Concerns Mount Over New Cabotage Policy

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Following the hue and cry over the poor implementation of the Coastal and Inland Shipping Act 2003 in the last 14 years, many believe the federal government needs to muster the political will to implement the law so that the country can begin to reap its intended benefits. But few think that the new cabotage policy being pursued by the government is the way out. John Iwori writes

Cabotage came into being in Nigeria with the enactment of the Coastal and Inland Shipping Act 2003. The provisions of the Act made it clear that only indigenous ship owners have the mandate to carry out coastal trade and inland shipping.

Provisions
The Act set out the limitations on foreign operations of cabotage shipping and the tight conditions under which exceptions can be allowed. These provisions are set out in sections 3 to 6 of the Act, which prohibit coastal carriage of cargoes and passengers, except by wholly Nigerian-owned, manned, built, and registered vessels.
It also restricts towage by tugs or vessels to those wholly owned by Nigerian citizens, just as it limits carriage of petroleum products and related oil and gas shipping services to vessels of Nigerian ownership. Furthermore, the Act prohibits domestic trading in the inland waters of Nigeria, except by vessels wholly owned by Nigerians.

Huge Funds, No Disbursement
In order to drive the implementation of the Act, the federal government initiated the Cabotage Vessel Finance Fund (CVFF). The Nigerian Maritime Administration and Safety Agency (NIMASA) is saddled with the responsibility of managing the fund. It is in line with its mandate that the agency selected four commercial banks as primary lending institutions (PLIs). These include Sky Bank Plc, Sterling Bank Plc, Diamond Bank Plc, and Fidelity Bank Plc.
To ensure the effective disbursement of the fund, the federal government, in 2010 at Dicpharima House, the Corporate Headquarters of the Federal Ministry of Transport, Abuja, signed an agreement with the four PLIs. Since then, nothing tangible and concrete has taken place on the disbursement of the fund.

Successive Directors-general of NIMASA, right from Dr. Shamsudeen Ade Dosumu to the incumbent, Dr. Dakuku Peterside, had repeatedly promised to disburse the funds. They were mere promises; as the funds, which were over N40 billion as at December 2016, have not been disburse.

Many stakeholders have wondered why the federal government is yet to commence the actual disbursement of the funds more than 10 years since it promised to do so.

The long delay in the disbursement of the funds seems to lend credence to insinuations in some quarters that some persons in the corridors of power may have diverted it or are keeping it for use in the prosecution of their political ambitions ahead of the 2019 general elections.

There have also been insinuations regarding the high interests that would have accrued from the huge CVFF in the commercial banks. This is because, most often, top government officials are eager to go public on how much CVFF has accrued so far without a word on the interest it has accumulated overtime in the banks.

Already, many banks are struggling to have the CVFF in their vaults because of the mouth-watering interests involved.

Many stakeholders want the CVFF to be disbursed without further delay this year, as the absence of adequate funding is hampering the successful implementation of the provisions of the Cabotage Act.
They believe the successful implementation of the scheme will help to address the challenges of funding in the Nigerian shipping sector, particularly the issue of modern fleet acquisition.

Will the federal government disburse CVFF this year or will it have another reason to move the disbursement date forward as it has done several times in the past? This is the question at the forefront of the minds of many stakeholders.

New Cabotage Policy: Heading the Wrong Direction
The poor implementation of the provisions of the Cabotage Act is the reason why not a few stakeholders in the maritime industry have kicked against the fresh moves by NIMASA to enact a new policy on cabotage. Indeed, many have taken Peterside’s fresh moves with a pitch of salt. According to them, the new NIMASA cabotage policy is too insignificant to make the desired impact.

Maritime lawyer and principal partner, Akabogu and Associates, Mr. Emeka Akabogu, said the new cabotage compliance strategy recently unveiled by NIMASA will not fly. He argued that its effectiveness was dependent on NIMASA, just as the agency was to blame for the failure to effectively implement the cabotage law. To him, NIMASA over the years has lacked the will to implement the law.

According to Akabogu, “What the agency has come up with simply is that they will no longer grant waivers relating to certain categories of officers. Now for those categories of officers, yes, it makes sense that there is no point having foreigners for second officers, but I really do not see any significant impact that would have, given that ordinarily most of the time, those categories of officers are indigenous. For the companies which are coming into the country temporarily and working for a very short period of time, how that will apply, we need to see.

“I think that the more significant area of focus should be granting of waivers to ships itself. If NIMASA is serious, the new compliance strategy should not have been limited to a number of officers; it should have covered none granting of waivers to certain types of ships, particularly, tanker vessels involved in operations along the coast. If they had insisted and said they would no longer grant any waivers for now to such tanker vessels, that would have had an impact. But as far as it keeps granting waivers to tanker vessels, all these other ones, their impact will just be minimal and more of noise as opposed to real impact. The real impact is by limiting the granting of waivers to tanker ships. If they are serious, that is what they should do.”

Way Out
Akabogu stated that the absence of enforcement of the provision of the Act remained the bane of cabotage in the country.
He said, “The challenge is simple. It is simply enforcement. What is enforcement? Enforcement is, for example, a ship coming into Nigeria waterways and operating within cabotage defined area. It is not a Nigerian ship, it is granted a waiver to operate, yet, it does not fall under the category of ships which should be granted waivers. It is granted a waiver simply because from an enforcement point of view, the enforcers have been compromised.
“So as far as that is happening, you will find that cabotage will not work. And who enforces it? It is NIMASA. NIMASA has the enforcement officers and the executive powers on which to grant waivers.

“The reason why cabotage has not worked is because NIMASA has been unwilling to enforce the letters of the law simply because it is either compromised or lacking the political will to enforce the law. We do not need any new law or additional money to enforce cabotage. All you need is to ensure that people obey the letter of the law. The enforcement officers whom it has across the zones should obey the letter of the law. When enforcement officers originally come with the strong intention and desire to obey and enforce the law, things would work. But when they start getting signs from the management that such enforcement may be varied or waived in some cases, they too will begin to get themselves compromised and begin to look for ways to cut corners.

“So the blame for cabotage failure up till now can only be put at the doorstep of NIMASA. Incompetence and vested interest are two major reasons why NIMASA has not been enforcing cabotage.”