Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
PROSPECTS
By
1.0 INTRODUCTION
1.1 DEFINITION
goods (and passengers) within the territorial and inland waters of any nation state
by ship or by ship and any other means of transportation from one place in the
Black’s Law Dictionary (6th Edition) defined Cabotage as “The caring 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” The Webster Dictionary defined Cabotage
use of coastal waters and airspace by a country to its own domestic traffic”
Following from the above definitions we can derive the meaning of “Cabotage
Law” as the law reserving the coastal trade of a nation to vessels flying its
national flag2.
1.1.1 Under Section 2 of the Coastal and Inland Shipping (Cabotage) Act 2003
1
(a) The carriage of goods by vessel, or by vessel and any other mode of transport,
from one place in Nigerian waters to any other place in Nigeria or above
Nigerian waters, either directly or via a place outside Nigeria or to any other
(b) The carriage of passengers by vessel from any place in Nigeria situated on a
lattice or river to the same place, or to any other place in Nigeria, either
directly or via a place outside Nigeria to the same place without any call at
(c) The carriage of passengers by vessel from any place in Nigeria to any other
place in Nigeria, or from any place above Nigerian waters to the same place or
to any other place above or under Nigerian waters where the carriage of the
(d) The engaging, by vessel, in any other marine activity of a commercial nature
in Nigerian waters and, the carriage of any goods or substance whether or not
1.1.2 From the foregoing academic and statutory definitions one can safely
summarise Cabotage Law as the Law restricting the coastal and inland waters
2
1.2 CABOTAGE REGIMES.
located within a state. It generally connotes the idea of trans – national coastal
navigation and covers the movement of vessels from one cape to another
activities are reserved for national flag vessels, indigenous vessel owners and
policy, being the restriction of coastal and inland waterways’ trade to vessels
navigation and trading within a country’s coasts or from port to port within a
national flagships and nationals (Igbokwe M. 2001). The Cabotage law can be
a country.
and the type that suits a nations interest, namely, strict Cabotage laws and
3
regime of strict Cabotage laws is as found in the United States of America by a
combination of some of its shipping laws. By virtue of its Jones Act3 which was
marine and consequently all waterborne goods between US ports, are carried in
US flagged ships, built in the USA, owned by US citizens and crewed wholly by
US citizens. Before the Jones Act the US had forbidden foreign ships from trading
within its coasts since 1817. The 1886 passenger services Act states that no
foreign vessel shall transport passengers between ports or places in the US under
a penalty of US 2000 dollars for each passenger so transported and landed. The
US Merchant Marine Act of 1936 also allows the government to bar foreign
vessels, which have been built cheaply by means of subsidy if they operate in the
US domestic trade. Following from the above and other shipping laws, the
transportation of goods and passengers within the US ports and coastal trade are
exclusively the hands of US citizens and ships. The Laws are deliberate US
nationals and its domestic shipping industry4. It is instructive to note that inspite
by the US and the US backed WTO, there is immense support in the US from its
policy, law makers for retention of its strict Cabotage laws without any form of
relaxation5.
3
Section 27, Merchant Marine Act of 1920 Public Law 66 – 261.
4
Igbokwe, Mike Esq. “Advocacy Paper for the Promulgation of A Nigerian Maritime Cabotage Law”,
2001. www
5
Op cit.
4
1.2.2 Relaxed Cabotage Legal Regime.
Relaxed Cabotage legal regime is a non strict Cabotage regime where the laws are
relaxed, modified or liberalized and the elements of a strict legal regime are not
building of the ships and nationality of the operators or foreign registered ships
Cabotage laws are India, the Philippines, Australia and Malaysia where certain
aspects of their Cabotage laws are already relaxed or liberalized. In 1992 India
relaxed its Cabotage laws, allowing foreign shipping lines for a period of five years,
foreign port and to run feeder services to reach import containers at various ports.
requirements and Immigration Laws, 90% of its coastal trade is by Australian crewed
ships and all foreign vessels operating along its coast are licensed or permitted under
certain conditions7. Australian Cabotage laws allow only Australian flagged and
crewed ships on its domestic shipping and where there are no Australian ships
available, foreign vessels are granted single voyage permit8. The Maritime Union of
Australia usually argued that shippers are manipulating the system by waiting until an
Australian – manned vessel sails out and then rush to contract a foreign – flagged ship
with third world low – paid crew and substandard ships to participate in its coastal
5
Malaysia is another country whose relaxed Cabotage laws permit foreign registered
(DDSLB) to carry on coastal trading where there are no available Malaysian vessels.
respect of oil tankers where there are insufficient Malaysian registered vessels, by
Before the enactment of the Cabotage Act, there was absolutely no legal provision
owned and or registered vessels. Foreigners dominated the maritime trade, coastal
and inland water transportation. Even to date foreigners own the bulk of the feet
The reason for the dominance of the industry is not far fetched, shipping is a highly
ameliorate the situation was the promulgation of the National shipping policy Decree
No. 10 of 1987 which established the National Maritime Authority (NMA) Section
13(2) of the Decree states that the NMA shall “establish a fund which shall assist
Historically the Nigerian shipping industry can properly be traced to the early 20th
century with the activities of Colonial British Companies like Elder Dempster
9
Op cit.
10
Akinjide-Bologun, Jumoke ‘Making Waves In Nigeria”; The Maritime Advocate. Com, issue 15, May
2001.
6
Agencies, John Holt, Liver Pool Limited and United Africa Company (UAC) who
were primarily involved in merchant shipping. Credit for commercial freight services
is attributable to UAC when in early 50’s it floated Palm Line Limited to provide
shipping services to the public on commercial basis. The foreign colonial enjoyed a
monopoly and kept their shipping business doors shut on indigenes and local
entrepreneurs.
controlled by foreigners. However the Nigerian National Shipping Line (NNSL) had
earlier in 1959 signaled the birth of an indigenous shipping line. There is no record to
show that any Nigerian individual other than NNSL, owned any ocean going vessel
until 1972 when Late Chief Henry Fajemirolain’s Nigeria Far East Company blazed
the trail, followed by Wahab Folamiyo’s Nigeria Green Lines and Alhaji Mahmud
Waziri’s African Ocean Line11. As stated earlier, the foreign dominance of the
industry led to the setting up of NMA in 1987 primarily to develop the local shipping
industry by assisting Nigerians to acquire ships, ocean vessels and training seafarers
for the industry, through the Ship Acquisition and Ship Building Fund (SASBF) and
access goods for lifting via the Cargo Allocation. However due to mismanagement,
ineptitude and corruption the NMA derailed from it’s set goals leading to the
scrapping of the Cargo Allocation Policy and the SASBF12 . With the advent of
democracy in 1999 stakeholders and professionals in the shipping industry have made
a clarion call for the reordering and restructuring of the maritime industry as it affects
11
Adewale, Francis “The sale of MV Abuja and the Failed War On Corruption” ganmji. Com /
NEWS2601. HM 11 / 15/ 2004.
12
Nigerian Maritime Directory. Com 11/11/2004.
7
domestic trade for the benefit of the citizenry and the Nigerian economy one of the
world trade, accounting for about eighty percent (80%) of world trade. However the
acquisition of ships is not only very complex but highly capital intensive, its
acquisition and building process is long tenured and the cost largely dependent on the
size of ship, its physical condition, the type of cargo it is designed to lift and the
It was the dire necessity to assist Nigerians to acquire and own their own ships and
make a break through, in the Nigerian Maritime Industry that Nigeria promulgated
the Nigeria National Shipping Policy known as Decree 10 of 1987 which established
the Nigerian Maritime Authority (NMA) and provides for the setting up of national
carriers i.e. vessels eligible to benefit from cargo – allocation, cabotage, access to
special cargo, training of seafarers and the ship acquisition and ship building fund
(SASBF) to assist Nigerians in the development and expansion of the national fleet.
The SASBF has long been scrapped due to mismanagement dearth of funding. Also
the Nigerian National Shipping Line the NNSL, the one time national carrier, which
at its peak owned about 27 ocean liners, had by 1995, gone moribund without a single
vessel to its name. Its successor the Nigeria Unity Line (NUL), which owned and
13
Adewale, Francis Op cit.
8
operated only one dry bulk ship MV Abuja bought in 1995 after series of vicissitudes,
It was as a result of the abysmal state of the Nigerian domestic fleet that urgent calls were
made by the Federal Ministry of Transport and other stakeholders in the maritime
In considering the Cabotage Bill prelude to its enactment, the Chairman of the House of
Olusegun Obasanjo urging him to support the Cabotage Bill enunciated the benefit of the
“We believe that the enactment of Cabotage in Nigeria would lay a solid
foundation for the domestic maritime industry, and stimulate and contribute
maritime fleet, create employment opportunities for over 30, 000 trained but
According to the Minister of State for Transport, Alhaji Inua Musa Mohammed the
shipping, increase capacity building and provide employment for Nigerian seafarers,
adding that it was in line with the Federal Government and Development scheme
(NEEDS) strategy.
14
Vanguard of 18/6/2003
15
Guardian Newspapers 9/12/2004.
9
Many countries with a view to safeguarding their national security and promoting and
preserving their national shipping operator have resorted to legislating to reserve such
transportation of goods and services within territorial and inland waterways for their
national flag ships to the exclusion foreign shipping operators such legislation are to be
found in over 40 major maritime and industrial nations such as United State of America,
The introduction of a Cabotage Law was seen in Nigeria as the only veritable way for the
development of a national fleet. For one it has long been accepted that the US – flag
Jones Act fleet, that operates under US maritime Cabotage Laws is the foundation upon
which US maritime power and the national maritime infrastructure rest. The general view
in Nigeria being that what is good protectionist policy for the United States of America
must be good for Nigeria, a developing economy whose local companies are forced to
From the foregoing the policy thrust of Cabotage legislation can aptly be summarised (as
follows) to wit.
16
Ilogu, Chidi I. Esq. Op cit.
17
The Maritime Advocate. Com Issue 15, May 2004.
10
8. Freight generation and capacity building.
The purpose of the Act is to restrict the use of foreign vessels in domestic coastal
trade and promote the development of indigenous tonnage18. The provisions include
3.1 Restrictions.
A vessel other than a vessel wholly owned and manned by a Nigerian citizen, built
and registered in Nigeria shall not engage in the domestic coastal carriage or cargo
and passengers within the coastal territorial, inland waters, island or any point within
the waters of the exclusive economic zone of Nigeria19. This general restriction order
registration of vessels and applicable to the carriage of all manner of cargo and to
passengers but not absolutely applicable to towage or salvage services. The Act
further provides that a tug or vessel not wholly owned by a Nigerian citizen shall not
18
Preamble to the Coastal & Inland Shipping (Cabotage) Act 2003.
19
Section 3
11
tow any vessel from or into any port or point in Nigerian waters or tow any vessel
carrying any substance whatsoever, whether of value or not or any dredge material
whether or not it has commercial value from a port or point within Nigerian waters 20.
It follows that the vessels that may be used for towage must be owned by Nigerians
and need not be built or registered in Nigeria, or manned by Nigerians. The restriction
does not preclude a foreign vessel from rendering assistance to persons, vessels or
A vessel, tug or barge of whatever type other than a vessel, tug and barge whose
beneficial ownership23 resides wholly in a Nigerian Citizen shall not engage in the
carriage of materials or supply services to and from oil rigs, platforms and
installations or the carriage of petroleum products between oil rigs, platforms and
requirements still subsist as they are covered by the general restriction which deals
A vessel of whatever type or size shall not engage in domestic trading in the inland
waters of Nigeria except as a vessel that is wholly owned by Nigerian citizens25. The
20
Section 4 (1)
21
Section 4 (2)
22
Articles 10, 11, & 12 Salvage Convention. Articles 18 & 21, UN Convention on the Law of the Sea.
23
Section 8 defines beneficial ownership as minimum 60% shares ownership by a Nigerian Citizen.
24
Section 5.
25
Section 6.
12
general restriction order also applies here as regards the requirement of manning by a
However this requirement of the Act does not seem to cover all Cabotage trade. For
restriction nor in that for carriage of petroleum products. However while the towage
restriction does not cover foreign built tugs or vessels, the petroleum products carriage
restriction does28. The Nigerian build requirement is not applicable where the vessel is
Nigerian built vessels, barges etc. in the domestic coastal carriage of cargo and
passengers carries the immediate prospects of the shipbuilding industry. The same
goes for the rebuilding a vessel provision, to the effect that rebuilt vessels shall be
eligible for Cabotage services if the entire rebuilding including the construction of any
major components of the hull or superstructure of the vessel is effected in Nigeria 30.
Ships are not built and displayed for sale in an open market; they are built according
dependent for its survival on demand for its services. The essence of the Cabotage
26
Section 3
27
Ibid
28
By virtue of Section 3 which covers domestic coastal carriage of cargo, which includes materials as used
in Section 5. on carriage of petroleum products.
29
Section 7(2).
30
Section 7(1).
31
Akabogu, Emeka & anor, “Maritime Cabotage In Nigeria”, 2004. p. 20.
13
3.5 Ownership.
The Act talks of beneficial ownership32. The essence of this requirement is to prevent
proxy ownership of shares in the vessel by Nigerian fronts for foreign equity owners.
Where a person beneficially owns shares, he has full dealing powers over those shares
and can derive maximum equity from his ownership thereof33. A demise or bareboat
charter would not ordinarily qualify or be regarded as a beneficial owner 34. However,
the Act makes provision for demise chatterers to have the same benefits as beneficial
Nigerian citizens, unless that the Minister is satisfied among others, that the vessel is
on bareboat charter to Nigerian citizens and is under the full control and management
should be noted here that the admiralty law rule in respect of arrest of a ship is that
not to justify arrest36 The Act makes provision for vessels that are partly, though
3.6 WAIVERS.
The Minister is given powers under the Act38 to grant waivers to foreign vessels to
partake in Cabotage trade where he is satisfied that there is no capacity on the part of
32
Section 5
33
Op cit 14
34
Congresso del Partido (1978) 1AUER1169 @ 1201 – 1202.
35
Section 23(1)(b).
36
The Loviersgracht[1995]2Lloyds Rep 411.
37
Section 23(3)
38
Sections 9-11 Minister’s powers to grant waivers.
14
the Act. This is premised on the fact that Nigerian capacity at this time is not such that
can carry the volume of business trade usually associated with the Cabotage trade. The
capacity shortfalls are in various fronts. Currently Nigerian owned vessels are few and
limited in number relative to activities to be undertaken under the Act; without doubt
there are quite a number of Nigerian trained seafarers39 but only a limited few are
qualified with all the requisite international certifications and practical on board
expertence40.
The Minister may on the receipt of an application grant a waiver to a dully registered
vessel on the requirement for a vessel under the Act to be wholly owned by Nigerian
citizens where the Minister is satisfied that there is no wholly Nigerian owned vessel
that is suitable and available to provide the services or perform the activity described
application which has been made, the Minister may grant a waiver to a duly registered
vessel where he is satisfied that there is no qualified Nigerian officer or crew for the
position specified in the application42. Further where the Minister is satisfied that no
Nigerian Shipbuilding Company has the capacity to construct the particular type, size
registered vessel on the requirement for a vessel under the Act to be built in Nigeria43.
The granting of waivers by the Minister is discretionary and he may not be compelled
to do so. However where an applicant feels strongly about the Minister’s refusal, he
39
30, 000 by 2001.
40
Op cit. 14.
41
Section 9
42
Section 10.
43
Section 11(1).
15
may seek judicial review of the Minister’s exercise of his discretion 44. The waiver
agreements. In Germany for instance, waivers are granted to non – EU vessels only on
the basis of non – availability or if they are available but at very unfavorable
conditions. Spain, Portugal and Sweden grant waivers if no vessels are available for
the particular service. Greece, Germany and Canada grant waivers based on
reciprocity to vessels that allow each others country to participate in their Cabotage
trade. Finland, Norway and Sweden grant access to vessels on the basis of bilateral
agreement was probably not incorporated into the Act because of the well founded
fears that this might work only to the advantage of foreign operators in view of the
fact that Nigerian operators are not at all involved in international ocean
capacity is established the Act provides that a waiver should be granted by the
Minister, in the first instance, to a shipping company and vessels owned by a joint
shareholding or equity participation of the Nigerian joint venture partner in the vessel
and the shipping company shall not be less than 60% free from any trust or obligation
that in the second instance, the waiver may be granted to a vessel registered in Nigeria
44
Op cit 14 p.24.
45
Usoro, Mfon Ekong, “Cabotage Bill: Understanding The Issues”, www.16/11/04.
46
Section 12(a).
16
and owned by a shipping company registered in Nigeria, provided that the applicant
The policy consideration here is to make it possible for Nigerian operators, in the spirit of
the Cabotage regime, to participate in the coastal maritime trade thereby acquiring
Aside from the long-term advantage of the policy, the measure it is hoped will in the
short term break the present foreign monopoly48. Worthy of note is that waivers granted
under the Act are for a specific duration which shall not in any circumstance exceed one
(1) year49. Also the waiver system provided for under the Act may be reviewed after five
(5) years by the National Assembly50. This measure has the attribute of Nigeria
Aside from the stated terms of granting waivers, an application must comply with the
procedure and guidelines established and issued by the Minister51. A foreign owned
vessel can only be registered for participation in the Cabotage trade upon obtaining a
license from the Honourable Minister of Transport52 in compliance with the Act and
need for such and where he is satisfied that the applicant has met all the necessary
requirements and paid all the prescribed fees. Other requirements are that the owning
47
Section 12(b).
48
Op cit. 29 p.2
49
Section 13
50
Section 14(2)
51
Section 14(1); The Hon. Minister of Transport, Dr Precious Abiye Sekibo issued the Implementation
Guidelines on Cabotage on 7/6/04.
52
Section 15(1)
17
company of the foreign vessel has a representative office in Nigeria, all applicable
duties, levies and tariffs imposed by the relevant authorities applicable to foreign
vessels have been paid, the vessel possesses all certificates and documents in
compliance with international and regional maritime conventions and the foreign
vessel meets all safety and pollution standards imposed by Nigerian Law53. Licenses
issued must be carried on board the vessel at all times54. All waivers and licenses are
produce evidence of improved level of compliance with the provisions of the Act on
a) Evidence of provision of practical training for Nigerian cadets on board the vessel
and
employment.
3.9 REGISTRATION
Registration is compulsory for all vessels intended for use in the Cabotage trade and
shall be dully registered by the Registrar of ships in the special Registrar for vessels
53
Ibid.
54
Section 47.
55
Section 17.
56
Joint Maritime Labour Industrial Council.
18
and ship owning companies engaged in cabotage57. Vessels eligible for registration
a) Passenger vessels
b) Crew boats
c) Bunkering vessels
d) Fishing Trawlers
e) Barges
g) Tugs.
j) Dredgers.
k) Tankers
l) Carriers, and
m) Any other craft or vessel used for carriage on, through or under water of persons,
5. Temporary registration59.
57
Section 22(1)
58
Section 22(4).
59
Section 27 empowers the Minister to grant temporary registration to foreign owned vessels engaged in
domestic trade prior to commencement of Cabotage Act for the duration of their existing contract.
19
In order to obtain the relevant registration certificate of special Registration 60 for each of
the above category of vessels the applicant must meet the requirements prescribed under
The certificate shall thereafter be carried on board the vessel at all times, endorsed
annually61 and renewable every five years. All such registered vessels which are above
fifteen years of age shall continue to be eligible for participation in the Cabotage trade for
a period of five years provided they possess a certificate of sea worthiness from a
recognized classification society62. Foreign vessels must first obtain a license to trade in
the coastal and inland waters before they can be registered in the special Cabotage
register.
domestic trade constitutes an offence under the Act which attracts on conviction a fine of
not less than 5 million Naira63. Further a person shall not in purported compliance with a
requirement under the Act proffer misleading information in any material particular. The
3.10 ENFORCEMENT
However, the implementation guidelines limit the grant to one year after which the condition for foreign
owned vessels under the Act will prevail.
60
Section 29(1).
61
For annual endorsement, an applicant company must as in renewal of license produce (1) evidence of
payment of 2% surcharge where applicable and (2) copy of JOMALIC Certificate of compliance.
62
Section 28.
63
Section 35(1).
64
Section 37(2).
20
designate the officers in the unit enforcement officers65. The enforcement officers are
empowered to stop and board a vessel which they believe on reasonable grounds to
have contravened the provisions of the Act and to detain such a vessel or officers and
with or without a warrant, to search the vessel and seize anything found which they
may where necessary enlist the assistance of the Nigerian Customs Service, the
Nigerian Navy, the Nigerian Police and any other law enforcement agencies as he
may deem necessary67. Also the enforcement officers of NMA are expected to work
in collaboration with officers from other Agencies like the NPA, National Inland
offence has been committed under the Act by or in respect of a vessel, the officer
may without a court order by reason of exigent circumstance make a detention order
in respect of the ship68. Upon detention of a vessel the enforcement officer shall issue
a ship’s Detention Order Form, which must as soon as possible be filed at the Federal
High Court69.
Jurisdiction over matters and offences referred to in the Cabotage Act lie with the Federal
High Court. The Court will be expected to adjudicate widely on matters arising from the
Act; particularly the exercise of Minesterial discretion in the grant of waivers is expected
65
Section 30(1)
66
Section 31(1).
67
Section 31(3)(d).
68
Section 32(1)
69
Minister’s Implementation Guidelines. Enjoins E.O’S NOT TO BOARD VESSELS ON
INTERNATIONAL trade for purposes of Cabotage & restrict boarding of vessels to port /
jetty/anchorage/terminal to avoid security breaches.
70
Op cit. 14 p.38.
21
3.11 CABOTAGE VESSEL FINANCING FUND (CVFF)
The Act establishes a fund to be known as the Cabotage vessel financing fund71. The
Assembly;
d) Such further sums accruable to the Fund by way of interest paid on and repayment
The Fund shall be managed under guidelines to be proposed by the Minister and
While the Fund is salutary, it is hoped that it will not have to go the way of the
SASBF, which was bedeviled by corruption and bad management. The fund on its
part will in all probability not be enough to satisfy the demands that would be made
on it. Recourse will have to be made to other sources of funds like commercial banks,
multilateral and development institutions assistance, grants aid and shipyard credit74.
The target funding level of NMA is to attain a funding base of 500 million dollars,
with no upper limit75. The NMA intends that the Fund will be applied towards vessel
71
Section 42(1).
72
Section 42(2).
73
Section 44.
74
Modalities for the Implementation of the coastal and inland waters by NMA 2004.
75
Ibid.
22
acquisition, infrastructure and manpower development. The Oil and Gas sector will
enjoy considerable leverage, due to its guaranteed cargo traffic. Also priority
The scope of cabotage operations under the Act covers the country’s entire territorial
waters including the Executive Economic Zone (EEZ) stretching up to 200 nautical
miles from the coast baseline. There are twenty one (21) ports on the over 800
nautical miles stretch of Nigeria’s coastline in addition to river ports and private
jetties77. The coastline and territorial waters are replete with vast living and natural
resources including oil and gas with an extensive offshore oil – industry where
shipping services are critical operational factors78. According to Dr. Ebiye Sekibo79
oil and gas sector plays a predominant role in Nigeria’s sea trade, estimated to
contribute about 95% to coastal and inland shipping allied marine activities. He
added that fishing trawlers and break-bulk carriers make up the remaining five
The Cabotage law policy which causes all cargos and passengers in the inland and
coastal waters to be transported by ships and ferries built, owned, crewed and
industries such as moving, towage, pilotage, dredging and waste disposal. Also the
76
Ibid.
77
Akabogu, Emeka Op cit. p. 41.
78
Okonma, Kelvin. Cabotage Law & Investment Opportunities, Internet service, posted 11/22/2004.
79
Nigeria’s Minister of Transport.
80
All Africa. Com/stories/200412170362 1/5/2005.
23
channels of about 3, 000 kilometers of inland waterways under the jurisdiction of
National Inland Waterways Authority. The rehabilitation of the Onitsha Niger River
port and the planned development of the Oguta Lake River port for loading and
transportation will relieve a lot of pressure from road and rail transportation in the
Since the Act bars foreigners from the operation of coastal shipping, it follows that
cargo especially oil and petroleum being lifted solely by foreign registered ships will
now be reserved and guaranteed for Nigerian registered or owned vessels. This
means additional business. “The availability of cargo and passengers to sustain their
business makes domestic shipping companies attractive to credit facilities for fleet
and business expansion and attracts more investors into coastal shipping business”83.
The Cabotage regime creates a domestic market, which ordinarily did not exist,
various ports within the country, through ports to offshore locations, from offshore
81
Igbokwe Mike Esq. Advocacy Paper for The promulgation of A Nigerian maritime Cabotage Law.
Mi – Law office @ nova. Net.ng.
82
Akabogu. loc. cit.
83
Igbokwe Op cit p. 47.
24
locations to the inland waterways, from foreign bound vessels going through local
major areas of need. Support services offer an enormous range of opportunities due
to the heavy movement required between the offshore platforms and land locations
Insurance Companies will be engaged to insure cargo and vessels and seafarers. Presently
hull and machinery (H & M) insurance is low in the country while Protection and
Indemnity (C&I) insurance does not exist86. Act does not have provisions, which will
directly alter the situation; however its operation will to intents and purposes excite the
market87. It will be most convenient and economical for local ship owners, fabricators and
other operators, to insure hull, machinery and cargo with Nigerian insurers for ease and
Calls will be made on banks to finance the building and the acquisition of coastal vessels
while the Nigerian shipyards and dry – docks will have greater patronage in building and
repairs of ships. The construction industry would also benefit from the construction,
Technology Systems will be involved in the supply and maintenance of marine radio
The fact that the ships and vessels must be Nigerian-crewed creates employment
opportunities for Nigerian seafarers to run and man the ships88. This will enhance the
84
Akabogu op cit p. 43.
85
Ibid.
86
Akabogu op cit p.45.
87
The Insurance Act 2003 creates an opening for Cabotage insurance under its domestic insurance or
reinsurance provisions. Vide Section 72(1) Insurance Act 2003.
88
As at 2001, Nigeria had 30, 000 trained but unemployed seafarers.
25
training and accumulated experience of Nigerian seafarers89. There is no doubt that the
regulated cabotage regime will create wholesome opportunities within the domestic
maritime industry that will lead to increased economic activities and immense economic
growth in Nigeria.
The opportunities and benefits of the Cabotage regime is acknowledged and no way
5.1 Institutional
Prior to the enactment of the coastal and Inland Shipping (Cabotage) Ad 2003 a
number of institutional structures that will define the building blocks for the
implementation of Cabotage regime had been in place. Some of the institutions are:
While there may be need to tinker with these institutions, the main institution that needs a
total and complete overhauling is the Nigerian Port Authority. (NPA) 90. There has been
89
NMA in 2003 sent a set of seafarers to Malaysia under a professional training scheme sponsored by the
Malaysian Government..
90
Established by the Ports Act of 1954 is saddled with the responsibility of providing an integrated
approach to port administration in Nigeria. The port system includes 21 ports. The NPA is charged with the
regulation of ports, priers & jetties, pilotage services, berthing, discharging and boarding of cargo from
ships and other transport modes.
26
consistent call for ports reform and government has been making considerable moves in
this direction.
The Nigerian Ports are generally regarded as far below international standards and
commercially unfriendly, charging high tariffs and delivering poor service. The problems
are myriad and include an inadequate supply of craft and plants, a cumbersome
and security agencies. The multiple government agencies include the NPA, Federal
Military Intelligence, JOMALIC and the National Agency for Food and Drugs
Ports are generally regarded as unsafe91. There is the problem of low or non –
plants and equipment with the attendant decline in quality of services and labour
productivity. Others are those of berthing problems arising from quay congestion through
lack of deep water berthing space, reduced channel widths due to silting and other
obstacles and poor lighting in ports. Above all is the shortage of capital for the
improvement of the Maritime infrastructure which reflects in the comparative high port
costs.
cannot be regulated loading or discharging under the Cabotage trade without proper
91
The Maritime Advocate, issue 15, May 2001 www.maritime advocate. Com. 11/17/2004.
27
systems for controls. The Ports Authority should have regulatory control over all harbors,
The continuing deregulation reforms by way of investing the Ports Authority with only
landlord functions suits the Cabotage regime. In order to achieve the desired objectives,
the Port reforms would include achievement of efficiency in Port operations reduction of
Port costs, reduction in bureaucracy, 24 hour port operation, provision of modern cargo
handling equipment, easy clearance of cargo, efficient pilotage, port services, reduced
Too many government regulatory agencies at the port collating levies and charges may
hamper the successful implementation of the Act, as operators will have to deal with
Petroleum Resources, the Navy, the SSS, Police, Federal Inland Revenue Service and
now the Special Enforcement Unit of the Nigerian Maritime Authority (NMA)94.
5.1.1 Another major challenge is the nations ship building capacity; the technological and
financial inadequacy to build our own vessels by Nigerians. Central to Cabotage vessel
operation is the ship building industry, which is at par with that of vessel acquisition.
All domestic operators in the Cabotage regime will be required to build maintain and
repair their vessels at local shipyards unless where there is no capacity locally for
the construction or repairs of a particular size of vessel95. The main and major
shipbuilding and ship repairing in Nigeria is the “Nigerdock Nigeria Plc. Apart from
Nigerdock Plc with an upgraded capacity to build 10, 000 tons vessels, the capacity and
92
Akabogu op cit. p.72.
93
Akabogu. loc cit.
94
Business News December 9, 2004 posted on the internet.
95
Section 11.
28
efficiency of other yards are doubtful96.“Nigerdock Nigeria Plc is the leading West
African fabrication facility for offshore Oil and Gas Industry and is a major ship repairs
and shipbuilding yard. Coming out of a restructuring exercise and now operated by
private investors who are undertaking a major investment programme in capital resources
and people to meet the demands of the projected huge growth in its market97.
“It is hoped that the Cabotage Vessel Financing Fund (CVFF)”98 will constitute a
veritable fund for assisting Nigerian citizens and shipping companies, wholly owned by
Nigerians for vessel acquisition and for promoting the development of indigenous ship
acquisition capacity.
Mr. Uche Nwokedi opined that government proposed Cabotage vessels Financing Fund
(CVFF) should also include maintenance and repairs of vessels used for Cabotage trade 99.
With the restructuring going on in the banking sector it is also hoped that specialized
banks will emerge in the near future to fund maritime industry and activities:100
5.2 OPERATIONAL
The operational challenges to be found in the practical working of the Cabotage are
those that border on infrastructural constraint, inadequate capacity and fair trade. The
provision of the waivers/licenses clause in the legislation was to circumvent the problems
of inadequate infrastructure and local lack of capacity in the immediate term. However it
must be borne in mind that the mischief of the Cabotage Act was meant to remedy is the
domination of the Nigeria’s coastal marine services and waterborne trade by foreigners
and the need to empower Nigerian operators; and that foreign firms which can provide
96
“Cabotage Law & Investment Opportunities” by Kelvin Okonma. posted on internet November 22, 2004.
97
Advert in The Guardian Tuesday, January 11, 2005.
98
Section 42.
99
Mr. Nwokedi’s opinion contained in his address at a 2 day seminar in December 2004 in Lagos. Reported
Business News of Dec. 9, 2004.
100
Some writers have muted the idea of a Maritime Bank.
29
necessary services, in the absence of indigenous capacity, do so after servicing a waiver
Since the take off of Cabotage on the 1st of May 2004, the indigenous operators have
been complaining that they have not enjoyed the best of the regime. They claim that there
are so many vessels belonging to foreign firms providing shipping services locally
In raising an alarm, The Managing Director of Express Cargo (Liner) Shipping Company,
Mr. Abel Edijala disclosed that most of the foreign ships are hiding under the provision
of waiver in the Cabotage Law to continue to use foreign crew instead of employing
Nigerians to man their vessels. This development, according to him has impacted
explaining that indigenous firms failed in responding to the call to register their Cabotage
An analyst has estimated the number of ships currently used in the Nigeria’s coastal oil
trade at 3008 And of the 58 coastal tankers now owned by Nigerians, 22 are foreign
Nigeria reckons a tanker tonnage of over 290, 000 tons as belonging to its members105.
5.2.1 Another problem to contend with in the operational challenge of Cabotage regime is
the so-called “cowboys” in the Nigerian Coastal tanker business. These fly – by – night
101
This Day of December 9, 2004.
102
This Day of December 2, 2004.
103
Ibid.
104
TM cover story posted on the Internet Dec. 2001.
105
Only Bulkship Nigeria Ltd. possesses an ocean going ship within the Association.
30
operators are said to be vessels owned by foreigners but trading in Nigeria under
patronized by the oil majors in less than Legal transactions and that they keep changing
names and flags at will, some of the vessels being investigated by the authorities in this
category include MT. Bora, MT Desert King, Magic Wage, MT Golden Sunrise MT
African Pride, MT Maria NE and MT Adriana. Industry sources say most of the accused
vessels do not have up-to-date survey and requisite certificates to trade in other overseas
One of the frontline maritime operators Captain Emmanuel Ihenacho has opined that a
availability of Nigerian owned registered and crewed vessels of the appropriate market
role and description. He stated that in the context of the current effort of Nigerians to
optimize the Cabotage potentials of the nation there must be emphasis on the need to
provide adequate funding support for asset acquisition if the expected results are to be
achieved107. Ihenacho further noted that aside from the funding requirements for ship
acquisition, given the apparent inbalance which currently exists between supply and
demand factors in Nigeria’s coastal cabotage trade, some of the funding may be made
106
The most contentious of these vessels is the MT African Pride which was owned by a creek flying
Panama flag and crewed by Russians. It also led to the sacking of 2 top Naval Officers over their
involvement in the disappearance of the ship.The National assembly is still investigating; the House of Rep.
recently ordered the arrest of some officials including the hirer of the controversial vessel.
107
Captain Ihenacho, MD Genesis Worldwide Shipping was reported in the Daily Champion, December 10,
2004. Posted on the web.
108
Ibid.
31
On the question of waivers the waiver clauses are inevitable and they are the price for our
types of clauses are not novel and are used even by experienced seafaring nations 109.
What the situation calls for is honesty and commitment on the part of operators and
towards better effective enforcement of the terms of the law”. The National Maritime
Authority and the regulatory bodies, it is suggested, must be fully resourced, competent
and properly trained and comprehensive, as well as transparent monitoring systems put in
Oil and gas industry account for more than 80% of Nigeria’s Cabotage industry111.
Currently, transportation of Nigeria’s oil and gas materials is done almost entirely by
foreign vessels, but government has said that the Cabotage Law is part of its policy of
raising the local content of the oil and gas industry from its current level of about 10% to
According to Dr. Abiye Sekibo, Minister for Transport “the oil and gas sector has
hitherto contributed about 95% percent to coastal and inland shipping and allied marine
activities being dominated by foreign operators”. The Cabotage Law he further stated
capacity building, and provide employment for Nigerian seafarers, adding that it was in
line with the Federal Governments’ National Economic Empowerment and Development
Scheme (NEEDS) strategy consequently the enactment of the nation’s Cabotage Act was
109
Cabotage in Nigeria & Waiver Clauses: A Critical Appraisal of Control Options – Andrew
Obinna.Onyeru. www. Nigerian maritime.com.
110
ibid.
111
Vincent Nwanma Don Jones Newswire website 12 – 02 - 04
112
Vinwanma @ beta. linkserve. com.
32
no doubt a response to the yearnings of Nigerian stakeholders in the oil and gas as well as
5.2.2 However the argument that offers a challenge to the object of the Cabotage Act is
that the regime is a protectionist policy, which violates the spirit of the World Trade
cabotage principles as it were, runs against the globalisation philosophy of the new world
order, the principle of Most Favoured Nation (MFN) and National Treatment, it amounts
to closing our doors to foreigners and depriving the wider market of the benefits of
competition.
As logical as the arguments are, they are not absolutely reasonable. First, cabotage is for
the regulation of domestic maritime industry and does not stricto sensu constitute a
barrier to international trade since it does not close the borders to entry of goods but only
makes regulations for the movement of goods and passengers and the provision of
Also it is interesting to note that the ardent protagonists of globalisation and trade
Kingdom, Japan, Canada, et al, practice cabotage and have strong cabotage laws in their
respective countries e.g. USA has a strong Cabotage Law in Jones Act.
Further about 43 countries of the world have Cabotage Laws and practice cabotage in one
form or the order and restrict the participation of foreigners in their local maritime
113
Law and the Oil and Gas Industry Two Day Seminar on Cabotage Regime co – sponsored by NMA &
NAPIMS December 2004. www.guadiannewa. Ngr.com. 12/9/2004
33
industry. There is the question of national interest and Security, which is the prime
benefit of Cabotage. According to Clyde J. Hart Jr. “Cabotage laws are critical to every
Maritimes nations security interest. More than 40 nations including all G8 members –
agree that free markets are bedrock idea’s but secondary to the welfare of their
citizens…”114. The foregoing facts are self-evident and Nigeria cannot afford to be an
exception; National interest must not be sacrificed on the alter of globalisation and free
trade.
6.0 CONCLUSION
The provisions of the Coastal and Inland Shipping (Cabotage) Act 2003 represent the
foundation of the Nigerian Maritime Cabotage System. It will not be unusual to find
implementation that loose ends will be highlighted and necessary amendments proposed.
challenges in line with the law and policy of the regime will throw up the envisaged
benefits to the nation and its citizenry. Further, it is the expectation that the Cabotage
regime will stimulate and expose our indigenous shipping firms as a stepping-stone to
deep-sea shipping. For in the immortal words of Sir Walter Raleigh “Whoever commands
1
13b“The Oscar Chinn Case” ICJ Dec. 12, 1934.
114
Clyde J. Hart Jr. was addressing the students of the US Merchant Marine Academy (Kings point on
Jones Act; cf. Mikee Igbokwe Esq. op cit.
34
the sea, commands the trade. Whosoever commands the trade of the world commands the
115
Judicious & Select Essays and Observation by Sir Walter Raleigh upon the First Invention of shipping
London. H. Moseley, 1650, quoted by Stop Ford in maritime Economics’ (London, Unwin Hyma) p.138.
cf. Principles of Cargo Reservation & Their Effects on capacity Building In Nigeria, workshop paper by
Chris Asoluka; April 2001.
35