Nigeria’s shipping sector is facing significant challenges. A major obstacle hindering its growth is inadequate funding. The sector struggles with limited access to financing options and exorbitant interest rates, making it difficult to invest in new vessels and maintain existing ones. Moreover, a substantial number of Nigerian-owned vessels are ageing and in dire need of replacement, further exacerbating the industry’s woes.
The ineffective enforcement of the Coastal and Inland Shipping Act 2003, commonly referred to as the Cabotage Act, coupled with the non-disbursement of the Cabotage Vessel Financing Fund (CVFF), has severely impeded the growth of indigenous tonnage in Nigeria and restricted the involvement of Nigerian-owned vessels in global trade. The participation of Nigerian shipping companies in international trade remains limited due to various obstacles, primarily the inability to access affordable financing options.
The local shipping industry is vital to a nation’s economic growth and development, making its support essential for several compelling reasons. By generating revenue, creating employment opportunities, and stimulating local trade, local shipping companies significantly contribute to the national economy. A robust local shipping industry ensures the reliable transportation of goods, including critical supplies and equipment, during times of crisis or conflict, thereby enhancing national security. Furthermore, supporting local shipping fosters self-sufficiency, reduces dependence on foreign entities, and bolsters national autonomy. Additionally, it provides valuable training and skill development opportunities for the workforce, enhancing expertise and competitiveness in the industry.
To support local ship owners, the Federal Government can provide access to affordable financing options, such as low-interest loans, grants, or subsidies, to facilitate the acquisition of new vessels and maintenance of existing ones; offer tax incentives, including breaks or exemptions, to reduce operational costs and encourage investment in the industry; strengthen enforcement of the Cabotage Act to protect local ship owners from foreign competition in coastal trade; and establish training and capacity-building programs for local ship owners and crew members to enhance skills and competitiveness.
Additionally, the government should endeavour to streamline regulatory processes, reduce bureaucracy, and provide clear guidelines to facilitate ease of doing business in the shipping sector; implement policies to protect local ship owners from unfair competition, such as restricting foreign vessels in certain trades and deliberately award contracts to local ship owners for the transportation of goods and services, providing them a steady source of revenue.
The Nigerian Maritime Administration and Safety Agency (NIMASA) can significantly enhance the national economy by fulfilling its mandate and promptly disbursing the Cabotage Vessels Financing Fund (CVFF). Established under the Cabotage Act, the CVFF aims to promote indigenous tonnage by providing financing for Nigerian ship owners. The Fund is sourced from a two percent contribution by ship owners operating in the coastal and inland shipping trade in Nigeria, making it a private fund contributed by industry stakeholders, although NIMASA is designated as its custodian. The purpose of the CVFF is to enable Nigerian ship owners to access loans at single-digit interest rates to acquire vessels for Cabotage trade. However, despite being established over two decades ago, the administration of the CVFF has been marred by secrecy, hindering its intended impact.
The administration of President Bola Ahmed Tinubu has a unique opportunity to foster a conducive environment that empowers local ship owners to flourish and significantly contribute to Nigeria’s economic growth. Supporting the local shipping industry is crucial for achieving multifaceted benefits, including economic growth, enhanced national security, environmental sustainability, self-sufficiency, skill development and competitive advantage. By prioritising local shipping options, we can substantially contribute to the prosperity and resilience of our nation, ultimately ensuring a brighter future for generations to come.
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