How Nigeria can deepen indigenous participation in the maritime industry

By Dr. Muda Yusuf

As a country we are yet to appreciate the full significance of trade and the international trade ecosystem as leverage for economic transformation.  This perhaps why trade issues have not attracted the level of attention commensurate to its contribution to the economy. The trade sector accounts for 16% of our GDP in 2023 which amounts to over N27 trillion.  But this data reflects largely domestic trade – that is wholesale and retail trade.  The contribution of international trade and the entire ecosystem is yet to be adequately captured in our GDP data.  We are optimistic that with the imminent rebasing of our GDP, the contribution of the maritime sector would be accurately captured.

I would like to congratulate the PortNews for putting this event together, and more importantly, for spotlighting a very critical developmental issue, not only in the maritime sector but the Nigerian economy. I am referring to the theme of the summit which is about local content in the maritime sector, or better still the deepening indigenous participation in the sector.

The central issue here is about economic inclusion which is extremely important for the growth and development of any economy.  This philosophy has enormous development implications for an economy.

Importance of scaling local content in the maritime sector
• Economic development: The act can help stimulate economic development by promoting growth of the maritime sector, creating economic linkages, and boosting employment.

• Human capital development: The act can help develop human capital by increasing the participation of Nigerian companies in the maritime sector.

• Reduced capital flight: The act can help reduce capital flight from Nigeria.

• Multiplier effect on the economy: Awarding contracts to local contractors can have a significant multiplier effect on the economy.

State of the Maritime Sector
Our maritime sector is huge, not withstanding the under reporting or under recording of the sector by the NBS. One way to appreciate this is to look at the international trade data.

In 2029, the value of our merchandise trade was N36 trillion; in 2020, it was N25.2 trillion; in 2021, it was N39.7 trillion; in 2022, it was N52. 9 trillion, in 2023, it was N71.9 trillion.

Typically, this volume of trade generates enormous economic activities across the entire maritime ecosystem.  There is shipping, clearing of the cargo, terminal activities and handling, cargo handling, warehousing, haulage, etc.  Regrettably, indigenous players in the sector have been progressively excluded from the major activities in the sector.  they increasingly becoming spectators in the scheme of things as foreigners are a field day.  This is a major maritime policy shortcoming which needs to be urgently corrected.  Maritime policy and indeed our economic policy must promote indigenous participation in the sector, the way it was done in the oil and gas sector.  what is good for oil and gas sector is good for maritime sector.

There should be a deliberate policy action to elevate the level of indigenous in the maritime sector ecosystem.

I am not calling for a displacement of foreign investors in the sector, what I am calling for is a deliberate policy by government to bring indigenous players into the mainstream of maritime sector activities.  We cannot afford to be spectators in the sector.  We have local capacity in clearing and forwarding, cargo handling, terminal operations, haulage, warehousing and many more.  The unfolding scenario is that most of these jobs are being taking away from indigenous players in the sector.  Indigenous investors need policy support to curb their growing exclusion in the sector.

Need to review NIPC Act
This act was enacted in 2005 and gives foreign investors unlimited access to all sectors of the economy.  This policy needs to be urgently revisited to protect domestic indigenous investors in sectors where we have capacity especially in the maritime sector.  besides, capacity grows with opportunity.  We need to give indigenous players more opportunities to grow.

Globally now, many countries are protecting indigenous jobs.  A good example is the United States of America, which is reputed to be a model of free enterprise economy.  The protectionism would get more intense under the Trump presidency.

Making the Cabotage law work for the country.
It is regrettable that the Cabotage Act which was enacted in 2003[21 years ago] to help develop the local shipping industry has not been effectively implemented.  The law establishes that no foreign vessels ought to do business in Nigerian waters other than indigenous ships, while offering the local shipping lines the right of first refusal.

The Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigeria National Petroleum Corporation (NNPC), need to step up on this matter in national interest.  Not much has also happened with regards to the Cabotage fund disbursement to indigenous shipping companies.  Ordinarily, this should be a low hanging fruit in promoting inclusion in the maritime sector.

Expanding Scope Of Presidential Executive Orders
There are already executive orders to promote the patronage of made in Nigeria products and the hiring of local expertise and skills.  There could be similar executive orders to protect indigenous jobs in the maritime sector.

Replicating the Local Content law of the oil and gas sector in the maritime sector.

This law has had an incredible impact on indigenous capacity in the oil and gas sector.  this model should be replicated in the maritime sector.  if it can work in the oil and gas sector, it would work in the maritime sector. 

Being an excerpt from the keynote address by Dr. Muda Yusuf, CEO, Centre for the Promotion of Private Enterprise (CPPE) at the PortNews Summit on December 4, 2024 at Rockview Hotel, Apapa, Lagos