Nigeria’s maritime industry: Prioritizing it for more investment and Growth
Nigerian maritime sector is one of the key sectors of the nation’s economy. Its strategic role is very instrumental to the growth of the economy, which is the largest in Africa with $446.543 billion GDP in 2019.
The industry facilitates global trade market as well as very instrumental to transformation of the local markets onto national, regional and international levels. It also helps in stimulating economic growth through local and foreign direct investment opportunities.
Also, the sector helps to create employment opportunities for Nigerians and if properly managed, Nigerian Ports Authority (NPA) and other associated agencies can triple their outputs. It is interesting to note that NPA made 18.8million metric tonnes in the first three months of 2019, despite the various challenges facing it.
The great potential of the industry are the reasons why most international companies expanding into West Africa consider Nigeria as the main business hub in the West African subregion.
Nigeria is the gateway to West African subregion because of its position as the biggest market and its population, which is the largest in Africa (approximately 207 million people)
The geographical position, population and robust market ofNigeria gives its Port added advantage as well as its vast coastline and navigable inland waterways, which is strategically placed in the Atlantic coast of West Africa. Thisalso gives it an edge over other nations in the region.
Tin-can Port and Apapa-Wharf remainsthe Ports to reckon with in the region, no wonder in November 2019, Nigerian Ports Authority (NPA) signed a collaboration agreement with Belgium’s Port of Antwerp in a bid to boost the potential of its six seaports and bolster its role as the leading maritime centre in West Africa.
While the industry remains one of the strongest revenue generating points, it is very discouraging to see that the industry does not get the needed attention from the government that will help boost the desired growth.
Although, developing the sector is very capital intensive, the expected value to be gained by Nigeria far exceeds the huge capital involved to develop it.
Investing more in the sector is very worthwhile with very high return on investments (ROI) because developing the sector always has great multiplier effects on the economy of the nation if Government double its efforts in upgrading it. All these will make the industry more competitive and attract more foreign investments opportunities.
It is worthy to note that Nigeria’s maritime sector also accounts for approximately 95% of vehicular means of International Trade. It allows economies of great scale in areas that have competitive advantage and are associated with generation of huge investments and employment opportunities as well as stimulate increase in production and lowers production costs, which are spread over a larger number of goods.
Nigeria is a highly import-dependent nation at the moment but needs to work speedily to increase local production that will increase growth in the economy.
Currently the economy largely depends on export of crude oil and therefore needs to give more priority attention to investment opportunities in the industry, otherwise it may find herself susceptible to globalization shocks in the future.
It is interesting to note that Nigeria with four refineries and combined capacity of 445,000 barrels per day (bpd): one in the north (Kaduna) and three in the oil-rich Niger delta region at Warri and Port Harcourt were all shut pending rehabilitation.
While the refineries lost some 167 billion naira a year early. Additionally, Port Harcourt complex consists of two plants with a combined capacity of 210,000 bpd. All these if properly structured and managed properly will increase the output of the maritime transport industry as well as add more value.
For example, the maritime industry in Denmark (with population of Denmark is 5,807,954, 2021) is one of the nation’s largest export industries and it is very interesting to see how the nation turned its maritime potential into a value creator and growth engine to their economy.
An example of the result of the Danish maritime innovative outcome is its strategic investments in offshore energy activities in Ocean Wind farm project where the government generated 407megawatts (MW) in its energy sector that covered its yearly electricity consumption of around 425,000 Danish homes in the power sector.
However, this did not emerge by itself it is the result of Denmark enduring ability to continuously evolve and set higher standards in the global maritime market and this ability is rooted in Denmark’s proud traditions as a maritime nation, where the sea has always been a way out into the world, rather than a barrier.
Another example is Egypt (with population of102,334,404) huge investment in the expansion of the Suez canal to double its capacity from 49 to 97 ships per day at a cost of $9billion dollars, where 1.74 million barrels per day passes through the Suez Canal which makes it a very strategic link to global trade. But interestingly, Egyptian government made $5.61 billion alone from the Suez canal tolls in 2020.
Although, prior to COVID 19 pandemic the volume of trade passing through Suez canal contributed approximately 2% to Egypt GDP (39.2 million barrels per day of crude imported was by sea in 2020).All these further reaffirms the importance of developing and prioritizing resources to the maritime sector.
While most maritime nations like Nigeria have continued to innovate, reposition and reinvent their maritime industry for growth as well as make it more resilient to adapt to unforeseen challenges just like the recent situation of Suez canal, more efforts still needs to be made by the Nigerian government in the maritime industry.
In addition to the above, other major challenges facing our maritime sector are the challenges of Nigeria Ports systems, inadequate manpower development, lack of modern policies to drive the sector to manage current challenges, inadequate financing, decaying Port infrastructure, maritime infrastructure deficit, loss of revenue, inefficiencies and sharp practices, inadequate structures for capacity building, lack of use of modern technology etc.
In the light of the above, Nigeria needs to develop better strategies to take the maritime industry to greater heights and therefore it is important for us to take a cue from developed nations such as China, Greece, Japan, Singapore, Germany, USA etc. We need to tailor our maritime systems and policies in line with theirs for greater efficiency, profitability and growth as most of these nations are ranked among the best maritime nations globally due to its success in shipping, finance, law, technology, Ports and Logistics etc