A more diversified Nigerian economy demands an amphibious network of links from railway terminus to seaport.

Nigeria is a regional power in sea transport

Trade liberalization and the channeling of money toward non-oil sectors has prompted the government to rethink the country’s transportation chain. “Port infrastructure is being upgraded. Safety at sea is being improved, private participation in port activities is being encouraged and shipping technology is being enhanced. One can say that we are prepared for the liberalization of the economy,” says Rear Admiral Festus Porbeni, Minister of Transport under Abubakar.

A versatile land and water transportation scheme will serve as a catalyst for Nigeria’s industrial revolution. The inland waterways are being dredged to ensure year-round navigability. River ports along the way are being developed. But if cocoa production (160,000 tons forecast for this year’s harvest) continues its upward movement both in prices and volume, traders will need to supply their buyers before competitors like Côte d’Ivoire get there.

Commerce is projected to increase by 20% among members of the Economic Community of West African States (ECOWAS). Nigerian manufactured goods and mineral exports like bitumen will need to travel seamlessly from factories and tarsand sites down to the country’s six seaports. From there, it’s just a stone’s throw away to West Africa and Atlantic Europe, timewise of course. But after years of military rule, these changes will bring the country out of its psychological self-exile. “We are committed to breaking the jinx of isolation from the developed world,” says Porbeni.

The image makeover which the new Obasanjo government has given Nigeria will help the country capitalize on West Africa’s largest naval infrastructure. With an eye on developing a system to support the expanded productive base, the country’s seaports have been at the vanguard of reform. Port facilities that stood idle have been privatized and the number of federal agencies involved in cargo processing has been reduced to four: the Nigeria Customs Service, the Ports Police, the Nigerian Immigration Service, and authorized agents. The capital budget for 1999 also foresees $8.5 million of investments into access roads like the Port Harcourt refinery road in the oil-producing delta region. The National Railway Corporation (NRC) underwent its own rehabilitation program in 1997 when a Chinese civil engineering team updated 2,278 km of tracks and re-equipped it with locomotives, wagons, and freight cars. Completion of the Itakpe-Warri ore line was prioritized in the National Rolling Plan’s 1999-2001 budget. And the railroad system has been allotted approximately $16.7 million for the installation of a digital microwave signaling system at its telecommunications stations. If these upgrades in the inland transportation system are coupled to projects like the megaport in Onne, Rivers state, known as the Federal Ocean Terminal, the advent of democracy will indeed have given the country a face-lift. “We will win the confidence of the international community. Foreign investors have been assured of concessions and a favorable investment climate,” says Porbeni.

Festus Porbeni

“We will win the confidence of the international community. Foreign investors have been assured of concessions and a favorable investment climate.”

“This is where the internationalists come in,” says John Egesi, director of the National Maritime Authority (NMA) and a graduate in nautical science. “Without them we won’t be able to cope. The whole idea is to gradually start to let trade in until we grow stronger. Then the need for intervention will lessen and we will be able to walk, talk, and run like other people.” The NMA was created by decree in 1987 and ten years later was grossing $52 million for the federation’s coffers. It serves as the overseer of shipping policy and with the country’s new opening to world trade is also supervising the proper commercialization of the sector. Egesi defines his parastatal company as the mother of the future shipping industry in Nigeria.

Ultimately directed at fostering economic ties among members of the ECOWAS sub-region, the NMA assists local companies in expanding their fleet. It also ensures that Nigerian flag vessels carry at least 40% of the total trade to and from Nigeria, referred to in short as the ‘40:40:20’ cargo sharing rule. “But the real definition of the maritime sector is not just the ‘40:40:20’ rule,” says Egesi. “Shipping is not a welfare state. The important idea behind shipping policy is to prepare Nigeria for a laissez-faire stage in maritime activity so that local shippers can become proper competitors.”

In order to compete at sea, Nigeria has to meet safety standards dictated from abroad. The recent merger of the NMA with both the Maritime Inspectorate Division (MID) and the Government Inspector of Ships (GIS) will harmonize safety regulations. All laws relating to maritime safety will now be executed by the NMA. The implementation of these laws in turn grants credibilty to a country’s ports and vessels. “The safety of a ship is expensive. But this is what we call ‘affordable safety.’ Without keeping certain standards we cannot have a good flag state,” says Egesi. A national coast guard regiment is being constituted for search and rescue operations as well as for antipiracy action.

These days marine pollution and other environmental issues are included in the concept of ‘seaworthiness.’ But complying with international eco-standards is an expensive tool for commerce. “The EU might say that the emission levels for exhaust should be set at such and such a number. If they push hard enough, they will push through a convention that fits their own environment. Whenever you talk of safety you are talking cost, and developing countries often cannot afford that level of safety,” says Egesi.

If it pays, go right ahead. That would sum up Wali Ahmed’s management philosophy. Ahmed, the 56-year-old CEO of the Nigerian Ports Authority (NPA), is an engineer by profession who carries with him a reputation for business house-cleaning and pragmatism. He was awarded the title of Maritime Man of the Year for 1998 but remains unassuming: “I am the Maritime Man of the Year, thank you very much, but this is my profession. I am an engineer. I believe in action.” Since his arrival at NPA in 1993, Ahmed is credited for having flushed out corruption and theft at the country’s six seaports of Apapa, Tin Can Island, Roro, Port Harcourt, Delta and the Lagos container terminal. Under his guidance, NPA refurbished old dredgers like the ‘River Challawa’ to clean up the country’s inland channels that lead to the seaports. The campaign to keep these waterways navigable rescued the Calabar port from isolation after a $475 million investment. His strategy will have paid off when Calabar launches its Export Processing Zone later this year. Democracy, according to Ahmed, is definitely a selling item: “This year, with the democratization of the nation we expect four million tons more than we forecast in the budget. The design capacity of our ports is about 28 million tons, but with a little addition we can reach 30 million. Normally in a year we get about 15 to 17 million tons of cargo. Now we could hit the 20 million mark.”

The strategic parastatal at Ahmed’s helm is in charge of operating cargo and quay facilities. NPA offers pilotage and towage services as well as fuel and water supply for berthing vessels. “The NPA is the landlord of the ports, you rent their services and you pay them. They are basically a business enterprise, although owned by the government,” says NMA’s John Egesi of the sister company.

The NPA has proven its operational efficiency in dredging, navigational lighting, water drainage, ship maintenance, and cargo security: $9 million worth in turnover last year alone. Computerization will allow tracking of ships and cargo to avoid pile-ups at port.

As unlikely as it sounds, privatization remains a topic discussed best behind closed doors. Instead, code words like ‘sectional privatization’, ‘private participation’ or ‘joint management’ are passed back and forth at staff meetings. At the dockyards, though, the words lose all their ambiguity. Cargo sheds are being leased out to private firms who in turn hire private tugboats and stevedoring services. At Apapa Port in Lagos, for example, none of the eight berthing stations is under direct NPA stewardship. The 57,000 square meters of combined capacity are operated by small private firms. The port at Tin Can Island, with 13,600 square meters, has similarly leased out its cargo sheds to other businesses. “We are not privatizing per se,” suggests Ahmed. “But we are encouraging individuals with money outside to bring it in if they are in the shipping profession. The ports lease their facilities to foreigners. They then provide their own security, equipment, and documentation”. By going into partnership with a Swiss company, Dockyard Engineering Ltd, the NPA’s dockyard in Lagos has recently added a new floating dock that will help it compete in the ship maintenance sub-sector. It too is nothing if not eminently commercial.

The deep-sea port known as Federal Ocean Terminal (FOT) was a moribund project in a swampy Bonny Island creek until NPA revived the plan. Its versatility has turned out to be the megaport’s selling point. The six berth stations for ocean-going vessels are designed to become a transshipment center for bulk cargo from the oil, natural gas, steel, and petrochemical industries. The federal government has upped the ante by declaring it a free port zone as well: ‘Onne Oil and Gas Free Zone’. The neighboring Liquefied Natural Gas project (a Shell, Elf, Agip, and NNPC joint venture), Soko Gas Plant (Shell), and Oso Field Development (Mobil) are some of its first clients. To promote FOT into a logistics center for the oil and gas industry in West Africa, there are no corporate taxes or import-export duties and 100% foreign ownership is possible. The best incentive of all? You get first-class port facilities.

Trade among ECOWAS countries should leap

Trade relations with ECOWAS could account for 20% of Nigeria’s commerce in ten years. Citing regional development in a recent speech at Abuja, U.S. Undersecretary of State for Economic Affairs, Stuart Eizenstat, remarked that West African integration could create a level of wealth comparable to Latin America’s MERCOSUR. “Right now in the countries of ECOWAS, of which Nigeria is the largest member, only 10% of the total trade of the countries is among themselves. Contrast that with Europe where 60% of EU trade is among member countries. In MERCOSUR, Brazil, Argentina, Paraguay, and Uruguay joined together and trade leaped 20% a year in the first seven years of its existence. If that happened here, think of the wealth that could be created,” said Eizenstat.

Wali Ahmed

“Normally in a year we get about 15 to 17 million tons of cargo. Now we could hit the 20 million mark.”

Privatized and upgraded seaports like FOT aspire to become the nerve center for future ECOWAS commerce. The young cadres of marine port engineers, pilots, and maritime business managers are being trained in Oron at the Maritime Academy of Nigeria (MAN). “We not only train Nigerians who are qualified, but want to extend our training to West African countries, particularly French-speaking ones,” says Olu Akinsoji, MAN’s general manager. “There are 26 countries in the region. In West and Central Africa, only four or five are English-speaking. We want to join other regional maritime academies by promoting regional cooperation and integration. The ambition is to have no boundaries. If you look at the industry, it is a global industry.” The school’s running motto is ‘Manpower development in the maritime sector is a catalyst for economic growth’. The Academy is a training institute for seafarers of all kinds and is regulated by the Ministry of Transport. In 1998 cadets graduated in disciplines like marine engineering, maritime transport, marine pollution and shipping technology. “The purpose of the Academy is to train seafarers to monitor international ships and also to train managers or supervisors in the maritime sector. Without well-trained managers, you are not likely to have enough economic growth to buy the ships,” says Akinsoji.