Towards the development of the indigenous shipping industry, Nigeria in 2003 enacted the Inland and Coastal Shipping Act, popularly known as the Cabotage Act 2003. Nearly a decade later, the country has yet to witness a reasonable implementation of the law. In this interview with SAMSON ECHENIM, a member of the National Assembly that passed the bill and now the Executive Director, Maritime Labour and Cabotage Services, at the Nigeria Maritime Administration and Safety Agency (NIMASA), Hon. Ibrahim Zailani, speaks on the challenges the agency is having in enforcing the Act and why it has to be amended.
The Inland and Coastal Shipping Act, popularly known as the Cabotage Act 2003, enacted to empower the local shipping industry and give them a competitive edge over their well-established foreign competitors has really worked since its enactment; what exactly is the challenge here?
It’s true that we are having challenges in implementing the Cabotage Act, otherwise known as the Inland and Coastal Shipping Act 2003. The challenges are multi-faceted. The cheering news about the Cabotage Act is that I was a members of the National Assembly in 2003 that passed the Cabotage Act, and what we did was that, from the genesis of the provisions, we looked at the Cabotage Act theoretically.
But now that I am in charge of implementing Cabotage, I have seen the practical difficulties of implementing the Act. The Cabotage Act, I will say, was virtually built on almost nothing; and,? to me, you cannot build on nothing.
You have to build on something. Coming to the perspective of the Cabotage Act, you will note that the Act is built on four legs – all the vessels that will be engaged in constant trade must be owned, built, manned and registered in Nigeria.
One of the practical problems we are having is: how do you make the requirement of coastal trading by saying that all Cabotage vessels must be built in Nigeria? One, is Nigeria a ship building nation? No. So, you see, this is one of the biggest challenges.
That is, the legal instrument setting up Cabotage was ab initio wrong. It shouldn’t have included the requirement of building ships in Nigeria.
Two, when it comes to manning, and you are saying that all Cabotage vessels that will be engaged in our coasts must be manned by Nigerians; do we have the required manpower? Do we have the sufficient manpower to man all our vessels? We don’t. So, there’s a challenge in that area.
How do you do it? We must have internationally recognised training institutions in Nigeria where we will be producing seafarers that will man our Cabotage vessels. And I am telling you, Nigeria has found itself in a very bad situation, whereby after the dissolution of the Nigeria National Shipping Line (NNSL), the training of seafarers has stopped. For the past 15 to 16 years, no seafarer is being trained in Nigeria.
So, how do you meet this gap?? The minimum age of most of the master mariners we have in the country today is about 60 and above. How do you engage a 60-year- old man in manning ships now? So, there are problems; there are gaps in relation to the manning requirements.
There are gaps in relation to building requirement and so on. So, we must go back to the drawing board. But the cheering news again is that the National Assembly, with particular reference to the House Committee on Marine Transport, has started the process of amending the Cabotage Act. I think we are going in the right direction.
When you feel the pulse of local shipowners, you find out that their biggest complaint is that they are not getting jobs. Can’t the few shipping companies in Nigeria which have good ships, even if they are not manufactured in Nigeria, get jobs?
The challenge as, I said, in implementing the Cabotage Act is not restricted to only the regulator, which is NIMASA. The challenge crosses over to even the operators. Yes! If you want to corner a coastal trade, do you have the required vessels? Do they have the number of vessels required to engage in constant trade? This is a very big challenge.
We have about 400 vessels that are owned by indigenous operators, but I can tell you that over 70 per cent of these vessels are not engaged because they need to be put up to standard, one way or another. So, if you do not have the required vessels, how do you do the job? If you are carrying my crude oil, for example, I must inspect your vessel; it must meet the international standard. It must have the required insurance and so on.
Do you have this type of vessel? That is the challenge. And how do we address it? We have set up a technical committee between NIMASA and Indigenous Shipowners Association of Nigeria (ISAN) and one of our decisions is, how do we assist ISAN to repair their vessels? We have decided, in the first instance, that we will repair 20 of these vessels, deploy them for trade; and we are also making provisions for them to buy 20 brand new vessels.
So, gradually, NIMASA is trying to build up the capacity of indigenous operators so that they can be engaged in constant trade. In addition to that, we have the Cabotage Vessels Financing Fund (CVFF) and we have gone a very long way in the process of disbursing this fund.
So, very soon, they will also benefit from the CVFF in such a way that they will buy additional vessels that will also help them to be in constant trading. So, by and large, we have challenges with the operators in the area of owning vessels that can be deployed for constant trading.
The minister of transport recently disclosed that $150 million of the CVFF fund was earmarked to be disbursed to eight local shipping operators. What are the criteria for selecting the eight beneficiaries and how much of this fund has been disbursed so far?
Well, I will like to say that the CVFF fund has not been disbursed, but we are in the process of disbursing it. As rightly pointed by him, we have about $150 million to disburse to indigenous operators. In disbursing the CVFF, we have a guideline for the administration of the fund, and the guideline was proposed by the minister in accordance with the Cabotage Act, and as approved by the National Assembly.
So, whatever we do in disbursing this fund must be in accordance with the guideline. The guideline is sacrosanct; nobody can breach the guideline. And what the guideline says is that all Nigerians and Nigerian shipping companies are entitled to apply for it. So, we try to restrict ourselves to the guideline.
In essence, every Nigerian shipping company is entitled to apply. The guidelines also provide that we appoint some banks which would administer the fund on behalf of NIMASA. And the guideline says the disbursement of the fund is at zero risk to NIMASA. So, how do we achieve it?
We decided that the role of appraising any of these applications should lie strictly with the primary lending institutions (PLIs) because, previously, NIMASA took a role under the Ship Building and Acquisition Fund that it did not have because NIMASA was engaged in appraising funding. NIMASA is not a lending institution.
For you to be able to appraise a project, you must be a lending institution. So, the guideline introduced the PLIs whereby the entire process of appraising the project for the application is on the PLIs and NIMASA and, ultimately, the minister of transport will base their decisions on the recommendations of the PLIs. So that is how it works.
NIMASA has no role whatsoever in appraising any application. We are just a transitive agency. We receive it and pass it to the four PLIs and I’m sure you know that we have appointed Diamond, Fidelity, Skye and Sterling banks as our four PLIs.
So they are charged with the responsibility of appraising the applications and making recommendations to NIMSA; then NIMASA will also make its recommendation to the minister of transport, who will give final approval for the disbursement and going by this guideline, no company will benefit beyond $25 million. So, any company that applies for beyond $25 million is far out of our power to honour.
ISAN keeps saying that Nigeria loses N2 trillion in capital flight because we engage foreign ships to lift our oil and other cargoes which the local vessels should have done, and that about five million jobs are also lost to this process; do you agree with ISAN on these figures?
Well, I have always said that those statistics are verifiable. However, I do know that Nigeria is losing money through capital flight in the maritime sector, because the freight or carriage services that is supposed to be done by Nigerians are done by foreigners.
Those figures are verifiable, but I know that Nigeria is losing some money through capital flight, and I am telling you that NIMASA and the Federal Ministry of Transport are concerned. And we must do whatever we have to do to make sure that Nigerians benefit from this trade. We must stop this capital flight so that our people will benefit from their own God-given resources.
Stakeholders posit that NIMASA has not been involved in robust collaboration as a lead agency in the implementation of Cabotage with other relevant agencies such as the NNPC to ensure that this Cabotage Act is useful. Do you agree with them; and what are you doing now to activate this highly needed collaboration?
No, I don’t agree with that. I disagree because we have very robust collaboration and created synergy, for example, between NIMASA and NPA, PTDF, NNPC, the Nigeria Customs, Immigration, the CBN, and so many other relevant agencies. This is because we understand that we cannot do this work alone. Every agency has its roles.
For example, the Immigration Service is responsible for all foreigners that come into the country, and we have foreigners who are manning vessels that enter this country. So, we need to interface with Immigration and you very well the responsibilities of the Customs. We do have a very robust interface and synergy between NIMSA and other agencies of government.?
Again, we work on daily basis with the Nigeria Local Content Development Board, synergising on how we can ensure the success of the Local Content Act (NLCDB) and that of the Cabotage Act. We have almost shared responsibilities.
The NLCDB is there to ensure that at least about 50 per cent of jobs in the oil industry are given to Nigerians and Nigerian companies; that is what we are also doing. So, we do have a very robust relationship and we interface very well.
A recent report in a national newspaper said that certain multinational companies and foreign oil and shipping companies were lobbying NIMASA and the National Assembly to stop the review and amendment of the Cabotage Act, which has passed its second reading. Are you aware of this?
Well, I have to say categorically that I do not know of anybody or firm lobbying NIMASA in order to stall the amendment and of the Coastal and Inland Shipping Cabotage Act 2003. Absolutely, I am not aware. Let’s take a look at it. We are in charge of the implementation of this Act and we are concerned and challenged on daily basis that this thing is not working.
We are striving to see that the thing works and now they say somebody is lobbying us so that this thing will not work. How can we agree to such a lobby? I have said that one of fundamental challenges of the Cabotage Act is the law establishing it. And you have somebody who is kick- starting amendment of the Act and you are saying the person who is charged with the responsibility of implementing the Act is being lobbied to stop its amendment.
Please, I want to appeal to Nigerians not to absorb negative insinuations. We are for total implementation of the Cabotage Act. Anybody who attempts to lobby NIMASA is coming to the wrong place and we will deal with such a person or company harshly. If the National Assembly decides to amend the Act, why will anyone come to lobby NIMASA?
NIMASA, no doubt, has a role to play in this amendment. Knowing that the four pillars on which the Act was built is faulty, what specific recommendations has NIMASA made to the NA to guide its amendment of the bill to suit the local industry needs?
Yes, NIMASA was consulted and we gave advice for a more effective implementation of the Act. Certainly, one of the areas is that the requirement of building Cabotage ships in the country should be reconsidered. Building ships is not like building bicycles; it is highly capital and technology-intensive. You need a lot of infrastructure, even in building boats.
But NIMASA has set the ball rolling. We now have provisions in our 2012 budget where we set up a ship building yard. We are working towards that.
Still on building local shipping capacity, NIMASA plans a N2 billion maritime department at the University of Lagos. But the only institution for maritime studies, the Maritime Academy of Nigeria (MAN), Oron, which NIMASA is a major sponsor, lacks a simulator, a fundamental training instrument. Don’t you think NIMASA is making a mistake here?
No. No mistakes. The statutory responsibility of training seafarers is squarely rested on NIMASA. What we are doing is that we are going to the universities so that we ensure that they can produce qualified manpower for the maritime sector.
What is wrong with that? Statutorily, we are required by the law to pay five per cent of our income as infrastructural development fund to MAN, Oron, and we are doing that. So, how can anyone say we are not helping the academy? We are playing our role there.
I do say that you cannot train a nautical engineer or a mariner without a simulator or a training ship.? It’s either you have a simulator or you have a boat. But in academies all over the world, you have boats as well as a training ship, because a simulator is an assumed ship whereby one can understand how a ship works. But where you have a training ship, you see it practically.
So, for an institution to successfully train a nautical scientist, as well as marine engineer, you need all. Well, MAN is coming up gradually because now they are installing a simulator, and that is after 30 years of its establishment. Gradually, we are working towards better training environment for the cadets there.
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