15 Dec 2021

Why Cabotage is crucial

Every nations Cabotage regime is essentially a reflection of that nations enlightened self-interest aimed at ensuring that the shipping industrys universal value is channelled and routed into developing indigenous capacity and expanding local participation of its citizens in the riches of coastal trade. Thus, to increase the participation of Nigerians in the development of the countrys maritime assets, the Coastal and Inland Shipping (Cabotage) Act 2003, which was shaped after the US Merchant Marine Act of 1920 (Jones Act), was enacted. It is an indigenous shipping development capacity initiative, meant to increase indigenous capacity in tonnage, manning, building and flag registration.

The objectives of the Cabotage law are to:
(1) Attain national sufficiency in tonnage capacity, shipbuilding and seafarers capabilities.
(2) Acquire the technical know-how in ship management, shipbuilding and ship manning.
(3) Enhance the earnings and conservation of foreign exchange for the country.
(4) Preserve the internal and economic security of the nation and
(5) Create employment in the maritime industry.

The Coastal and Inland Shipping (Cabotage) Act, 2003 was signed into law in April 2003 to achieve the growth of domestic Nigerian Shipping Capacity. Cabotage trade under the Act covers:
Carriage of goods by sea and passengers from one coastal or inland point which could be ports, jetties, piers etc., to another point located within Nigeria.

Carriage of goods and passengers by sea in relation to the exploration, exploitation or transportation of natural resources whether offshore or within the Nigerian inland and coastal waters.
Carriage of goods and passengers on water or underwater (sub-sea) installations.
Carriage of goods and passengers originating from a point in Nigeria intended for Nigeria but transiting through another country then back to Nigeria for discharge.
Operation by vessel of any other marine transportation activity of a commercial nature in Nigerian waters including; towage, pilotage, dredging, salvage, bunkering etc.

The implementation of the Cabotage Act is intended to promote:
Accelerated economic growth
Increase in indigenous ownership of vessels
Increase in technological know-how (skilled manpower)
Increase in the participation of Nigeria in domestic transportation and logistics services in the oil and gas sector and acquisition of expertise therefrom.
Stimulate growth in local shipyards
Employment opportunities
Training of seafarers
Improved revenue generation (taxes)
Improved balance of payment position
Saving foreign exchange
Facilitate enforcement of safety and security standards
Afford the participation of the Nigerian financial services sector (Banks, stock exchange, insurance firms)

Increase in tourism
Improved security in Nations domestic shipping trade which is strategic to economic development.
National security and other backward linkages.

However, Nigeria does not have sufficient domestic capacity in both the ownership and infrastructural aspects of Cabotage covered in the Act. Taking due account of the inadequate indigenous capacity, the Act provides the use of the waiver principle, which is based on the following considerations: Non-availability; Reciprocity or Bilateral agreement. In Germany for instance, waivers are only granted to non-EU vessels on the basis of non-availability or if they are available at very unfavourable conditions. Portugal, Spain, and Sweden also grant waivers if no E.U. vessels are available for the particular service.

Greece and Canada grant waivers based on reciprocity to vessels from countries that allow Greek or Canadian flags to participate in their Cabotage trade. Germany, Finland and Sweden grant access to non-EU vessels if they have been granted access on the basis of bilateral agreements. Records show that waivers are generally granted very sparingly. In Finland, only 4 waivers were granted in 1997 and in Greece only 18 waivers between 1997/98. Most Cabotage countries did not record any waiver in the period under review.

Dr. Jamoh, Director-General and Chief Executive Officer of the Nigerian Maritime Administration and Safety Agency, writes exclusively for The Guardian

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