Cabotage: Still in the Woods

Temi Omatseye

Stakeholders in the maritime industry raise doubts over renewed efforts by government to enforce the cabotage regime
By Bayo Bernard
When on July 8, 2009, Dr. Adegboyega Dosumu, former Director-General of the Nigerian Maritime Administration and Safety Agency (NIMASA), was relieved of his exalted position, one of the reasons cited for his ouster was the claim that the Agency under his watch lacked the requisite managerial ability to implement the cabotage Act. In fact, the committee set up at the time to evaluate the impact of the Coastal and Inland Shipping Act (Cabotage), under his over two year regime had recommended that the erstwhile NIMASA boss failed woefully to translate the letters and intent of the Act to the benefit of the investing Nigerian public in the booming shipping business.
The Committee had stated that why Dosumu needed to be given the boot was because NIMASA under the former DG “lacked the capacity to enforce the Act.” It further stated as part of its recommendation: “There is a dearth of human and material resources to implement Cabotage. The institutions charged with implementing the Act are, therefore, weak and incapable of effectively delivering on the objectives of the Act and expectations of the promoters.”
With this in mind, the incumbent management led by Temi Omatseye had, as soon as it came to office, declared that it would succeed where its predecessor failed. In fact, the new helmsman plainly told stakeholders that Cabotage, as was being implemented, has failed. For Omatseye, therefore, his predecessors had failed in this regard.
His words: “There is very little doubt that Cabotage so far has failed. I think the issue, quite clearly, is the inability to properly administer the law. With all due respects, I do not think NIMASA has lived up to its responsibilities as the manager of Cabotage.”
Therefore, to repose confidence among stakeholders, the Omatseye-led administration then said that the full implementation of the Cabotage regime will be the centre force of his administration. According to him, “growing indigenous capacity through the full implementation of Cabotage, facilitating tonnage volume, and positioning the maritime industry as a major contributor to federal revenue and national development are the focus of this administration. These programmes will be performance – driven so as to create value and the right impact.”
But despite deliberate efforts to drive Cabotage to the extent that it will translate investment hub for Nigerians, the sector is still in the hands of foreigners, or better still, their fronts.
To this extent, the country's Minister of Transport, Ibrahim Bio recently set up a committee and gave it the task of finding out why the over seven-year-old Act has failed to achieve its aims.
The committee is headed by the Executive Secretary/Chief Executive Officer, Nigerian Shippers Council (NSC), Captain Adamu Biu, and has the following as its terms of reference: To investigate the show pace of the implementation of cabotage regime; to investigate allegations that Federal Ministry of Transport had delayed the granting of waivers by NIMASA to verify whether or not the ministry; and to investigate the processing of waivers and identify causes of delay, if any in the process. The committee, according to the Minister must also; investigate the issuance of Temporary permit to vessel owners and identify hoopholes in the process; investigate any other matters that may crop up during the management which has not been included in these TOR C terms of the reference; and make recommendations on this TOR as it may deem fit to enhance accelerated implementation of the cabotage Act.
But stakeholders insist that the failure of Cabotage, as it were, goes beyond the absence of available legal framework to drive the regime. In fact, maritime experts contend that the 2003 Act, as conceptualised, is enough to encourage Nigerian participation in the boisterous shipping business. Stakeholders, at a forum organised by the Nigerian Maritime Administration and Safety Agency recently, said operators must look into areas that were before now considered important to the workability of the Cabotage law. Operators have for long overlooked these important factors to the detriment of prospective Nigerian investors and the industry as a whole, experts insist.
Ernest Nwapa, an engineer and General Manager, National Content Department (NCD) of the Nigerian National Petroleum Corporation (NNPC), said operators like NIMASA, the major government agency empowered to implement Cabotage, seem not to consider the importance of requisite government bodies to the implementation of the Act.
Nwapa stated that the Cabotage Act will remain hamstrung, except NIMASA comes to the understanding that these agencies must be mainstream into the policy. NIMASA, he said, must encourage partnership with agencies such as NNPC, International Oil Companies (IOC) and security agencies, for visible loopholes to be blocked. “There must be linkages with other sectors. Any partnership to make Cabotage work must be encouraged,” he said.
Commenting on one of the provisions of the Act that requires that vessels operating in Nigerian waters must be built in the country, Nwapa said that it is almost impossible because, as things stand, there is dearth of capacity building in the sector. "How can ships be built when Nigeria does not have a working steel rolling mill?," he queried.
Failure by NIMASA to use funds allocated to it for that purpose was also identified as a major bottleneck affecting the success of Cabotage. Stakeholders expressed disgust over what they described as diversion of funds for political purposes. For example, a participant queried the usage of the Cabotage Vessel Finance Fund (CVFF). The fund was created to serve as an avenue for indigenous players to borrow capital to acquire vessels.
Emeka Akabogu, a popular maritime lawyer, on his own contended that it would be difficult to really determine whether those empowered statutorily to implement the policy are doing their jobs. According to him, NIMASA, as it were, cannot lay claim to the fact that it has a database for Cabotage.
A Data Clearing House (DCH), he contended, must be established by NIMASA to measure progress being recorded in this area. He said the absence of a Cabotage Development Index (CDI) has further diminished NIMASA’s ability to measure the level of compliance.
Though the CVFF is almost a sine qua non for building indigenous capacity for the shipping sector, stakeholders insist that the fund must be disbursed appropriately. Regulators, they insist, must avoid a situation where the Fund would be made a 'destination fund.'
On his own, Professor Pat Utomi, an economist and Director of the Lagos Business School, said that a long-term vision must be conceptualised for the nation’s shipping sector. He revealed that major shipping nations such as South Korea have achieved a leap in their indigenisation policy because of deliberate institutional plans and commitment. NIMASA’s drive for revenue, at the expense of performing its statutory function, he said, must also be discouraged.
But for the Indigenous Shippers Association of Nigeria (ISAN), the umbrella body for Nigerian ship owners, synergy between NIMASA and the body remains key to the success of Cabotage. On several occasions, NIMASA and ISAN had bickered over allegations that the regulatory body had failed to take action against violators of the Act.
Indeed, there appears to be hope among stakeholders in the sector that the industry will soon experience a positive turn-around in the new fiscal year, especially considering renewed efforts by NIMASA.
But they insist that NIMASA’s seriousness to the issue will somehow be determined by the manner it manages and disburses the $40 million CVFF currently at the Agency’s disposal. The commencement date for the disposal of the fund was set for December 31, last year.