Curbing European Dominance of Intra-Africa Shipping

Nigeria and other African nations might have become independent and sovereign nations for decades, but to say these countries have become reasonably liberated economically is to stir a raging controversy, analysts believe.
Economically, Nigeria and its neighbours in the West and Central African regions depend on western and developed nations for a number of necessities.
Fish from the Scandinavian nations, rice and wheat from the United States and Asia, palm oil from Malaysia and gasoline from all over the world; this is how African nations are remotely controlled from abroad.
Nigeria, for example, produces cocoa and is one of the most prolific countries on earth in the production of this commodity. But the nation’s cocoa sector operators are faced with an international trade gimmick called the African Caribbean and Pacific Economic Partnership Agreement (ACPEPA), which subtly forces Africans to export only primary agricultural produce like cocoa to the European Union, without processing, value addition and all the economic activities these can generate.
Away from simple international trade in commodities, another major area where the independence of Nigeria and other African nations is heavily compromised is shipping of goods both out of Africa and within the region. How can one explain that it is far more expensive to move goods from Nigeria to Ghana than from Beijing, China to Nigeria or from Europe to Nigeria?
Analysts state that because it is difficult to find ships that move goods within Africa, so Europeans usually come to the rescue, charging sums up to 8 times higher than what it should actually cost to move these goods within the continent. When this happens in a trade situation, the entire profit that should accrue to the trading parties is entirely gleaned by the shipping companies, usually owned and operated by western nations.
Attempt at Emancipation
Thankfully, the Nigeria Export Import Bank (NEXIM) and Federation of West African Chambers of Commerce and Industry (FEWACCI) have introduced a private sector-led investment in the trans-shipment of goods within West and Central Africa aimed at ending this needless European control of trade and shipping within the region.
The initiative, called the Regional Sealink Project, is championed by FEWACCI; Nigerian Association of Chambers of Commerce and Industry Mines and Agriculture (NACCIMA), which is a member of FEWACCI; NEXIM and Transimex Integrated Logistics Providers, and it is estimated that it will cost only about $61.5 million.
Noting the desperate need to save Nigeria and other countries in the region from strangleholds of the European dominance of the business, the Managing Director of NEXIM, Mr. Robert Orya, lamented that it is currently more expensive to move goods from Lagos to Accra or Douala than to move the same goods from China to Nigeria.
“It is less expensive to carry a container from China to Lagos. It costs about $2,500 to move products from Lagos to Douala while it costs about $3,500 to move the same products from China to Lagos. If you want to take goods to Tema ports from Nigeria by road it takes 6 days with a lot of hassles but if you want to move it by sea, it takes 60 days because you will use European vessels to take the goods to Europe first and then bring it back to Ghana.
“So, a quick win solution for us is to set up a maritime shipping company since most ECOWAS and central African countries are coastal countries. That way, we will liberate our countries and our businessmen and help them to keep the margins of their businesses instead of paying it to European shipping companies,” he said.
Analysing the structure of the regional sealink project, he said the $1.5 million of the $61.5 million investment will go into the setting up of the Special Purpose Vehicle (SPV) for the project; setting up of other preliminary structure of the project, embarking on feasibility studies in the various countries, organising board meetings and interfacing with the various concerned governments.
Orya added that the $60 million will be for actual investment of the project with $36 million, which will be sourced as equity going into the procurement of vessels, equipment, office space and other infrastructure, while $24 million, which will be sourced as debt, will go into the project as working capital to cover general and administrative expenses.
Highlighting the importance of the project, the NEXIM boss said intra-ECOWAS trade has grown from 4.7 million tonnes in 1998 to 13.2 million tonnes in 2008 without any corresponding increase in road or rail transport logistic infrastructures.
He noted that there is a low level of African container traffic at less than 1 per cent of the total world container traffic of over 400 million containers. He also identified the increase in West African loaded and unloaded dry cargo in million tonnages from 41.4 and 66.2 in 2009 to 53.8 and 73.2 in 2010 respectively as well as Central Africa rise from 8.5 to 9.2 and 10.9 to 11.4 respectively.
He outlined the benefits of the project to include unlocking the opportunities in the maritime sector through effective indigenous participation, thereby stimulating maritime-related employment as well as minimise the incidence of freight rate payment capital flight of an average of $5 billion annually from import and export tonnages.
He also said the project would facilitate the realisation of the various maritime-related laws like the Cabotage and MIMASA Acts and the implementation; provide immediate impact to the amelioration of basic road or rail infrastructural deficit challenges that affects regional integration and a major cause for the muted growth of the intra African and ECOWAS trade levels of about 10 per cent and 12 per cent respectively.
“It would enable NEXIM achieve its projected credit growth towards improving intra-regional trade from current intra-regional trade levels to a minimum of 15 per cent annually,” he said.
Also speaking at the event, the National President, NACCIMA, Dr. Herbert Ajayi, said the West African market is huge and had not been fully tapped as a result of challenges being faced when goods and persons are being transported due to the time of freight, and the attendant high cost due to absence of any direct shipping line plying the West and Central African corridor.
He commended the full support of the Federal Government to the project and the endorsement of NEXIM Bank as the facilitating and the coordinating agency, maintaining that the success of the project would bring about an increase in intra regional trade flow from the current flow.
“It would also enhance capacity building in international trade and structured trade financing and create job and investment opportunities; thereby meeting the Federal Government economic objectives and transformation agenda,” he added.
Success Guaranteed
All said the success of this project will not only bring prosperity to actors within the continents international trade milieu but also to African individuals and corporate bodies who identify the edge of this initiative and commit investments towards making it succeed.
Analysts say the success of the venture is guaranteed and in a couple of years, its success will be similar to that which Eco Bank Transnational