IMPACT OF CABOTAGE ACT ON LOCAL CAPACITY DEVELOPMENT: A STUDY OF SELECTED INDIGENOUS SHIPPING COMPANIES IN NIGERIA

IMPACT OF CABOTAGE ACT ON LOCAL CAPACITY DEVELOPMENT: A STUDY OF SELECTED INDIGENOUS SHIPPING COMPANIES IN NIGERIA

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CHAPTER ONE

                                                   INTRODUCTION

1.1  Background of the study  

The term “cabotage” is a Spanish word which refers to the maritime trade along country coastlines. In the context of its usage in the study, the term Cabotage refers to the coastal shipping opportunities which exist in respect of Nigeria’s coastal maritime trade. The captivation of this lucrative shipping market opportunity is expected to occur as a result of the compulsion of the restrictiveness provisions of Cabotage Law. The market reservation provisions of the law is intended to achieve the reservation of a significance part of the Nigerian coastal shipping business opportunity, particularly those existing in respect of the local carriage of goods, the coastal transport of men and materials, the supply of offshore vessels of differing operational and market role description, the supply of all manner of shipping services between all Nigerian coastwise and offshore locations for Nigerian operators only (Walter, 2010). The commencement of the cabotage regime is supposed to effectively signal the rebirth of Nigeria as a budding regional player (Abubakar, 2002).

The Cabotage Law came into force in April, 2004 (Cabotage Act, 2003) aimed at reserving the costal shipping for Nigeria national. In essence, the system of maintaining the domestic shipping industry is being regulated by the Cabotage Law. This involves the merchant fleet, and the protection of the environment and bio-diversity (Ballack, 2005). The study is of the view that if the Cabotage Law is properly implemented, Nigeria will be able to maintain jobs and skills in an industry that is vital to its future. Lack of knowledge about the maritime sector could be blamed for the very poor response it has generated from investing public (Agidee, 2001). The oceans are as old as the maritime trade and dates back to the beginning of recorded time. Nigeria can only negate the development of its maritime potentials at its own peril especially taken into consideration her expensive maritime resource. (Ozuruya, 2007) The nation has been losing as much as $4 billion U.S dollar to foreign ship owners yearly owing to lack of indigenous capacity in the local maritime transportation.

This lack of participatory capacity was attributed to the inability of indigenes to invest in the maritime transportation sector. The situation is quite critical to the extent that transport services for the personnel and equipment for oil exploration in the deep sea were being rendered by foreigner, which has caused the country dearly. It is the opinion of the ship operators and maritime stakeholders that with the advent of the Cabotage Law and the local content policy of the government, which should be supported by proper implementation, it is hoped that better days lies ahead for Nigerian businessmen who could key into the merit of the Act. The local operators should be prepared to tap into the multipliers effect of the Cabotage Law (Ozioruva, 2004). The law gives room for ship building, shore to rig services, green field development and manning. In turn, Nigeria would as well make its system attractive to foreign investors. Given legislative backing by moving local content from 40-70% in the near future. It is conceived that there would be more shipping services such as ship chandelling, agencies and haulage for Nigerians (Agbakoba & Associates, 2002). However, Cabotage guidelines specified the procedure of implementation the Act. However, currently it has been receiving a lot of criticism from the public and stakeholders. In sum, according to the Cabotage Law, cargo means goods carried on a vessel whether or not for commercial value and include livestock, whereas coastal trade or Cabotage means, the carriage of goods by vessels or any other mode of transport (Ballack, 2006), from one place in Nigeria or above Nigerian waters. Either directly or via a place outside Nigeria and includes the carriage of goods in relation to the exploration or transportation of the minerals or the minerals or non-living natural resource of Nigeria. However, the impact of the Cabotage Law cannot be overemphasized in that the agency is to see that ships within the zone comply with the international conventions and National Safety Regulations. In addition, NIMASA is responsible for promoting indigenous maritime capacity, particularly in the ship, ownership, greater tonnage and an enlarged professional work force. According to Decree No.10, 1987 and other related functions by Section 2 of the Cabotage Act, it covers the carriage of goods by sea and passengers originating from one coastal or inland point, which could be port, terminals, jetties, piers etc., to another point located within Nigeria. It as well revolves

around the following:

1. Carriage of goods and passengers by sea in relation to the exploration, exploitation or transportation of mineral and non-natural resources whether offshore or within the in inland and coastal waters.

 2. Carriage of goods and passengers on water or underwater (sub-sea). Installations.

3. Carriage of goods and passengers originally from a point in Nigeria destined for Nigerian market but transiting through another country then back to the Nigerian market for discharge Ukpere and Lazarus 5659

4. Operation by vessel in Nigeria waters including tonnage, pilotage, dredging, sawage, bunkering etc. The Coastal and Inland Shipping (Cabotage) Act 2003 was quite recent; the Act is part of the policy of government to create opportunities for Nigerian to participation in all sectors of the economy. The enactment of the Act was also in response of the yearning of Nigerian stakeholders within the maritime industry both in the public and private sector for legislative intervention to stimulate the participation of Nigerians in its domestic coastal trade.

In recognition of the technical capacity of the shipping industry, Section 51 of the Act provides for a transition period of one year within which the necessary modalities and guidelines for the smooth running of the Cabotage regime would be developed. To facilitate the enforcement of the Cabotage Act, the Honorable Minister of Transport constituted a committee on the modalities for the implementation of the Cabotage on the 12th of February, 2004. The act was divided into four; enlightenment/ sensitization, operations and enforcement, Cabotage Vessel Financing Fund, and Legal/Regulatory Framework. The study therefore seeks for more indigenous participation in the maritime industry with the aim of repositioning the Maritime industry for economic recovery and sustainability (Cabotage Act, 2003).


1.2  Problem statement

The essence of the cabotage Act is to allow more indigenous ship operators to participate in the Nigerian Maritime industry for economic recovery and sustainability.

However, the current outlook seems discouraging as more foreign operators are rather patronized within the Nigerian Maritime industry.

1.3  Research question

The above statement led to the following research questions:

What is the effect of foreign vessels operators dominance on the maritime industry in Nigeria,

what is the impact of this foreign vessels operators’ dominance on the Nigerian economy at large.

What are other pertinent issues affecting indigenous does not significantly affect tanker operation in Nigeria

1.4  Research objective

The objectives of this research are:

The above statement led to the following research questions:

To examine effect of foreign shipping operators dominance on the maritime industry in Nigeria.

To explore the impact of foreign shipping operators’ dominance on the Nigerian economy at large.

To examine other pertinent issues affecting indigenous operation in Nigeria

1.5  Hypothesis

Foreign vessels operators’ dominance does not significantly affect maritime industry in Nigeria.

Foreign vessels operators’ dominance does not significantly affect Nigerian economy at large.

To examine other pertinent issues affecting indigenous operation in Nigeria

1.6  Significance of this study

The result of this study would be useful to training institutions, management of major business organizations, administrative office managers, students, researchers, curriculum developers, policy makers in education and the lecturers to fine-tune the curriculum to meet the new challenges in office administration for greater productivity. Training institutions would in a special way benefit immensely from the result of the study as this serves as a guide in their training approaches. This study would provide a useful road map to the management of major business organizations by helping them to make useful decisions about what training programmes they should offer to administrative office managers who have been in the service before the advent of the contemporary skills.

The findings of the study would provide useful information to the practicing administrative office managers to make useful decisions on self-development for improved service delivery. In the same way, students in office technology and management would benefit immensely from this study as the findings would provide a solid foundation for their academic pursuits. Researchers would also find this study useful as the findings would serve as reference material in their investigations.


1.7  Scope of the Study/Limitation of the study 

The study was delimited to evaluation of the Impact of cabotage act on local capacity development: a study of selected indigenous shipping companies in Nigeria.

It is inevitable that a survey research of this nature must have some constraints which impact on this study. The study was limited strictly to undergraduate students of University of Calabar. Insufficiency in research funding reared its head to perhaps limit the researcher’s efforts and interest during typing, photocopying and binding processes.   

The dearth of materials for a proper and effective research work constituted a major limitation. Again, how to get the true and required information from the students through questionnaire also constituted a constraint in the study.

To this end, there was the problem of convincing the students on the primary objectives of the questionnaire so as to give the true and required information.


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