A former General Secretary and member of the Board of Trustees of the Nigeria Shipowners Association (NISA), Mr Tunji Brown, has raised the alarm that unless the National Assembly replaces a waiver clause embedded in the $700m Cabotage Vessel Financing Fund (CVFF) with a right-of-first-refusal provision for Indigenous shipowners, the objectives behind the disbursement of the fund will remain elusive.
In a statement made available to the Nigerian Tribune at the weekend, the NISA chieftain stated that, “The disbursement of the Cabotage Vessel Financing Fund (CVFF) presents a pivotal opportunity to fortify the capacity of Indigenous shipowners, significantly elevate Nigeria’s Gross Domestic Product (GDP), and create millions of jobs for citizens across the country.
“However, the failure to implement this disbursement effectively over the past 22 years has severely limited Indigenous shipowners’ ability to develop their capabilities and claim the opportunities envisioned by the Coastal and Inland Shipping Act.”
Mr Tunji Brown highlighted how the inclusion of a waiver clause has been detrimental to the objective of empowering Indigenous businesses. Mr Brown argued that the justifications for maintaining this waiver clause no longer apply, making its removal imperative.
“To bolster Indigenous participation, NIMASA should approach the National Assembly to replace the waiver clause with a right-of-first-refusal provision.
“This change would provide Indigenous companies with a significant advantage during bidding processes and ensure that local businesses have a fair opportunity to compete for contracts,” Mr Brown stated.
He added that the waiver clause should be expunged because cabotage is fundamentally a home trade issue, not a foreign policy matter.
Another barrier that the NISA chieftain identified is the lack of collaboration among Indigenous shipowners.
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“Their reluctance to unite during bidding processes has left them vulnerable to competition from international firms. The growing number of small vessel-owning companies has also hindered Nigerians from securing contracts in the upstream oil sector. However, the recent initiative by the Nigeria Shipowners Association to establish NISA Ocean Transport Limited aims to consolidate Indigenous shipowners, positioning them to compete effectively against foreign entities for Cabotage opportunities,” Mr Brown added.
Mr Brown lamented that the cabotage initiative has, to date, been a mere façade, mainly due to collusion between certain local operators and foreign vessel owners. This collusion has allowed foreign interests to continue dominating Nigeria’s maritime trade by temporarily importing marine assets under the waiver clause.
He emphasised the need for greater synergy among government agencies such as NIMASA, Customs, Immigration, and relevant ministries to achieve the goals set forth by the Cabotage Act.
Mr Brown pointed to a significant gap between market demand and local supply, identifying shipbuilding and ship repair yards as critical areas where Nigerians have yet to establish a foundation for cabotage’s success.
“Currently, marine assets operating in Nigeria are valued at over USD 180 billion, with Nigerians owning less than 10% of these assets. Most vessels in the country operate under temporary importation agreements, providing little direct economic benefit. These vessels, owned by foreign companies, are operated by foreign crews who enter Nigeria every three months on temporary work permits, bypassing local taxation (PAYEE) and avoiding import duties.”
To rectify this situation, Mr Brown underscored that once the waiver clause is replaced with the right of first refusal, the balance of marine asset ownership will shift from foreign operators to Indigenous shipowners. He clarified that Nigerian shipowners cannot advance to the commercial bidding stage without owning marine assets to present during technical bids.
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