Ogbeifun’s recipe for Nigeria’s untapped maritime business
Perhaps, the best and practical way Greg Ogbeifun aptly captures the humongous amount of revenues Nigeria is losing to foreign ship owners is in the freighting of crude oil for export across the world with Nigerian shippers as mere spectators.
When you factor in the fact that Nigeria has also been importing all its petroleum products using foreign ships, then the reality of the monumental loss hits like a thunderbolt and you wonder why there’s even a government at all.
According to the author, ‘’Nigeria produces 2.2 millions barrels of crude oil daily. Average freight rate is S2.5 per barrel.
At 2.2 million barrels, average freight per day is $2.5 x 22 million barrels to give $US5.5 million. In a month, the average freight rate for shipping Nigeria’s crude will amount to $5.5 million x 30 days = $165 million per month = N56.1 billion @$1 = N340.’’
With the naira now over N500 to $1, the magnitude of the loss becomes staggering.
In spite of this huge economic bleeding the country is experiencing, it’s still business as usual for the managers of Nigeria’s maritime sector. They do not see reason to change the fortunes of the sector, so it serves Nigeria and Nigerians better.
According to Ogbeifun in his seminal book, Potentials of Nigeria’s Maritime Economy (Paperworth Books, Lagos; 2021), ‘’Nigeria is a maritime goldmine which if properly harnessed has enormous potentials (sic). The very nature of the Nigerian economy, which is import-dependent, as well as oil economy, boots her export cargo and is indication that the maritime industry will continue to be critical to the growth of the nation’s economy. The industry offers a viable solution to government’s quest to diversify the economy. It is capable of overtaking oil and gas contribution to the GDP of the country. To achieve that, a practical and holistic plan is required to address the issues challenging the industry…’’
Noteworthy is the fact that Ogbeifun is a trained and seasoned practising maritime operator in that sector of Nigeria’s economy and so what he says carry with it weight of knowledge and years of experience. He’s not some starry-eyed academic pontificating on some theoretical construct.
Ogbeifun’s book and the constructive axis on which he bases it are not new to many Nigerians. The maritime sector, like so many other sectors of Nigeria’s economic life – the refineries that don’t work, the railway that is just managing to work, the aviation – Nigeria Airways that is long dead – suffers similar if not worst neglect and poor regulatory and support required to drive it to success for the overall economic wealth for the country. In other words, potentiality abounds in all aspects of Nigerian life, but translating such latent potential to actual benefits is the bane of almost everything government. Indeed, Nigeria’s ‘potential in all sectors merely remain potential’. Government that ought to implement policies to translate such potential to actual opportunities and results also indulge in lamenting abundance of potentiality that it fails to harness.
While government keeps lamenting its single source of income – oil and gas – a sector like maritime that ought to help the diversification of the economy is left untapped, such that foreign ship owners dominate it, with local operators struggling at the margin. Of course, it’s not surprising that government has continued to neglect the maritime economy; a government that could allow its national flag carrier, Nigerian National Shipping Line (NNSL) to go under is capable of the sort of monumental neglect the sector is currently witnessing. The upside of diversifying the economy that a properly managed maritime life could achieve both for government and the citizenry is job creation and a robust GDP. But with the abysmal neglect of that sector, both its potential to create jobs and contribute to the country’s GDP are lost, just as foreign operators smile home with billions of dollars yearly that could have accrued to local operators and government’s coffers.
Tourism that ought to boom along Nigeria’s vast coastline is suffering the same fate as the country’s maritime business. Ogbeifun outlines the vast coastal stretch of Nigeria and how it could have far reaching economic implications both for maritime and tourism businesses. Sadly, this is largely unharnessed.
According to Ogbeifun, ‘’The maritime industry is Nigeria’s economic centre of gravity, with 80 per cent of the national budget based on revenues from crude oil and gas exports, taxes and royalties. Composed mainly of: shipping and ancillary services, offshore services, shipbuilding and repairs, and marine and ports services. Indeed, the Nigerian maritime industry offers vast investment opportunities. Sadly, we are yet to harness its latent potentials (sic), especially in areas such as: medium of transportation, resource exploitation, tourism and recreation, aquaculture, and commerce.’’
Reading Ogbeifun’s book is akin to the story of the man who built his house on a goldmine. But while the man may not know his foundation is built upon huge treasures, Nigerian government knows the goldmine inherent in maritime business, but chose to overlook it. The current woe of the country’s maritime sector is an avoidable economic tragedy that attests to the incompetence of those supposedly managing it.
Being a capital intensive business, coupled with the difficulty of securing funding with Nigeria’s double digit lending rates, Ogbeifun argues that government has a large role to play to assist local investors in the maritime business, so they can compete with foreign operators. To achieve this, he canvasses increased stakeholder engagement during government’s policy formulation, so government is properly advised what path to follow, backed up with appropriate legal framework that drives the business, developing the nation’s steel industry as key to shipbuilding and repairs and provision of electric power as well as guarantee fiscal incentives like tax holidays, scrapping multiple taxation and extortionist policies that hurt operators in the sector.
According to Ogbeifun, who has successfully operated company Starz Shipyard, argues that there’s a dearth of skilled manpower in the maritime sector, because the available training institutions in the country are poorly equipped and that the few trainees lack ships to help them get required sea time for their certification. He tasks both stakeholders and government to rise to the challenge. The situation, he states, has left to an influx of foreign seamen from Asia and Europe who man ships owned by the few local investors in the sector.
Although there are some shipyards or dockyards operating in the country, Ogbeifun states that they are few and limited in scope. The result is that ships go to neighbouring West African countries or Europe or Asia for repairs and shipbuilding. He estimates such losses to Nigeria at US$500 million annually and laments that this is also another huge economic opportunity being lost to foreigners, because of Nigeria’s inability to tap into ship repairs alone. He blames some of these inadequacies on lack of funding that operators in the sector face, and urges government to make the ‘Cabotage Vessel Financing Fund’ as established by the Cabotage Act of 2003 operational for local ship owners to draw funds to expand their maritime business, since they have also contributed to the funds as stipulated by law.
In the book, Ogbeifun has served Nigerians and government a hard meal to digest. If ever a book is timely, it’s Ogbeifun’s. Happily, he has not only highlighted what the problems are, he has painstakingly outlined best strategies to bridge the gaps both in the short and long term.
As in all big businesses requiring huge investment, he lays the guilt charges at the doorstep of government. This is so because while the Nigerian government leaves its citizens to fend for themselves the best way they can, the foreign operators competing with them have the strong backing of their home governments in the juicy incentives they enjoy back home to out-compete their Nigerian counterparts who have nothing to fall back. It’s Ogbeifun’s desire that this sad narrative for the maritime sector and all economic sectors in the country should change quickly for the better. Indeed, the time for government to act is now.