Nigerian Shipowners Warn of $8.5bn Yearly Loss Due to High Import Duties
Indigenous shipowners in Nigeria have issued a stark warning, stating that the country's high import duties on vessels acquired by Nigerians, combined with preferential treatment for foreign operators, are severely stifling the growth and development of the domestic shipping industry. This situation is significantly weakening Nigeria's competitiveness in global maritime trade, according to industry leaders.
Disparity in Duties and Its Impact
Speaking at a citizens-stakeholders engagement organized by the Ministry of Marine and Blue Economy in Lagos, Greg Ogbeifun, Chairman of Starzs Investments Company Limited, highlighted the critical issues. He explained that the existing fiscal framework places indigenous shipowners at a substantial disadvantage compared to their foreign counterparts. This discourages investment in vessel acquisition and international shipping operations, ultimately harming the national economy.
Ogbeifun detailed the cost burden, noting that local operators sometimes pay up to 14 percent of a vessel's value in duties and associated charges. In contrast, foreign competitors bringing in their ships pay as little as one percent and can begin operations immediately. "The last ship we built attracted about 14 percent of the cost of the vessel in duties. Meanwhile, foreign competitors pay as little as one percent and begin operations immediately," he stated.
Consequences for Competitiveness and Capital Flight
This disparity has made it nearly impossible for Nigerian shipping companies to compete effectively in both domestic and international markets. Higher capital costs inevitably translate into uncompetitive freight rates, further eroding their market position. Ogbeifun emphasized that in other maritime nations, ship acquisition attracts zero or minimal duties because governments recognize shipping as a strategic industry. "Here, we impose heavy financial burdens and still expect local operators to compete globally," he lamented.
The shipowner warned that Nigeria's high duties continue to leave the country dependent on foreign shipping lines for cargo movement. This dependency results in an estimated yearly capital flight of $8.5 billion, a significant drain on the nation's resources. Ogbeifun recalled that past attempts to establish a national shipping line in collaboration with foreign partners faltered within weeks after signing agreements, largely due to Nigeria's unfavourable tax and duties regime.
Calls for Policy Reforms
Ogbeifun called on the Federal Government, particularly the Federal Ministry of Finance and the Central Bank of Nigeria (CBN), to implement zero import duties on vessels intended for commercial shipping. He described this move as critical to unlocking investment in the sector. Such a policy would not only reduce the cost burden of entry for Nigerian operators but also enhance their ability to access international financing, develop viable business cases, and compete on equal footing globally.
He also emphasized the need for a broader review of fiscal policies, including high port charges and regulatory fees, which further compound operational costs for indigenous companies. This comprehensive approach is seen as essential for revitalizing the industry.
Regulatory and Coordination Challenges
Raji Bolaji, a pioneer member of the Nigerian Indigenous Shippers Association (NISA), urged regulatory authorities to provide clear guidance on the proper sequence of documentation required to obtain letters of intent for vessel acquisitions. Bolaji stressed the importance of aligning procedures with existing protocols to prevent loopholes. He sought clarification on whether financial status verification should precede or follow the request for such letters, cautioning that issuing letters without proper vetting could lead to misuse.
Sonny Eja, President of the Ship Owners Association of Nigeria (SOAN) and Managing Director of Petromarine Nigeria Limited, called for maritime policies to align with Nigeria's overarching national policy framework. He emphasized the need for coherent and coordinated policymaking to support vessel owners and operators, particularly in offshore oil and gas and other maritime operations.
Eja further advocated for clearer coordination among multiple maritime agencies to prevent duplication of responsibilities. He noted that overlapping functions among agencies such as the Nigerian Maritime Administration and Safety Agency (NIMASA), Nigerian Ports Authority (NPA), and the Nigerian Inland Waterways Authority (NIWA) could hinder effective operations, adding to the industry's challenges.
