NIMASA: Forecast or Illusion?

By Enyeribe Anyanwu

In recent time, the National Maritime Administration and Safety Agency (NIMASA) has started thinking seriously about the growth and development of the nation’s shipping sector. The agency appears to have come to the realization that one of its core mandates is to nurture and grow the shipping/maritime sector, instead of seeing it as private businesses. To all intents and purposes, it was the need to ensure Nigeria’s effective participation in international shipping that gave birth to its predecessor, the National Maritime Authority (NMA), from where NIMASA metamorphosed.   

To demonstrate its new thinking and renewed consciousness, the agency last year birthed its first forecast for the industry. This year again, it has come out with its 2019/20 forecast. The forecast which was unveiled in the first week of February is tagged “Maritime Forecast 2019/20: What Shipping Industry Should Expect”. The forecast was anchored on three major variables: CVFF Disbursement, Better Funding for Indigenous Operators, and Hope for Anti-Piracy Bill to Reduce Incidents. 

In high spirits, NIMASA announced that the forecast will set the tone for the industry for the period under focus. According to the agency, the forecast will give direction to operators and investors, both local and international, as to what should be expected within the period of the forecast. It also said that the 2019 – 2020 Forecast focuses on harnessing the shipping sector for sustainable growth, just as it will “essentially address how emerging trends in the global maritime industry affect the maritime sector in Nigeria, and what domestic factors will influence the maritime sector in Nigeria.” 

Noting that Nigeria has the biggest market in West Africa, generating about 65-67 per cent of cargo throughput in the region, the agency declared that the maritime sector has the potential to increase greatly its contribution to Nigeria’s GDP in no distant future. It also observed that “the maritime sector remains a pivot to the stability and growth of the economy, hence the need to provide guidance to industry players as it will attract more foreign direct investment and ultimately improve the nation’s Gross Domestic Product (GDP).”

An important feature of the 2019/20 forecast is NIMASA’s realization that for Nigerians to participate actively in the maritime and shipping sector, asset acquisition and human capacity development are indispensable. According to the agency, the macroeconomic outlook for 2019 will be driven by the general elections and its aftermath, prices of crude oil and policy imperatives –fiscal, monetary and regulatory.

Another factor that will affect the performance of the forecast, it said, is the passage of some key maritime bills still pending at the National Assembly. These bills include: The Suppression of Piracy and other Maritime offenses (Anti-Piracy) Bill, the National Transport Commission Bill, the Petroleum Industry Governance Bill, the National Inland Waterways Authority Amendment Bill, Coastal and Inland Shipping (Cabotage) Amendment/Revised Bill and Ports and Harbour Bill. It observed that the passage of the Suppression of Piracy and other Maritime Offences Bill, in particular, will provide the framework to criminalize and punish piracy and unlawful acts in the nation’s maritime domain. 

However, despite all these probabilities and uncertainties, NIMASA said the maritime forecast model it adopted projects an increase in demand for maritime services in Nigeria, considering the global and domestic economic conditions. One is at loss as to what the agency means by this contradiction since the domestic outlook already painted by the agency does not support a growth forecast.

In addition, the agency recognizes some “negative factors that will pose challenges to stakeholders within the period.” These include: funding, ethnological change, supply of specialized maritime industry skill, and efficiency of ports and shipping companies amongst others. In the aspect of funding, it observed that the Cabotage Vessel Financing Fund (CVFF) was inadequate to handle the huge demand for maritime assets, saying that it was working with the Central Bank of Nigeria (CBN) and the Federal Ministry of Finance to push for funds at single digit interest rate. One thing that must be noted here is that the disbursement of the CVFF is still a remote possibility, and funding will remain a critical problem for Nigerian shipping operators despite indications of extra funding arrangements. As a matter of course, are the intended beneficiaries aware of, and part of the funding arrangements? 

Painting a more gloomy picture, NIMASA declared that “the domestic conditions for the maritime sector in 2019 looks tighter considering the budgetary proposal of N8.83 trillion when compared to the approved N9.12trillion naira appropriated in the 2018 national budget.” The agency also predicted that while growth in the global maritime sector is expected to slow over the next five years with crude oil projected to decline by 0.1%, containerized trade to decline by 0.4 % and seaborne trade by 0.2%, total fleet increase was projected at slightly over 4% growth for both 2019 and 2020. 

Against all this bleak domestic and global outlook, NIMASA said that its “baseline forecast is based on the 2018 outcome and 2019 Economic Recovery and Growth Plan (ERGP) forecast for total trade and foreign reserve.” The agency said its “optimistic forecast is based on the assumption that total trade will increase to N28.55trillion in 2019 and N30.11 trillion in 2020, while foreign reserves is $44.7 billion in 2019 and projected to be $61.7bn in 2020.” 

According to the maritime regulatory agency, the review of the performance of its 2018 maritime industry forecast “shows that the publication is reliable as the figures projected for the year almost matched the full year actual figures, noting that while the forecast projected 0.66 growth for oil tankers and 3.21 for non-oil tankers in 2018, the actual growth rate was 0.71 for tankers and 3.0 for non-oil tankers.” Whether this growth rate was a product of a painstaking study or mere observation is a question only the agency can answer.

While NIMASA should be commended for coming out with a growth forecast for the industry and the promise of working towards its growth, one cannot understand the basis for all these “optimistic forecast”. From all indications, NIMASA based its 2019/20 forecast on mere observations, probabilities, speculations, presumptions and conjectures. The three pillars on which the forecast rests, namely, CVFF disbursement, better funding for indigenous operators, and hope for the passage of Anti-Piracy Bill are also not reliable framework on which a forecast can be based: They are nothing but probabilities and assumptions. 

In the business world, the word ‘forecast’ means to calculate or predict some future event or condition usually as a result of study and analysis of available pertinent data. This is contrary to the ordinary meaning which is to foretell, predict or prophesy. Looking at these two meanings of ‘forecast’ one can easily situate NIMASA’s 2019/20 forecast. Did the industry regulator arrive at its forecast based on the result of analysis of any study or is she merely speculating, predicting or prophesying? 

Naturally, reactions are not unexpected from stakeholders. Even though some say mum is the word, a few others have expressed their reactions against the forecast. While some industry operators see it as mere speculations, others described it as quite unrealistic. 

Among those who see the forecast as unrealistic is foremost industry operator and President, Shipowners Association of Nigeria (SOAN), Engr. Greg Ogbeifun. He described the forecast as “extremely unrealistic” dismissing it as more theoretical than practical. He said NIMASA ought to have reviewed the performance of last year’s forecast and addressed all the shortfalls before making projections for 2019/2020.

“Before we start projecting for the future, what is the performance of last year projection? What was the percentage achievement of what was projected last year? If the projection was not achieved, what contingent arrangement have they put in place to mitigate those shortcomings? What did we achieve that will give you the confidence on your projection?” he snorted.  

Ogbeifun said, “As a shipowner, CVFF (Cabotage Vessel Financing Fund) has not been disbursed, our fleet has not grown. On the issue of seafarers, ship owners are still struggling to find adequate seafarers to employ to stop us from applying for waivers. NIMASA said they have sent some cadets abroad for training. In one year, one would expect that those cadets would have moved from one level to another in their training programme. Let us have the statistics. We should have a graphic position on where we are on the issue of CVFF; these are practical things that people can relate to.”

He said the “forecast looks nice on paper but some of us can’t relate to it because we need to know where we are coming from, where we are and how NIMASA expects to get us to their projections.”

Emeka Akabogu, Secretary, Nigerian Maritime Law Association (NMLA), described the forecast as ambiguous. He observed that all the parameters used in giving a broad-based forecast of the industry was limited to total fleet, which he said, does not give the full picture of the relevant maritime industry activity.

“In the first place, the fleet size is not effectively classified into vessel types to give an indication into the nature of vessels that the growth is referable to. Though non-oil tanker fleet is stated as the key driver of significant growth, insufficient detail is provided as to the nature of this non-oil tanker fleet.

“Investors, many of whom we advise, will be keen to explore this industry segment with fuller details, particularly in view of historical apathy for investment in non-oil vessels. The reference to non-oil tankers is particularly curious, as the country is not known for any non-oil and gas cargo of significance that will drive the projected growth,” Akabogu said in a statement.

He recalled that the agency’s 2018 forecast factored the passage of the five regulatory bills mentioned in the forecast. He said these bills are still under legislative or executive consideration, resulting in a repetition of 2018 expectations in the 2019 forecast.

While NIMASA should be commended for a new consciousness regarding the development of the nation’s shipping sector, it must embark on concrete policies that will bring about the desired results. Mere forecasts not based on facts and figures but on assumptions, guesses and speculations will not make any difference. And taking this further can only border on illusion.