Govt Urged To Implement Reforms To Enhance Efficiency, Competitiveness Of Nigerian Ports
. Sea Research Center Seeks More Attention To Maritime Sector To Boost Economy
By Abimbola Abdullah
The Federal Government has been urged to implement reforms that would enhance the efficiency and competitiveness of Nigerian ports, to improve the industry’s global ranking.
The Sea Empowerment Research Centre RGS, in its New Year bulletin signed by its Head of Research, Eugene Nweke and made available to Slye News said despite the efforts, the Nigerian maritime industry faced significant challenges, including corruption, inefficiency, and limited resources during the year.
He said to move forward, the Nigerian government needs to pay more attention to the maritime sector and its affairs to boost the economy.
“This can be achieved by deliberate investing in infrastructure, including ports and terminals, and enhancing safety and security measures.
“The government also needs to address the issue of regulatory compliance and ensure that regulations are enforced consistently and efficiently. In this instance, the funding of the newly reinforced industry economic regulator by the government cannot be overemphasized,” it stated.
Full details of the report below…
SEA EMPOWERMENT RESEARCH CENTER RGT
New Year Bulletin..
A CRITICAL REVIEW OF THE NIGERIA MARITIME INDUSTRY (PERFORMANCES AND ISSUES) IN 2024.
PREAMBLE:
In 2024, the Nigeria maritime industry has not changed its common description as a complex and multifaceted sector that plays a crucial role in the country’s economy.
Notably, the maritime sector is regulated by a wide range of laws and international conventions, including the Constitution of the Federal Republic of Nigeria, the Admiralty Jurisdiction Act, and the Merchant Shipping Act which have helped shape the industry yearly.
For a particular mention, the Nigerian Maritime Administration and Safety Agency (NIMASA) has been working to improve the country’s maritime safety and security as well as efficient port operations. The agency has achieved some milestones, including the passage of the Suppression of Piracy and other Maritime Offences Bill into law, establishment of integrated national maritime surveillance and security infrastructure, and sustainable implementation of the International Ship and Port Facility Security (ISPS) Code.
However, a 2024 review shows that, despite these efforts, the Nigerian maritime industry still faces significant challenges, including corruption, inefficiency, and limited resources.
So, in reviewing how the maritime industry has fared in the year 2024, the Center firstly, undertake a general overview of the industry in one part and on the second part, review the maritime industry cum port global ranking, on third part review the critical sectors in the industry and on the fourth part review the impact of the foreign exchange rate policy on the industry, especially, the international trade arena and the port sub industry, and as a way forward in 2025, proffers solutions and suggestions.
PART ONE
AN OVERVIEW OF THE MARITIME INDUSTRY PERFORMANCE IN 2024:
A review of the industry on one hand for the year 2024 shows that, the industry has shown significant growth and potential, with Nigeria being a major oil-producing and exporting country.
However, despite the industry’s potentials, it faces several challenges that hinder its growth and development.
One of the major challenges is the issue of safety and security with piracy, sea robbery, and illegal bunkering still prevalent in Nigerian waters. In tackling these challenges, the Nigerian Maritime and Safety Agency (NIMASA) in strategic partnership with the Nigeria Navy has exhibited professional commitments and administrative will in changing the narrative within the year. Stakeholders look forward to the sustainability of this feat and other regulatory drives.
Additional impetus, by way of value addition to the industry was provided by Tantita Security Services Limited (TSSL), a private maritime security firm exploits in the area of curbing local maritime industry threats such as oil bunkering and under water/surface pipeline vandalism.
Noticeably, the inadequate investment on infrastructure and operational facilities including ports, harbours, and terminals, is another significant challenge that needs to be addressed.
Incidences of occasional port congestions was recorded in 2024 which is not too good for Nigeria’s global image.
Like in previous years, the industry also faces environmental challenges, including marine pollution which has caused degradation to the environment and its ecosystem.
Furthermore, the industry faces challenges related to regulatory compliance, with inconsistent enforcement of regulations and bureaucratic inefficiencies hindering effective maritime operations and investment.
Stakeholder are in high spirit that with the repeal of the Nigeria Shippers Council Act of 1979, and passage and subsequent enactment of the Act, the metamorphosed body will provide the desired and requisite economic and central regulatory functions and adequately fill in this omitted gap, which was lacking pre and post ports concessions in 2006.
The shortage of skilled workforce, including seafarers, marine engineers, and experts in maritime logistics and management, is also a significant challenge.
As observed, internal politics, avoidable distractions and lips service was common scenes in this sector, while concerns on the dearth in the workforce age, which is not hiding its near consequences, continues to grow.
Unfortunately, this sector ( seafaring marine engineers and marine & logistics experts) is the main industry cooking pots that guarantees industry growth and sustainability. Also, noted here, is the challenge occasioned by poor mentorship (an enduring industry human capacity re-engineering) programme.
To move forward, the Nigerian government needs to pay more attention to the maritime sector and its affairs to boost the economy. This can be achieved by deliberate investing in infrastructure, including ports and terminals, and enhancing safety and security measures.
The government also needs to address the issue of regulatory compliance and ensure that regulations are enforced consistently and efficiently. In this instance, the funding of the newly reinforced industry economic regulator by the government cannot be overemphasized.
Additionally, the industry needs to develop a skilled workforce, including seafarers, marine engineers, and experts in maritime logistics and management.
Here again, prompt funding is apt.
This can be achieved through training and development programmes, as well as collaborations with international organizations and institutions.
PART TWO
THE ABISSIMAL MARITIME CUM PORT INDUSTRY GLOBAL RANKING:
Presently, it can officially be said that the Nigeria maritime industry is currently ranked 48th globally in terms of merchant shipping fleet, with the country’s shipping sector contributing an insignificant 1.6 million tonnage to the world’s merchant shipping fleet in 2019.
This ranking is based on the review of maritime transport carried out by UNCTAD in 2020 which shows that Africa makes less than one percent contribution to global shipping trade.
As for the global port ranking, Nigeria’s ports are ranked 183rd out of 185 countries in terms of efficiency, according to the World Bank’s Trading Across Border indicator.
This ranking is due to various challenges such as delay of import/export processes, unofficial charges, human interface, technical breakdown, and security concerns that are prevalent in Nigerian ports.
Thus, while port predictablity and competitiveness appears a foul cry, the ports delivery corridors is also bedeviled by human barrier elements, impeding the fluidity of prompt cargo delivery.
Indeed, this global ranking is more or less a testimonial, constituting and pointing at how our maritime industry faired in 2024.
PART THREE
OVERVIEW OF KEY SECTORS – HOW THEY FAIRED IN 2024.
a). Shipping Sector:
The shipping sector has had a bit of a mixed bag in 2024. On one hand, the sector’s historical growth is strongly tied to the global economy and with the world still recovering from the pandemic, demand for shipping services has been affected.
For instance, the tanker shipping market has seen lower-than-expected oil demand, which has impacted both crude and product tankers, with cargo volumes in the first half of the year being lower than in 2023.
On the other hand, there are some positive trends emerging. The dry bulk shipping market is expected to see growth in grain shipments, with maize shipments recovering and driving growth in this sector.
Additionally, the container shipping market is forecast to see demand growth between 3% and 4% in 2024, with supply growth expected to be around 6.8%.
Again, the ship building sector and yard activities, just like the steel sector is still at a near no activities if not stagnated.
Overall, it seems like the shipping sector is still navigating some challenges, but there are also opportunities for growth and investments.
In fact, there have been some high-value deals in the sector, such as Maran’s order for shuttle tankers which suggests that investors are still interested in the industry.
b). Regulatory Sectors:
The regulatory agencies within the port system in Nigeria have faced significant challenges in 2024. Despite these challenges, some agencies have made notable progress in their respective areas of responsibilities.
The Nigeria Customs Service (NCS) has continued to play a critical role in revenue generation and trade facilitation. However, the agency has faced challenges related to corruption, inefficiency, and modernization still on course. The NCS has made appreciable efforts to address these challenges, including the introduction of new technologies and procedures to improve efficiency and reduce corruption. The Service has within the year commenced the application of the Advance Ruling AR concept. It has also commenced the application of the Authorized Economic Operators (AEO) programme. Additionally, it recently introduced the application of geo-partial surveillance networks, thus, sizing down multiple checks points along the cargo movement corridor. It intends to beam its administrative search lights inwardly, hence, the redeployment of the post clearance audit to the headquarters for a closer and effective usage of the unit, especially, the recovery of revenue infractions.
The Standard Organization of Nigeria (SON) has also played a crucial role in ensuring the quality of goods imported into the country. However, the agency has faced challenges related to limited resources and inadequate enforcement of standards. SON has made efforts to address these challenges including the introduction of new standards and procedures to improve the quality of goods. Here again, the agency has a duty to stem the influx of substandard and counterfeit products which gained access to the market through insider tradings and compromise.
The National Agency for Food and Drug Administration (NAFDAC) has continued to play a critical role in ensuring the safety and quality of food and drugs imported into the country. However, the agency has faced challenges related to limited resources and inadequate enforcement of regulations. NAFDAC has made efforts to address these challenges, including the introduction of new regulations and procedures to improve the safety and quality of food and drugs. The recent signing of an MOU with the Nigeria Customs Service is expected to accelerate enforcement and increase efficiency.
It has a duty to increase its market surveillance and enforcement, to rid fake products off the shelves.
As noted earlier, the Nigerian Maritime Safety Agency (NIMASA) has played a crucial role in ensuring the safety and security of ships and crew in Nigerian waters. However, the agency has faced challenges related to political incursions and inadequate enforcement of regulations.
The Nigerian Port Authority (NPA) has continued to play a critical role in the management and operation of ports in Nigeria. However, a growing concern is on the rising spate of cargo diversions to the neighbouring countries. Though, the agency has faced challenges related to limited resources and inadequate infrastructure. The NPA has made efforts to address these challenges, including the introduction of new technologies and procedures to improve efficiency and reduce congestion. But, despite these efforts, it doesn’t seem to be enough. Administrative supervisory wise, issues related to making public a transparent yearly port performance reevaluation for the respective port operators is still a concern to port users for several reasons, especially, port efficiency and competition wise.
The Nigerian Shippers Council (NSC) has assumed a central economic regulatory role under a new agency, which has given it more powers to regulate the shipping industry. However, the agency has faced challenges related to limited resources and inadequate enforcement of regulations. The NSC has made efforts to address these challenges, including the introduction of new regulations and procedures to improve the efficiency and competitiveness of the shipping industry. However, by ascending to its new legislative roles, as the central industry economic regulator, it is expected to inject the needed impetus in the industry regulatory compliance.
bi). Key Issues At Stake:
From the above review, key issues to be brought to the fore includes but not limited to:
1. Corruption: Corruption remains a significant challenge in the port system and regulatory agencies must take steps to address it.
2. Inefficiency: Inefficiency is another significant challenge and regulatory agencies must take steps to improve their processes and procedures.
3. Limited Resources: Regulatory agencies face limited resources which hinders their ability to effectively regulate the port system.
4. Adequate enforcement: Regulatory agencies must ensure adequate enforcement of regulations to prevent non-compliance.
5. Modernization: Regulatory agencies must modernize their processes and procedures to improve efficiency and reduce corruption.
bii).Need To Change The Narrative – Going Forward.
1. Strengthen regulatory agencies: Regulatory agencies must be strengthened to improve their effectiveness and efficiency.
2. Increase resources: Regulatory agencies must be provided with adequate resources to effectively regulate the port system.
3. Improve enforcement: Regulatory agencies must improve their enforcement of regulations to prevent non-compliance.
4. Modernize processes: Regulatory agencies must modernize their processes and procedures to improve efficiency and reduce corruption.
5. Collaboration: Regulatory agencies must sustain strategic collaboration and engagement with each other and with other stakeholders in the industry to improve the efficiency and competitiveness of the port system.
6. Training and capacity building: Regulatory agencies must streamline and provide relevant training and capacity building for their staff to improve their skills and knowledge.
7. Use of technology: Regulatory agencies must leverage technology to improve their processes and procedures, and to reduce corruption and inefficiency.
biii). Proffering Specific Suggestions: In this regards the following are recommended:
1. Establish a single window system: A single window system should be established to improve the efficiency and transparency of the port system. As such, the national committee on the Nigeria single window project, should hasten their assignment.
2. Implement a risk-based approach: A risk-based approach should be implemented to improve the effectiveness of regulatory agencies.
3. Increase transparency: Regulatory agencies must increase transparency in their processes and procedures to improve trust and confidence.
4. Improve stakeholder engagement: Regulatory agencies must improve stakeholder engagements to improve the efficiency and competitiveness of the port system. They should take paradigm shift from all forms of jamboree in the name of conference, without any value addition to the system.
5. Develop a national transport policy: A national transport policy should be developed to provide a framework for the development of the transport sector. Unfortunately, the transport industry has been segmented. It is worthy of note to state and appreciate the fact that the Ministry of Marine and Blue Economy has published its national policy framework, indeed a welcome development, stakeholders are in high spirits, as they look forward to prompt implementation in 2025.
6. Establish a transport regulator: A transport regulator should be established to regulate the transport sector and improve its efficiency and competitiveness. It is on this note that the new central industry economic regulator is now in the eyes of the sun as far as the stakeholders are concerned.
7. Increase investment in infrastructure: Investment in infrastructure should be increased to improve the efficiency and competitiveness of the port system.
PART FOUR.
IMPACT OF EVER INCREASING FOREIGN EXCHANGE REGIME IN THE INDUSTRY:
The Nigerian maritime industry has been facing significant challenges due to the increasingly unregulated foreign exchange rate and 2024 has not been an exception, rather,a turbulent to commercial activities.
The capital-intensive nature of the industry requires a substantial amount of capital to keep it afloat but the unpredictable foreign exchange rate has made it difficult for investors to ascertain the risks and revenue generated.
This has resulted in a reduction in investment options as investors are wary of putting their money into an industry with such high risks.
The lack of funding has been a major issue with the industry requiring significant investment to modernize and expand its infrastructure.
The Nigerian Ports Authority (NPA) for instance, needs to upgrade its ports to meet international standards, especially, a deliberate pursuant to attaining “regional trans-shippment hub status “within the West and Central Africa sub-region.
However, the unregulated foreign exchange rate has made it challenging to secure the necessary funding.
The situation is further complicated by the fact that the industry is heavily reliant on foreign exchange with most of its transactions being denominated in foreign currencies.
The shipping and freight sector has also been affected with the unpredictable foreign exchange rate making it difficult for companies to budget and plan for the future.
The cost of importing goods has increased significantly and the lack of stability in the foreign exchange market has made it challenging for businesses to operate efficiently.
The situation is exacerbated by the fact that Nigeria is a major importer of goods and the high cost of imports has had a ripple effect on the entire economy.
Furthermore, the unregulated foreign exchange rate has also affected the country’s ability to attract foreign investment in the maritime sector. Investors are hesitant to put their money into an industry with such high risks.
The absence of stability in the foreign exchange market has made it challenging for the country to compete with other countries in the region.
The Nigerian government needs to take urgent steps to address the issue of the unregulated foreign exchange rate and provide a stable and predictable environment for investors to operate in.
Presently, the port import throughput is on the downward indicators, ship calls to the port also on downward indicator when compared by the previous year’s record.
The regulatory frameworks in place such as the Nigerian Maritime Administration and Safety Agency (NIMASA) Act, the Coastal and Inland Shipping (Cabotage) Act and the Merchant Shipping Act have helped to shape the maritime sector. Nevertheless, more needs to be done to address the challenges facing the industry.
GOING FORWARD (SOLUTIONS AND SUGGESTIONS)
In conclusion, the Center wishes to suggest as follows:
Firstly, is to appreciate that the Nigeria maritime industry in 2024 has significant potential for growth and development, but it faces several challenges that need to be addressed.
It is the Center’s opinion that with the right investments, policies and regulations, the industry can play a crucial role in driving the country’s economy and connecting Nigeria to the global market.
Secondly, is on the need to improve the industry’s global ranking, it is essential to address these challenges and implement reforms that will enhance the efficiency and competitiveness of Nigerian ports.
And finally, the government needs to work towards creating a more favourable business environment with a stable and predictable foreign exchange rate to attract investments and stimulate growth in the maritime sector .
Thank you for your attention.
Wishing all a happy and prosperous new year!
Long Live the Maritime Industry!
Long Live, the Federal Republic of Nigeria.
Fwdr Eugene Nweke, Rff
Head of Research, Sea Empowerment Research Center RGT
1st January, 2025.
®Support references: Reviewed extracts from online published reports and AI( as archived).
