INVESTMENT OPPORTUNITIES IN THE NIGERIAN MARITIME INDUSTRY

INVESTMENT OPPORTUNITIES IN THE NIGERIAN MARITIME INDUSTRY

PICTURE CREDIT: SERGIO SOUZA

Over the years, the maritime industry has given especially in the area of marine transportation which has made the movement of cargoes of any size and volume possible. This has positively impacted global trade and global logistics value chain.

From statistics carried out by Vessel and co, it can be found that over 90% of world cargo merchandise/trade by volume is carried by seas and from statistics by the Nigerian Maritime Administration and Safety Agency (NIMASA), it is observed that over 60% of all maritime activities in west Africa is generated by Nigeria only.

In 2019 report by NIMASA tagged “Nigerian Maritime Industry forecast 2019-2020” described the Nigerian ports as an enabler of economic growth and prosperity and urged Nigerians entrepreneurs to key into the numerous investment opportunities in the Nigerian Maritime Industry.

The investment opportunities includes the following:

1.   SHIP FINANCING:

Shipping is capital intensive because the maritime assets needed are government intervention in this area to provide soft interest long-term loans in the industry.

This also provides an opportunity for the financial sector to key in and provide this finance for prospective investors.

A prospective investor can seek innovative financing modules and other sources of funding away from traditional models

Capital market remains the most important financing option for the enhancement as well as the promotion of shipping business growth and creation of corporate value.

This opportunity for finance house can however be achieved with adequate evaluation and provisioning for risk, appropriate leverage levels and use of financing structures suitable for the Nigerian Maritime Industry.

 

2.   SHIP BUILDING AND REPAIRS

NIMASA has a department solely dedicated to ship building. In 2019-2020 maritime industry forecast as carried out by NIMASA, the maritime industry holds the key to diversifying the economy away from oil and gas, after all there are countries like the Philippines who solely depend on maritime for the bulk of their income.

 

The dependency on maritime in Nigeria calls for more tankers, vessels and the like. The amount currently operating is not enough and more investment is needed.

 

This calls for spirited entrepreneurs to seize the opportunity and invest in ship building and repairs.

 

This sub-sector, remains under-developed and has the potentials of reducing capital flight, because ship owners will not have to repair their ships outside the shores of Nigeria.

 

This is also supported by the cabotage law of Nigeria and there are so many areas entrepreneurs can explore which includes building and repair of barges, merchant ship, dredger, self-propelled barge, floating vessels, lift boat, patrol vessel, jack up barge, crew/supply vessel and many more.

 

Other opportunities that can be explored include human capacity building, technology and funding.

 

With over 3,500 vessels operating in the Nigerian waters, dry-docking remains a critical area of business because many of these boats are dry-docked and repaired outside the shore of Nigeria. This business opportunity must be explored by Nigerian entrepreneurs.

 

3.   MARINE INSURANCE:

The role of insurance in any business cannot be over emphasized because insurance has the ability to mitigate the impact of risks in any business. Insurance also correlate with economic growth because entrepreneurs would be willing to take more risks.

An overview of the insurance business in Nigeria shows that marine insurance is one of the lucrative insurance business in Nigeria, only second to motor insurance.

 

Even at that, the marine insurance business is one of the under-developed and needs more investors as huge opportunities abound in the sector.

 

4.   RESEARCH & DEVELOPMENT

In any area of life or business, you can never use up creativity, the more you use, the more you have.

 

This is the reason why research and development is necessary in any human endeavour, even in the maritime industry.

 

New approaches and innovations are taking place globally and this calls for the need for entrepreneurs to seize investment opportunities by setting up training and research centres to scale up activities in the maritime sector.

 

5.   LAW OF SEA EXPERTS

The maritime industry on the existing laws of the land coupled with other maritime laws both locally and internationally.

 

This calls for experts or prospective lawyers to seize the numerous opportunities in the industry. Apart from soliciting, opportunities also abound in providing legal documents.

 

6.   MANPOWER DEVELOPMENT

In the 2019 – 2020 forecast by NIMASA, there are plans by the government to float a National vessels that would compete with other vessels internationally.

To achieve this feat, there needs to be an intensive manpower training because the availability of manpower is crucial to the development of the maritime sector.

If done well, the establishment may begin to see influx from student all around the world.

This will lead to employment generation, sea-time for cadets and competitive cost of doing business. 

ALL YOU NEED TO KNOW ABOUT DOING MARITIME TRANSPORTATION BUSINESS IN NIGERIA.

ALL YOU NEED TO KNOW ABOUT DOING MARITIME TRANSPORTATION BUSINESS IN NIGERIA.

                                                PHOTO CREDIT: FRANK MCKENNA

The Nigerian maritime industry is estimated to worth over 10 billion dollars annually and pose a huge potential and robustness if properly harnessed.

From a glance it could look challenging but its potential should attract any experienced entrepreneur. The various segments potential entrepreneurs can tap into include ship operations, cargo importation and various support services which span the supply chain.

There are two identifiable operations that any entrepreneur can key into and these include;

v There’s an active coastal shipping environment in which imported petroleum products must be trans-shipped daily from mother ships to daughter ships and transported from offshore locations to terminals and jetties in the hinterlands.

 

v There’s a robust fleet of offshore support vessels that operate offshore operations in oil exploration and production.

As the years go by, the Nigerian maritime industry is expending more and more and should attract any seasoned investors. For instance, international oil companies must regularly update their work plans to reflect the vessel employment needs for their operations with date suggesting that there is an annual spend of approximately 3 billion dollars on offshore supply Vessels in Nigeria.

Any potential investor in Nigerian maritime space must conform to a range of regulation often updated by NIMASA.

They must understand the Nigerian cabotage laws and must navigate important compliance issues, which includes the nature of registration and the flag state of operation.

In early 2019 Nigerian Maritime Administration & safety Agency (NIMASA) issued new guidelines on the granting of waiver but this has been abolished by the current administration.

A potential investor must also understand & review fiscal obligations and options available for a smooth vessel importation and best approach to participation.

The would-be investor must consider the appropriate structures of operation, safety and safety issues and a great knowledge of marine environmental management.

Currently, there are no financing option from either the public or the private sector, but the management of NIMASA, headed by Dr. Braimoh Jamoh is putting things in place to make that feasible.

Given the high levels of foreign participation, the reality on ground is not as bad as it seems. However, it is important to seek professional guideline in navigating this environment which NIMASA can gladly provide.

EXPANDING NIGERIA’S MARITIME INDUSTRY

EXPANDING NIGERIA’S MARITIME INDUSTRY

PICTURE CREDIT: CHRIS PAGAN

Nigeria is yet to achieve its full capacity in the maritime sector. There is no doubt that Nigeria is major globally recognized and reputable maritime Nation with over 8000km of navigable inland and coastal channels, including its fresh water lakes, but is still far from achieving it’s potential in boosting the country GDP.

Research has shown that there are many factors inhibiting this potential. For instance, Nigerian seaports are relatively small for modern vessels to load or discharge bulk cargoes and liquefied products compared to modern seaports in developed countries. Secondly, the Nigerian waterways are not deep enough for the navigation of these modern vessels.

The setbacks need urgent attention and must be corrected immediately if we must compete favourably with our counterparts elsewhere, and this has the ability of reducing Nigeria’s level of involvement in international trade and the global economy.

Nigeria needs to copy the strategic efforts of world renowned maritime nation’s like panama, Nicaragua, Norway, the United States and Denmark and create a significant future for effective and efficient global maritime economy. This is achievable and must be pursued.

Nigeria needs to start thinking ahead of its African peers in building a sustainable maritime economy to boost its GDP. Countries like Nicaragua are positioning itself for the future, for instance, a recent proposal highlighted the potential of connecting the Atlantic Ocean to the Pacific Ocean via the Nicaraguan lake and isthmus of Rivas. This would facilitate the passage of large vessels of over 80,000dwt, speeding transit times and decongesting the Panama Canal, thus bringing much income to the Nicaraguan government. Nigeria strongly needs to be thinking towards that direction.

In so doing, the country’s GDP would benefit enormously if the right things are put in areas for effective maritime competitiveness and significant trade participation larger vessels.

The plans to expand the Nigerian maritime industry should not be limited to deepening the coastal waterways but should be extended to the re-enforcement of human capital within the maritime sector such as management and financial empowerment, digital supply chain proficiency etc.

A recent study by the Nigerian ports Authority (NPA) in 2017 found out that a whooping $7 billion dollars of annual revenue is lost due to inefficiencies and weak infrastructure of Nigerian Seaports, this suggests that more needs to be done in this sector.

In conclusion, in expanding the Nigerian Maritime industry, the government needs to create a more competitive and enabling infrastructure, including digital logistics, inland waterways expansion, foreign direct investment and encouraging more private investors to enter the maritime business.

These definitely would help Nigeria and also boost its economic situation.

THE CHALLENGES AND PROSPECTS OF THE NIGERIAN MARITIME INDUSTRY

THE CHALLENGES AND PROSPECTS OF THE NIGERIAN MARITIME INDUSTRY

PHOTO CREDIT: ANDY LI

The maritime transportation industry of any country is undeniably an important economic growth of any Nation. In Nigeria, it contributes so much to the GDP. Depending on the management, it’s role can either make or break an economy.

The Nigerian economy is a mixed economy and the maritime industry is a major sector in the economy given the fact that Nigeria is a major producer of Crude Oil and also a major importer of commodities.

Maritime trade in Nigeria has played a major role in deepening the economy in that it contributes about 95% of the vehicular means of Nigeria’s International trade. It allows economies  great scale in areas that have promising comparative advantage with concomitant generation of huge employment opportunities.

On the down side, the maritime sector is capital intensive and requires huge amount of finding. However, the history and growth of many Nations are directly interwoven with the degree of development of the maritime transport industry that can exist or is already existing.

Nigeria has a coastline of 253 km which runs through most southern states and must be harnessed if this country will prosper with its maritime industry.

This article intends to discuss the challenges and prospects of the Nigerian maritime industry. There are certain key qualities and attributes of the maritime sector that forms the scope of this article and they include;

v Maritime transport is an essential derivative demand

v Maritime transport is demand responsive

v Maritime transport is capital intensive

v Maritime industry requires both skilled and unskilled labour

v The global economy influences the maritime sector because it affects the trade patterns of nation.

v Maritime transport is open to technological changes

v To achieve an efficient maritime transportation system, structural support and logistics are very vital.

 

CHALLENGES OF MARITIME INDUSTRY IN NIGERIA

There are many challenges affecting the Nigerian maritime industry and they include;

1.   LEGISLATION AND LEGAL REFORMS:

The committee of Nigerian Maritime lawyer’s association, shipper’s council of Nigeria and the house committee on marine transport should sit together and enact laws that would be favourable to the Nigerian Maritime transport and all stakeholders.

At the moment, the law reform commission is an omnibus commission because if not only deals with maritime sector, but with other sectorial laws like constitutional and criminal laws. These commission needs to be very active in discharging the mandate of the federal government. They need to work very hard in actualizing the many far-reaching policies of the federal government, from revolutionizing transportation, to allying the maritime transport sector to best international standard and to ensuring the implementation of policies.

There is need for policies overhaul in this sector if the government intends to achieve the trillion Naira potential the maritime industry can generate annually.

Of note is the 40:40:20 code enacted by the United Nation’s Code on trade and Development (UNCTAD) in 1987. This code stipulates that 40 percent of the total volume of cargo traffic and revenue should be reserved for indigenous Nigerian carriers, another 40% should be reserved for carriers of cargo originating in destination countries while 20% should be reserved for third party flag carriers.

If this law or code was fully operational in Nigeria, this country would have gone a long way to correct the imbalance in shipping trade..

The Nigerian Maritime and Safety Agency (NIMASA) that took over from the Nigerian Maritime Authority (NMA) in 2007 is yet to implement this policy to the extreme but is consciously working towards achieving the goal with its 4 pillars of the cabotage laws. Due to the duplication of functions by various government agencies, the leadership of NIMASA headed b y Dr. Braimoh Jamoh, on 3^rd July, 2020 invited the various agencies and clarified everyone of its role.

 

2.   MARINE ENVIRONMENT PROTECTION

There is agent need to protect marine life because of our dependence on water bodies for survival.

Because of the degradation of the ecosystem due to petroleum production, the government must protect the marine life so as not to endanger the livelihood of the communities spanning the coastal areas.

3.  SAFETY AND SECURITY

No entrepreneur will want to do business in an insecure environment. This is a major challenge in Nigeria waters and must be addressed by the government.

 

4.   HUMAN RESOURCES AND TRAINING

Human resources is one of the most important role in any industry. If Nigeria must grow its maritime industry, there is need to train and re-train manpower so that they can complete favourably with their counterparts anywhere in the world.

 

5.  FINANCE

The maritime industry as earlier stated is capital intensive and needs huge amount of funding. There’s need to create additional sources of finding away from the traditional models already on ground.

 

 

RECOMMENDATIONS

The Nigerian Government should do all in his power in creating an enabling environment for maritime business to thrive and also making accessible loans with low interest rates.

The necessary agencies must ensure a safe and secure environment for all player and the issues of militancy must be resolved.