‘Government is frustrating local shipbuilding, capabilities’
Ini Ekong Charles Udonwa is the Executive Chairman of Norfin Offshore Shipyard Limited and Executive Chairman of Norfin Offshore Group, promoters of a new shipyard located at Oruk Anam, Akwa Ibom State. In this interview with AYOYINKA JEGEDE, he reveals how shipbuilding and maintenance can help reduce insecurity, unemployment and other vices in the country.
What’s the importance of shipbuilding to the nation’s economy?
Nigerians, the government and companies import averagely $5.6 billion dollars worth of vessels into the country yearly to operate in oil and gas industries, and also into fishery industry. Most of these are in purchases of Floating Production, Storage and Offloading ships (FPSO), security vessels, jack up rigs, Liquefied Natural Gas (LNG) vessels and other related offshore support vessels. For instance, Egina FPSO delivered to Nigeria in January in 2018 costs up to $8 billion.
In shipbuilding, 40 per cent capital cost goes into human labour, which means Nigeria is contributing about $1.8 billion worth of human capital cost yearly to foreign shipyards, needless to say about the loss in technology transfer and real engineering experience and expansion for our teeming youths. Nigeria also loses about $6.2 billion estimated earnings yearly from shipbuilding, ship repairs and spare parts manufacturing activities and other losses of about $4.6 billion in regional trade due to lack of domestic vessels access for goods transportation.
It can be said that the world’s economy “rides on the sea” as borne out by the fact that approximately 80 per cent of international trade is moved by sea. However, as said by Okonjo-Iweala, “Nigeria’s share in world trade last year was 0.33 per cent, which showed a small fraction of what Nigeria could do. Our share in Africa’s trade is 19 per cent, which is below our share of Africa’s Gross Domestic Product (GDP). This means we can turn it around.” We can only turn things around with a focused logistics and seaborne transportation plan and policies.
Nigeria’s shipbuilding industry is of strategic importance to the economy and plays an important role in employment generation, development of manufacturing and related industries, foreign exchange savings, provide for national security and most important, create access for regional and international trade.
The last three decades have seen the rise of Asian economies, led by Japan, followed by South Korea and now China. These three countries have cornered 86 per cent of world shipbuilding from a mere 8 per cent in 1975. In contrast, Nigeria has no policy or future growth plans in shipbuilding.
From all these foreign built ships imported to Nigeria yearly, we are at the same time losing tremendous foreign exchange and currencies. It defeats the right senses to see the Central Bank of Nigeria (CBN) proposing unwitting policies to attract foreign currencies from Nigerians in diaspora while we are wasting away the foreign currencies in the buying of ships overseas.
Government should look into ship building industry as the main aid to diversification and as an alternative source of revenue to the national economy. We require ships for support to oil and gas industry, we require ships for regional trade, we require ships for human transportation, we require fishing trawlers, etc. We will always require ships to exist as a nation, and then it is imperative that we should embark on building these ships in Nigeria.
How will shipbuilding help in reducing unemployment as well as encourage diversification from oil to Agriculture?
Nigerian government has to look into shipbuilding as a major part of the economic recovery and expansion plan and centralize our next growth pattern in diversifying to prominent shipbuilding activities. It must be the number one target for us to expand in agricultural produce trade regionally. The Federal Government is investing heavily in the agriculture, but how do we get our products to the regional market? Our farmers are tired of seeing rotten unconsumed products wasting away because of lack of access to regional trade routes.
We are selling our children’s future by not building ships in Nigeria. As I had mentioned earlier, Nigeria is contributing yearly about $1.8 billion worth of human capital cost to foreign shipyards. Do the mathematics and calculate how many of our youths would be employed with the amount of money lost yearly. When you look at Nigerian youths and compare them to the youths in Western Europe, Singapore or Japan or South Korea or China: at 22, they gain employment as soon as he/she finishes university. But in Nigeria, our youths remain unemployed and are sacrificed to crime. A sizeable shipyard like ours can easily employ up to 5000 youths if supported. That means, 5000 youths taken away from crime and cultism.
It can be noted that USA have up to 500 shipbuilding and repair yards, Europe do have up to 200 shipbuilding and repair yards, China do have up to 80 shipbuilding yards, South Korea up to 30 shipbuilding yards, Singapore with up to 30 shipbuilding and repair yards. Nigeria needs up to at least 50 sizeable shipbuilding yards that can employ up to 100,000 youths.
At this moment, the Federal Government is strategizing and aiming to diversify our economy to LNG, LPG and agriculture, but the government is not strategizing on how to champion and move these products to the regional markets and to every overseas markets with ships built in Nigeria, thus a great component of this earnings and labour is lost to overseas shipyards.
Without Nigerian government supporting ships building in the country, the nation will continue to struggle with the same challenges of past 50 years.
What are the challenges you have encountered in the quest to build local shipyard?
Our major challenge is with the Federal and State Governments of Nigeria. There is no support at all by the executive arm of government, neither the legislatures nor the Judiciary.
For example, six years ago, Nigeria was included in the next 11 economies poised for growth and at higher par to Vietnam. Just recently in 2020, the Nigerian Ports Authority (NPA), bought several ASD Tugs and pilot boats from a Vietnamese shipyard, despite the cry from our youths for employment opportunities, despite the increase in banditry, cultism and militancy. The government is causing and creating an environment where Nigerian shipbuilding capabilities is denied. A good Nigerian shipyard such as ours would have built those vessels at a cheaper cost to NPA, and the cost of transportation of those vessels to Nigeria would have been eliminated altogether.
If we were provided opportunity and contracts to build two of the Azimuth Stern Drive (ASD) tugs as NPA did for the Vietnamese shipyard, we would have employed at least 200 Nigerian youths and given them a chance to realise their dreams.
When we continue to import ships into this country, we employ labour overseas while our own youths are going into insecurity. The importance of the Nigerian shipbuilding capabilities for Nigeria’s long-term economic growth, strategic interests and security concerns clearly indicates that the growth of Nigeria shipbuilding, in both, the commercial and naval sectors is a pressing strategic imperative.
Recently, the governor of the Central Bank of Nigeria stated that Nigeria needs to be given a chance to reset and diversify its economy. Nigeria has been given a fair chance to reset and diversify its economy, but the government, by the very act of building ships in Vietnam versus building in Nigeria should be seen as insincere about her plans to diversify.
Nigeria needs a more ambitious and proactive approach to enhancing local content and local jobs in the shipbuilding supply chain. Our executive and legislative policies should be amended to require targeted levels of both commercial and Naval shipbuilding production in Nigeria for the adaptation, maintenance, transportation, and services for the African market.
Taxes for imported vessels to Nigeria must be raised to 300 per cent of the new building cost price to deter importation and vessels below 3500 tons must not be allowed to be imported into Nigeria at all. For instance, comparing the gains in importation in tariff and taxes received by the Nigeria Customs Service against the earnings by the overseas shipyard and the labour loss to Nigeria, it is really a sad story for Nigerian youths.
We are aware that the African Continental Free Trade Agreement (ACFTA) has taken off. We now have a single market of over 2 billion people with over $3 trillion in expected GDP and 52 per cent projected increase in intra African trade by 2022. There’s no better time than now to develop massive domestic shipbuilding capabilities in Nigeria. Our people have the talents, we believe government will muster political will to change our narratives, we at Norfin Offshore Shipyard Ltd are set to deploy our experience to unleash the incredible potential of our people. While our focus today may be oil and gas and agriculture, we now have a great opportunity to harvest prosperity through the new initiative in shipbuilding. Admittedly, we cannot achieve a future beyond oil unless we properly harness our present oil and gas proceeds to other sustainable economies and industries similar to what UAE has achieved. This is exactly the reason Norfin Offshore Shipyard Ltd is embarking on this monumental project because we believe in our country and we believe in our dear Akwa Ibom State. From this blessed country, we will dominate African market with our skills, talent and resourcefulness.
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