Development Of Maritime Industry In Nigeria And Its Role In Private Sector

Project and Seminar Material for Maritime and Transport

Abstract

This study was carried out to examine the development of maritime industry in Nigeria and its role in private sector. The study was carried out to determine whether the maritime industry is important for the economic development in Nigeria, determine whether the maritime industry has a role to play in the private sector, determine whether the presence of the maritime industry boosts the private sector, examine the challenges of the maritime industry in Nigeria. The survey design was adopted and the simple random sampling techniques were employed in this study. The population size comprise of staffs of Nigerian Maritime Administration and Safety Agency, Lagos State. In determining the sample size, the researcher conveniently selected 160 respondents and 141 were validated. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using frequency tables and mean scores. While the hypotheses were tested using chi-square statistical tool. The result of the findings reveals that the maritime industry plays a significant role in the private sector. The study also revealed that the challenges of the maritime industry in Nigeria includes; poor incentives for investors, poor integrated transport system, paucity of Port infrastructure, inadequate super-structures, insecurity in the water–ways. Therefore, it is recommended that government and the private sector under public-private arrangement should raise adequate capital to build maritime infrastructure in the eight seaports in Nigeria. To mention but a few.

Chapter One

Introduction

1.1 Background of the Study

Greater efficiency in Transport has been pursued recently in many countries by changing the structure and institutional framework of the industry. These changes have been introduced by such measures as privatization and deregulation so that the role of government, Federal governments in particular will be reduced significantly. The Maritime industry has been subject to similar development. However, in most third world countries like Nigeria changes in maritime and port policies have been modest. The countries in which the policy changes have been greatest are those in which national policies exerted strong influence on port performance (Usoro, 2003). The United Kingdom and New Zealand are well known examples. In recent times, the policies of government are seemingly moving in ways, consistent with a more competitive market structure. In many countries, public ownership, subsidization and some levels of central planning are still common in the maritime industry. However, the varied arrangement for the ownership and administration of ports and maritime operations gave raise to questions about the appropriateness of existing government policies. In the light of the above argument, there emerged two decades ago, the National Shipping Policy otherwise known as Decree No.10 of 1987 which came into force in 1988,establishing the then National Maritime Authority(NMA). The origin of the National Shipping Policy could be traced down to the United Nations Conference on Trade and Development (UNCTAD) code of conduct (40:40:20), adopted in 1975 and entered into force in 1983. Since its inceptions, the then National Maritime Authority had created a laudable impact on the maritime industry, which in turn has a big role to play in national economic development. Nigeria has a highly productive open sea with abundant and diverse maritime resources. However, Nigeria has not been able to maximize the advantage of these natural resources. Rather, she has in the last half a century, witnessed a chequered history in the development of her maritime industry and shipping to be precise. Earlier than the period 1959, the maritime industry of Nigeria was exclusively owned, managed and controlled by her colonial master and its international maritime business allies. Essentially, the cyclic theory of port oscillation is manifest in port concentration and diffusion, which could be attributed to the then trend in cargo through put of the country’s port. This situation was not peculiar to Nigeria alone as many other African countries also found it extremely difficult to take part in the maritime business of their country .The ports were managed by these foreigners who handled exclusively the import and export cargo. Therefore the benefits that should accrue to a country in the management of her maritime industry went to the foreigners (Usoro, 2003). Today, the shipment of cargo into and out of Nigeria mostly depends on foreign shipping lines. More so, in spite of the “National Shipping Policy”, Nigeria faces a crisis of extinction from her maritime industry. Perhaps, the country needs to know what it is losing to be able to adequately address this problem. Maybe, the passage of the coastal and inland shipping Act, 2003 by the National Assembly seems to mark a new beginning in the shipping and maritime administration in Nigeria (Wambua, 2009).

The legislative device known as cabotage is used to restrict access to or reserve marine or aviation trade within the territorial jurisdiction of a country for the capacity of the local companies. Following calls by prominent maritime specialists and operators on the need for government to make concerned effort towards harnessing the indigenous maritime capacity and utilizing the abundant opportunities in the sector for the benefit of the Nigerian people in order to reverse the trend where it still has its maritime trade both territorially and extra territorially dominated by foreign operator, the Nigerian Government came up with the idea to create the Nigerian Maritime and Cabotage. This was done in order to bring about a change in the status quo, where it still has its maritime trade both (Ferdinand 2021).

In the face of suffocating external competition and dominance, the government’s goal in establishing the cabotage regime was to support the expansion of the maritime sector through the implementation of an interventionist program with the goal of fostering faster, more sustainable economic development on the local level (Fraund, & William 2021).

A contemporary economic approach that justifies intervention of this nature to induce some determined result (as opposed to the classical economic approach of free market forces), as an acceptable tool to achieving some set economic goals, particularly where competition is unfair and dominance is prevalent is called cabotage. This practice has been around for more than 60 years (Falokun, 2021). It has been observed that this practice is widespread in both the maritime and aviation industries, and that it was brought about by a variety of factors. One of these factors was the practice of reserving all or part of the national market opportunity to national flag ships or aircrafts for either political, economic, or security reasons. The cultivation of indigenous people’s human and financial resources is another objective of the protective strategy that is widely implemented all over the world. These are some of the most important goals that the Nigerian marine cabotage hopes to achieve (Fraund, & William 2021).

And as for the scope of the cabotage Act, the Coastal and Inland Shipping (cabotage) Act, 2003 covers the carriage of goods and passengers by vessels and any other mode of transportation, mineral, and other natural resources, and any marine transportation or activity of commercial nature within Nigeria’s territorial waters as prescribed by the Exclusive Economic Zone Act CAP 116, laws of the Federation Republic of Nigeria, 1990. Additionally, the cabotage Act applies to any marine transportation or activity of commercial nature within Nigeria’s territorial waters. The Act intends to place limitations on the participation of foreign boats in domestic coastal trade and, as a result, to encourage the growth of indigenous tonnage (Ferdinand 2021).

1.2 Statement of the Problem

According to sources from the Nigerian Ports Authority about 49 ships carrying various products including petrol, containers, base oil, bulk fertiliser buckwheat, frozen fish, bulk salt, bulk sugar, maize, base oil, diesel, aviation fuel, steel prod- ucts, container, bulk gypsum and aviation fuel berthed at the Apapa and Tin-Can Island ports between August 16 and August 25, 2018.10

These activities in volumes are worth billions of dollars, hence the saying that ‘Wealth is on Water.’ For instance, according to Customs Area Controller of Tin- can Island Command of the Nigeria Customs Service, Musa Mohammed, agricul- tural products and processed and manufactured goods led the park as more than 75, 000 metric tons of export goods with Free on Board (FOB) Value of over N56 billion were shipped out through the Tin-can Island Port between January and July, 2018. However, due to a number of challenges12 Nigeria is unable to harness her full potentials in the sector. To this end, it is important to note that Nigeria needs an effective maritime transportation to rake in the revenue required for economic and infrastructural development.

This industry plays an important role in the economy of nations of the world. It is worthy of note that shipping stands out as the most important boost to a nation’s economic growth and development. It is a backbone of Nigeria’s economy. The maritime sector of Nigeria’s economy holds great potentials for the growth of the country’s economic development. Maritime transportation has been in existence since the beginning of time and it has been a source of wealth for nations and merchants for many centuries through the carriage of persons and goods by seas. Nigeria being a littoral State possesses great potentials to generate huge revenues from both local and international transportation of persons and goods on water.

1.3 Objectives of the Study

The main objective of this study is to examine the development of maritime industry in Nigeria and its role in private sector.

Other objectives of this study are:

To determine whether the maritime industry is important for the economic development in Nigeria.
To determine whether the maritime industry has a role to play in the private sector.
To determine whether the presence of the maritime industry boosts the private sector.
To examine the challenges of the maritime industry in Nigeria.

1.4 Research Questions

The following research questions will be answered in this study:

Is the maritime industry important for the economic development in Nigeria?
Does the maritime industry play a significant role in the private sector?
Does the presence of the maritime industry boosts the private sector?
What are the challenges of the maritime industry in Nigeria?

1.5 Research Hypotheses

The following null hypotheses will validate this study:

H0: The maritime industry does not play any significant role in the private sector.

Ha: The maritime industry plays a significant role in the private sector.

1.6 Significance of the Study

The findings of this dissertation will likely set in motion further research studies into the Nigerian maritime industry and its impact on the nation’s economy and /or as an interventionist in the boosting of the Nigerian private sector. In fact, it is expected that with the passage of the cabotage Act by the National Assembly, a new world of opportunities for business ventures in the Nigerian private sector have emerged. As the backbone of entrepreneurial set up, new opportunities are always being sought, discovered, grasped and acted upon to the benefit of the consumer and the entrepreneur. To this end, the maritime experts, regulators and entrepreneurs alike, have to rob minds together to provide insights into how to utilize the opportunities in the maritime industry. The potential entrants into the maritime business should see these as good business opportunities to be utilized in order to create job opportunities, training for seafarers, provision of / building of ships and other ocean going vessels to be used, which will have to bear on the nation’s economy and to improve the well-being of the Nigerian entrepreneur. It is also believed that the study will stimulate and provide the needed impetus into the economic growth of the nation’s maritime industry, hence the standard of living in general.

1.7 Scope of the Study

This study focuses on the development of maritime industry in Nigeria and its role in private sector. Specifically, this study focuses on determining whether the maritime industry is important for the economic development in Nigeria, determining whether the maritime industry has a role to play in the private sector, determining whether the presence of the maritime industry boosts the private sector and examining the challenges of the maritime industry in Nigeria. The respondents for this study will obtained from the staff of Nigerian Maritime Administration and Safety Agency, Lagos State

1.8 Limitations of the Study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents. However, the researcher were able to manage these just to ensure the success of this study.

Moreover, the case study method utilized in the study posed some challenges to the investigator including the possibility of biases and poor judgment of issues. However, the investigator relied on respect for the general principles of procedures, justice, fairness, objectivity in observation and recording, and weighing of evidence to overcome the challenges.

1.9 Definition of Terms

Maritime:

Connected with the sea, especially in relation to seaborne trade or naval matters.

1.10 Organization of the Studies

The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, and selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.

Chapter Five

Summary, Conclusions and Recommendations:

5.1 Introduction

This chapter summarizes the findings on the development of maritime industry in Nigeria and its role in private sector. The chapter consists of summary of the study, conclusions, and recommendations.

5.2 Summary of the Study

In this study, our focus was to examine the development of maritime industry in Nigeria and its role in private sector. The study specifically was aimed to determine whether the maritime industry is important for the economic development in Nigeria, determine whether the maritime industry has a role to play in the private sector, determine whether the presence of the maritime industry boosts the private sector, examine the challenges of the maritime industry in Nigeria.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 141 responses were validated from the enrolled participants where all respondents arestaffs of Nigerian Maritime Administration and Safety Agency, Lagos State.

5.3 Conclusions

Based on the findings of this study, the researcher made the following conclusion.

The maritime industry is important for the economic development in Nigeria.
The maritime industry plays a significant role in the private sector.
The presence of the maritime industry boosts the private sector.
The challenges of the maritime industry in Nigeria includes; poor incentives for investors, poor integrated transport system, paucity of Port infrastructure, inadequate super-structures, insecurity in the water–ways.

5.4 Recommendations

Based on the findings of the study, the following recommendations are proffered.

There is need to strengthen the security in the coastal ways, this is will ensure the smooth running of the marine sector.
There is dire need for structural re-engineering and reforms.
There is need to ameliorate the interference of government on the operations. This will help to mend the bureaucratic bottlenecks in decision making process and corruption the public service.
Government and the private sector under public private arrangement should raise adequate capital to build maritime infrastructure in the eight seaports in Nigeria.
The maritime institutions, i.e the Maritime Academy, Oron and Nigeria Maritime University (NMU), Okerenkoko should be funded to improve their infrastructural base for learning, research and training of professional manpower for the maritime sector.