While Nigeria's port reform process continues to make slow if steady progress, efforts to promote the growth of domestic shipping lines in the face of dominant international firms have made less headway.
The government is probably right in assuming that transferring control of the nation's largest ports from the Nigerian Ports Authority (NPA) to private sector operators will inject more competition into the sector and should improve services for vessels transporting goods into and out of the country.
Yet the federal government still hopes that a larger proportion of those vessels can be owned and crewed by Nigerians than is the case at present.
The federal government has secured a N42bn ($300m) loan for the National Maritime Authority (NMA) to support its attempts to promote domestic shipping companies. The loan is being provided by Malaysia's Affcom Group, in association with the Malaysian government, following the conclusion of talks that began in 2003. The negotiations are believed to have taken so long because Affcom has stuck by its guns in insisting that the loan must be spent with Malaysian shipyards.
The money will be used by the National Vessel Financing Fund (NVFF) to both support local shippers and the country's controversial cabotage law, which reserves local trade for local companies. The director of cabotage for the NMA, Stephen Ezekwem, says that the loan will be vital because the Nigerian shipping sector is limited in terms of tonnage, while there are problems with the quality and maintenance of many of those Nigerian vessels that do exist.
At present, few domestic firms are involved in the coastal transportation of crude oil or refined petroleum products, despite the Nigerian National Petroleum Corporation's (NNPC) role in the sector.
Foreign firms dominate, despite cabotage
The Cabotage Act passed into law in 2003 and became effective in May 2004. It aims to reserve shipping work that takes place entirely within Nigerian waters for Nigerian vessels. Cargo that either begins or ends its journey in another country can be carried by ships flying the flag of any nation, but cargo moved between Nigerian ports or along the country's inland waterways must be transported by Nigerian vessels. The act also applies to the transportation of oil within the country.
However, the Nigerian shipping sector currently lacks the capacity to handle all domestic cargo and so President Olusegun Obasanjo...