INSIGHT: WHY NNSL FAILED, NIGERIA NEEDS TO REFLOAT A NATIONAL SHIPPING LINE

BY Celestina Chinyere Okere

 

Nigeria as a coastal state is saddled with many challenges of which unemployment is one.
The Country has a coastline of about 850km and an exclusive economic zone of about 300,000sqkm and more than 3000km of navigable inland
waterways as reported in Punch Newspaper of 13th March 2018.

With it’s largely endowed maritime nation in terms of coastal shipping resources.
The River Niger is the third longest river in Africa with over 1,2715km of navigable water and an attendant huge potential for transportation.
In terms of infrastructure, Nigeria has a number of viable seaports and inland container ports located in the hydrocarbon rich Gulf of Guinea. Nigeria is the world’s 6th largest exporter of crude oil with an output of more than 2.4million barrels per day mostly at peak periods.

The former Minister of Transportation, Chibuike Ameachi and other well meaning Nigerians have seen the need to explore and harness the maritime sector to reposition Nigeria’s economy and absorb the unemployed population of the nation.

Also, the Director General of NIMASA , Dr Dakuku Peterside has referred to the Maritime sector as the trust of golden opportunities that sincere investors are assured of with maximum profit.
All these natural resources comparatively places Nigeria amongst the richest Countries of the world and position her to make a significant impact on the global shipping arena. But the Country has not been able to properly harness this wealth that nature has endowed on her, rather she has allowed the industry to be dominated by foreigners due to lack of skilled domestic labour.

Statistics from the NNPC obtained from the National Bureau of Statistics indicates that Nigeria imports 1,260metric tones of petroleum product monthly which are lifted exclusively by foreign shipping companies since would-be competitors lack the requisite capacity to do so.

The questions that arises are:
Has Nigerian government and her people not seen the hidden treasures in the Maritime sector?,
What economic value do the foreign shipping lines add to the economic growth of our country? and What is the fate of our dear nation in the near future if the sector is left unharnessed?

I will start by providing answers to these thought provoking questions.
Nigeria does not have a shipping line now since the liquidation of the NNSL in 1995.There is a cogent need for Nigeria to float a shipping line as proposed by the immediate past minister of Transportation. But before the new national shipping line is refloated, the defunct NNSL should be revisited to investigate the reason for its collapse and the way forward.
The Nigeria National Shipping Line (NNSL) was the only baby our Country had in the maritime sector and it served us well to its full capacity until its liquidation.

NNSL went aground as a result of its faulty managerial foundation, mismanagement, operational issues, political influence/negative government interferences and greed by the operators and government.

FOUNDATION/ FORMATION OF NIGERIAN NATIONAL SHIPPING LINE
The establishment of the Nigerian National Shipping Line (NNSL) was born out of government deliberate policy not only to participate in the invisible earning sector of the economy, but also as part of its economic independence from the Colonial Masters and the creation of the Country’s distinct image.

It also came into being through a private member motion at the Federal House of Representatives in 1958 and 1959.
The motion called for the establishment of a government shipping line that would carry the Country’s flag to all the seas of the World. It was passed into an Act of Parliament in 1959, the Federal
Government then incorporated the NNSL with the following objectives.

1. To protect the good image of Nigeria abroad by flying the nation’s flag on the high sea and World Seaports.
2. To promote the acquisition of shipping techniques by creating and diversifying employment opportunities in the shipping industry.
3. To improve the Country’s Balance of Payment positions by enhancing the earnings and conservation of foreign exchange.
4. To assist in the economic integration of the West and Central African sub-region.
5. To support the Nigerian Navy in the event of conflict.

From the forgoing objectives, it could be said that profit motive though implied was not the motivational factor for the company’s establishment.
One has to understand the mood of the major political players of the time to appreciate why “showing the nation’s flag to the World was a major focus”
The ships were indeed expected to play the role of ambassadors for the emerging Independent Country of Nigeria at that time.

Arguably, NNSL achieved most of its major objectives as envisaged by Nigeria founding fathers.
It was adopted and authorized and fully paid up share capital of 4,000,000.00 Pounds Sterling held jointly by the Federal Government of Nigeria and two non-Nigerian shipping lines, namely Elder Dempster Lines Limited and Pamo-line limited, both British were Technical Partners.
The Federal Government held a controlling share of 51% while the two technical partners had 49% between them.

In 1961, either in euphoria of political independence or selfish interest of the Nigerian management of the company, the non-Nigerian equity holding were bought out prematurely and the company became wholly owned by the Federal Government of Nigeria with the Nigerian Management in total control.
The company however had a small office at Liverpool in the United kingdom wholly manned by British personnel for fleet management which included technical ship maintenance and programming.
Elder Dempster lines were also general agents in the UK which provides the major ports of call.

The company started operations with four second-hand vessels in 1959 and this increased to 15 vessels by 1971, but at that time the ships were already becoming obsolete and were unable to meet up with the challenges of modern shipping.
The Federal government then decided tonnage the fleet with 19 Combo Vessels, but by the time the first of the new ships was delivered in 1976 through 1977, changes in ship technology and containerization concept had taken place and unfortunately all the 19 Ships were of same combo vessels type.
Diversification in ship types, size and the evolving technology could not be reflected in the new ships due to inflexibility in government policies as it was the government that provided the funds.
This drastic and ultimately changes played a major part in the failure of the the defunct NNSL.

MANAGEMENT/OPERATIONAL ISSUES:
When the 19 new Combo Vessels were introduced into operations, there was no Working Capital, even the initial bunkering of the vessels at the builder’s ship yard was done on credit, but the situation was managed because in 1973 NNSL incorporated a subsidiary company known as the Niger-Line (UK) Ltd based in Liverpool, England.

The subsidiary company acted as General Agent in Europe to NNSL.
The subsidiary company also employed experienced and knowledgeable British shipping technocrats in the field of Marine Engineering for the fleet technical maintenance as well as commercial/operations etc. Even though a Nigerian was head of the subsidiary company.

The subsidiary company was trusted in Europe by creditors and shippers alike. It also served as a training ground for Nigerian officers and in particular for co-ordination of sea officer’s trainings.
Notable advantage of this arrangement was that apart from performing agency services for the parent company, NNSL, was also earning agency commission which was hitherto used to pay Elder Dempster Line, the other partner that was supervising ship and repairs and was making sure that the right work ethics were maintained resulting in reasonable ship maintenance costs and sea worthiness of vessels.

However, when the civilian government returned to the Country in 1979, interest groups with Lagos base management began to criticize the situation where decision on ship repairs/maintenance was not totally controlled by Lagos head office even though all major repairs for strategic and economic reasons were carried out in Europe.
The interest groups used the politicians to get the Niger line (UK) Ltd wound -up and all the foreign officers relieved of their positions in the UK.
Ship agency jobs were also awarded to some British Companies, signifying that the agency fees were lost and the British Officers who operated fairly honest and cost effective ship repairs services were sacked.
Nigerians took over their places particularly in the technical areas and so the personnel cost skyrocketed.

The local office funding was provided from Lagos head office as against the former Niger Line (UK) Ltd fending for itself through the agency fees.
In this misfortune the NNSL Ships started to be arrested by ship repair yards whose bills were not only unpaid, but inflated as such the trade creditors therefore lost confidence in NNSL

POLITICAL INFLUENCE/NEGATIVE GOVERNMENT INTERFERENCE
Because of government interference, there was no longer deliberate government policies to protect and support the shipping line as was the case previously. While some officials of the supervising ministry did everything except those that could have assisted the company to grow.

Changes in the management were not for the right reasons and so management programs for turning around the line were not given due considerations.
The company and government could not react without delay to situations dictated by market and technological changes or development in the trade.

For instance, it took the federal government almost five years to approve the tonnage expansion programs and modernization of the NNSL ships in the Seventy’s.
Perhaps, the best would have been to demand a change in the initial contract of the ship before its construction as demand are required.
But, nobody contributed to this and by the time the vessels were eventually built and introduced into the market, a measure of obsolescence had set into the original concept.

It took another five years to convince the government about the need to phase out the 19 combo vessels with a view to introducing appropriate vessels that were technologically up to date as well as the market demanded.

Other decisions such as rationalization of staff were dictated by government policies while services performed for government by the company were not paid on time when the money would have been more beneficially used and sometimes not even paid at all like the carriage of relieve and war materials to Liberia was not paid for and even when paid was paid in local currency when the operation was performed in foreign currency.

Accumulated debts of NNSL to trade creditors originated from government’s failure to pay NNSL for the Aluminum Smelter Company, Aladja and Ajaokuta steel projects.
Efforts made by the management of the company to diversify into ancillary activities/ services such as terminal operations etc were not approved.

Regular changes in the headship of the federal ministry of transport and the company brought about inconsistency in its focus and vision.
Every minister had his own ideas and there was never continuity in vision and changes in the management of the company was not based on knowledge and technicalities rather it was based on nepotism, ethnicity and selfish interests.

It is this type of situation that a onetime chief executive of a parastatal who happened to be a retired general of the army had in mind when he once said that the relationship between the supervisory ministry and its parastatal could be likened to that of a military commander who sent a platoon of soldiers to capture a location and also deliberately sent another platoon of his soldiers to ambush the other to ensure a failure of that assignment.
This analogy is very apt. it must be acknowledged however that genuine efforts made by government in 1994 through direct cash injection into the company for settling creditors and an upgrade in the ships, ironically pushed the last nail on the company’s coffin because of avarice of some officials of the company in collaboration with others outside the company.
This was like throwing away the only baby with the bath water, hence our dear baby, the Nigerian national shipping line (NNLS) was thrown away just like that and had never been resurrected till date.

BENEFITS OF THE NIGERIAN NATIONAL SHIPPING LINE (NNSL)
The foregoing, notwithstanding, is a statement of fact that NNSL rendered a lot of services to the nation for which no credit was given to her particularly in the 1970’s up to the time “SAP” (Structural Adjustment Programme) was introduced into the country. For instance, during the time of Nigerian produce marketing company, NNSL was overburdened with the responsibility of carriage of cocoa produce and other export commodities at very low ocean freight rates which were deliberately agreed with the maritime conference in order that the Nigerian export commodities would be competitive in the world market.

This is because the commodities were sold on the basis of Cost, Insurance and Freight (CIF). NNSL was therefore used by government as an instrument of North Bond freight stabilization in the overall interest of the country which was one of the adjectives claused in the company’s incorporation.
The foreign shipping lines that reluctantly accepted the negotiated freight rates were however not particularly interested in lifting cocoa in bags because it was not economical or profitable to do so.

NNSL vessels had no choice, but to lift the export produce which at that time were shipped in bags and this kept the ships in ports longer than necessary due to the slow loading rate.
The freight was also paid in local currency in the interest of conserving the country’s foreign exchange. These days, cocoa is containerized and loaded out for export with ease.

The other major/significant contribution to the nation’s economy by NNSL which was not generally appreciated or taken into considerations in spite of efforts to inform the public and the government was in the area of training and manpower development in the maritime sector.
NNSL trained and produced many marine Engineers, Master Mariners, Marine Communication Officers, Marine Electrician and shore Management and transport logistic Managers at great expense as if she (NNSL) was a scholarship board.

NNSL indeed trained not only for herself but also for the whole maritime industry and the petroleum sector and Shore engineering outfits like breweries, Hotels etc.
It is a statement of fact in the early 70’s and beyond, that Nigeria Port Authority pilots were Indians, Egyptians, Pakistanis etc but with the facilities produced by NNSL, it was possible for NPA to partner withNNSL in the training of pilots and this position became completely indigenized.

To quantify in monetary terms, the cost of these facilities as a result of winding up of the NNSL is difficult and heart breaking. It is even going to be more difficult later because the trained officers are aging and the numbers are being depleted by various factors.
The Maritime Academy Oron as at then had no functional facilities for sea training. You cannot have competent seafarers by just classroom work. I am also not unaware of the sustainable programs and equipments the honorable minister of transport has put in place recently to ensure sea time trainings.

But the fact still remains that we cannot train marine personnel in a shore classroom alone or by hiring vessels. Mandatory sea times are unavoidable and this cannot be achieved with foreign vessels either by hire or any form of contract because it is not economical, meaning that Nigerian must own ships in one way or the other.

Hence, my thought became so “provoked” how would Nigeria acquire, manage and own vessels?, how do we train maritime personnel? How also do we create employment for the growing population of this country? Which other means do we conserve our foreign exchange since petroleum products prices dropped in the international market? Which way my dear beloved country?
I key into the proposal of the minister of Transportation and that of the NIMASA, DG who have seen the hidden treasures and are working assiduously to harness it.

Nigeria has left this aspect of her economy unharnessed and unutilized as compared to the rest of the world. Our country is a consumer nation and we have been very active in the global market only on imports.
Refloating the national shipping line will create a new line of investment for the private and public sector and create employment for the growing unemployed population of our great nation and also conserve our foreign exchange.

The question that comes to mind now is “who manages the new Nigeria national shipping line if refloated”?.
I have been reading through the news papers about the plan of the federal government of Nigeria through the ministry of transport (NIMASA) about their plans to refloat a new national carrier in a very short while. It is a very welcoming idea, if it will serve the purpose this time around.

It now becomes pertinent to remind all of us of the mistakes in the past that led to the defunct of the old NNSL. We have to be aware and be reminded of the pit falls to ensure the survival of this new venture.
Once again I highlight the reasons that led to the defunct of NNSL.
Excessive interference by top government officials played an important role in the eventual demise of the defunct Nigerian national shipping line. Because it was seen as a cash cow, Federal ministry of transport officials found every excuse to meddle into the affairs of this organization and this circumvented important decisions.

The management of NNSL was changed as often as transport ministry officials liked, every NNSL managing director who was seen as un-corporative by the ministry officials soon found himself in the labor market.
Frequent changes in the management were not for the right reasons and management programs for turning around the shipping line were not given due and adequate considerations. The company and government could not react without delay to situations dictated by the market and technological changes or development in the trade.

NNSL Started performing actions and operations for other arms of government and they were not paid even if payment was made, it was made late and in local currency while the operation were executed in foreign currency.
NNSL Played roles in moving troops and material into Liberia during the operations of the Nigerian Led ECOMOG war without a dime paid for these services.

Accumulated debts of NNSL to trade creditors originated from governments failure to pay NNSL for the shipment of government project materials such as Aluminum Smelter Company, Aladja and Ajeokuta steel projects
Efforts made by the company’s management to diversify into ancillary services such as clearing and forwarding, oil tanker operations and terminal operations were not approved.
Regular changes in headship of the ministry of transport and company brought about inconsistency in the focus and vision of the NNSL.

RECOMMENDATIONS:
The minister of Transportation has recommended a private driven new national carrier to be undertaken by NIMASA but NIMASA and all other government agencies should work together to provide a level playing ground to enable the private sectors in this teams to survive.

The government agencies in Nigeria strangulates businesses own by government and private sectors by creating unnecessary bottle neck in the quest to satisfy their greed and to claim possession and authority.
Government in the process of providing enabling business environment should do away with unnecessary bureaucratic process which hampers decision taking and does not permit the ease of doing business which they have long clamored for.

God bless Nigeria
God bless the Federal Ministry of Transport
God bless NIMASA
God bless Hon. Rotimi Chibuike Amaechi.

Mrs Celestina Chinyere Okere (Customs Broker)
CEO Celefrank Nig. Ltd