agency. Section 44 also mandates NIMASA to collect monies for and operation of the Cabotage Vessel Finance Funds.

The purpose of the Act is to restrict the use of foreign vessels in domestic coastal trade and promote the development of indigenous tonnage. The provisions include restrictions, waivers to meet lack of capacity, enforcement, Cabotage Vessel Financing Fund amongst others.

The entire Act is for the benefits of Nigerians. According to the former Minister of State for Transport, Alhaji Inua Musa Mohammed, the Cabotage Law was enacted to encourage indigenous company’s participation in shipping, increase capacity building and provide employment for Nigerian Seafarers, adding that it was in line with the Federal Government and Development Scheme (NEEDS) strategy.

However, the act has been faced with various challenges most of which has been described by experts as a self-cause/ inward driven challenges. For instance, the conditions prescribed for obtaining a waiver by foreign firms are less challenging, that it is likely that more foreign ships will be granted waivers to engage in Cabotage in Nigeria. This is because there is presently insufficient Nigerian fleet to cater for the Nigerian Cabotage shipping. Thus, with the inclusion of waiver, the bulk of the responsibilities of the indigenous vessel holders have been shifted to the foreigners making the Cabotage Act to be ineffective and at the same time defeats the purpose the Act from the onset.

Cabotage laws apply to merchant ships in most countries that have a coastline so as to protect the domestic shipping industry from foreign competition, preserve domestically owned shipping infrastructure for national security purposes, and ensure safety in congested territorial waters.[

The Minister may request the secondment of any officer to NIMASA from government enforcement agencies such as Nigerian Port Authority (NPA), Nigerian Inland Waterway Authority (NIWA), Joint Maritime Labour Industrial Council (JOMALIC), Nigerian Navy, Nigerian Immigration Service and the Nigerian Customs Service to the Cabotage Enforcement Unit.

However, according to the DG NIMASA, Dr. Dakuku, NIMASA is set to deliver what will be Africa’s fifth largest modular floating dockyard in 2017 and the project is expected to fetch over N2billion naira annually.

“When we went to Netherlands, I discovered that the minimum life-span of a floating dock is 100years. The one we went to was built in 1903, others in 1914 and 1923. None of them was less than 100years yet they are still working fine, generating a lot of money and none of them is below 120meters by 23meters.

“It is something that has a very long life-span and if we make this investment the numbers show that we could generate as much as N2billion yearly and in 10years we can recoup the capital and begin to enjoy the benefits” Dakuku said.

He asserted that NIMASA the floating dockyard would support the case of financial sustainability for both the agency and the dockyard, even as he was impressed that it had a long life-span.

Cabotage should not only be seen as the carrying on of trade along a country’s coast, the transport of goods or passengers from one port or place to another in the same Country. It can also be seen to mean the exclusive right of a country to control its costal, underwater or offshore transport in order to promote the revenue of the sector and the nation at large.

Today, when you look at all sectors in the maritime industry you will notice little or no Nigerians are participating in it. All the shipping that comes via dry cargo, little or no Nigerians are employed to do anything on these ships and these are potentials for income.

For the wet cargo, we look at crude oil and the refined products. In the crude oil segment we are almost non-existent because we do not participate. A minimum of 70 vessels are loading out of Nigeria every month. In two days an average of 5 vessels are loaded with crude oil in Nigeria and all the freights outlined on these vessels, the people working on the vessels as well as the tax paid; none comes to Nigeria. Nigeria is giving the foreigners everything. They employ their people, pay tax to their economy and the money goes to their banks while we are losing that entire income and economic development that we should have got.

For the refined products, it is the same scenario as no Nigerians participate in it. So, out of the over 700 vessels that come into this country per annum, nobody participates. The freight, the people working on the ship, the tax, etc is gone to other countries. Hence, we are feeding other countries more or less at a time when the nation is crying about lack of foreign exchange.

NIMASA also loses the 3% levy accruable to it as a result of ship-to-ship transfer in neighbouring ports. The ships that come into Lome are over 200 vessels in a month, if they had come to Nigeria they would have paid 3% levy to NIMASA which will be about $30, 000 to $40,000 per vessel. Hence, the agency loses revenue on 200 vessels per month, about $8,000,000 that would have generated.

It is also important to note that if these vessels had berthed in Lagos and there would have been several other ways of generating income for Chandlers, Tourisms, Hotels and Hospitality, etc., because when ships have to do STS (ship –to-ship) transfer and lighterage operations, they would need several other services and patronize the Nigerian businesses.

Cabotage laws apply to merchant ships in most countries that have a coastline so as to protect the domestic shipping industry from foreign competition, preserve domestically owned shipping infrastructure for national security purposes, and ensure safety in congested territorial waters.

By Kenneth Jukpor