This paper was awarded the "2015 Prize for the Best Researched Essay" at the Ship & Ports Annual National Essay Competition and presented in Lagos on December 17, 2015. Do enjoy and share with me how we can boost indigenous participation in the shipping sector. ABSTRACT: Nigeria shipping industry is currently marred by the low-participation of indigenous operators. Numerous articles have been written on the reasons and problems, but this article goes further by describing three critical areas that have to be tackled: 1) Manpower development. 2) Business development. and 3) Government and proper legislation implementation. The Singapore shipping industry is used as a case study to explain how these three areas were tackled and today Singaporean indigenous shippers are among the top ten in the global shipping industry, from being a mere British shipping outpost a couple of years ago. ENJOY...

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HOW TO BOOST INDIGENOUS PARTICIPATION IN
THE SHIPPING SECTOR.
Ukwuegbu, Chijioke Anthony
0818 212 0314
Declaration
I certify that all the material in this essay that is not my own work has been identified and that the
contents of this article reflect my own personal views.
Table of Contents
1. Abstract .....................................................................................................................................1
2. Nigeria Shipping Industry Overview .....................................................................................1
3. Indigenous Shipping In Nigeria ..............................................................................................1
3.1 Benefits of Indigenous participation ..............................................................................2
4. Boosting Indigenous Shipping In Nigeria ..............................................................................3
4.1 Manpower development .................................................................................................3
4.2 Business development ....................................................................................................3
4.3 Government and Enabling Legislation Implementation ................................................4
5. Case Study of Singapore boosting Indigenous Shipping participation ...............................4
6. Conclusion ...............................................................................................................................5
7. References ................................................................................................................................5

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1. ABSTRACT
Nigeria shipping industry is currently marred by the low-participation of indigenous operators. Numerous
articles have been written on the reasons and problems but this article goes further by describing three
critical areas that have to be tackled: Manpower development, Business development and Government
and proper legislation implementation. The Singapore shipping industry is used as a case study to
explain how these three areas were tackled and today Singaporean indigenous shippers are among the top
ten in the global shipping industry, from being a mere shipping outpost a couple of years ago.
2. NIGERIA SHIPPING INDUSTRY OVERVIEW
Shipping is important to a nation’s economy. It is the cheapest means of transporting goods and services
among nations. The shipping sector includes stakeholders involved in Shipping; Ship building,
maintenance and repair; rigging and offshore engineering services; and maritime support industries. In
1849, MacGregor Laird formed the Royal African Steamship Company with British Subsidy and cargo
support, thus, the foundation of modern shipping was laid in Nigeria. As trade increased, the British and
American Steam Navigation Company was established (Ugochukwu, 1990). The Nigerian Maritime
Department established in 1906 was the foundation for the Nigerian Ports Authority (NPA) (Ugochukwu,
1990). By the fifties, ports of Burutu, Degema, Lagos, Port Harcourt, and Warri were improved upon.
3. INDIGENOUS SHIPPING IN NIGERIA.
In mid-1950s, Nigeria’s first indigenous shipping line the “Nigerian Line” was established by Mr. Patrick
Osoba as a joint venture with the Finnish firm, Nordstrom and Company. In 1959, the Nigerian Shipping
Line Limited (NNSL) was established by the Nigerian Government; with Palm Lines ltd. and Elder
Dempster ltd. as technical partners who were bought out in 1961 (Ugochukwu, 1990). NNSL started
operations with two second-hand vessels, grew to 27 ships in 1980, and declined to 13 in 1992. To
revitalise its fortune, $65million via the Ship Acquisition and Ship Building Fund (SASBF) was invested,
but this was mismanaged leading to NNSL’s liquidation in 1995. Failure of NNSL can be attributed to
several factors among which are: political interference, huge debts, exorbitant repair bills, debt owed
among others. In 1995, NMA established another government owned national carrier: the National Unity
Line (NUL), with MV Abuja – a 6,879 dwt vessel, as its only vessel. Unfortunately, in 2002 its only

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vessel was sold off. By 2000, Nigeria had a total of 122 registered indigenous shipping companies who
mainly chartered their vessels.
3.1 BENEFITS OF INDIGENOUS PARTICIPATION
i. Conservation of Foreign Exchange: With more indigenous participation, foreign exchange that
would otherwise been paid to foreign companies will be conserved and boost economic activities in
Nigeria. Let’s illustrate these using only indigenous shippers in crude-oil lifting.
𝐴𝑚𝑜𝑢𝑛𝑡 𝑡𝑜 𝑐𝑜𝑛𝑠𝑒𝑟𝑣𝑒𝑑 = 2.2𝑚𝑝𝑑+
× $2.5∗
× 365𝑑𝑎𝑦𝑠
= $2,007,500,000
= $2.0075𝑏𝑛
+ 2.2mpd: millions of barrels per day. NNPC September, 2015 report.
∗ $2.5: The benchmark price charged to lift a barrel of crude-oil.
ii. Employment opportunities: The building and maintenance of coastal vessels will trigger the need to
employ more Nigerian seafarers (Igbokwe, 2006). Over 50,000 Nigerian workers can be employed in
ship building and maintenance.
iii. Increased Government Tax: Many of the newly created shipping industry jobs will pay personal
income tax and the shipping companies will pay corporate tax and other shipping duties and levies to
the government boosting governments’ revenue.
iv. National security and defence: With more indigenous shippers, Nigerian Armed Forces will have a
readily available fleet in the event of a national crisis just like the British Armed Forces utilised their
indigenous shippers during the two world wars.
v. Development of Local capacity in Ship building and repair: There will be a complementary need
to build repair and maintain vessels in Nigerian shipyards. Dockyards will develop and enhance local
capacity in shipbuilding and repair.
vi. Increased contribution to GDP: The immense potential contribution of increased indigenous
participation in our shipping industry is close to N2 trillion annually. It is illustrated below using only
indigenous shippers handling Nigeria’s import and export freight.
𝐺𝐷𝑃 𝑐𝑜𝑛𝑡𝑟i𝑏𝑢𝑡i𝑜𝑛 = 148,323,065+
𝑥 (
$30 𝑥 $ 65
2
)
++
= $144.61𝑏𝑛
+ 2014 Gross tonnage according to NPA (Nigeria Ports Authority, 2015).
++ Average freight charges per tonnage between Nigerian – European ports; and Nigerian - Asian ports.

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4. BOOSTING INDIGENOUS SHIPPING IN NIGERIA.
In order to boost indigenous shipping in Nigeria, three major areas need to be tackled:
4.1 Manpower development:
This emphasises creation and developing a skilled and continuous human capital locally that is necessary
to the needs of the shipping industry. This can be achieved via:
i. Maritime Academy: Creation of more maritime academies should be encouraged and existing ones
upgraded. The Nigeria Maritime University in Warri (Obiageli, 2011) should be quickly opened and
staffed with world class faculty. As more skilled maritime manpower is available in Nigeria,
indigenous shippers will find their cost of doing business greatly reduced and therefore, thrive.
ii. Scholarship: Subsidising the cost of seafarers’ training will encourage more people to take up
seafaring training and attract the best and brightest of Nigerians.
4.2 Business Development:
i. Industry wide audit: NIMASA, NISA and other stakeholders should conduct business wide audit
identifying short and long-term opportunities and how to harness them.
ii. Foreign Technical Partnership: Just like how Mr. Patrick Osoba entered a JV with Nordstrom and
Company; indigenous shippers should seek foreign technical partners who they can work with to boost
their operational capacity.
iii. Acquisition of vessels: NIMASA can work with NISA to refurbish and acquire new ships. Funding at
low-interest rate can be gotten from the Cabotage Vessel and Finance Fund (CVFF). But this time,
Nigerian banks should be involved in its disbursement to prevent the recurrence of the mismanagement
of SASBF of the 1990’s.
iv. Mergers and Acquisition: The shipping industry should be incentivised to engage in mergers and
acquisition as their current individual size is insignificant in competing with international shippers.
Indigenous shippers who engage in mergers and acquisition should be given waivers such as tax
holidays and preferential statues.

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v. Finance: Various financial incentives should be made available to eligible indigenous shippers such as
tax holidays, zero duty on ship and ship parts, disbursement of the CVFF at CBN interest rate,
accelerated depreciation for ships and other capital assets to accumulate capital for future expansion.
4.3 Government and Enabling Legislation Implementation
i. Holistic implementation of the Cabotage Act: The Cabotage Act of 2003 provides the necessary
legislation that will boost indigenous participation in Nigerian shipping but it is being implemented
half-heartedly (Federal Government of Nigeria, 2003). The Act reserves the commercial transport of
goods and service within Nigerian coastal and inland waters to vessels flying the Nigerian flag owned
by Nigerians and built in Nigeria. Government should reduce the granting of waivers to foreign
owned vessels and encourage foreign shipping operators to have indigenous partners.
ii. Provisional time charter contracts: NIMASA in collaboration with NISA/SOAN and NNPC should
get international Oil Companies to sign provisional time charter contracts with indigenous shippers
stating in principle that NISA/SOAN vessels will be engaged as soon as they are purchased. This
provisional contract will encourage financial institutions to finance vessel acquisition since the loan
will have a repayment plan.
iii. Rebate: Granting rebates on port dues and levies for ships using local shipyards for their regular
maintenance should be implemented by government agencies. This will encourage the patronage of
existing shipyard facilities in Nigeria and boost indigenous participation in Nigeria shipping.
5. CASE STUDY OF SINGAPORE BOOSTING INDIGENOUS SHIPPING PARTICIPATION
In the 1950’s, Singapore shipping was just a normal trading post dominated by British companies. Today
the Singapore shipping industry is a world class industry dominated by indigenous players with
international clientele handling ship building and repair, rig building and offshore engineering, and other
shipping support services. This started in the sixties when the Singaporean government set-up a high level
committee to co-ordinate and develop all aspects of shipping. Technology transfer was encouraged and
the best and brightest minds were granted government scholarships to Tokyo, Newcastle and Glasgow to
learn Naval Architecture and Marine Engineering. Many of these scholars eventually became Captains of
Industry and Government instrumental in shaping the affairs of the industry. HM Dockyard was

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privatised and this led to an exponential growth in the ship repair industry. By 1968, Keppel shipyard,
Sembawang shipyard, Singapore shipbuilding and Engineering, Neptune Orient Lines, and Jurong
shipbuilders were born (Chung, 2014). Indigenous operators got together and formed the Singapore
Association of Shipbuilding and Repairs (SASAR) with the objective of increasing the exports of
Singapore ships and boats. That year, SASAR members grossed over $100m but they saw a greater
potential for themselves. Offshore engineering American companies were encouraged to have local
partners and now Bethlehem, Marathon, LeTourneau and Levingstons’ successor companies having
transformed Singapore to the “Houston of the East”. Keppel FELS was granted waivers and this
encouraged its acquisition of proprietary technology in oil rig jacking system. By 1982, Singapore
became the world’s busiest port by shipping tonnage. Today, indigenous shippers in Singapore are ranked
among the top 10 in the global shipping industry.
6. CONCLUSION
The benefits of increased indigenous participation in the shipping sector is massive, be it economic, social
or national security reasons. To maximise these benefits, stakeholders have to work arduously together in
developing the skilled manpower, world class business management practices and a proper
implementation of the Cabotage Act. It will be a long journey of 5 – 10 years but this can be achieved. If
these steps are taken, indigenous shipper’s will one day be global players like Maersk
7. REFERENCES
Bello-Olowokere, G. (2011). The effects of Cabotage Regime on Indigenous shipping in Nigeria. Malmo:
World Maritime University.
Chung, C. K. (2014). Development of Singapore 's Maritime industries from a heritage perspective.
Singapore.
Federal Government of Nigeria. (2003). Coastal and Inland Shipping (Cabotage) Act. Lagos: Nigeria
Maritime Administration and Safety Agency.
Igbokwe. (2006). The importance of maritime transport in Nigerian economy. Lagos: United Thisday
Company Ltd.
Nigeria Ports Authority. (2015). Cargo Throughput (MT): 2007 - 2014 by years. Lagos: Nigeria Ports
Authority.
NIMASA . (2011). Report of the Technical Committee on modalities for empowering indigenous ship
owners in Nigeria. Lagos: Nigerian Maritime Administration and Safety Agency.