Impact of Cabotage Act on Local Capacity Development in Rivers State, Nigeria. Introduction: Maritime activities are globally acknowledged to play a key role in the alleviation of extreme poverty and hunger through employment and other economic opportunities. This include the supply of seagoing personnel and ship recycling, ship owning and operating, shipbuilding and repair and port services, among others. Nigeria is blessed with a coastline of about 870km and about 3,000 kilometres of inland waterways with varieties of natural resources including petroleum, natural gas, tin, columbite, iron ore, coal, zinc, limestone, lead and other minerals. According to the Cabotage Implementation Guidelines (2007) for example, Nigeria had about 22.5 billion Cubic Meters of crude oil, 3.5 trillion cubic meters of gas and 42.7billion cubic meters of bitumen. These statistics depicts that Nigeria should have a whole lot of trade opportunities across the globe

1. THE IMPACT OF CABOTAGE ACT ON LOCAL CAPACITY
DEVELOPMENT IN RIVERS STATE, NIGERIA
BY
ADELEKE ABEL OLALEKAN
G2017/MSc/CELTS/FT/104
A PROPOSAL SUBMITTED TO THE CENTRE FOR LOGISTICS AND
TRANSPORT STUDIES (CELTRAS), UNIVERSITY OF PORT
HARCOURT, PORT HARCOURT, RIVERS STATE, NIGERIA
SUPERVISOR: DR GODLY OTTO
APRIL, 2019
1

2. INTRODUCTION
• Maritime activities are globally acknowledged to play a key role in the
alleviation of extreme poverty and hunger through employment and other
economic opportunities. This include the supply of seagoing personnel
and ship recycling, ship owning and operating, shipbuilding and repair and
port services, among others.
• Nigeria is blessed with a coastline of about 870km and about 3,000
kilometres of inland waterways with varieties of natural resources
including petroleum, natural gas, tin, columbite, iron ore, coal, zinc,
limestone, lead and other minerals. According to the Cabotage
Implementation Guidelines (2007) for example, Nigeria had about 22.5
billion Cubic Meters of crude oil, 3.5 trillion cubic meters of gas and
42.7billion cubic meters of bitumen. These statistics depicts that Nigeria
should have a whole lot of trade opportunities across the globe.
2

3. INTRODUCTION CONT’D
• Nigeria generates more than seventy percent of the cargo throughput in West and
Central Africa but presently, the sector is characterized by the domination of
foreign flag vessels especially those of developed market economies of Western
Europe and America. Available data show that as at 2013, about 98 percent of the
sea freight in Nigeria was still done by foreign companies and that foreigners make
up about eighty-five percent of the maritime workforce in Nigeria (Global
shipbuilding Market Report, 2013).
• However, attempts made to correct this problem has remain futile as most of the
indigenous companies either bought ships that were old and obsolete and
consequently could not be used for big scale operation. Other companies simply
diverted these loans into smaller investments, which in most cases were non-
maritime related (Ndikom 2010).
• It is based on this that the study shall focus on the impact of cabotage law on
local capacity development in Rivers State.
3

4. STATEMENT OF THE PROBLEM
• In the absence of National Fleet and indigenous participation in providing the shipping
services which add value to the import/export trade of the country, foreign shipping
service providers would have absolute prerogative to determine the regularity/non
regularity and/or availability of the shipping services. In the same vein, they will have
stronger bargaining power for the freight over the indigenous shipping companies.
• Nigeria almost depends on foreign shipping companies paying up to 80% of her freight
to foreign shipping operators. This is more pronounced in crude oil and refined
products shipping business which has led to revenue losses in 100s of billions of US
Dollars (Nwapa, 2013).
• The Cabotage Act was obviously designed to guarantee the Nigerian shipping
companies or citizen participation in its own domestic maritime trade which includes
lifting of Nigeria crude oil to foreign countries, but the reverse seem to be the case
after many years of the cabotage regime.
• In relation to these challenges of the Nigerian Cabotage act 2003 that the current study
shall seek to examine the impact of cabotage act on local capacity development in
Rivers State, Nigeria.
4

5. RESEARCH QUESTIONS
• (i) What are the impacts of cabotage act
implementation on indigenous shippers in Rivers State?
• (ii) Will cabotage act/law have any impact on the
economy of the State?
• (iii) What are the major challenges facing the
indigenous shipping companies in the study area?
• (iv) How does the fleet capacity of indigenous
companies affect their participation in the oil business?
• (v) How is the performance in general of cabotage law
of government agencies charged with these
responsibilities?
5

6. AIM AND OBJECTIVES
The aim of this study shall be to examine the impact of cabotage act on local
capacity development in Rivers State, Nigeria. The following objectives shall
be pursued to this effect:
• (i) Examine the impacts of cabotage act implementation on indigenous
shippers in Rivers State.
• (ii) Determine the impact cabotage act/law have on the economy of the
State.
• (iii) Investigate the major challenges facing the indigenous shipping
companies in the study area.
• (iv) To find out if the fleet capacity of indigenous companies affect their
participation in the oil business.
• (v) Examine the overall performance of government agencies charged
with the responsibilities of implementing the cabotage law.
6

7. RESEARCH HYPOTHESIS
• 1. The cabotage law enforcement by
government agencies have not significantly
reduced the foreign domination of Nigerian
coastal shipping trade.
• ii) The performance of the implementation
Agencies of cabotage law have not made
positive impact on cargo availability to the
indigenous shipping operators.
7

8. SIGNIFICANCE OF STUDY
The research will act as reference material and will add to the
existing stock of literature on the subject and be of great
assistance to scholars wishing to carry out similar study.
Importantly, the recommendations from this study would
fertilize policy decision and would be of immense benefit to
government policy making in the maritime and oil and gas sector
of the economy and generally promote the efficient operation of
the Cabotage regime.
8

9. SCOPE
The study focused on indigenous shipping
companies in Rivers State who are registered under
the Ship Owners Association of Nigeria (SOAN) that
are involved in the crude oil lifting business or other
shipping operations. The chief executive officers of
these companies or any elected/qualified authority
in each company shall form the respondents for the
study.
9

10. STUDY AREA
This area belongs to the South-south region of Nigeria or
otherwise known as Niger Delta Region. It is located between
latitudes 04º 00'N and 004º60'E and longitudes 06º 00'N and
007º 00'E (Figure). Its capital and largest city, Port Harcourt is
economically significant as the centre of Nigeria's oil industry.
Rivers State is bounded on the South by the Atlantic ocean, to
the North by Imo, Abia and Anambra States, to the East by Akwa
Ibom State, and to the West by Bayelsa and Delta states. It is
home to many indigenous ethnic groups: Ogon, Abua, Ekpeye,
Ikwerre, Ibani, Opobo, Eleme, Okrika, and Kalabari, Etche, Ogba,
Engenn, Egbema, Obolo and others. The people from Rivers
State are known as "Riverians" (Hoiberg, 2013).
10

11. 11

12. LITERATURE REVIEW
Concept of Transport and Economic Development
• The primary driver of social and economic activities such as
manufacturing and distribution of raw materials and finished
goods, commuting, supply of energy and technology is the
mobility of people, freight and information.
• Economic growth is increasingly linked with transport
developments, namely infrastructures, but also with
managerial expertise, which is crucial for logistics.
Theory of Multinational Corporation – Local Firm Relations
The theory is focused on three economic traditions
(1) Trade economics: allowing for capital flows between capital
rich and capital poor
12

13. LITERATURE REVIEW CONT’D
(2) Industrial Organizations: The main idea of this school of thought is that the
characteristics of the industry fundamentally affect the strategy and performance of firms,
and indeed, the effects that MNCs may have on host countries.
(3) International Business: The multinationals’ ownership advantage is often reinforced by
the ability they have to access finance internationally and in the host economy, compared
to local firms which are most of the time financially constrained.
Maritime Activities and Meaning of Cabotage
Maritime activities are globally acknowledged to play a key role in the alleviation of
extreme poverty and hunger through employment and other economic opportunities. This
include the supply of seagoing personnel and ship recycling, ship owning and operating,
shipbuilding and repair and port services, among others.
The term "Cabotage" is a Spanish word which refers to maritime trade along countries
coastlines. The Nigerian Cabotage Law came into force in April, 2004 (Cabotage Act, 2003).
The aim was to reserve the costal shipping business by Nigeria national. According to Black’s
Law Dictionary (Thumma, & Kirchmeier, 1999) “Cabotage is the carrying on of trade along a
country’s coast, the transport of goods or passengers from one port or place to another in
the same country”.
13

14. RESEARCH METHODOLOGY
• The study shall adopt the cross sectional research design
• Both primary and secondary data sources shall be employed
• The primary data collection shall involve the use of questionnaire and personal
observations for the study. The questionnaire design shall be made up of
structured close-ended, open- ended and contingency questions.
• Secondary data especially those that concerns Cabotage Acts/Law shall be
sourced from relevant agencies in relation to the subject matter of the study.
• Population of study shall involve operators of indigenous shipping companies
in Rivers Sate. The registered indigenous shipping companies shall be the
targeted population of study.
• Descriptive statistics shall be used in form of simple percentages to explain the
results of the analyses. Inferential statistics would be employed to test the
research hypotheses for the study. Pairwise t test shall be employed to test the
first hypothesis; while the second hypothesis shall be tested using the One
sample T-test analysis at 0.05 significant differences. Results of the analysis
shall be presented in tables and graphs.
14

15. THANKS FOR LISTENING
15