10 YEARS AFTER: Stakeholders declare Cabotage regime a failure

Except for slight variations in semantics, a number of top rank maritime industry stakeholders, who offered their views on the issue were unequivocal that 10 years after the emergence of the Cabotage Act, that critical piece of legislation has failed woefully in meeting expectations.
In their judgements, the implementing organ of the Cabotage Act, the Nigerian Maritime Administration and Safety Agency (NIMASA) was scored low.
Then President Olusegun Obasanjo had on April 30, 2003, signed the Coastal and Inland Shipping Act, otherwise known as the Cabotage Act.
Implementation of the Act commenced May 1, 2004.

On the 10th and ninth anniversaries of the Obasanjo’s initialing of the Cabotage Act, and the kick-off, respectively, there is clearly no cause for celebration, going by the common thread of gloom in verdicts of the respondents to enquiries by SHIPS & PORTS DAILY.
As the Chairman of the Ports Consultative Committee (PCC), Otunba Kunle Folarin, succinctly put it: “There is no political will to implement it.”
As succinctly, leading maritime lawyer, Mr. Mike Igbokwe, told SHIPS & PORTS DAILY thus: “His (Obasanjo’s) high hopes on the Cabotage Law, 10 years ago, is obviously misplaced. The implementation has been very poor and dismal. Objectives of the have not been achieved due to poor implementation.”
The despondency in Igbokwe’s words of the past week is a far cry from the hopes espoused in his paper about a decade ago.

“An intended effect of the (Cabotage) Act on the local shipping industry is the institution of a ‘liberal protectionist maritime industrial policy’ for the protection or resuscitation of the local shipping industry from death or incapacitation due to the domination of carriages from point to point within Nigerian waters and unhealthy competition by the highly subsidised foreign vessels. In this regard, the Act sees the local shipping industry as a strategic industry which being in its ‘infant’ stage of development and not being in control of indigenous shipping operations, navigation and ship ownership, in the interest of Nigeria’s economy and national security, requires some guidance, conducive environment and protection from foreign competition so as to be nurtured into maturity and given room to develop through its acquisition and building of the necessary capacities to become sufficiently commercially viable and strong. Thus, the local industry will be able to control and become very strong in domestic shipping before venturing into regional or international shipping where it will then be able to withstand competition from the highly subsidized foreign ships in international shipping, it should for the time being be in a position to control and dominate carriages of cargo and passengers from point to point in Nigerian waters”, stated the Senior Advocate of Nigeria (SAN) in a paper he delivered at a the Annual Maritime Seminar of the Nigerian Maritime Law Association, which held May 13 and 14, 2003, at the Muson Centre, Onikan, Lagos.
Describing the “performance of the Cabotage Act” as “satisfactory”, another leading maritime lawyer, Mrs Jean Chiazor-Anishere, said that “it has motivated a lot of Nigerians in the industry to gear up and take advantage of its own shores.”
Noting that the Cabotage Act “also sped up the Local Content Act, amongst others,” Chiazor-Anishere, however, posited that “the implementation has not met my expectations because a major fall out from the Cabotage Act, which is the CVFF (Cabotage Vessel Financing Fund), is yet to fund the indigenous ship owners/stakeholders, who have satisfied the set down requirements! And that is a major set back!”
She traced hindrances to the effective implementation of the Cabotage Act to “the incessant changes in the Board of NIMASA (the regulatory body in charge), with particular reference to its DG/CEO; lack of continuity of policy implementation, even where the changes in the Board or its Executive Directors are made; lack of time frame in carrying out an idea; lack of mandate from the Ministry of Transport.”
Last Friday, the National President of the Nigerian Institute of Freight Forwarders (NIFF), Dr. Zebulon Ikokide, told SHIPS & PORTS DAILY: “Generally, there has been no performance in the Cabotage regim in this country. This was evidenced in the remark of the Director General of NIMASA when he assume office, that he is there to fully implement the provision of the Cabotage Law and make it to work for the country.
“However, I still believe that a more harmonised approach to support measures for the implementation of the Cabotage regime is needed for its success. The variations between the Cabotage Law and its successful implementation is the national taxation system that have make people and investors in the local maritime sector to shun investing in the water transportation business. An example can be seen from a foreign ship that brought cargo, to Lagos as a first port, discharged all the cargo, paid all dues for all the cargo including the NIMASA freight levy of three per cent and do not want to go to other port in the Country. If the local owner want to use the provision of Cabotage rules to transport part of this cargo to other part of the country through small craft will be disappointed when NIMASA will insist that they must pay a second three per cent freight levy even though the cargo have earlier been paid for at the first port of call. This stand of NIMASA does not augur well for business to thrive and it discourages investors.

“I want to recommend that a separate committee be created to look into the implementation of the Cabotage Law in Nigeria for a sustainable economic transformation of the maritime sector or in the alternative, that NIMASA be unbundled for a more effective service delivery.”
At a joint public hearing by the Justice and Marine Transport Committees of the House of Representatives on a bill seeking to review the Cabotage Act in June 2012, Speaker of the House of Representatives, Honourable Aminu Tambuwal, did not mince words in expressing his displeasure over the performance of the maritime industry and poor implementation of the Cabotage Act.
“So far the industry has not lived up to its billing as the performance has been woeful, poor, dismal and nobody will say successful”, the Speaker, who was represented by the Chief Whip of the House, Honourable Isiaka Bawa, said.
Tambuwal expressed concern over what he observed as increasing failures in the nation’s maritime industry.
He was of the opinion the Cabotage Act, designed to give the maritime industry world reckoning, had failed to generate the desired result.
In his words: “The question to ask since the enactment of the Act is how far we have gone in increased participation of our indigenous companies and nationals in our domestic shipping business. How many more Nigerians are manning the vessels operating in our domestic waters? How many more of our domestic vessels are built or repaired in Nigerian shipyards and dockyards, how many more Nigeria companies are involved in the trade?

“How many more are flying the Nigeria flag? What is the position of the Cabotage Vessels Financing Fund? The ultimate question is almost 10 years on, how far has Cabotage fared? The answer will range from woeful, poor dismal to fair and nobody will say successful.”
In a presentation he made on the Impact of Cabotage Act on Entrepreneurial Opportunities in a Developing Economy at the Ladoke Akintola University of Technology (LAUTECH) ,Ogbomoso, Postgraduate School, Department of Transport Management Interactive Discourse Programme in July 2012, the Vice Chairman/ Chief Executive Officer of Sifax Group, Dr. Taiwo Afolabi, said that the problem with the effective implementation of the Cabotage Act is rooted in the provisions of its four pillars.
According to him, the requirements of the law which stipulate that vessels to be used by indigenous operators must be built and registered in Nigeria and also be wholly-owned and manned by Nigerians are unrealistic.
He noted that the Act, which made provision for waivers, should indigenous operators be unable to meet the requirements of the act, has not been used favourably to better the lots of indigenous operators.

“And if, as it is likely to happen, the indigenous operators fail to meet these requirements, government has also provided a waiver clause in the same legislation that allows their more advantaged competitors to muscle in and corner the larger chunk of the trade. Given the combination of these two adverse elements in the Act therefore, in a non-technological and developing economy such as ours, it is little wonder that the critics of government can go to the extent of pronouncing the enactment of the Cabotage law as ‘dead on arrival’,” Afolabi said.
According to the Sifax boss, available statistics indicate that an average annual traffic of about 152 million metric tonnes of both oil and non-oil cargo, worth over $5 billion in freight earnings is generated in the country and that if government ensures that the indigenous shipping interests have access to half of these earnings, it will go a long way to solve the problem.
Afolabi lamented that at present, over 90 per cent of income in the shipping sector is earned by foreign shipping companies alone.

“Until this issue of cargo rights is addressed, it is my submission that the present controversy raging among the stakeholders concerning the cargo, which has come to sound like the proverbial egg and chicken conundrum, may prove diversionary, useless and nauseating. Out of about 400 vessels that are owned by indigenous operators, over 70 percent of them are reportedly not engaged, allegedly because the vessels are presumed to be unsuitable and need to be put up to standard,” Afolabi stated.
Earlier last year, the Chairman of the Indigenous Shipowners Association of Nigeria (ISAN), Chief Isaac Jolapamo, had expressed the belief that the problem with Nigeria’s Cabotage regime is implementation.
“The Cabotage Act 2003 and the Nigerian Content Act 2010 provide expressly for Nigerians to the exclusion of other nationals for Cabotage trade and maritime transportation within the oil and gas industry. There is the need to enforce these laws so that Nigeria and Nigerians can derive the envisaged benefits”, Jolapamo said at the second edition of the Nigeria Maritime Expo (NIMAREX) in March 2012.
SHIPS & PORTS DAILY recalls that in 2012, ISAN had decided to take its destiny into its own hands by sending its members out to the sea to arrest foreign vessels that engage in coastal trade without obtaining ministerial waiver as specified in the law.
Following the arrest of a number of such renegade foreign vessels, others of their ilk fled, only to return when ISAN suspended the initiative, having bowed to pressure from NIMASA and other government quarters.

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