23 Jun 2021


There has been a significant reduction in the rate of piracy on Nigeria’s maritime environment since February 2021, when the Nigerian Maritime Administration and Safety Agency (NIMASA) rolled out the Integrated National Security and Waterways Protection Infrastructure, popularly known as the Deep Blue Project. This should ordinarily be cheering news to maritime stakeholders in Nigeria, including the federal government which has done a lot, perhaps more than any government before it, to make the country’s waterways safe and secure for seafarers and for economic activities to thrive. But this has not been the case.

While the crime rate in Nigeria’s waterways has maintained a steady decline, war-risk insurance on Nigeria-bound cargoes has remained inexplicably high. This has continued to pose a threat to maritime trade in the country’s waterways. Stakeholders in the Nigerian maritime industry are hard pressed to understand a situation in which offshore underwriting firms still insist on very high premium on cargoes coming to Nigeria, despite the evidently declining rate of piracy in the country’s waterways.

For purpose of explanation, war-risk insurance is insurance that covers damage caused by war, including invasion, insurrection, rebellion and hijacking. This policy, which also covers damage caused by the use of weapons of mass destruction, is commonly used in the shipping and aviation sectors.

War-risk insurance comprises basically two components. There is the War Risk Liability, which covers people and items inside the vessel or aircraft, as the case may be, and is calculated based on the indemnity amount. The War Risk Hull covers the vessel or aircraft itself and is calculated based on the value of the craft. Premium on liabilities varies according to the expected level of stability in the country where the ship or aircraft is going.

Before now, the war-risk phenomenon applied to countries with established high rate of piracy, such as Somalia. However, due to the involvement of youths in the Niger Delta in militancy about a decade ago and the general state of insecurity in the Gulf of Guinea, Nigeria was included in the list of war-risk countries. This consequently saw Nigeria bearing the biggest brunt of the increase in war-risk insurance on cargoes coming to its ports, especially since the country accounts for about 70 per cent of maritime trade in the Gulf of Guinea.

The Deep Blue Project is proving to be the game changer in NIMASA’s efforts to keep Nigeria’s waterways, extending up to the Gulf of Guinea, not only secure but also safe for maritime activities to flourish. It is an initiative that has been acknowledged by no less an institution than the International Maritime Organization (IMO) as the answer to the security challenges in the Gulf of Guinea.

Within four months of operation, the project has reduced quite significantly the rate of piracy in the Nigerian maritime environment, on a monthly basis. This success is aided by the existence of the Suppression of Piracy and Other Maritime Offences (SPOMO) Act of 2019, which makes it possible for maritime offences to be prosecuted in a court of law. Since its enactment, over 10 convictions for various maritime offences have been secured.

With the boost given the Deep Blue Project by the recent arrival of one of the special mission aircraft which form the last component of the project, coupled with the project’s official inauguration by President Muhammdu Buhari on June 10, 2021, criminal activities in the Nigerian maritime environment will continue to abate.

Our waterways will become safer and more secure. It is a matter of time before the unenviable tag of the most insecure and unsafe maritime environment in the world given the Gulf of Guinea by the international community is removed. There couldn’t be a better indication of the possibility of achievement of this goal than President Buhari’s assurance, at the launch of the Deep Blue Project, of government’s commitment to ensuring sustainability of the project.

It is against the background of this soaring and unprecedented success that one must question the continued maintenance of the astronomically high insurance premium Nigeria-bound cargoes still attract. According to Oceans Beyond Piracy’s 2020 Report, the total cost of additional war-risk area premiums incurred by Nigeria-bound ships passing through the Gulf of Guinea was $55.5 million that year, while 35 per cent of ships transiting the area carried an additional $100.7 million as kidnap and ransome insurance.

Before the deployment of the Deep Blue Project by the current NIMASA administration, insecurity in the Gulf of Guinea was so bad that Beazley, the global insurance firm, had to design a bespoke insurance plan for maritime crew passing through the region, called “Gulf of Guinea Piracy Plus”. This is meant to provide for extra losses that may be incurred due to unforeseen criminal activities in the region.

It goes without saying that the negative consequence of this additional spending by shippers in Nigeria lies in the very high cost consumers in the country pay for imported goods.

The international shipping community must rethink the issue of war-risk insurance paid on cargoes meant for Nigerian ports. It is time to effect a downward review of such insurance premium, if Nigeria is to participate fully and profitably in international maritime trade, like other countries.

Dr. Jamoh can be reached on Twitter: @JamohBashir. #Thevoiceofmaritime

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