Losing Oil as Mainstay of Nigeria Economy
Last year, The Minister of Finance, Dr. Okonjo-Iweala, noted that Nigeria should be viewed henceforth as a non-oil producing nation and need to explorenew revenue resources as a result of the decline in the price of oil. This statement has been justified by the free fall of oil prices such that dependency on oil for revenue generation has adversely affected the Budget for the current year. The federal Budget of N4 trillion is predicated on 73 Dollars per barrel. At current price of 46 Dollars per barrel, this has halved the value of the budget by nearly 50 percent. No meaningful development can take place under this condition.
Revenue from Shipping Sector as alternative to Oil
There is massive untapped revenue in our maritime sector estimated at N7 Trillion per annum. In order to tap revenue from this sector there will need to be an overhaul of policy, institutional, regulatory and legal framework.
Nigeria’s shipping policy framework is outdated and incoherent. The last major review was 28 years ago i.e the NSP Act No 10 of 1987. As a result, Nigeria’s ports have become uncompetitive; Shippers have been pushed outside the shores of Nigeria. Nigeria was designated to be a maritime hub for West and Central Africa, with the potential to be a Maritime International Center (MIC). But Nigeria ports are being abandoned for those in the Benin Republic and Togo. This is due to lack of regulation in the sector, which, has led to a plethora of uncoordinated activities and exorbitant port charges, which make Nigeria very unattractive for business.Government hardly implements its own policy thereby creating leakages in the system. Invariably Nigeria due to paucity of its shipping regulations is violating international trade facilitation laws. For instance, Nigeria as a coastal state is to provide port importation support and access to landlocked countries such as Niger and Burkina Faso. Cameroun and Ghana are now providing those services in spite of long distances between the Countries. Nigeria has also lost out on tonnage that would have accrued from its International carrier status. No vessel carries that flag in Nigeria currently.
Forecast also states that Over 2 million cars are brought into Nigeria daily from neighboring countries of Benin and Togo due to regulation and efficiency. At an estimate of N450,000per car. This translates to N90 Billion loss in revenue each day. Nigeria requires an economic regulator for shipping sector. Until recently, there is no clearly recognized Economic Regulator for the shipping sector. The Federal High Court has held that the Nigeria Shippers Council is an economic regulator. It is only when the Nigerian Shippers Council, is empowered to regulate, that stakeholders in the sector can turn around their businesses and generate huge revenue for the Nation as their counterparts in other jurisdictions such as Malaysia, Indonesia, and Hong Kong, USA etc.
New laws are urgently required. There are a raft of Bills before the National Assembly such as the PIB, the Ports &Harbour Bill, the Bill establishing the Economic Regulator (shipping sector), and the Maritime Zones Bill etc. waiting to be passed. It is even incumbent to review Nigeria’s Ocean Policy to tap abundant national resources. These and other vital issues will form part of the Policy Dialogue.
Making Shipping a Big Issue in 2015 Elections
Revenue generation should be a topical issue. How can Nigeria survive in view of dwindling fortunes in the oil sector? This should have been made a key campaign. Elsewhere Economic Issues, Immigration, Labour dominate campaigns. It is high time the contestants spoke their mind on this issue which is critical to the Nation. Furthermore, shipping and Maritime sector are crucial to maximizing oil potentials because ships, rigs are classified as vessels under our laws. Thus a strong shipping framework is fundamental to strong oil economy and a country such as Nigeria can only ignore it to the detriment of economy.
Multilateral approach is needed. At advocacy level, our firm through its leadership position in shipping laws and maritime policy advocacy will be kick starting the discussion with a Policy Dialogue on Generation of Revenue from Nigeria’s Shipping Sector in conjunction with relevant stakeholders. The Policy Dialogue will bring together all stakeholders to highlight the constraints in the shipping sector, which are at present preventing Nigeria from becoming the maritime hub of Africa and International Maritime Center.