Lagos — Nigeria's maritime industry is in need of reform to help it survive globalization, Minister of Transport, Ojo Maduekwe, said here Monday.
He spoke against the background of press reports that the US government has classified Nigeria among the most difficult countries in which to do business.
Speaking at the start of a three-day seminar on the maritime industry, Maduekwe said it was imperative that Nigeria should pursue policies consistent with the government's belief in competition, privatization, deregulation and a market-driven economy.
He said "statism" in economic management in the maritime sector had led to a displacement of policies by contracts, as government officials abandoned policy formulation and implementation, to chase contracts.
For ten years, the Nigerian Maritime Authority had no board of directors, until one was appointed last year. Within that decade, the Authority lost its direction, as government officials used it to award various contracts to themselves and their cronies.
There has been increasing demand from indigenous shipping company operators for a re-instatement of a cargo allocation formula to protect their business interests. Until last year, an official allocation gave 40 percent of cargo leaving or entering Nigeria to Nigerian shipping companies, and another 40 percent to foreign shipping companies. The remaining 20 percent was reserved for cross-traders or tramp operators, who are free to pick business from anywhere. But Government last year abrogated the 40:40:20 formula.
Indigenous maritime operators now say they are being crowded out by the better capitalized foreign shipping companies. Currently, no indigenous shipping company in Nigeria has a cargo vessel. In the past when the cargo allocation and reservation principle worked, they could charter vessels to carry cargo but now, most of them simply serve as agents or representatives to foreign shipping companies here in Nigeria.
"The basic problem is that we do not have ships," says Captain Emmanuel Iheanacho , Chief Executive Officer of an indigenous shipping company. "We don't have capacity - the ships or the people to handle the processes." Nigeria currently has no flag carrier on international routes.
Maduekwe, however, said calls by indigenous companies for the re-introduction of cargo allocation should be matched by the financial wherewithal to invest in the local maritime industry. "I want to see the financial muscle of our investors in shipping," he said. "There are many Nigerians with money (to invest). What are they waiting for?"
Instead of returning home to invest their funds in the local maritime industry, said Maduekwe, many wealthy Nigerians are rather going to invest in South Africa, Brazil, and elsewhere.
Iheanacho blames the problems of indigenous shippers on lack of funds. Unlike their counterparts from developed countries who borrow "from international centers at the right interest rate and quantity," Nigerian operators are faced with high interest rates (currently as high as 25-30%, per annum), he says. "So you have to have a way of leveling the field."
Government attempted that in 1995, when the then military government established the Ship Acquisition Fund. But that experiment produced a less-than satisfactory result. Under it, government disbursed about $67 million to shipping companies, including seven private companies. It was supposed to be a revolving fund, with beneficiaries repaying, and the fund passing on to others.
But, as Maduekwe noted Monday, many of the beneficiaries actually saw the loans as their share of "the national cake." Only two companies actually did good business with their loans, he said, and many of those who borrowed did not secure enough to buy ships but used the money for other purposes.
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He said he would not consider pleas for a debt write-off, pointing out that the funds could have been utilized in other sectors of the Nigerian economy, such as health, education, or even rail transportation.
The inability of the beneficiaries to repay, he said, has sent many children to an untimely grave because it could have been invested in the heath sector. It has also denied many children the opportunity of receiving qualitative education, as it could have been invested in the education sector.
"We are so rich, and yet we are orphans in paradise," Maduekwe lamented.
