PARTICIPANTS at the 2006 annual meeting of the Nigeria Economic Summit Group (NESG) were stunned on June 8, 2006, when the Director General of the National Maritime Authority, Engineer Festus Ugwu, informed that Nigerians control a mere 10 per cent of the country's 6.8 billion dollars. In other words, this is a vital sector of the economy where foreigners are absolutely in control. The grave implications of this situation are too obvious to be repeated here. The only consolation indigenous pariticipants at the economic summit came out with is the assurance that the situation will not remain like this for long as the NMA, which he heads, will by next year reduce foreign dominance of the maritime industry by a half through a scheme which includes a S500 million credit facility from a Malaysian consortium. Already, five Nigerian firms have all but begun to draw from the facility which has a low interest of about 10 per cent and a three year-moratorium.

The new development would seem to robustly challenge the reported misgivings by the Association of Indigenous Shippers of Nigeria, about how the Federal Government has been implementing the 2003 Coastal and Inland Shipping Act. The Association was, during the third anniversary in May, 2006, of the Cabotage Act, apparently not happy that a good number of foreign firms are granted waivers by the Federal Ministry of Transport to operate within the Nigerian domestic waters.

The Cabotage Act came into existence in 2003 all right, but did not become operational till May of 2004, when the Ministry of Transport issued comprehensive guidelines on its implementation. The Act allows only vessels owned by bonafide Nigerian citizens, built in Nigeria and crewed by Nigerians to transport passengers or goods from one local seaport to another. A vessel which does not meet all these requirements can sail within the domestic waters only when it is granted a waiver by the Ministry of Transport on the recommendation of the National Maritime Authority (NMA).

The Act seeks to create massive employment and business opportunities for Nigerians, guarantee greater maritime security for our nation, assist our people acquire more management and technological skills, and help check capital flight from the country. Some other countries of the world have similar laws and policies. In the United States of America, for instance, there is the Jones Act whose provisions are, in no significant way, different from the 2003 Coastal and Inland Shipping Act of Nigeria.

It is true that in spite of the noble intentions of the Nigerian Cabotage regime, waivers are still granted to vessels which do not meet demands of the Act. The reason is obvious. The number of vessels built in Nigeria and owned by bonafide Nigerian citizens is very limited. Such vessels cannot meet up to five per cent of the demand for vessel services in the country. In consideration of this cold reality, the Federal Government, through its appropriate agencies, has been constrained to grant waivers to vessels not built in Nigeria.

It will take some time to establish enough shipyards in the country to produce an adequate number of vessels needed in Nigeria. One major reason is the absence of the relatively high level of technological competence which shipyard business demands. To state the obvious, our country is still on the journey to technological development. Another reason why the number of shipyards and vessels is grossly inadequate has to do with the high finance required for the business. Ships are, like aeroplanes, very expensive. Nigerian financial institutions have not been supporting their acquisition because of the capital intensive nature, apart from the banks' limited understanding of the maritime industry.

Still, it would be unfair to give the impression that concerned public agencies have not been making spirited moves to change the situation. The National Maritime Authority, for instance, which is the leading body in the implementation of the Cabotage Act, has been working closely with stakeholders to greatly increase indigenous content in the maritime industry, which, in one word, is the whole essence of the new regime. Within three months last year, three conferences were organised in Lagos and Port Harcourt, with small, medium and large scale indigenous maritime operators to find solutions to their pressing problems.

Since the conferences, there has been greater pressure on the Nigerian National Petroleum Corporation (NNPC) and other big oil companies to comply with the Cabotage Act by patronizing indigenous shippers and other operators in the maritime industry. A situation where even a leading Federal Government-owned corporation has to be reminded constantly of the provisions of the Coastal and Inland Shipping Act is not good enough. Nigeria exports some 2.4 million barrels of crude oil daily and imports large quantities of petroleum products consumed by over 130 million people. Its indigenous maritime participants should be allowed to partake in all this. Once the NNPC begins to support local shippers, other major oil industry players are likely to follow suit. By so doing, the government's objective to appreciably increase local content in both the maritime and oil sectors of the economy will be realised.