Industry stakeholders have identified weak enforcement, high financing costs, foreign vessel waivers and inadequate infrastructure as some of the major impediments to the effective enforcement of Nigeria’s Coastal and Inland Shipping (Cabotage) Act 2023.

They also mentioned regulatory bottlenecks and limited domestic shipping capacity as other challenges that have limited the success of the Act since its signing into law.

According to the stakeholders, effective enforcement required simultaneous action on indigenous vessel ownership, affordable and accessible maritime funding, infrastructure, human capital development, cargo availability, stronger local shipbuilding and repair capacity, and transparent and efficient regulatory processes.

The Nigerian Maritime Administration and Safety Agency (NIMASA), in a marine notice issued last week, tightened enforcement of the country’s Cabotage trade and maritime activities regulations, insisting that vessels deployed for coastal shipping must meet statutory requirements on indigenous ownership, registration, manning and construction.

Under the new enforcement regime, Cabotage vessels must, where applicable, be wholly owned by Nigerian citizens, registered in the relevant special register, manned by Nigerians, and built in Nigeria.

Commenting on the issue, stakeholders said that enforcement alone would not be sufficient to develop a competitive indigenous shipping industry without deliberate measures to address the structural challenges confronting local operators.

Managing Director, Polaris Marine and Offshore Support Services Ltd., Charles Ohanwe, said the government must look beyond physical enforcement of the Cabotage regime and address the critical sectors that support vessel ownership and acquisition.

He emphasised that the government must evaluate access to finance for vessel acquisition at lower single-digit interest rates as obtainable in most shipping climes.

He noted that Nigerian shipowners could not compete effectively with foreign operators while borrowing at high double-digit interest rates, even as competitors in other shipping jurisdictions had access to lower single-digit financing.

Ohanwe said the country’s poor electricity infrastructure was another major impediment, stressing that shipbuilding and fabrication yards consume large amounts of power, thereby increasing the cost of vessel building, repairs and servicing, while making such investments expensive and unattractive.

Ohanwe called for focused skills acquisition through the establishment of world-class training centres for engineers, fabricators and seafarers, adding that such institutions must be equipped with qualified and experienced instructors to support the development of the human capacity required to sustain the maritime industry.

He harped on closer collaboration between NIMASA and agencies such as the Nigerian Content Development and Monitoring Board (NCDMB) to facilitate partnerships between Nigerian and foreign vessel owners through the use of bareboat charters with purchase options.

Ohanwe argued that such arrangements could enable Nigerian operators to bid for contracts using assets provided by foreign owners and subsequently acquire the vessels once contracts had been secured and operations commenced.

Also, the Chief Executive Officer of Offshore Marine Solutions Ltd., Adekunle Akure, identified the lack of political and regulatory will to implement the Cabotage Act as the biggest challenge.

Akure called for the cancellation of all waivers granted to foreign vessel owners for the next 20 years, arguing that this would create sufficient demand for Nigerian-owned vessels and stimulate investment across the maritime value chain.

According to him, the alternative capacity created through waivers to foreign operators killed local capacity growth.

Executive Director, Gas Transport, Nigerian National Petroleum Company Limited (NNPCL), Huseina Modibbo, said the central challenge was the gap between the Cabotage policy and indigenous capacity.

Modibbo said stronger enforcement of the law was necessary and must be matched by access to competitive financing, bankable cargo opportunities and investment in modern Nigerian-controlled tonnage.

She maintained that sustainable Cabotage could only be achieved by developing indigenous operators capable of competing effectively and reliably in the domestic shipping market.

On his part, the Head, Operations at Emet Homes and Properties Ltd., Chinatu-Abali Ndukwe, said Nigeria already had policies and regulations governing Cabotage, but maintained that weak enforcement, inconsistent implementation and regulatory bottlenecks continued to undermine the objectives of the law.

He posited that proper enforcement, coupled with transparent and consistent compliance mechanisms, would create an environment where funding and vessel ownership could be addressed more effectively.