“Every aspect of the Maritime sector is uncontrolled, in the hands of foreigners….”-Agbakoba
Olisa Agbakoba, OON, Senior Advocate of Nigeria and Maritime Development Lawyer, former President of Nigerian Bar Association and Human Rights Activist spoke with TNMN’s team, Ezinne Azunna and Akin Brown on several issues in the Maritime sector. He lends his opinion on the need to enforce maritime laws, create good policies and establish institutions. Read on…
TNMN: With the Elections over, there is an incoming government, as a maritime expert kindly highlight areas government should focus on once they come on board.
AGBAKOBA: Good question. In order to solve the maritime problem as you know we have, there’s a larger picture we need to look at. The first picture is the change process and that Nigerians have for the first time revoked power. You probably wouldn’t understand that. It means that the recipient of the new power understands the clear manage that if he fails to perform, then revocation can occur in 2019. The reason governments don’t perform property in Africa is precisely because of the invincibility of power, the impunity that they have, so they don’t do well. Look at power (electricity). Power is so basic to any economy yet we don’t have power. So, I will expect that the new president on assumption of office will be very clear about a number of shocks. The first shock is that the imperial presidency which was elevated by Obasanjo is over.
Olusegun Obasanjo, GCFR, former President of Nigeria
Something tells me that we are going to have a new sense of a working president. And that’s a big difference. In terms of costings, we are looking at billions and billions of Naira slashed, and if this goes well, it will impact on the food bills in Aso Rock which is estimated to be about 50 to 70 billion a year. It will impact on the National Assembly that consumes 25% of our National resources. The most senior member of the National Assembly earns one billion a year. That’s ridiculous! Now I’m going into all this to show you that the maritime sector cannot turn around without the proper enabling environment being laid. So, I think that that’s what the new president should focus on.
Muhammadu Buhari, GCFR ,President-elect & Prof. Osibanjo V.P elect
Second thing that will be good for the Maritime sector is the second shock. The first is the change. Second shock is that Nigeria is now a post oil economy which means that receipts from oil revenue are going to dwindle. In fact, the first shock the president will face is an empty treasury. Many state government are not paying, in other words, Nigeria is technically broke as we speak. So, where is the revenue going to come from? Where are you going to get the money to drive the process? It is by cutting the cost of governance, cutting corruption, and then looking for new sources of revenue. So, government has to understand that the shock is that Nigeria is now in a post oil economy. If Nigeria is now a post oil economy, it’s got to look at new areas, not just the maritime sector even though that is your interest. Housing! Housing should explode like a volcano and that will unleash trillions and trillion and trillion of Nigeria.
Then, through the maritime sector which has been comatose, why has it been comatose, because policies are wrong, the legal framework is wrong, the institutions driving it are not there so, we have to have a fresh maritime road map to say what should government be doing, what government does best and what should the private sector be doing, that’s it.
TNMN: For a while you have called for the establishment of the Ministry of Maritime Affairs. In what ways will this help the sector?
AGBOKA: It will help because it will bring a senior policy person to focus on what I think is one of Nigeria’s most important sectors. If we can have a Ministry of Aviation which is miniscal when compared to the Maritime Industry, then I’m saying why don’t we have a Ministry of Maritime Affairs so, it can elevate the discussion. Part of the challenge in the Maritime sector is that there’s no one carrying the policy agenda in Abuja. Transportation is broad but the Aviation guys have the advantage of having someone who focuses and you see what Chidoka did in the short time he was there. He began the policy of institutionalizing a national carrier, enhancing finance. Those are the sorts of things we need to see at the Maritime level. Unfortunately, it is doubtful that President Buhari will create a Ministry of Maritime Affairs simply because; I understand he wants to run a lean government. I also understand that Aviation may merge with Transport. Now, if this happens, then I will expect to see senior level directors. In the old days, the Director of Maritime Services was a specialist. Now, it’s a disgrace. Anybody can be posted there. There was once someone was posted from I think Agriculture, and she had no clue what her job entailed. So, two scenarios: the Ministry of Maritime Affairs or if it is merged, a senior person at the Directorate level who understands what the Industry needs.
TNMN: You were one of those who piloted Cabotage in Nigeria. After many years, one will expect to see ships built, owned and manned by Nigerians.
AGBAKOBA: But, that’s not there.
TNMN: So, would you say Cabotage is a failed project?
AGBAKOBA: It is not a failed project. It is an unenforced project. So, it’s not failed. Cabotage is a good proposition; otherwise, the Americans won’t have it. Every country must have laws to protect its national development. In Nigeria, the opposite is the case. So, it’s an all comers affair. MTN is here without assets. MTN makes more money than Dangote and all the banks combined yet, they don’t have a single asset. They have no vehicles, they have no houses. They have only one asset, that’s the airtime they sell to you. If there’s a problem in Nigeria today, all the MTN big boys from South Africa will board a plane and go. They will lose nothing. Everything is rented. We can’t allow that. There has to be National Content, National Treatment, Local Content. So, Cabotage is Local Content. Unfortunately, it is not enforced. You have 10,000 , 15,000 , 20,000 foreign vessels plying our coastal waters. So, it’s unattractive to banks to lend to local ship owners because, they will say where you will get the business from. But, if we close the market in a way that allows Nigerians to be the dominant operators, then you are creating business for the Nigerian economy.
TNMN: But waivers are said to be one of the challenges of Cabotage
AGBAKOBA: That’s what I’m saying. The Law is not enforced
TNMN: Why not sir?
AGBAKOBA: Because Government takes bribe. That’s all. That’s what they do. The Ministers take bribe. That’s the reason. Because, we drafted the Law and we said that waivers will be granted only in exceptional circumstances; when it is clearly proved that we don’t have local capacity. But, it’s not working. It is not working because we have corrupt inefficient government that does not understand that the only way you can create employment, not only in the Maritime sector but elsewhere is to enforce the Laws. If you don’t enforce laws, the country will not work. Not just the Maritime sector, anywhere! So, what we are looking at is a President who will set up policies across field to grow economic development, and in our field of Maritime Trade, to make sure that we can tap the massive revenue/resources.
Since oil is going down. America is not importing our oil. India, China now has competition. So, Nigeria is challenged to sell oil. And Nigeria is one of the countries whose oil is carbon driven. Carbon oil is no longer popular. So, we are in a situation where as we go along, it will be difficult to sell carbon oil. Today, economists describe carbon oil as trapped assets. What happens when you have trapped assets? You want to dispose of it at any price. Very soon, oil prices will come down because those who have trapped assets want to force it out cheap. Prices will go down and Nigeria will be staring at a massive revenue shortfall. And I think that in a way, it is a good awakening call. It will kick us up. It will make us think. A country that’s so blessed with Maritime resources and has never bothered to tap it. Mark you, we are also one the eight countries in the world that have the luck, the God given blessing of having an extended 150miles of Exclusive Economic Zone. Every country in the world has 200nautical miles but we have an additional 150. What do we do? We allow the Asians to gazump in those waters and take billions and billions of Aquatic resources; shrimps, fish etc. It’s lunatic!
TNMN: There’s an obvious need to enforce Laws in the Industry
TNMN: That’s the only way forward?
AGBAKOBA: Not only enforcing laws. Create policies. Create good policies, enforce the laws and also create institutions. It is very important to remark on this. How do you expect the Maritime industry to grow when crucial bills like the Port and Harbour Bill has been in Parliament for nine years? It is ridiculous! It’s unbelievable! How do you expect the Industry to grow when there’s no economic regulator? Alright, I know Shippers Council was empowered by the President just the other day, but the law has been in the Parliament for four years. The Nigerian Maritime Administration and Safety Agency (NIMASA) is confused with too many responsibilities. Initially, it was the lean responsibility of Maritime Safety and Security. Then, they added everything! Ship building, this, that! And so right now, NIMASA is a confused institution. So, institutions must be set aright, implement policies and enforce the Law. Then, allow the private sector to provide the resources to drive it. You will be looking at seven trillion a year plus about a million jobs created in the next five years.
TNMN: How about Cabotage Vessel Financing Fund (CVFF)? Is it a blessing?
AGBAKOBA: It’s a failure. Complete failure.
TNMN: Why would you say so?
AGBAKOBA: It’s a private sector thing. Government has no business financing. What Government does is to set up institutions. So, if institutions are set up, that’s why in the letter I did to the incoming President, which I hope he reads because there will be so many letters, I talked about the bedrock of development which is credit. Without money, you can’t do anything. People often do not have enough so, I want to buy a VLCC (a Very Large Crude Carrier) but I have a million dollars. I also have a good plan but, it cost 30 million dollars. The guys are willing to sell to me but they are afraid. How will they get paid? The National Credit Guarantee Agency is such a vital institution that I don’t even understand why even Ngozi Okonjo-Iweala did not create it because once it’s there; it enables you to multiply your capital.
Ngozi Okonjo-Iweala, Finance Minister
You can never have enough. America’s economy is driven by 80% to 90% borrowed money. So, I will expect that the new government will look at this Cabotage Vessel Financing Fund (CVFF) and abolish it. Simply create the National Credit Guarantee Agency. If you have a good plan, and a letter of credit is opened for you to the shipyard, you will get the guarantee. It becomes a condition for the guys to sell to you knowing that if there’s a default, they go against the government. That’s what everybody does. All the leading countries in the world have this National Export Guarantee Agency, the Americans call it NEXIM. So, it’s simple. In that way, people in the Aviation Industry, Maritime Industry can all borrow. So, CVFF is not necessary.
TNMN: There’s been a tussle between Shippers Council and Port Concessionaires over high port charges. What’s your take on it?
AGBAKOBA: The policy was also wrong. Remember that the Bureau of Public Enterprises created the privatization policy to sell public enterprises, which notionally is a good idea, but in practice, they messed it up because the relevant bridges were not built. You don’t go from State Owned Enterprises (SOE) to Private Sector Enterprises without constructing the relevant systems. So, they just threw out the concessions. They didn’t even put a law. That’s the Port and Harbour Bill which now says that NPA is no longer a service port. It’s now a landlord. That’s all they do. It’s a miracle that the concessions were able to sell. But then, the concessions sold because it was a fraud on Nigeria in the very first place. All these concessionaires you see don’t your interest at heart. They want quick money. They know we are fools. They made bids, took the concessions and they have done absolutely nothing. If you look at the concession agreement that says they must do XYZ including putting up electronic gates at the ports, they have done nothing. All they have done is to strengthen the ports to enable them do their own business. So If I were in authority I would cancel all the concession on the grounds that they have all defaulted then, go back to the beginning, pass the Port and Harbour Bill, and then invite proper bids. Then, they can come back if they want. If they now misbehave, you see it comes to enforcement again, if they misbehave by not doing what they have been contracted to do, they will be punished. The ports are just kalokalo market. The charges are outrageous. It’s the most expensive port in the world. Can you believe that out of 10 containers coming to Central /West Africa, eight belong to Nigerians? But they go to other ports because they are cheaper. Have you ever been to Cotonou car market? All those cars come here.
Cotonou Car Market
Why don’t they come to our ports? Even the fuel subsidy scam, virtually all the mother vessels berthed in Cotonou. 25% of the economy there depends on Nigeria. Can you imagine? It’s terrible!
TNMN: Let’s talk about Project Cargo. Indigenous Freight forwarders lament that Project Cargo is in the hands of foreigners. Another case of the Local Content Act not being functional and it’s the same story when you talk to divers…
AGBAKOBA: What of fish trawlers? Every aspect of the Maritime sector is uncontrolled. It is in the hands of foreigners and I have nothing against them but they have to obey our laws. So, what I’m saying as a general proposal to push the industry forward is the need for a Maritime Minister. If that fails, then we must have someone in Transportation that carries the interest of the Maritime sector at heart. Luckily, oil has failed so; this is likely to happen anyway. Then, a new maritime policy road map should set and there’s no need for dogon turanci or big grammar because everything is written already. I was the deputy chair of the Presidential Committee on Maritime Reform. So, it’s all there. That’s a road map. All you need to do is to implement it. Once you implement it, then all these things you speak of can be corrected. Even the so called Inland Container Depots (ICD) that should have brought revenue, the six of them are lying empty. What about the Inland ports? Under the colonial government we had 46 Inland ports so, you could move cargo. You know you can go from Lokoja to Bayelsa moving yam, and you can go from Lokoja to Onitsha moving yam and fish, and from Ondo to Port Harcourt. That’s all gone. So, the only source of moving goods today in Nigeria is the roads. Everything has collapsed. So, the Transportation Minister has the task of creating a multimodal transportation system- Sea, Air, Road. That’s what we are looking at.
TNMN: Now, that you‘ve mentioned roads, we all come to Apapa daily in this traffic gridlock. What comes to your mind as you ply this route?
AGBAKOBA: Sad. It’s sad!
TNMN: What’s the way forward?
AGBAKOBA: The way forward is all I have said but coming through Apapa and seeing the decay, it’s sad and I just say why can’t anybody realize that this Apapa brings in half Nigeria’s wealth? Half! Customs alone with their inefficient method of collection, they collect one trillion naira annually. What’s this year’s budget? Four trillion plus. That’s already a quarter. Imagine when Customs have a larger catch because the ports are efficient, and everybody is bringing goods, we will make 10 trillion from the ports alone. Fashola made 30 billion just from land charges because he has a good tax revenue administration. Before you do that, you must show people what you are doing, and they have confidence in you. Right now, no body is coming here. So, all the roads are broken down and all you have are tank farms. It’s absolute mess.
TNMN: You are the consultant to Nigeria Shippers Council. Recently, the Council was declared the Economic Regulator of the sector. What should we expect?
AGBAKOBA: If it works, first of all, it is to empower the Council properly so that we can avoid litigation bordering on if they have power to do what they are doing. As you know, the two cases in court is because Hassan Bello, who I like very much, he’s very passionate, the Executive Director of the Council issued the regulations.
Hassan Bello, Nigeria Shippers Council boss
Then, it shocked the concessionaires.
The function of the economic regulator is to balance the tariffs, to make sure that the ports are quality and at the same time competitive and attractive. That’s all they do. The concessionaires instead of coming to talk about it went to court to say who gave you the power.
In truth, notionally, the concessionaires may hide under the fact that we all know the Shippers Council to be established under the Nigerian Shippers Council Act, and that power is not there. But the President exercising his powers under section five of the Constitution made them the economic regulator for the sector. But instead of all these lack of clarity, why can’t you simply pass the law. You see, that’s what I’m saying. Why can’t you simply pass the law so that the concessionaires can’t hide under gaps? The first thing President Buhari needs to do is to pass that law so, the case in court becomes spent. Useless. Then, Shippers Council will now issue fresh regulations, let’s see why they won’t obey it. That’s it. And once Shippers Council is able to stabilize prices, and get port users (here I’m not focusing on concessionaires alone, get people in the Maritime sector to keep their prices user friendly then, you will see that it will change.
And I can give you an example of NCC. They regulate the telecommunications companies. The companies can’t just say that they won’t produce N100 recharge cards anymore, that the cheapest is N1000. They can’t do it. And right now, under NCC’s quality control directions, quality of service regulation, MTN is not issuing new cards. They are simply recycling because the base stations are not enough to carry them. Drop call as you know is a big problem. So, the work of the Nigerian Communication Commission (NCC) in communication is exactly what the work of Shippers Council will be in the Maritime Industry. And when you do that, many players will come and there will be revenue for government because it’s user friendly. And that’s why I really hope that the incoming administration will understand the power of the sector and the multiplying effect it has on developing Nigeria.
Olisa Agbakoba SAN, Maritime Development Lawyer and Ezinne Azunna,Editor, The Nigerian Maritime News
Posted on : May 14, 2015