It is lamentable that Nigeria loses over $4 annually due to the foreign domination of ship chandling business in the maritime sector. Unfortunately, this obtains in the industry despite the 95 per cent allocated to indigenous companies in the Nigerian Local Content Policy Act. The development has underscored the urgent need for the government to address the factors that hinder local ship chandlers from playing a dominant role in the maritime subsector of the economy that used to generate huge foreign exchange.
Due to the domination of the chandling business by foreigners, Nigeria has lost about $60 billion in the past 15 years. This is in addition to losing more than 25,000 direct and indirect jobs. It is equally sad that only one per cent of Nigerian chandlers are currently engaged by the multinationals operating in the nation’s petroleum upstream sector. Previously, Nigerians were in the forefront of the lucrative business that is denominated in foreign currencies. However, following the exit of 20 shipping firms from the country a few years ago due to low business, the bulk of the business is now in the hands of foreigners.
Established through an Act in 1958, the chandling business is made up of retail dealers who specialise in the supply of equipment and goods for ship, known as ships stores. Items that ship chandlers supply include rosin, linseed oil, whale oil, tallow, rope and cordage, chisels, planes, boats, hook, leather goods, engine oil, water and other materials that the captain of the ship may require. By law, ship chandling is designed to be driven by local operators. But the implementation of necessary policy framework witnessed the entrance of foreign operators. Section 24 of the Customs and Excise Management Act (CEMA), which used to regulate the business, has reportedly not been reviewed since 1968 to reflect emerging trends in the sector.
Currently, there are more than 10,000 ships, oil platforms, rigs, and barges operating in the oil and port sectors every year that require essential provisions and services to maintain their crew on board the ships. But these items and services are said to have been hijacked by foreigners, while Nigerians play supporting roles.
All of this is against the provisions of the Local Content Policy currently in operation. We believe that time has come to update the Local Content Policy Act to favour local operators in the maritime shipping sector. This is where the National Content Monitoring Board (NCMB) should wade in and provide the necessary intelligence on companies and their vessels which violate the provisions of the Nigerian Oil and Gas Industry Content Development Act 2010.
There is need to check the Nigeria Customs licence regime as regards licensing foreign shipping firms in the sector that ought to be dominated by local operators. Nigerians can no longer continue to be at the receiving end of foreign shipping operators and logistic companies, owing to lack of funding and poor import policies of the government.
There is no doubt that shipping business is a global venture that is not only internationally regulated, but thrives on giving priority to local operators. That is why the right policies should be put in place to allow local chandlers perform optimally. Giving more attention to local players in the subsector will stop the current loss of revenue to foreigners. Concerted effort should be made to redress the present domination of the business by foreign shipping companies.
Let the Federal Government improve the state of the nation’s ports, especially the terminal and general work environment in the maritime industry. The Dockworkers Union of Nigeria (DUN) recently lamented that the poor state of our ports had forced many shipping companies to fold up, resulting in loss of jobs. It is regrettable that port operators are charging indigenous chandlers about 20 per cent of the total cost of goods supplied. We urge the Nigerian Maritime Administration and Safety Agency (NIMASA) to do something quickly and save the local ship chandlers. This is the time to give local operators their rightful place in the shipping sector.