…a comprehensive report on the Nigeria Maritime Conference 2024
Introduction
The Nigeria Maritime Conference, organised by BusinessDay, recently took place with the theme “Nigeria Maritime: Unlocking Potential, Overcoming Challenges.”
It brought together key stakeholders, including government officials, industry players, investors, operators and regulators, to discuss the current state and prospects of Nigeria’s maritime sector. The opening address highlighted the critical role of the maritime sector in facilitating trade and generating revenue, both domestically and internationally.
Sponsors were GOG Marine, Lekki Port LFTZ Enterprise Limited, SIFAX Group, and Kreston Pedabo.
Overview of the Maritime Sector – Minister’s Keynote Address
The Minister of Marine and Blue Economy, Adegboyega Oyetola, highlighted the immense potential and challenges of Nigeria’s maritime sector, emphasising its extensive coastline, inland waterways, and marine biodiversity. The government has established the Ministry of Marine and Blue Economy to drive the sector’s development.
Revenue increased in the first quarter of 2024 compared to the same period in 2023 due to strategic approaches and technology investments. Efforts are underway to upgrade ports, decongest traffic, and attract larger vessels.
Public-private partnerships are encouraged for port modernisation and infrastructure development. The maritime sector has been piracy-free for the past two years due to initiatives like the Deep Blue Project and collaboration with the Navy.
Ongoing efforts include developing inland waterways, promoting sustainable marine resource use, and enhancing port operational efficiency. The ministry focuses on policies to combat illegal fishing and support the growth of the blue economy.
Address by the President of the Nigerian Chamber of Shipping
Aminu Umar, president of the Nigerian Chamber of Shipping, delivered a keynote address emphasising the importance of the maritime sector and shipping industry. He acknowledged the government’s efforts in establishing the Ministry of Marine and Blue Economy while highlighting the global nature of maritime conventions and regulations.
Alhaji Umar discussed several global trends impacting the shipping industry, including changes in global shipping routes due to the post-COVID era, the impact of geopolitical conflicts such as the Russia-Ukraine war and the Israel-Hamas conflict on shipping routes and costs, and the opportunities arising from the African Continental Free Trade Agreement (AfCFTA).
He recommended stakeholder engagement before adopting international maritime conventions to ensure alignment with Nigeria’s readiness and capacity. He also stressed the importance of developing local capacities and fostering strategic partnerships to enhance the sector’s growth and competitiveness.
Key Challenges
1. Diverse Customs and Regulations: Each African country has its customs and regulations, complicating intra-continental trade. Trade between African countries often requires US dollars or euros, creating additional barriers and costs.
2. Energy Transition: Ships must adhere to international regulations on carbon emissions, such as those from the International Maritime Organisation (IMO). Investments in dual-fuel capabilities and eco-friendly engines are necessary to reduce carbon emissions.
3. Local Port Development: The development of new infrastructure, such as the Lekki Deep Seaport, is crucial for handling larger ships and increasing exports. High costs associated with war risk insurance in West Africa, especially in Nigeria, put local operators at a disadvantage.
4. Fiscal Policies and Taxes: Nigerian shipping companies face high taxes and import duties compared to their international counterparts. Tedious processes and high duties for importing spare parts and equipment hinder operational efficiency.
5. Funding and Financial Constraints: Nigerian shipowners struggle with accessing long-term, low-cost funding. High interest rates and short repayment periods are significant hurdles. Limited access to capital markets for equity funding further exacerbates financial challenges.
6. Human Capital Development: While Nigeria has invested in training seafarers, more focus is needed on developing management-level professionals in the maritime industry. Countries like the Philippines and India have successfully leveraged their human capital in maritime sectors, generating significant remittances and revenue.
7. Operational Efficiency and Competition: Nigerian shipping companies face stiff competition from international operators with lower operational costs and better access to capital. The lack of incentives and support for local shipping companies limits their competitiveness.
Recommendations
1. Harmonise Customs and Regulations: Work towards harmonising customs regulations and policies within African trade blocs to facilitate easier intra-continental trade. Explore regional currency solutions or trade agreements that minimise reliance on external currencies like the US dollar or euro.
2. Support Energy Transition: Provide subsidies and incentives for investments in eco-friendly technologies and dual-fuel capabilities. Ensure compliance with international regulations through government support and collaboration with industry stakeholders.
3. Develop Port Infrastructure: Invest in developing and upgrading port infrastructure to handle larger vessels and increase export capabilities. Work towards reducing war risk insurance costs through improved security measures and regional cooperation.
4. Revise Fiscal Policies: Implement tax reforms to reduce the burden on shipping companies, such as adopting tonnage tax systems used in the UK and other European countries. Provide duty exemptions or reductions for essential spare parts and equipment imports.
5. Enhance Funding Mechanisms: Develop long-term funding mechanisms tailored to the shipping industry, possibly through government-backed initiatives like the Cabotage Vessel Financing Fund (CVFF). Facilitate access to capital markets for shipping companies to obtain equity funding.
6. Invest in Human Capital: Expand training programmes to include management-level professionals and align with international standards. Study and implement best practices from countries like the Philippines and India to enhance Nigerian maritime professionals’ skill sets and employability.
7. Boost Local Competitiveness: Introduce incentive programmes for local shipping companies, including reduced port fees and operational subsidies. Simplify procedures for importing spare parts and equipment to minimise delays and costs.
Panel Sessions
The first panel was themed, “Protecting Our Waters: Sustainability and Efficiency in Maritime Operations,” and moderated by Tonye Krukrubo,(SAN), partner, Aluko & Oyebode. Panellists were Bodundrin Enitan Adewole, president, of the Marine Arbitrators Association of Nigeria; Rear Admiral Dolapo Kolawole (Rtd), CEO, Devgru Transnational Enterprises Limited; Mark Mordi, SAN, FCI, ARB, partner, Aluko & Oyebode and Joshua Olufemi, founder and publisher, Dataphyte.
Rear Admiral Kolawole emphasised the critical role of security in the maritime sector. A secure and protected environment is essential for trade, commerce, and generating revenue within the blue economy. Common maritime security issues in Nigeria include piracy, sea robbery, illegal bunkering, and unregulated fishing.
These security problems increase insurance costs and deter foreign investment, forcing oil companies to hire private maritime security. The Nigerian Navy collaborates with other Gulf of Guinea navies and employs advanced technology to combat piracy and improve security.
The Falcon Eye System is a key technological advancement that enhances maritime domain awareness, tracking ships and illegal activities. He emphasised the importance of exploiting backwaters for maritime transport and enhancing security in inland waterways.
This means there is a need for effective systems to monitor and secure these areas to prevent sea robbery.
Kolawole highlighted the importance of laws for prosecuting maritime crimes, noting gaps in legal frameworks and enforcement that allow criminals to evade prosecution.
He encouraged the application of non-kinetic approaches such as the amnesty programme to address issues like illegal bunkering and emphasised the human aspect and the need for alternatives to purely force-based solutions.
Mordi stressed that Nigeria has sufficient laws and regulations (e.g., Admiralty Jurisdiction Act, Merchant Shipping Act) to address maritime challenges. The issue lies more in the enforcement of these laws, requiring political will and resources.
He highlighted the resource constraints that hamper effective enforcement and interdiction efforts such as judicial system bottlenecks, where judges have too many cases and not enough time to dedicate to each one.
The senior advocate of Nigeria called for a deliberate policy to foster technological development in the maritime industry, suggesting reverse engineering and local manufacturing to reduce dependency on imports and create jobs.
Olufemi, who joined virtually presented data on the economic potential of the maritime sector and its impact on Nigeria’s fiscal revenue and gross domestic product (GDP).
He highlighted the potential of the maritime sector to generate significant revenue and reduce budget deficits.
Nigeria’s extensive coastal area provides a comparative advantage that should be fully exploited. However, to take advantage of this opportunity Africa’s most populous country must address the inefficiencies at its ports, which force imports and exports through neighbouring countries, resulting in significant revenue losses.
Presentation by Laurence Smith, chief operating officer, Lekki Port LFTZ Enterprise Limited
State of the Port Facilities
Nigeria’s maritime industry is a crucial artery of the economy, positioned to drive growth, create employment, and connect our nation to the global market.
However, significant obstacles hinder the industry’s ability to achieve its full potential. Foremost among these challenges is the state of Nigerian port facilities. Many of the ports are outdated and urgently need modernisation. The lack of adequate infrastructure hampers the efficient movement of goods and services, leading to increased costs and reduced competitiveness.
Lekki Port: A Model for Modern Infrastructure
Lekki Port, one of the most advanced ports in West Africa, exemplifies what can be achieved with strategic investment in modern infrastructure and collaboration between private investors and government agencies.
The recent arrival of CMA CGM’s GANDOLA, the largest vessel to visit Nigeria, demonstrates the capacity for efficiencies and new energies in Nigeria. This ship can carry over 14,000 twenty-foot equivalent unit (TEU), which is three to four times the size of the vessels that can navigate into Apapa and Tin Can ports.
Freight Rates
Currently, freight rates from China to Africa or Europe can reach up to $10,000 per TEU, which has doubled recently due to challenges in the Gulf of Guinea and the Red Sea. This benefits shipping lines but burdens consumers. Reducing these costs is imperative.
Advantages of Lekki Deep Sea Port
Lekki Deep Sea Port has a depth of 16.50 metres with a design depth of 19 metres, offering a significant advantage over other West African and Nigerian ports. The port is equipped with five ship-to-shore cranes, the largest ever introduced into Nigeria, which significantly enhance performance and reduce vessel turnaround time.
With advanced terminal operating systems and vehicle booking systems, the port can achieve greater efficiencies in the yard and reduce container dwell time, currently averaging 18 to 19 days in Nigeria, compared to about 4 to 5 days in European and American ports.
Security and Technological Enhancements
Smith said they have installed two FS 6000 scanning machines in consultation with the Nigerian Customs Service, capable of scanning three containers every minute, unmatched by any other port in the country.
Security concerns, including piracy and maritime crime, remain a significant challenge. Lekki Deep Sea Port is working closely with the Nigerian Port Authority (NPA), the Nigerian Navy, and other relevant stakeholders to better secure both the water and landside environments.
Regulatory and Bureaucratic Hurdles
Regulatory hurdles and bureaucratic red tape frustrate businesses and investors. Documentation processes are often redundant and lack digitalisation, leaving most ports stuck in the analogue era.
These inefficiencies contribute to Nigeria’s low ranking of 102 in the World Bank’s Logistics Performance Index, which must change to attract the necessary investment.
Strategic Location and Economic Impact
Lekki Port’s strategic location within the Lagos Free Zone offers significant economic benefits. Smith said they envision direct delivery from the vessel to the free zones, reducing time and costs for manufacturing enterprises.
The port is expected to create up to 200,000 jobs, generate $200 billion in revenue, and have a direct and indirect economic impact of $160 billion.
Fireside Chat with Bem Garba, founder/CEO of GOG Marine
Garba outlined a couple of issues in the sector and potential solutions.
Challenges of Leading a Maritime Company in Nigeria
● Economic volatility, fluctuations in forex, and taxes pose significant challenges.
● Workforce management is crucial, requiring a skilled workforce capable of operating at global standards.
● Future challenges include maintaining and upgrading infrastructure, ensuring security, adapting to technological advancements, and integrating digital solutions.
Regional Shipping Lines and Tariff Barriers
● AfCFTA’s reduction or elimination of tariffs makes products cheaper and more accessible, addressing food security and reducing costs.
● Developing regional shipping lines can reduce dependence on foreign carriers, lower transportation costs, and keep profits within the region.
Panel 2
The second panel was themed, “Overcoming Trade Barriers and Unlocking Economic Growth,” moderated by Vivian Chimezie Azubuike, director general, of the Nigeria Shipping Chamber. Panellists comprised Iroghama Ogbeifun, MD/CEO, Starz Investment Company Limited; Yang Xixiong, operation director, Lekki Port LFTZ Enterprise Limited; Peter Nosa Ogbebor, partner, Kreston Pedabo; Emeka Akabugo, (PhD) Esq, senior partner, Akabugo & Associates and Mohammed Bello Koko, MD/CEO, Nigerian Port Authority.
Implementation of Digital Technologies
Adopting digital technologies like blockchain for trade documentation, Radio Frequency Identification (RFID) for cargo tracking, and paperless trade solutions can greatly enhance transparency, efficiency, and security in the maritime supply chain.
Development of Inland Dry Ports: Developing inland dry ports can help in decongesting seaports and improving the efficiency of cargo distribution to and from hinterland areas.
Harmonisation of Maritime Policies and Standards
Uniform maritime policies and standards across the 54 AfCFTA member countries can significantly boost trade by creating a predictable and stable environment for businesses.
To enhance maritime trade in Africa, key actions such as standardising safety and environmental regulations, and developing common customs and port procedures should be implemented. The African Integrated Maritime Strategy (AIMS) 2050 can serve as a framework for cooperation, guiding harmonising maritime safety, security, and environmental protection.
Addressing Disparities in Policies
The lack of harmonised maritime policies across different jurisdictions in Africa leads to inefficiencies and increased costs for businesses. To address this issue, solutions such as policy coordination through an AfCFTA maritime council and incentives for compliance with harmonised regulations are proposed. Regional collaboration, exemplified by countries in West Africa working together to streamline port operations and customs procedures, can also reduce the need for goods to be rerouted through multiple countries. These measures aim to facilitate smoother and more efficient trade within Africa.
Promoting Investments and Innovation
Investing in maritime infrastructure and innovation is crucial for enhancing African ports’ capacity and efficiency. Key areas include attracting Foreign Direct Investment (FDI) by creating a favourable investment climate and encouraging maritime businesses to adopt strong corporate governance practices. The Lekki Deep Sea Port in Nigeria is an example of how significant investment can modernise infrastructure, increase capacity, and attract further economic activities.
Capacity Building and Skill Development
Training programmes should be implemented to enhance workers’ skills in port operations, logistics, and customs. Institutions such as the Regional Maritime University in Ghana should be supported to provide continuous education and certification, ensuring a steady supply of skilled professionals for the maritime industry.
Enhancing Port Efficiency and Connectivity
African ports face challenges such as inefficiencies and connectivity issues that hinder trade. To address these problems, solutions like implementing 24-hour port operations, utilising advanced scanning technology for faster cargo handling, investing in port infrastructure, and enhancing transport networks (roads and railways) can improve cargo movement. The success of Mombasa Port in Kenya serves as an example of how strategic investments in improving port operations and connectivity can boost efficiency and trade volumes.
Quotes
1. The decision by the president to create a ministry for marine and blue economy as he has done is in my view a good example of identifying an important asset of the people of the Federal Republic of Nigeria and then putting the effort and resources to make it work. Frank Aigbogun, publisher, BusinessDay Media Limited
2. I am pleased to announce that the ministry is developing a dynamic policy framework for the marine and blue economy expected to roll out before the end of 2024. – Adegboyega Oyetola, minister of Marine and Blue Economy
3. In Singapore, when you establish a shipping company you have zero tax for 10 years. Nothing like that in Nigeria. – Aminu Umar, president, of the Nigerian Chamber of Shipping
4. Trade, commerce and generating money in the maritime and blue economy sectors depend on a secure and protected environment. Insecurity jacks up insurance costs. – Rear Admiral (Rtd) Dolapo Kolawole, CEO, Devgru Transnational Enterprises Limited
5. We have enough laws to police our maritime sector. The missing piece of the puzzle is enforcement, which is down to resources. It is a political will thing. – Mark Mordi, SAN, FCI.Arb, partner, Aluko & Oyebode
6. Shipping alone can generate N7 trillion annually. Should this revenue come in, and the government collects its tax this is enough to deal with a third of Nigeria’s budget deficit. – Joshua Olufemi, founder, Dataphyte
7. Lekki Port, one of the most advanced in West Africa exemplifies what can be achieved through public-private partnerships. – Laurence Smith, chief operating officer, Lekki Port LFTZ Enterprise Limited
8. Digitalisation is one of the biggest challenges. We need to find a way to digitalise all our processes. – Bem Ibrahim Garba, CMC, FIMC, founder, & CEO of GOG Marine
9. Time is money. Efficiency is life. Efficiency is very important for the development of the economy. At Lekki Port we have high efficiency but haven’t hit our targets yet. – Yang Xixiong, operations director, Lekki Port LFTZ Enterprise Limited
10. Technology is crucial to the extent that it enables ease of business and flow. Adopting blockchain technology can facilitate trade. – Emeka Akabogu, senior partner, Akabogu & Associates
11. We need to invest in port rehabilitation. The ports are decaying. We need draughts that can take bigger vessels, this enables efficiency and economies of scale. We need ship repair and service yards. – Mohammed Bello Koko, MD/CEO Nigerian Ports Authority
12. Nigeria used to have prominent shipping lines but they were defunct by 1995. Why? We need to know what didn’t work. Iroghama Ogbeifun, MD/CEO, Starzs Investments Company Limited
13. One of the key things we believe should be done is to harmonise maritime policies across 54 AfCFTA member countries. – Peter Nosa Ogbebor, partner, Kreston Pedabo
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