Rescuing the Maritime Sector

Eromosele Abiodun writes that the Nigerian Maritime Industry Forecast 2018–2019, released by NIMASA, shows that the agency‘s drive to improve operating conditions and position the country‘s maritime sector for greater efficiency is on course

With a vast and extensive natural maritime endowment base comprising a coastline of over 800kms, an exclusive economic zone of over 200 nautical miles, the Nigerian maritime sector has the potential to accelerate Nigeria’s economic development beyond its crude oil revenue earnings.

Nigeria is also blessed with a vast inland waterways resource estimated at nearly 3,000kms, and comprising over 50 rivers, big and small, that can support a vibrant intra-regional trade.

The country’s location on the coastline corridors of the Gulf of Guinea and the Bight of Benin, with eight of her 36 states having littoral status, coupled with a vast and growing population and market that confer ability to generate huge indigenous tonnage and capacity.

To this end, experts believe the maritime industry can become a veritable engine of growth of national economic development and its transformation agenda.

Industry stakeholders believe the nation’s maritime sector is a sector that, more than most, can be a notable contributor to efforts at poverty reduction, creation of wealth, promotion of skills acquisition and encouragement of entrepreneurship.

They believe that the sector, if seriously harnessed and exploited, can contribute very significantly to the growth of the nation’s gross domestic product (GDP) and eliminate the nation’s unsustainable over-reliance on petroleum as Nigeria’s major revenue earner.

Many industry watchers are, however, baffled that despite these intimidating factsheets, there is still a major disconnect. With its population, market and economy, Nigeria, since independence, has remained unchallenged as the biggest importer and exporter in the sub-region. Her cargo throughput, inclusive of oil and gas, far outstrips those of other seaports in the sub-region put together.

However, is it baffling that the ports in smaller neighbouring countries pose such a serious challenge to the emergence of Nigerian seaports as the leading ports in the sub-region, a preferred choice of destination for cargoes bound for the sub-region. The question that comes to mind then is how the Nigerian maritime industry can be made a stronger catalyst of growth of the nation’s economy. Some suggest that lack of planning and inconsistent economic policies have set the industry back, a problem the Nigerian Maritime Administration and Safety Agency (NIMASA) seek to solve with its maritime industry forecast launched recently.

The Way Out

The forecast tagged: “Emerging Opportunities and Challenges,” seek to open the eyes of investors to the opportunities in the sector and possible collaborative ways to harness opportunities to maximise gains.

The forecast examined how economic, sectoral and regulatory developments in both the international and domestic scenes affect the maritime industry in Nigeria.

It also highlighted the need to further explore the blue economy in driving growth and development for our country.

In summary, it shared from a holistic perspective, the opportunities and areas of advantage that will be of immense benefit to stakeholders and industry players, both locally and internationally in the year 2018 and 2019, as well as the foreseeable challenges in the industry, along with its possible mitigating factors.

The forecast results, according to NIMASA, employed scenario analyses in anticipating the performance of economic parameters such as GDP, total trade, foreign exchange reserves, oil price and oil production.

Moreover, the forecast, in line with expectations, set baseline figures within the parameters defined by the Federal Government‘s economic programme –the Economic Recovery and Growth Plan (ERGP).

Beyond the baseline, optimistic and pessimistic scenarios were proposed to offer insights into how the two years covered by the forecasts – 2018–2019 – would unfold in the maritime sector.

As part of its determination to move the sector forward, beginning from 2018, the NIMASA will continue to produce an annual document offering a forward-looking, medium-term analysis of the Nigerian maritime industry, which will present insights on: the surrounding context of the sector‘s operations; key issues – inherent and emerging – within and pertaining to the sector; and a medium-term outlook on the sector reflecting surrounding contexts and the internal industry dynamics affecting this.

Discharge of Statutory Mandate

According to NIMASA, the effort feeds into its commitment to the effective discharge of the agency‘s statutory mandate, enshrined in the establishment legislation, the NIMASA Act, 2007.

“It will be recalled that in being mindful of the maritime sector‘s critical role in facilitating Nigeria‘s international trade activities, as well as harnessing the country‘s marine resources and economy to drive accelerated growth and development, the federal government began actively implementing the maritime sector reforms in 2006. The need for reform was also in recognition of the centrality of maritime operations to the conditions and costs of doing business in Nigeria, including the sector‘s potential contribution to the pool of non-oil revenues for government.

“Also as part of efforts to transform the sector, the Nigerian government sought to revamp the maritime regulatory architecture. Consequent upon this, in August 2006, the National Maritime Authority was merged with the Joint Maritime Labour Industrial Council to form the Nigerian Maritime Administration and Safety Agency (NIMASA). Hence, the agency is the apex regulatory and promotional maritime organisation in the country. We are saddled with the responsibility of regulating the sector, with powers derived from the aforementioned NIMASA establishment Act, as well as ancillary legislation such as the Merchant Shipping Act, 2007 and the Coastal and Inland Shipping (Cabotage) Act, 2003. Guided by enabling legislation, NIMASA administers maritime safety, seafarers standards and security, maritime labour, shipping regulation, promotion of commercial shipping and cabotage activities, and pollution prevention and control in the marine environment. The agency also implements domesticated conventions, including those of the International Maritime Organisation (IMO) and International Labour Organisation (ILO),” said the Director General ofNIMASA, Dr Dakuku Peterside.

He added: “In discharging these responsibilities, NIMASA has begun undertaking regular engagement with stakeholders geared towards obtaining feedback mechanisms for improved communication, interaction and effectiveness in order to identify the current characteristics of the industry, alongside the key trends that would affect the maritime sector; and to provide an outlook for the Nigerian economy, and also the maritime sector. Undertaking these obligations constitute the inspiration behind Nigeria’s Maritime Industry Forecast 2018–2020.

“And, we are confident that the insights, data, parameter forecast estimates and analysis provided in this document would enable maritime industry stakeholders to anticipate future scenarios, on the basis of which they can strategise to advance both their commercial interests and the overarching interests of developing Nigeria‘s maritime sector, while positioning it to play an immense role in accelerating national economic growth and development.”

Enhancing Revenue

Dakuku had in his opening comments said as part of the measures to enhance its revenue drive, the NIMASA will focus its attention on the $8 billion (N2.88 trillion) maritime component of the Oil and Gas sector in 2018.

He disclosed that five bills amongst others, affecting the maritime industry will enter into force in 2018, one of which is a bill for the establishment of the Nigerian Marine Development Bank Bill.

The other bills currently undergoing legislative processes at the National Assembly are: the AntiPiracy Bill, Inland Fisheries Act (Amendment) Bill 2017, the Dee[ Offshore and Inland Basin Production Sharing Contract (Amendment) Bill 2016 and the Carbotage Act (Amendment) Bill 2017. He said the Nigerian maritime industry is projected to grow by 2.5 – 5 per cent within the period of 2018-2019 adding that there will be a projected increase in demand for maritime services in Nigeria during the period.

He added that Nigerians should expect total fleet size to grow by 4.08 per cent in 2018 and 4.41 per cent in 2019.

He projected that oil tanker fleet size will decrease by 2.23 per cent in 2018 and increase by 1.7 per cent in 2019.

“The non-oil tanker fleet size is projected to increase by 8.15 per cent in 2018 and 8.72 per cent in 2019 while the oil rig count is projected to increase by 27.67 per cent in 2018 and 0 per cent in 2019, “he said.

He added that two broad dynamics would drive the outlook on the Nigerian maritime industry in 2018 revealing that the first pertains to international developments as they relate to growth in global output and trade.

The second, he added, is the domestic economic conditions, which speak to economic growth and the associated growth in trade, availability of and access to foreign exchange, as well as the evolving factors in domestic maritime regulation.

“As a regulator, we are driven by values and commitment, as these are the only way that investors can be attracted to harness the great potentials in our maritime sector. On our part, we will continue to work out incentives and maritime sector specific interventions to attract investments, ”he said.

Speaking further, he expressed delight at the maritime forecast release which coincided with the release of the country’s gross domestic product (GDP) figures by the National Bureau of Statistics (NBS) confirming Nigeria’s exit from recession. He noted that it is a positive indicator that Nigeria’s economy is rebound for growth in 2018 and beyond.

He said the forecast reviewed developments in the industry in 2017; shows expected International and Local Developments in Policy and Regulatory Environment for the Maritime Sector in 2018 and 2019 and also takes a look at Emerging Opportunities and Challenges for the Maritime Industry; all with the sole aim of realizing a robust and business friendly maritime domain that will also create avenues for economic prosperity.

The NIMASA bos also maintained that despite the fact that the oil sector remains one of the pillars of the Nigerian economy and a catalyst for measuring the nation’s growth, the success of it is still largely dependent on the maritime sector which continues to play a strategic role in the economy of the country.

He also pointed out that some other factors that have contributed to the gradual growth being recorded in the sector are the receding crime in the Niger Delta Region, the Deep Blue Economy scale up of our maritime security architecture and continuous collaboration, which is addressing the immediate challenge in this areas aimed at suppressing the emerging threats on our waters.

In a goodwill message at the event, the Secretary General of the Abuja Memorandum of Understanding (MoU) and former DG of NIMASA, Mrs. Mfon Usoro commended the forecast as a great interaction with the industry players to move the sector forward. Furthermore, she also observed that the increased presence of NIMASA activities in the maritime sector of the West and Central Africa sub-region is an indication that the present leadership of the Agency is on course.

Sector Outlook

Succeeding this inaugural edition of Nigeria’s Maritime Industry Forecast 2018–2019, Dakuku said the follow-up 2019 issue, to be released by the end of 2018, would focus on activity parameters as they pertain to the maritime sector.

“Against the backdrop of an elaborate value chain and economic ecosystem of the maritime sector, this maiden edition focuses on activities driven by commerce and the oil sector. Subsequent editions will continue to build on this focus,”he added. “Two broad sets of dynamics would drive the outlook on the Nigerian maritime industry over the 2018–2020 period: First are international developments, particularly as they pertain to the following: general global economic conditions, proxied by global output and trade growth; developments in the global oil market; iii. International maritime regulatory conditions.

“Second are domestic economic conditions involving: economic activity, which speaks to domestic economic growth and associated growth in trade; availability of and access to foreign exchange, which will be proxied by the level of Nigeria‘s foreign exchange reserves,” he said.