How maritime sector can boost FG’s N36.35tr revenue target

As the Federal Government targets N36.35 trillion in revenue to fund the 2025 budget, an efficient maritime sector stands as a critical component in achieving the goal, ADAKU ONYENUCHEYA reports.

With its vast coastline, strategic location on international trade routes and abundant natural resources, Nigeria’s maritime sector holds immense potential for substantial revenue.

Effective shipping, port operations and other maritime activities are estimated to contribute over N7 trillion yearly, create approximately 40 million jobs and promote national development if fully harnessed.

However, inefficiencies in the maritime industry have deprived the country of the benefits of its naval advantage. Despite its potential, the sector is not listed as a major contributor to the country’s gross domestic product (GDP).

Previous reports from the Nigerian Maritime Administration and Safety Agency (NIMASA) estimate the untapped potential of Nigeria’s blue economy at $296 billion.

In 2023, President Bola Ahmed Tinubu established the Ministry of Marine and Blue Economy to address these inefficiencies and foster a functional maritime sector. Unfortunately, the ministry has yet to fulfil its mandate one year after its creation.

Stakeholders believe resolving these challenges is crucial to unlocking the sector’s potential and meeting the Federal Government’s 2025 revenue target.

They have highlighted several critical areas that require robust government action and investment. Their recommendations include modernising port infrastructure, prioritising local content, streamlining regulatory frameworks, enforcing safety codes on waterways, leveraging digital technologies, building local capacity, reducing operational costs, boosting security and renewing concession agreements.

According to them, the maritime sector could become a significant driver of Nigeria’s economic growth and revenue generation by addressing these issues.

Overhauling port infrastructure
Nigeria’s ports, frequently plagued by outdated and dilapidated infrastructure, congestion and inefficiency, urgently require modernisation to regain competitiveness in West and Central Africa.

The dilapidated state of facilities, extended vessel turnaround times and inadequate storage significantly diminish Nigeria’s potential as a regional maritime hub.

The Executive Secretary of the Nigerian Shippers’ Council (NSC), Pius Akutah, noted that the country’s ports suffer from insufficient infrastructure, including outdated cargo handling equipment, poor road networks, and limited storage capacity.

Key ports such as Apapa, Tin Can Island, Calabar, Warri, Onne and Rivers Ports, along with the Escravos breakwater, require $1.1 billion for rehabilitation and upgrades, according to the Nigerian Ports Authority (NPA). Stakeholders insist that investing in automation and the dredging of major waterways should be prioritised to modernise port operations.

The President of the Senior Staff Association of Statutory Corporation and Government-owned Companies (SSASCGOC), Akinola Bodunde, emphasised the need for comprehensive infrastructure upgrades, particularly at Calabar, Warri, Onne, and Port Harcourt ports. He called for targeted development projects at Quay Aprons, BUA in Port Harcourt and Eco Marine in Calabar.

Bodunde also highlighted the urgent need to dredge Warri Port regularly, as its critically damaged breakwater hampers safe navigation and berthing capacity.

The Minister of Marine and Blue Economy, Adegboyega Oyetola, echoed these sentiments, stressing that investments in upgraded port facilities are essential for safeguarding shipping activities and enhancing operational efficiency in the maritime sector.

Prioritising local content
Despite enacting the Coastal and Inland Shipping (Cabotage) Act, Nigeria’s maritime sector relies heavily on foreign expertise and vessels, significantly reducing the economic benefits retained within the country.

Nigerian cargoes are predominantly transported by foreign vessels, with no indigenous ships participating in international trade due to the absence of shipbuilding and repair facilities.

The Chairman of Starzs Investments Company Limited, Greg Ogbeifun, lamented that Nigeria loses approximately $9.2 billion yearly to foreign vessels operating in its waters. He called for financial support to enable local operators to acquire vessels and to revive a national shipping line.

Also, over N3 trillion in investments in indigenous bonded terminals remain underutilised, with some terminals now repurposed for unrelated activities like football fields.

The General Secretary of the Association of Bonded Terminal Operators of Nigeria (ABTON), Haruna Omolajomo, urged the government to implement deliberate policies prioritising local content.

He suggested reserving a percentage of cargo operations for indigenous bonded terminal operators. Omolajomo recommended that Nigeria emulate Ghana’s successful maritime policies, proposing a 60:40 operational ratio favouring local operators.

“This deliberate policy would not only empower Nigerians but also develop the country’s maritime capacity,” he stated. By addressing these issues, stakeholders believe Nigeria can significantly reduce capital flight, enhance its local maritime capacity and stimulate economic growth.

Streamlining regulatory frameworks
The overlapping mandates and inefficiencies among maritime regulatory agencies significantly hinder the sector’s growth.

Despite implementing Executive Order 001 by former President Muhammadu Buhari, which aimed to streamline port operations, many agencies have resisted compliance, resulting in delays, inefficiencies and congestion during cargo clearing processes.

Stakeholders emphasise the urgent need to harmonise the operations of these agencies, mainly through implementing a National Single Window (NSW). According to them, this system would integrate and coordinate the activities of various regulatory bodies, enabling seamless cargo clearing and examination procedures.

They said adopting the NSW could significantly reduce delays, improve the ease of doing business and attract foreign direct investment (FDI) into Nigeria.
Omolajomo suggested establishing effective monitoring agencies to ensure compliance among cargo handlers.

He also emphasised the importance of transparency in these efforts, which would enhance public trust and operational efficiency.

Enforcing waterways transport code
Nigeria’s inland waterways face persistent safety challenges, unregulated operations, and environmental degradation, contributing to frequent boat mishaps and significant loss of life.

To address these issues, the National Inland Waterways Authority (NIWA) introduced a transport code that provides a legal framework to govern inland waterways operations and improve passenger safety.

Key provisions of the transport code include mandatory operational licensing for all operators, including boat owners and ferry services, and safety compliance as operators are required to enforce life jackets, adhere to speed limits and conduct regular vessel maintenance.

Other provisions are environmental protection, such as eco-friendly practices, including proper waste disposal that is mandated to reduce waterway pollution, regulated freight operations requiring cargo vessels to meet specific standards to prevent overloading and accidents, as well as strict penalties for non-compliance with the code, which attracts fines and vessel seizures.

Despite its introduction, enforcement and compliance remain low, leading to ongoing safety risks and the loss of lives across the country’s inland waterways.

Stakeholders call for stricter enforcement measures, public awareness campaigns and establishing monitoring mechanisms to ensure adherence to the code. They also noted that strengthening enforcement is essential to prevent accidents, safeguard lives and preserve the ecological integrity of Nigeria’s waterways.

Leveraging technology and digitalisation
Adopting digital technologies has the potential to revolutionise Nigeria’s maritime operations. Unfortunately, the country has been slow in digitalising its port processes.

Implementing electronic payment systems, automating customs procedures and utilising blockchain for transparency in shipping logistics are essential measures other nations have successfully adopted to enhance their maritime sectors.

The Shippers’ Council boss noted that digitalisation curbs corruption and enhances operational efficiency. He, however, noted that the adoption of modern technology in Nigeria’s port operations remains relatively low, impeding transparency and efficiency.

Akutah highlighted challenges such as inadequate internet infrastructure, resistance to change among stakeholders and a lack of skilled personnel in technology-related fields as significant obstacles to progress.

Akutah emphasised the need for increased investment in digital technologies to modernise operations, minimise inefficiencies and improve transparency within shipping and logistics.

“The global shift towards e-commerce and digital trade presents an opportunity for Nigeria to enhance its digital capabilities and lead the way in automating port operations, customs processes, and supply chain management. By adopting technologies such as blockchain, the Internet of Things (IoT), and other emerging innovations, the NSC can facilitate faster, more transparent and cost-efficient trade,” he stated.

Capacity building and job creation
The maritime industry can potentially create approximately 40 million jobs in Nigeria.

However, many youths remain unemployed as foreigners dominate the sector due to their expertise and understanding of the business. Stakeholders have stressed the importance of building local capacity through specialised training programmes, maritime academies and fostering public-private partnerships to invest in local content.

According to them, such efforts could create jobs and reduce the outflow of capital from the country. Akutah called for comprehensive training programmes targeting industry stakeholders to improve skills and knowledge, particularly in logistics, shipping management, and digital tools.

Omolajomo underscored the need for significant investment in maritime education, noting that the Maritime Academy of Nigeria in Oron and the Nigeria Maritime University require adequate funding to enhance research, infrastructure and professional training.

High cost of doing business
Nigeria’s ports are among the most expensive in West and Central Africa due to the high charges imposed on port users. These costs have driven investors and cargo traffic to neighbouring countries, costing Nigeria more losses.

Factors contributing to the high cost of doing business include exorbitant tariffs, excessive port and demurrage charges, delays, fluctuating exchange rates impacting customs import duties, illegal shipping and terminal charges, and extortion by cargo consolidators and operators at port access points.

These challenges have crippled the haulage industry and increased the cost of trade. Akutah acknowledged that the NSC faces the difficult task of balancing the interests of port operators, shippers and the government while striving to make Nigeria’s ports competitive. He emphasised the need to reduce costs for importers and exporters while ensuring sustainable revenue generation for port authorities. Omolajomo added that ports should be redesignated as transit areas rather than storage facilities.

“Encouraging cargo transit instead of storage will improve operational efficiency and reduce congestion,” he explained.
Boosting security

Increasing the presence of personnel from maritime agencies to oversee critical infrastructure and curb insecurity is paramount. Stakeholders have emphasised the need to equip local maritime agencies with advanced surveillance technologies and proper training to protect vessels and boost investor confidence.

The President General of the Maritime Workers Union of Nigeria (MWUN), Adewale Adeyanju, raised concerns about the visible lack of NPA and Nigerian Maritime Administration and Safety Agency (NIMASA) personnel at jetties, which play an essential role as landing and storage points for goods and services.

Adeyanju highlighted that jetties are scattered across Nigeria’s littoral areas, but the absence of these personnel has allowed criminal activities to flourish, turning the jetties into hotspots for economic sabotage. He noted that this situation has also led to the unchecked influx of banned commodities into the country, resulting in significant revenue losses. He advocated for the urgent employment of workers across all maritime agencies to man these areas, which would improve efficiency, enhance security and contribute to resource accumulation.

Adeyanju further emphasised that such employment would provide more job opportunities for Nigerian youths, improving security and employment prospects.

Concession contracts renewal
Concessionaires are eagerly awaiting the renewal of their agreements with the Federal Government. The Group Head of Corporate Communications at SIFAX Group, Olumuyiwa Akande, stated that indigenous concessionaires are suffering due to the non-renewal of their licenses. He said investors are pulling back, fearing they may lose their investments, while importers increasingly turn to foreign terminals whose agreements are still active.

According to him, this situation has slowed business for indigenous concessionaires, leading to significant losses. The MWUN President General also expressed concern that the non-renewal of these agreements would lead to workforce retrenchments and growing anxiety regarding job security at the ports. He urged the Federal Government to expedite the renewal of licenses for terminal operators, who have provided livelihoods for many Nigerians since 2006.

“We would like to note that terminal operators employ many of our members across the dock, shipping, and seafarers sectors. Therefore, any disruption to their operations directly affects the welfare of our members and could result in unemployment.

“As it stands, the job security of our members, which we consider sacrosanct, is uncertain due to the government’s delay in renewing terminal operators’ licenses. We strongly believe that renewing these licenses will provide workforce stability and alleviate rising tensions among our members,” he stated.

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