Nigerian National Shipping Lines Limited – The Beginning And The End

The establishment of the Nigerian National Shipping Lines Ltd was borne out of government deliberate policy not only to participate in the invisible earning sector of the economy but also as part of its economic independence from the colonial masters and the creation of the country’s distinct image.
The Company therefore came into being through a Private members Motion in the Federal House of Representative in 19S8 and 19S9 calling for the establishment of a Government Shipping Line that would carry the “country’s flag to all the seas of the world.” After the motion was passed into an Act of Parliament in 19S9, the Federal Government then incorporated the NNSL with the following Object Clauses:
1. To project the good image of Nigeria abroad by flying the Nation’s flag on the High seas and world seaports.
2. To promote the acquisition of shipping technology by creating and diversifying Employment opportunities in the shipping industry.
3. To improve the country’s balance of payments position by enhancing the earnings and conservation of foreign exchange.
4. To assist in the economic integration of the West and Central African sub-region.
5. To support the Nigerian Navy in the event of conflict.

From the foregoing object Clauses, it could be said that profit motive, though implied, was not the motivating factor for the company’s establishment. One has to understand the mood of the major political players at the time to appreciate why “showing the nation’s flag to the world’ was a major focus. The ships were indeed expected to play the role of” Ambassadors” for the emerging independent country. Arguably, NNSL achieved most of its major objectives as envisaged by the founding fathers before its liquidation which I personally consider ill advised and very unfortunate.
The Company was incorporated with an Authorised and Fully paid-up Share Capital of N4 million (four million pounds sterling) held jointly by the Federal Government and two non-Nigerian shipping lines, namely Elder Dempster Lines Ltd and Palm Line Ltd both British which were technical partners. The Federal Government held a Controlling Share of 51% while the two technical partners had 49% between them. In 1961, either in the euphoria of political independence or selfish interest of the Nigerian Management of the Company, the non-Nigerian equity holdings were bought out rather prematurely and the Company became wholly owned by the Federal Government with Nigerian Management in total control. The company, however, had a small office in Liverpool in the United Kingdom wholly manned by British personnel for fleet management which included technical ship maintenance and commercial programming.

Elder Dempster Lines were also General agents in the UK which provided the major ports of call. The Company started operations with four second hand vessels in 1959 and this increased to 15 vessels by 1971 but at that time the ships were already becoming old and unable to meet the challenges of modern shipping. The Federal Government then decided to retonnage the fleet with 19 combo vessels but by the time the first of the new ships was delivered in 1976/77 changes in ship technology and containerization concept had taken place and unfortunately all the 19 ships were the same type combo vessels. Diversification in ship type, size and the evolving technology could not be reflected in the “new” ships due to inflexibility in Government policies as it was the Government that provided the fund. This situation ultimately played a part in the failure of the company.

OPERATIONAL PROBLEMS OF NNSL:
When the 19 new vessels were introduced into service, there was no working capital. Even the initial bunkering of the vessels at the builders’ ship yard was done on credit. But the situation was managed because in 1973 NNSL incorporated a subsidiary company known as NIGERLINE (UK) Ltd based in Liverpool, England. The subsidiary company acted as General Agents in Europe to NNSL.
The subsidiary company employed experienced and knowledgeable British shipping technocrats in the field of marine engineering for fleet technical maintenance as well as commercial/operations, etc. even though a Nigerian was the Head of the subsidiary company.

That subsidiary Company was trusted in Europe by creditors and shippers alike. The Company was a training ground for training Nigerian officers and in particular for the co-ordination of sea officers training. One notable advantage of this arrangement was that apart from performing agency services for the parent company- NNSL – and earning agency commission which was hitherto paid to Elder Dempster Lines, the outfit was supervising ship repairs and making sure that the right work ethics were maintained resulting in reasonable ship maintenance costs and seaworthiness of vessels. However, when civilian government returned to the country, in 1979 interest groups within the Lagos-based management began to criticize a situation where decisions on ship repairs/maintenance was not totally controlled by Lagos Head Office even though all major repairs for strategic and economic reasons were carried out in Europe. The interest groups used the politicians to get the Nigerline (UK) Ltd wound up and the foreign officers relieved of their posts in the UK.
Ship Agency seas were also awarded to some British companies. This means that the Agency fees which hitherto was earned by Nigerline (UK) was not only lost but the British officers who provided fairly honest and cost effective Ship repair services were sacked. Nigerians took over their places particularly in the Technical Department and repair costs sky- rocketed. The maintenance and personnel cost of the new NNSL local office was provided from the Lagos Head office as against the former Nigerline (UK) Ltd fending for itself through the agency fees. Ships started to be arrested by ship repair yards whose bills were not only unpaid but inflated .The Trade creditors therefore lost confidence in NNSL.

The eventual demise of NNSL is also attributable to negative government interference. There was no longer deliberate government Policy to protect and support the Line as was the case previously while some officials of the supervisory Ministry did everything except those that could have assisted the Line. Changes in the management were not for the right reasons and management programmes for turning round of the Line were not given due consideration. The company and government could not react without delay to situations dictated by market and technological changes or development in the trade. For instance, it took the Federal Government almost five years to approve the tonnage expansion programme and modernization of NNSL ships in the seventies. Perhaps the post civil war demands contributed to this. By the time the vessels were eventually built and introduced into the market a measure of obsolence had set into the original concept. It took another five years to convince the government about the need to phase out the 19 combo vessels with a view to introducing appropriate vessels that were technologically up to-date as well as meeting market demands.

Other decisions such as rationalization of staff were dictated by government policies while services performed for government by the company were not paid in time when the money would have been more beneficially used. Services rendered to Government were paid for in local currency even though operational expenses were incurred in foreign currency. Accumulated debts of NNSL to trade creditors originated from Government’s failure to pay NNSL for the shipment of Government project materials such as Aluminium Smelter Company, Ajaokuta and Alaja Steel projects. Efforts made by management of the company to diversify into ancillary activities such as Terminal operations, Clearing & Forwarding, oil tanker operation, etc were not approved. Regular changes in the Headship of the Federal Ministry of Transport and the company brought inconsistency in the focus and vision of the Company.

For instance, during my tenure as the Managing Director of the Company from 1990 -1993, J worked under four Ministers of Transport and my successor (1993-1995) also served under four Ministers of Transport and every Minister had his own ideas. In some cases changes in the Headship of the Company were engineered by the officials of the Ministry (not necessarily by the Minister) for selfish reasons. It is this type of situation that a one-time Chief Executive of one of the parastatals who happened to be a retired General of the Army had in mind when he once said that the relationship between the Supervisory Ministry and its parastatals could be likened to that of a military commander who sent a platoon of soldiers to capture a location and also deliberately sent another platoon of his soldiers to ambush the other platoon to ensure a failure of that assignment. This analogy is very apt. It must be acknowledged however that genuine effort made by government in 1994 through direct cash injection into the company for settling creditors and upgrading the ships ironically pushed the last nail on the company’s coffin because of avarice of some officials of the company in collaboration with others outside the Company. But even then the winding up of the Company was like throwing away the baby with the bath water.
The foregoing notwithstanding, it is a statement of fact that NNSL rendered a lot of services to the nation for which no credit was given to her particularly in the 1970s up to the time Structural Adjustment Programme was introduced in the country. For instance, during the era of the Nigerian Produce Marketing Company, NNSL was overburdened with the carriage of Cocoa produce and other export commodities at very low ocean freight rates which were deliberately agreed with the Maritime Conferences in order that the Nigerian export commodities would be competitive in the world market. This is because the commodities were sold on the basis of Cost, Insurance and Freight (C.I.F.) NNSL was therefore used by Government as an instrument of North-bound Freight stabilisation in the overall interest of the country which was one of the Object Clauses in the Company’s incorporation. The foreign shipping Lines that reluctantly accepted the negotiated freight rates were however not particularly interested in lifting cocoa in bags because it was uneconomical or unprofitable to do so. NNSL vessels had no choice but to lift or load the export produce which at that time were shipped in bags and this kept the ships in ports longer than necessary due to the slow loading rate. The freight was also paid in local currency in the interest of conserving the country’s foreign exchange. These days cocoa is containerised.

The other very significant contribution to the nation’s economy by NNSL which was not generally appreciated or taken into consideration in spite of efforts to inform the public and the Government was in the area of Training of maritime personnel. NNSL trained and produced many marine engineers, master mariners, marine communication officers, marine electricians and shore management and transport logistics managers at great expense as if she (NNSL) was a Scholarship Board. NNSL indeed trained not only for the whole maritime industry but the petroleum sector, shore engineering outfits like Breweries, hotels, etc. It is a statement of fact that in the early 1970s and beyond the Nigerian Ports Authority pilots were Indians, Egyptians, Pakistanis, etc but with the facilities provided by the NNSL, it was possible for the NPA to partner with NNSL in the training of pilots and this position became completely indeginised. To quantify in monetory terms, the loss of these facilities because of the winding up of NNSL is difficult. It is going to be even more difficult later because the trained officers are aging and the number is even being depleted by various factors. I am not aware of a sustainable training programme being put in place now to stem the tide. The fact still remains that you cannot train marine personnel in a shore classroom alone mandatory sea-time is unavoidable. This means Nigerians must own ships one way or the other.

Gerald Chidi, is the former Managing Director, NNSL and former Group Managing Director of Aeromaritime Group.



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