Private Sector Participation in Maritime Industry

Topics: Lagos, Nigeria, Private sector Pages: 48 (14736 words) Published: January 27, 2012
1. Background of the Study
Today's highly fierce and dynamic global economy requires nations of the world to thoroughly harness their human and natural resources so as to remain competitive within the scheme of things. The proper identification of available resources (both human and material), exploration, efficient utilization and proper maximization of such resources through competent modes are critical success factors in the quest for relevance in the new millennium. Beside human population which readily provides seemingly cheap labour for effective productivity in a given space and time, other factors of production such as capital and land (water and coaster resources inclusive) represent veritable platforms for achieving national growth and socio-economic development.

Nigeria, with an estimated population of over 140 million (NPC, 2000) and no doubt the most populous country in Africa, occupies a strategic location within the West and Central African sub-region. The country has a coastline of over 850km and four major port zones of Lagos, Port Harcourt, Calabar and Warri (NIMASA, 2008). This vantage position enables her easy access to the neighboring countries hence goods meant for other ports of the sub-region are being transshipped from Nigerian major seaports. Also, a larger part of goods meant for Nigeria's land locked neighbors are being freighted through Nigerian seaports. Even historically, Nigerian coastal and riverine communities were engaged in shipping and fishing using dugout canoes. They were quite versed in the art of shipping to the extent that regattas and other traditional maritime rituals were developed.

The importance of the maritime industry to Nigerian's socio-economic wellbeing cannot be overemphasized as cargo throughput to and from Nigeria accounts for more than 65% of the total volume of cargo generated by the entire West African Sub-Region. The sector remains critical to the realization of the projections of the oil and gas sector, which accounted for 40 percent of the GDP, 90 percent of export as well as 80 percent of total government revenue in 2008 (Dosunmu, 2009). The industry is projected to provide well over 10,000 jobs for Nigerian on yearly basis including seafarers, terminal managers etc.

Though Nigeria is richly endowed with great petroleum and maritime resources, the country has over the years not been able to tap these great potentials to the benefit of the people of the country. According to Abulsallam (2004), with an average daily crude oil production estimated at two million barrels per day at an average freight rate of $2.5 per barrel per day, Nigeria generates in excess of $5 million per day, most of which go to foreign operators and therefore spent outside the nation's economy. Experience has further shown that over the years, before an investment decision is made, the prospective investor considers the regime of laws and efficiency of the courts in terms of resolving disputes, safety of such investments, return on investment, which is quite high and the availability of infrastructure. The rating by the International Maritime Bureau (IMB) of Nigeria as a high risk area in terms of pirate attacks does not engender investment inflow.

At the dawn the new democratic dispensation in 1999, the Government hosted the Port Restructuring and Concessioning Team from the World Bank and started championing port reforms. Before this time, the Nigerian Ports Authority regulates all major ports in Nigeria, including the Apapa Port. The privatization of the agency and subsequent concessioning of the ports to private sector organizations willing to develop and manage their own ports and those wishing to contribute to the up-grading and standardization of existing equipment and facilities at the ports and the country's extensive onshore and off-shore terminals and jetties. This approach became necessary in order to reposition the entire...
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