Nigeria bleeds $86bn as foreign firms dominate maritime trade, say shipowners

Business a.m.

Nigerian shipowners have highlighted the financial toll of foreign dominance in the freight forwarding sector, revealing that the country loses $86 billion annually due to this situation.

They pointed to the federal government’s inaction and unfavourable policies towards local operators, which have strangled the growth of the country’s own shipping industry and allowed foreign-dominated shipping operations to scoop up billions of dollars in revenue that could otherwise have gone to Nigeria’s own maritime sector.

Emmanuel Iheanacho, managing director of Genesis Shipping dwelled on this during  the 16th Marine and Technical Summit of the Association of Marine Engineers and Surveyors, recently in Lagos.

Iheanacho noted  that Nigeria’s losses to foreign-dominated freight forwarding are far greater than the previously reported figure of $9.2 billion.

According to him, when the freight of petroleum products is taken into account, Nigeria’s losses far exceed the initial estimates, underlining the urgent need for action to address this crippling financial drain on the country.

He said, “When you look at the carriage of our crude oil programme, Nigeria is losing more than $9.2bn. We are losing over $86bn annually to foreign vessels’ dominance of our freight business,” the Genesis Shipping MD stated.

Greg Ogbeifun, chairman, Starzs Investments Company Limited, also shared his concerns at the event, stating that Nigeria’s freight trade is dominated by foreign vessels due to a lack of domestic capacity and government support.

In a paper titled “What is militating against the resurgence of Nigerian global trading?” Ogbeifun pointed out that Nigeria’s location along the Atlantic coastline makes it an ideal hub for marine activities, yet foreign vessels continue to dominate the freight trade due to a dearth of indigenous vessels and insufficient backing from the Nigerian government.

According to Ogbeifun, Nigeria’s ever-expanding demand for shipping services is not being met by indigenous operators due to a lack of government support, thus forcing the country to become overly dependent on foreign vessels for its maritime trade.

“Conservatively, Nigeria is losing about $9.2bn to foreign vessels’ dominance of her trade. We are the ones paying that money to the foreign vessel owners,” he said.

Ogbeifun noted that every Nigerian who engages in the import and export of goods is paying exorbitant prices due to the country’s overreliance on foreign ships.

He emphasised that Nigeria, despite generating 70 per cent of the total cargo between West and Central African regions, is not reaping the benefits of this massive trade volume as it should, due to the lack of indigenous shipping capacity.

“When you look at Apapa Port, Tincan Port, Warri Port, Onne Port, and the newly-established Lekki Port; all these ports are relevant in the carriage of Nigerian imports and export trade.

“It, however, breaks my heart that every time I look at our ports, all the quays and jetties are filled up with ships, but not one of these ships is owned by any Nigerian,” he added.

Ogbeifun also spoke on the struggles of local shipping pioneers like Emmanuel Ihenacho, Isaac Jolapamo, and Temisan Omatseye, who bought ships in the past but whose businesses were killed by the system.

Expressing concern for the indigenous shipping industry, Ogbeifun, who doubles as chairman of the Benin Port Project Technical Committee, urged the government to formulate policies that would allow indigenous shipping operators to compete on a level playing field with foreign vessel owners.

Ogbeifun drew attention to the advantages that foreign vessel owners enjoy, such as zero duty and near-zero tax regimes. These favourable conditions, he argued, create an unfair advantage for foreign players, putting indigenous shipping operators at a disadvantage. 

He therefore called on the government to put in place policies that would promote a more competitive environment for Nigerian shipowners.

“The enabling policies need to be implemented. How can Nigerians compete with foreign vessel owners who enjoy zero duty and a near-zero tax regime? It is time our leaders provide policies that encourage indigenous shipping in this country,” Ogbeifun stated.