THE IMPACT OF MARITIME INDUSTRY ON THE DEVELOPMENT OF NIGERIA ECONOMY

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THE IMPACT OF MARITIME INDUSTRY ON THE DEVELOPMENT OF NIGERIA ECONOMY

CHAPTER ONE

INTRODUCTION

Introduction

Since 1959, shortly before independence, Nigeria established the Nigerian National Shipping Lines (NNSL) and at the inception, purchased two second – hand COMBO vessels for its operations. By 1967, the vessels in the fleet of NNSL increased, and additional fifteen (15) shipping companies had been established by indigenous entrepreneurs with the assistance of government. This was possible due to certain development in global maritime industry. Apparently displeased by the dominance of developed countries in the maritime industry of developing countries, created a forum in order to break the monopoly. The creation of United Nations Conference on Trade and Development (UNCTAD) in 1965 provided ample opportunity for the fight against total domination and an international forum for discussion and policy formulation by all shipping companies, ship owners, shippers, shipping administrations and port authorities. At the UNCTAD meeting in New Delhi, India in 1968, it was decided that all affected countries should establish institutions which could defend and promote effectively their economic interest in shipping, thus Ivory Coast established the National shippers council in 1969, and was followed by the Ministerial conference of West and Central African states of Maritime (MINCOMAR) in 1975. With the introduction of UNCTAD’s Code of conduct for conference liners which stipulated the 40:40:20 share of cargos Nigeria also established the Nigeria shippers council by Decree No. 13 of 1978 and charged the body with the responsibility of organizing the Nigerian Shippers and shipping activities in Nigeria. To effect fully the agreement of the UNCTAD’s code, the government through Decree No 10 of 1987 established the National Maritime Authority which was to implement the country’s shipping policy in line with United Nations Conference on Trade and Development’s (UNCTAD) conventions. The implication of the foregoing is the rapid growth of the country’s shipping business. By 1987 the fleet in the Nigerian National Shipping Line (NNSL) business rose to twenty seven (27) vessels. Unfortunately, and for the many reasons there was a gradual decline in the vessel acquisition. As at 1997, there were total of one hundred and twenty two (122) registered shipping companies in Nigeria, during which period the NNSL got liquidated and a new company UNITY LINE was established.

Most shipping companies in Nigeria today cannot boast of their own vessels and they have to depend on vessel charter to move their allocated cargoes. This has several implications as the dominance intended to be corrected remained strong. For instance, of the six thousand and eight one (6,081) ships that called to Nigerian Ports between 1977/78 and 1979/80 only ten percent (10%) was indigenous and this carried only eleven percent (11%) of the total nine percent (9%) of the total freight revenues. Of the N 1.66 billion paid by Nigeria per year from 1971 to 1991, National Carriers earned only two hundred and forty Million Naira (N240m) representing a mere 14.4% of the total earnings from maritime services (Badejo,2007). Ironically, Nigeria was responsible for sixty eight percent (68%) of the total trade of West and central African sub region. This trend, however, is not unique to Nigeria in spite of UNCTAD’s aim to encourage greater participation in shipping. Up to 1983, the developed countries controlled eighty percent (80%) of the world shipping. The socialist countries which controlled 7.4% of world export and 40% of the world trade had only thirteen percent. (13%). Even today, the developed market economy countries and the major open registry continued to be the dominant group in the world merchant fleet. As noted by the Review of Maritime Transport in 1991, these countries, which combined tonnage of 467.2 million, accounted for 68.3% of the world fleet. Countries of central and eastern Europe and socialize Asia owned 6% and 3.2% respectively of the world’s merchant. The developing countries increased their fleet to 144.3 million dead weight tonnage (dwt); but their share in the total world fleet decreased to 21.1%. Almost 72.5% of this fleet was concentrated in only ten developing countries and Nigeria is not one of them. Thus disparity between developing country cargo generation and fleet ownership remains apparent. According to Maritime Educator (1997) ship owners in thirty five countries controlled more than 93.9% of the world merchant fleet in 1991. Ship-owners of the leading countries of Greece, Japan, United States and Norway controlled 46.41% and the ten most important countries controlled 69.14%. African countries are responsible for only 5.2%, fleet of National carries in West and Central African Sub regions were few, ill-equipped and inadequate even to cope with their share of 40%. In Nigeria, of the 2,739 ships with net registered tonnage of 47.4 million that entered the country in 1985 less than 10% were national carries. By 1990, this did not improve as only 3% of the registered tonnage of 13.3 million was freights by national carriers. The vessels in the fleet of the national carriers gradually reduced and Nigeria has not been able to carry its own share of 40% approved by UNCTAD.

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. 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.

1.2 Statement of the problem

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. The rebirth of National Maritime Authority (NMA) to Nigerian Maritime administration and Safety Agency (NIMASA) should create room for efficiency in the maritime sector while the carbotage regime is expected to increase to a reasonable extent, indigenous participation in maritime business.

1.3 Objectives of the study

1. To appraising the contributions of Nigeria maritime industry to the development of Nigeria economy

2 To ascertain if there exist any significant relationship between the number of ships registered by NIMASA and the revenue accrued to the government.

3. To understand the relationship between Nigeria maritime industry and Nigeria economic development

1.4 Research Questions

1. What are the contributions of Nigeria maritime industry to the development of Nigeria economy

2 Does there exist any significant relationship between the number of ships registered by NIMASA and the revenue accrued to the government.

3. What is the relationship between Nigeria maritime industry and Nigeria economic development

1.5 Research Hypothesis

H0: There is no relationship between Nigeria maritime industry and Nigeria economic development

H1: There is a relationship between Nigeria maritime industry and Nigeria economic development

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