Harnessing investment opportunities in maritime sector

Across the world, the maritime sector plays a very special role in the security and economic development of nations.
For several decades, the sector has earned the reputation of facilitating foreign direct investment coupled with prospect for numerous jobs in the informal and formal sector of societies.
However, in Nigeria, according to experts, the sector has consistently performed below expectations despite its huge potential for growth and economic development.
Though the sector is presently next to oil and gas in terms of revenue generation, observers are of the opinion that with the right policies in place and adequate commitment on the part of stakeholders, a lot can be achieved.
Consequently, stakeholders are calling for a conducive atmosphere capable of reversing the trend and in the process attract required investment on a sustainable basis.
Specifically, they are advocating for a review of existing rules and the need to develop the political will to attain set goals.
Speaking at the 2013 Nigeria Maritime Expo (NIMAREX), held in Lagos recently, stakeholders who converge at the event resolved to work together as a team in the interest of the sector and the larger economy.
Various speakers at the three-day event were unanimous in their call on all stakeholders to contribute their quota to the development of the sector.
The event, now in its third edition and tagged “Nigeria maritime: Invest now”, was also an opportunity for experts from different discipline to proffer solutions to identified problems.
In attendance were President Goodluck Jonathan who was represented by the Minister of Transport, Senator Idris Umar, Former President Olusegun Obasanjo, Former World Bank Vice President (African Region), Oby Ezekwesili, Director-General Nigerian Maritime Administration and Safety Agency (NIMASA), Mr. Patrick Akpobolokemi and Chief Executive Officer of Nigerian Stock Exhchange (NSE), Mr Oscar Onyema.
Also in attendance were former Chief of Naval Staff, Real Admiral Allison Madueke (rtd), Chairman, Indigenous Shipowners Association of Nigeria (ISAN), Chief Isaac Jolapomo, legal practitioner and Senior Advocate of Nigeria (SAN), Mr Mike Igbokwe among others.
Jonathan used the opportunity to explain in details various reforms agenda being put together by the present administration.
According to the president, the number of agencies at the ports have been streamlined from 14 to seven coupled with the introduction of 24 hours Ports operations.
Jonathan said: “We have equally awarded the contract for the rehabilitation of 1.6km access road in the Apapa Port Complex which has reached over 70 per cent completion. In addition, the Nigerian Port Authority (NPA) has recently carried out some rehabilitation work in the Creek and Wharf roads to ease traffic to and from the Ports.”
Making reference to the theme of the 2013 Expo “Nigerian Maritime: Invest Now”, Jonathan said it is apt and in conformity with the Federal Government’s transformation agenda.
“As part of Government’s commitment to transforming the economy, numerous reforms were introduced. In the maritime sector, Government has undertaken comprehensive port reforms that have made NPA a landlord and regulator and delineated the ports into terminals and concessioned them to private investors.
“This has led to steady improvement in operational efficiency. Government has also committed substantial resources in dredging and maintenance of channels in Lagos and Bonny and a channel management company has been formed for managing the Calabar channel while procurement processes for the capital dredging of the channel is in progress. In the same vein, government is poised to provide additional infrastructure in Apapa, Tin-can, Warri and Onne Ports,” said Jonathan
He said the annual event initiated in 2011 has provided an ideal forum for displaying an assemblage of various maritime products, new technologies, services and expertise and also provide a platform to open up various business opportunities in Nigeria’s growing maritime sector.
Nigeria according to the president, generates about 70 percent of the ship traffic, cargo throughput and volume of trade in the West and Central Africa Sub-regions, adding that Nigeria’s volume of trade has steadily risen from 82 million tons of cargo in 2008 to 93.7 million tons in 2009 and 100 million tons in 2012.
Obasanjo who decried the liquidation of Nigeria’s National Shipping Line (NNSL), also used the opportunity to advised the Federal Government to address the high charges and congestion at seaports in Lagos as part of strategists to curtail diversion of cargoes to neighboring countries.
He said despite concessioning, port users were still facing some challenges, adding a viable maritime sector play an important role in the development of the economy.
Obasanjo said indigenous ship owners should be commended for their steadfastness and commitment despite various challenges.
He recalled how the 19 ships that were in the fleet of NNSL when he left office in 1979 were sold, “20 years after in 1999, there was no ship left. Where are the 19 ships? If we are going to get it right, we must refer to history. History points to where we are going. One was sold as scrap for half a million dollar. Government later bought same ship for $2million. It was repaired for a million dollar,” said Obasanjo.
In her presentation titled “Financing Options for Shipping Development”, Ezekwesilli went down memory lane to trace the origin of shipping business in Nigeria and concluded that stakeholders in the sector must make their services competitive.
She also advised ship owners to map out strategist on how to earn the confidence of Nigerians especially in the area of shipping business.
To ensure sustained growth and development in the maritime sector, Ezekwesili, called for a transparent regulatory environment in the sector.
Transparent regulation, according to her is key to overcoming the various challenges presently confronting stakeholders and the larger economy. Though the sector is strategically positioned, she noted, “there is no clear communication between stakeholders and members of the public.”
She said: “It started with National Maritime Authority (NMA). Today, they call it Nigerian Maritime Administration and Safety Agency (NIMASA). I am going to crack a joke here. When National Electric Power Authority (NEPA) was being reformed, it ended up being called Power Holding Company of Nigeria (PHCN), which is essentially a special purpose vehicle because it was an unbundled organisation. Guess what some smart Nigerians called it, ‘Problem Has Changed Name.’
“In this particular case in your (maritime) sector, it was NMA, now NIMASA. The complaints that we have today are more than when it was NMA.”
Making reference to the establishment of ports, she said many people want to administratively create ports, but that is not enough criterion to get support of the private sector.
She added: “For the private sector, except the numbers add up, except there is an economic viability, nothing moves the sector. No persuasion, no administrative fiat, the market must function for the private sector to make certain decisions.”
Meanwhile, Madueke, who also spoke at the event, said that every stakeholder knows how intensive it is to finance the maritime sector. He likened a ship to a village where there is energy, water and security, adding: “It is not easy to find everything in a ship.”
Highlighting the diverse uses the maritime sector has become amenable to, Ezekwesili said: “Historically, the shipping and fishing industry have experienced a continuous trend of increase in their fleet, total trade volume and fishing capacity. Thus, shipping has long been the major form of transport, as well as an essential communication link connecting coastal cities, countries and continents.
“Next to rail transportation, water transportation is economically and environmentally the most efficient way to travel or transport merchandise. Around 50,000 merchant ships, registered in over 150 nations and manned by over a million seafarers of nearly every nationality, transport every kind of cargo internationally.
“Several thousand oil rigs and support and supply offshore vessels are engaged in the exploration and drilling for oil and gas in almost every corner of the globe. Nearly four million commercial fishing vessels ply the seas and oceans at any given moment.
“And a myriad of recreational ships (with approximately 40,000 privately-owned ships operating out of the United States in December 2006), including several hundreds large and mega cruise ships, offer the most diversified leisure and tourism services to an expanding market.”
Onyema who also spoke on the huge prospect in the sector, advised operators to take advantage of the capital market to finance their operations.
He described the capital market and the issuance of bond as the most convenient means of funding long term projects such as ship acquisition.
In his paper titled “Doing business in the Nigerian maritime industry: Constrains and prospects”, a Senior Advocate of Nigeria (SAN), Mr Mike Igbokwe identified ignorance as the bane of a lot of investors in the Nigerian maritime, pointing out those who invest in the sector “must rely on and use the advice, opinions and services/performance of professionals and experts.
While welcoming participants to the three day event, Chairman Nigeria Maritime Expo (NIMAREX) 2013 planning committee, Margaret Onyema Orakwusi said offers a holistic business experience by combining conference and exhibitions that will update the audience on the state of the maritime industry in Nigeria and connect key companies in the maritime sector to international maritime operators.
“Strategically, the Expo is aimed at attracting serious investors who will explore available opportunities and open up business for the industry, said Orakwusi.
She said to attract investment, there must be a favorable and secured environment “as this is sine qua nom for the promotion of investment in any Country”.
Speaking further, she said: “ Another worrisome area that needs to be addressed if we are to succeed in attracting more investments is the high cost of doing business at our ports. It is on record that with a population of about 160million people, more than 70 per cent of cargo throughput in West and Central African Sub region comes through the Nigerian ports, and Nigeria constitutes the largest market in the sub region.
“However, most of these cargoes are lost to neighboring competing ports due to high cost of doing business in our ports”, Orakwusi added.
Source: Guardian