$350million Cabotage Funds for foreign vessel, misuse of public funds – NIMENA Vice chair

National Vice Chairman, Nigerian Institution of Marine Engineers and Naval Architects (NIMENA) Engr. Eferebo I. Sylvanus has called on the federal government to take proactive steps in redirecting the purported purchase of foreign ship vessels into Nigeria as a misuse of public funds.

The NIMENA vice chair stated this in letter to the presidency, expressing his concern over the approval by the federal government to use $350million Cabotage Funds to finance vessel purchase by Ship Owners in Nigeria, saying the move would not only bring setback to the development and advancement of the maritime industry in Nigeria but also only benefit a selected few in the sector.

“I am writing to express my concerns about the recent move by the Federal Government to use $350 million of Cabotage funds to finance the purchase of vessels by ship owners in Nigeria. While the intention behind the approval may be to support the development of the Nigerian shipping industry, it is essential to consider the potential drawbacks of such a move,” says Sylvanus.

He noted that the Cabotage Act of the Federal Republic of Nigeria was enacted to promote and protect the Nigerian maritime transportation and domestic shipping industry, saying that the Act seeks to reserve the transportation of goods and services within Nigerian coastal and inland waters, including its Exclusive Economic Zone (EEZ), to only vessels owned, built, crewed, and flagged by Nigerians.

However, Sylvanus who claims that the use of Cabotage funds to finance vessel purchases outside Nigeria as a misuse of public funds revealed that Cabotage funds are meant to be used to develop the Nigerian maritime industry, which includes promoting the Nigerian shipping industry, training Nigerian seafarers, and developing local shipbuilding and repair facilities.

“The Federal Government, through its Apex Maritime Agency (NIMASA), must reevaluate its resolve on this and focus more on the aspect of the Act that adds more value to the economy of Nigeria rather than taking steps that will transfer wealth from Nigeria to foreign countries, defeating the purpose of the Cabotage Act, originally designed to promote the development of the nation’s maritime industry,” he said.

Speaking further, he noted, “This recent move by the federal government may not necessarily contribute to the sector’s advancement as a whole but benefit a select few. Purchasing vessels from foreign shipyards would not significantly contribute to the Nigerian economy. Hence, it is essential to note that the Nigerian maritime industry is not just about shipping but also shipbuilding, repair, and maintenance.

“The country can reap economic benefits by using Cabotage funds to finance purchasing locally designed, classed, and built vessels with Nigerian flags. Such benefits include creating jobs, increasing revenue generation and developing local expertise in shipbuilding and repair, he added.

“Furthermore, investing in local shipbuilding would contribute to research and Development (R&D) and innovations in design and technology which can be shared with other industries in Nigeria. This would create a ripple effect in economic growth and development. It would also contribute to economic diversification in Nigeria, develop new industries and sectors while the country would be less reliant on a single source of income for a long-term growth,” noted Sylvanus.

He therefore urges the federal government to consider the potential long-term benefits of investing in the value chain of the local shipbuilding industries, particularly developing regional expertise and promoting the national pride and local ship-building standards, other than a short-term solution that may provide little or no benefit to the Nigerian maritime industry.

“While commending your recent directives for utilizing the funds, I urge you to condition the funding on ship owners willing to design and construct their required vessels with Nigerian indigenous companies and existing shipyards in line with the recently adopted and carefully thought-out COREN guidelines for marine Engineering and Naval Architectural practice or its globally accepted equivalents.

“Nigeria can become a hub for shipbuilding and repair in West Africa, considering our attractive cheaper labor cost compared with other West and Eastern maritime nations. Since labor cost is nearly 40% of the total cost of green projects in the industry, the government can use this scenario to empower our youth population,” he said.