Elements Of Cabotage Law In Nigeria: Towards Integrating Nigeria Into The World Economic Order x6ev

Elements of Cabotage Law In Nigeria

Towards Integrating Nigeria into the World Economic Order

Obafemi Ademola Adekola

LLM (Swansea), Wales, UK

AuthorHouse™ UK 1663 Liberty Drive Bloomington, IN 47403 USA www.authorhouse.co.uk Phone: UK TFN: 0800 0148641 (Toll Free inside the UK) UK Local: 02036 956322 (+44 20 3695 6322 from outside the UK)

© 2018 Obafemi Adekola. All rights reserved.

No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of the author.

Published by AuthorHouse 05/17/2021

ISBN: 978-1-5049-9403-3 (sc) ISBN: 978-1-5049-9404-0 (hc) ISBN: 978-1-5049-9402-6 (e)

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This work is dedicated to my Heavenly Father, Creator of the Heavens and the Earth, the Almighty God, my father and my dear friend, Professor S.A. Adekola FAS, my mentor Pastor Poju Oyemade and the centrepiece of the puzzle Mrs. Oloruntosin Omolara Adekola.

CONTENTS

Preface Acknowledgments

Chapter 1: Definition and Fundamental Consideration of Cabotage

1.1 The Definition of Cabotage 1.2 Maritime Cabotage 1.3 The Cabotage Regimes 1.4 The Strict Cabotage Regime 1.5 Liberalized or Relaxed Cabotage Legal Regime 1.6. Latent Advantages of Cabotage Operations in Nigeria 1.7. Expansion of the Nigerian Domestic Fleet 1.8. Invigoration of Water-borne Transportation 1.9. Economic Development 1.10. Dockyard Development 1.11. Employment Opportunities 1.12. Fair Competition for Participating Vessels 1.13. Government Revenue

1.14. Training and Protection of Seafarers

Chapter 2: Evolution of the Nigerian Cabotage Environment

2.1. Cabotage and Colonial Nigeria (Elder Dempster Case Study) 2.2 The Effect of World War I on the Elder Dempster Monopoly 2.3. Post-1920 Reforms 2.4 West African enger Shipping Practice between 1923–1929 2.5. The Great Depression 2.6. Official ages During World War II 2.7. Concluding Remarks

Chapter 3: A Seaport Ideology for Nigeria

3.1. Cabotage and Seaports 3.2. Ports as Catalysts of Regional Development 3.3. The Japanese Maritime Policy 3.4. The Port and Harbour Law of 1950: Japan 3.5. Funding Port Development in Japan 3.6. Economic and Regional Impacts of the Port and Harbour Law of 1950 3.7. Towards Developing a Successful Port Ideology for Nigeria

3.8: Universal Exports 3.9. Practical Solutions Towards Port Prosperity in Nigeria 3.10. The Proposed South Atlantic Trade Organisation

Chapter 4: A Reformation Agenda

4.1 Reforming Nigerian Local Content Legislations 4.2. Local Content and China 4.3: Local Content and the Chinese Wind Power Industry Experience 4.4 Intellectual Property and Technology Transfer Requirements 4.5. Control through Taxation and Import Tariffs 4.6. Local Content Requirements in Legislation and t Venture Agreement (JVA) 4.7. Governmental for Capacity Development through Subsidies 4.8. Local Content and the Chinese Automotive Industry Experience 4.8.1: Phase1: The Central Control and Planning Era (1949–1979) – Shortly after World War II 4.8.2: Phase 2: The Proliferation Phase (1978–1994) 4.8.3. Phase 3: The Concentration Phase (1994–2004) 4.8.4: Phase 4: Controlled Economic Affluence (Post-2004) 4.9. Vehicle Manufacturing 4.10: The Chinese Automotive t Ventures

4.11: Financial Performance and Profits from those JVA 4.12: The Chinese Mission in Intellectual Property and Lessons. 4.12.1 Intellectual Property Mission and Reverse Engineering. 4.12.2: Lessons Derivable from the Chinese Experience. 4.12.3 Pre-colonial Nigeria 4.13: Every Society Needs Its Most Brilliant Minds in Positions of Authority and Leadership 4.13.1: A SIR ISAAC NEWTON Case-study 4.13.2. Newton 1676-“Standing on the shoulders of Giants” 4.13.3. Sir Isaac Newton as a Sleuth, and London’s 1⁷th Century Dirty Harry 4.14 The Kind Of Education Nigeria Needs: A Call For Transforming Nigerian Policies on Education 4.15 Concluding Remarks

Chapter 5: A Critique of the Nigerian Cabotage Act 2003

5.1: A Comparative Analysis of the Nigerian Cabotage Act and the relevant provisions in the US Jones Act 5.2: The Coastal and Inland Shipping (Cabotage) Act No. 5 of 2003: Laws of the Federal Republic of Nigeria 5.3: The Merchant Marine Act of the United States of America, 1920 (The Jones Act) 5.4: Restrictions under the Coastal and Inland Shipping (Cabotage Act)

5.5: Degree of Restriction 5.6: Exemptions and Waivers under the US Merchant Marine Act of 1920 5.7: Exemptions and Waivers under the Nigerian Cabotage Act 5.8: Waivers under the Nigerian Act 5.9: Registration under the Cabotage Act 5.10: under the Jones Act 5.11: under the Nigerian Cabotage Act 5.12: The United States Coastguard 5.13: The United States Coast Guard’s Authority as an Armed Service 5.14: Authority as a Law Enforcement Agency 5.15. Effect of the Cabotage Act of 2003 on the Nigerian Maritime istration

Chapter 6: Matters Arising from Critique

6.1: Shortcomings of the Nigerian Coastal and Inland Shipping (Cabotage) Act No. 5 of 2003 Laws of the Federal Republic of Nigeria 6. 2. The Act Merely Encourages Development; It Does Not Initiate Development 6.2:1 China versus America 6.3 NIMASA is Presently Overburdened 6.4: The Anomalous Issue of Waivers

6.4.1 Waivers; A Cancer In Nigerian Legislations Causing Decay to the Economy. 6.5: Powers of the Minister 6.6: Training and Development of Seafarers 6.7. Cabotage Enforcement 6.8: Freedom of Information 6.9. The Merger and Participation of ISAN under the Proposed JV Structure 6.10. Other Suggestions by William Ubadire Agoha

Chapter 7: Standards and Enforcement

7.1 The Need for Nigeria to Adhere to International Maritime Standards 7.2. Identifying the Standard of International Laws and Legal Principles Governing the Totality of Maritime Practice 7.2 Liability for Negligent Navigation 7.2.1. Overview of the International Regulations for Preventing Collision at Sea 1972 (COLREGs Regulation) 7.2.2. The Principle of Causation and the COLREGS 7.2.3. Novus Actus Interveniens. 7.2.4. Types of Damages to which a Defendant may be Entitled in the Event of a Collision 7.3.1. Ports, Docks, and Harbour Laws 7.3.2 Wreck Removal

7.3.3 Pilotage Law 7.4. Maritime Salvage Regime 7.4.1 Non-Contractual Salvage 7.4.1.1 Volunteer 7.4.1.2 The Act Must be Successful 7.4.1.3 Property Must be One Capable of Being Salvaged 7.4.1.4 Danger 7.4.2: Contractual Salvage 7.4.3 Duties of Salvors 7.5 The enger Liability Regime 7.6. Seafarers’ Rights 7.6.1 The International Labour Organization 7.6.1.1 Enforcement of ILO Standards 7.6.2 International Maritime Organisation 7.6.3. International Law on Human Rights 7.6.4 UN Convention on the Law of the Sea, 1982

Epilogue Bibliography

LIST OF MAPS

Figure 1.1 The Map of , showing its coasts along two seas. Figure 1.2. Map of the United Kingdom, showing territories in Ireland and the Isle of Man. Figure 1.3. Map of Nigeria indicating its 6 Geopolitical zones with the Mineral Resources that can be obtained from each zone. Figure: 3.1. Map of Japan archipelago aligned along northeast – southwest axis (i.e. islands of Hokkaido, Honshu, Shikoku and Kyushu). Figure 3.2. Map of West Africa showing of Nigeria’s potential windowto Africa and the rest of the world via Gulf of Guinea and the Atlantic Ocean. Figure 3.3. Map of Nigeria indicating its internal sea channels and state boundary. Figure 3.3.B Map of Nigeria indicating its internal sea channels and state boundary 2nd option. Figure 3.4. Map of Africa and South America showing Continental Drift A Figure 3.5. Map of Africa and South America showing Continental Drift B Figure 8.1. Map of Nigeria indicating regions before independence. Figure 8.2. Map of Nigeria indicating regions before independence. Figure 8.3. Map of Nigeria indicating its geopolitical zones. Figure 8.3.B Map of Nigeria indicating its geopolitical zones. Figure 8.4. Map of Nigeria indicating Thirty Six States and Capitals.

LIST OF IMAGES

Image 4.1. Oloibiri Oil Well Location Image 4.2: Oloibiri Well location showing date and depth of first ever oil well drilled in Nigeria. Image 4.3: Inaugural pump station valve of the Oloibiri Oil Well first operated in 1956 with the author [pumping out 5,000 barrels per day during 1956] Image 4.4: Oloibiri Oil well commissioning memorabilia with the author.

LIST OF TABLES

Table 1: A list of the Mineral Resources in Nigeria and the States where they can be located. Table 2: Revenue and Expenditure in Major Ports, Fiscal Year 1980 Table 3 Visual illustration showing, volume of cars, trucks, and vehicles in China, 1950–2002. Table 4. Revenue of major vehicle manufacturers, 2004.

LIST OF ABBREVIATIONS

1. AMWAC: 2. BAIC: 3. CAEA: 4. CVFF: 5. CAMA: 6. COWACL: 7. CIF: 8. COLREGS: 9. DONGFENG: 10. EU: 11. ECHR: 12. FEWAC: 13. FAW: 14. GBP: 15. GM: 16. IMO: 17. ILO: 18. ICR: 19. ICESR: 20. IAPH: 21. JRI: 22. JVA: 23. JOMALAC: 24. JMLIC: 25. LNG: 26. LFN: 27. LOF: 28. LSSA: 29. MOU: 30. MSA:

American/West African Confrence Beijing Automotive Industry Company Chinese Automotive Engineering Association Cabotage Vessel Financing Fund Company and Allied Matters Act Continent/West African Line Cost Insurance Freight Collision Regulations China Second Automotive Works European Union European Convention on Human Right Far East/ West African Line First Automotive Works Great Britain Pounds General Motors International Maritime Organization International Labour Organization International Covenant on Civil and Political Rights. International Covenant on Economic Social and Cultural Right International Association of Ports and Harbors Job (Creation) Revenue (Generation) and (Personal) Income. t Ventures Agreement t Maritime Labour Council t Maritime Labour Industrial Council Liquefied Natural Gas Laws of the Federation of Nigeria Lloyds Open Form Lloyd’s Standard Salvage and Arbitration Memorandum of Understanding Merchant Shipping Act

31. MARADA: (United States) Maritime istration Department. 32. MLC: Maritime Labour Congress 33. MIT: Massachusetts Institute of Technology 34. MOST: Ministry of Science and Technology 35. NNPC: Nigerian National Petroleum Corporation. 36. NDRC: (Chinese) National Development and Reform Commission 37. NREL: National Renewable Energy Laboratory 38. NIWA: National Inland Water Authority 39. NAMASA: National Maritime istration and Safety Agency 40. NPA: Nigerian Ports Authority 41. NMA: National Maritime Authority 42. NNSL: Nigerian National Shipping Line 43. NSL: National Shipping Line 44. ODS: Operating Differential Subsidy 45. PGD: Post Graduate Diploma 46. PPP: Public Private Partnership 47. SAIC: Shanghai Automotive Industry Company 48. SOLAS: Safety of Life at Sea 49. SAN: Senior Advocate of Nigeria 50. SCOPIC: Special Compensation of Protection and Indemnity Clubs 51. SDR: Special Drawing Rights 52. STCW: Standards of Training, Certification and Watch-keeping (for seafarers). 53. SDPC: State Development Planning Commission 54. TTO: Tanker Take Over 55. TTT: Tanker to Tanker Transfer 56. USC: United States Congress 57. USD: United States Dollars 58. UN: United Nations 59. UCC: Uniform Commercial Code 60. UKWAL: United Kingdom/West Africa Line 61. VAT: Value Added Tax 62. VHF: Very High Frequency (Communications) 63. WTO: World Trade Organization 64. WW I, WW II:World War I, World War II 65. WBC: World Boxing (Board of) Control 66. WLR: Weekly Law Report

PREFACE

My major undertaking in this book is an attempt to lay bare in a patriotic manner the weaknesses and loopholes in the subsisting Nigerian Cabotage law using the British, French, Indian, Japanese, Chinese, and American models as candidates for a most comprehensive comparative study. What then emerges, as “Elements of Cabotage Law- towards integrating Nigeria into the World Economic Order” may be described as a catholic assembly of legal submissions by the author to underscore some rather extinct aspects of the Nigerian Cabotage Law, based on the principles underlying the aforementioned models; and consequently identifying indicated remediation and associated improvements.

The Legal work elucidated contributions on how the establishment of highly efficient seaports can bring millions of Nigerians from poverty to lives more abundant, and includes proposals on how the country can become a wealthy nation characterized by a fine economic base with a place of pride in a technology-driven world. Nigeria, as it is today, is very domestic in structure and has yet to fully develop the political will to take systematic steps towards meaningful integration into the world economic order.

Presented here are possibilities for the economic well being and prosperity for millions of Nigerians as the book prescribes how the potentials of Nigerian seaports could be exploited through the most efficient management regime informed by a dynamic, reliable, and well-planned legislation. It is arguable that after five and half decades of independence, it is high time we woke up from our slumber and tap the God-given fortunes surrounding us for the benefit of all through participative management of our seaports, exploration and exportation of over four hundred identifiable mineral resources spread across the 36 states of Nigeria as well as Federal Capital Territory, Abuja. Solutions elucidated in this book are based on five premises: The first derives from considerations concerning how the British colonial government jealously protected the credible shipping industry of pre-colonial Elder Dempster Shipping Line. Second, is the

lesson to be learned from the sound protectionist strategy of the Chinese government on the fast-growing Chinese auto-manufacturing industry while highlighting policies of local content and the transfer of technology. Third, is the remarkable and highly protected United States’ internal maritime structure through the legally enforceable Jones Act of 1920. Fourth, is how the exposition on the practice of Japan’s archipelago in establishing seaports to catalyse economic and infrastructural development, suggesting that it is worthy of emulation. Fifth, is how the Legislative arm of government can breathe life into Nigeria’s laws by initiating well-crafted legislation channeling citizens to economic activity, rather than relying on legislation that tends to leave the developmental issues to chance.

To the best of the author’s knowledge, there appears to be no book on “Cabotage Law” specifically addressing the Nigerian Cabotage challenge in the manner articulated here. This book attempts to fill that vacancy. It is intended for students of law, economics, geography, history as well as those engaged in maritime studies. It should also prove useful to mariners, ship-builders, seafarers, as well as Federal and State governments in Nigeria including policymakers in the executive and legislative arms of government. Some aspects will equally be useful to practitioners in the shipping industry for the purpose of stability, sustainability, and prosperity of Nigerian seaports as well as other international communities who repose confidence in the political and economic stability of Nigeria.

Without a doubt, a prosperous and economically stable Nigeria is not only good for Nigeria but also invaluable to the international community as well. If Nigeria fails, (God forbid), the problem of refugees will almost consume the whole of Africa and will be an understandable embarrassment to the international community. Consequently, it is in the interest of the international community that Nigeria prospers. Cabotage, in the informed opinion of the author, represents a veritable pathway to enduring prosperity, and proposals outlined in the book deserve from within and outside the country.

ACKNOWLEDGMENTS

The book is an outcome of painstaking efforts of several years. The author has made references to many relevant works, quite a few of which are well known, but it is almost impossible to identify each idea to primordial roots; and it is not unlikely that some relevant references have been left out. In this regard, many apologies are hereby offered. Credit has been copiously given to authors and sources for several relevant ideas, which are not original to the author. However, if others have been left out, the ommissions are inadvertent and not deliberate. The author will appreciate if such omissions are communicated to him so that he would include them in future editions of the book.

Through the bibliography provided at the end of the book, the author conveys his gratitude for the opportunity to use as references, the seminal works of scholars whose contributions have formed the bedrock of how this book emerged: Amongst these are the most outstanding works of Ayodeji Olukoju, Olisa Agbakogba, Igbokwe Mike, Usoro M.E., Agoha Williams U., as well as Akagha et al, Ataksuka Y., Howleg A., Ihenacho E. and Lew Debra and others too numerous to list. Another purpose of the complete bibliography provided at the end of the book is to serve as supplemental consultation. These works inspired the various ideas, which the author has attempted to systematically present towards the end described by the book’s objectives, as outlined in the foregoing. Despite the considerable attention that has been paid to the preparation of the book, a few mistakes or oversights in the content, tables and figures are bound to inadvertently and inescapably arise. It will be highly appreciated if such errors are brought to my attention by anyone who discovers them so that they may be rectified or remedied in future editions.

Special thanks go to my publishers Author House London, for the painstaking work undertaken and offered to ensure that this book project is successful. Worthy of especial appreciation are the following scholars: Professor Iyiola Oni (Professor of Geography and Dean of the Faculty of Social Science,

UNILAG), Professor Mike Ogbeidi (Professor of History and Strategic Studies, UNILAG), Professor Ademola Adeleke (Professor of History and Strategic studies, UNILAG) and Evang. Dr. Henry Ogunjewo (Department of History and Strategic studies, UNILAG) for their contributions in rigorously and painstakingly reviewing the book and to Prof. Ike Mowete and Prof. O.U Okereke for ensuring that the work is almost virtually error free. Acknowledged here with pleasure are the efforts of Dr. A.O. Akintuyi, lecturer in the Department of Geography, University of Lagos (UNILAG), who generated the maps utilized in the book.

Many thanks are due to Babalakin and Co, the law firm where I first learned about the concept of Cabotage. I wish to acknowledge with gratitude the role of Dr. A.A Olawoyin and Justice R.O. Olukolu, who guided me through my first research attempt on the subject of Cabotage for my final year research project submitted to the Faculty of Law, University of Lagos, in partial fulfillment of requirements for the award of a Bachelor of Law degree in September 2008. They respectively played roles of Project Supervisor and Project Tutor.

My unalloyed gratitude also goes to Tunji Abayomi and Co., the Law Chambers at which I have been practising the legal profession for the past six years specialising in international trade and shipping amongst other legal briefs in Abuja, Lagos, Akure and elsewhere in Nigeria. Added to this, is the opportunity to serve as a member of the international election monitoring observers for the general election in the Republic of Benin, with my principal, Dr. Tunji Abayomi. Much cherished is the opportunity to serve under the Attorney General of the Bayelsa State Government, and the Certificate of Excellence awarded to me by that ministry has been a source of inspiration. Needless to say that, the rare opportunity allowed the author to study the environment in Bayelsa and the appreciation of several visits to the Oloibiri oil-well, the first oil-well drilled in Nigeria in 1956 at the Ogbia local government area of Bayelsa State offered the opportunity of a historical perspective. The exposure of the author at the University of Swansea, Wales, United Kingdom where he bagged an advanced legal degree in International Commercial and Maritime Law (International Trade Law, The law of Marine-Insurance, Adimirality Law and Law and practice pertaining to International Banking and Commercial Payments), together with

exposure and tutelage from a collection of the best international shipping law practiioners has to a great deal controlled the direction of this work and assisted in elucidating the ideas expressed in the book.

Worthy of mention is the role played by HOMEWORK DEVELOPMENT AND PROPERTIES LIMITED for their continued belief in our firm expressed by long term business relationship commitments and most especially for partlysponsoring this work. The reputation of the company as a group of architects who present unique functional homes in the Nigerian real estate space and also maintains the highest quality of building standards cannot be ignored and continues to spread. For this, I am indeed eternally grateful. Last but not the least, is the extensive and instructive exposure given to me through several high profile legal briefs by the internationally recognized firm, AFRICA ALLIANCE GROUP. The conglomerate is a channel set up by several successful local and international businesses to ister Public-Private Partnership projects and other development projects in Nigeria and the whole of Africa. It is led by a true visionary and business leader, Mr. Gregory Ozegbe.

Obafemi Ademola Adekola

LLM (Swansea), Wales, UK

CHAPTER 1

DEFINITION AND FUNDAMENTAL CONSIDERATION OF CABOTAGE

1.1 The Definition of Cabotage

When considering what should constitute an all-embracing definition of a word, attention is usually focused on its first usage or original meaning, in order to ascertain the right context in which the word was initially used, before going on to determine the scenario appropriate to the application of the word. Although ‘cabotage’ as a maritime term is conventionally understood as being coined from the Spanish word ‘Cabo’, which is interpreted to mean “the cape”, it is more frequently recognized as a French term used to describe sailing from cape to cape within a particular country’s coast – a meaning that can be traced to the French word ‘caboter’. The French cabotage structure is a successful model, which is worthy of emulation bearing in mind that has reaped tremendous benefits associated with a developed coastline. At present the French experience constitutes a world power in the global maritime sector, ing for over two hundred seaports engaged in coastal navigation.¹

Simply put, cabotage means coastal trade and refers to the authority of a sovereign government to control and regulate trading activities through sea channels within its coastal borders. In a paper titled “The New Cabotage Act: Its Effect on the Local Shipping Industry”, presented at the annual maritime seminar of the Nigerian Maritime Law Association on 13–14 May 2003, Mike Igbokwe explained, “Cabotage is ‘coasting trade’ or ‘coastal trade’, that is, the movement of cargoes and engers by ship between ports of the same coast or between ports of the same country.”

The word has also been defined²as a principle that refers to the practice of maritime countries in reserving or restricting the economic privilege of navigating with the aim of carrying out trade along the coast between two ports within the national territory, and enabling only vessels ed according to the law of the host country, to participate in such economic activity.

Black’s Law Dictionary³defines cabotage as “A nautical term from the Spanish denoting strictly navigation from cape to cape along the coast without going into the open sea”. Maritime cabotage is not limited only to the transportation of cargo and engers along the same geographical coast of a country. This is due to the fact that some countries’ coastlines are fragmented in such a way that any vessel trying to access some other part of the country via seas channels may have to through the coastline of neighbouring countries. Also, some other voyages may involve a journey through the high seas in order to access other parts of the same country’s coast due to its geographical characteristics. In such circumstances, it would be in-exact to limit the definition of cabotage to costal trade because a part of the voyage is, strictly speaking, outside coastal boundaries. In this regard, a problem will occur concerning a comprehensive definition of cabotage where the coasts over which a country purports to exercise control, are unavoidably outside its immediate boundaries. For example, controls two large stretches of coasts, one on the Atlantic and the other on the Mediterranean Sea as portrayed in Figure 1.1.

And so is the case of Great Britain, which consists of different regions that are separated by sea. This is typified by the case of the Isle of Man and Ireland as depicted in Figure 1.2.

Figure 1.1 The Map of , showing its coasts along two seas.4

Figure 1.2. Map of the United Kingdom, showing territories in Ireland and the Isle of Man.5

It is almost impossible to imagine that any nation-state will give up a chance to secure extra income for its citizens by neglecting to control the operation of trade within its coast. Indeed, countries in certain strategic geographical locations began the practice of extending cabotage sanctions to include voyages where a vessel es through international boundaries or other neighbouring sovereign boundaries to access ports of the same country. The French, for example, enacted the Statute of 21 September 1793, which distinguished cabotage petit from cabotage grand. The former is used to describe and restrict coastal trading between ports along the same stretch of coast; and the latter refers to trade between any French port located on the Atlantic Ocean coastal stretch and another along the expanse of the Mediterranean Sea. also followed suit in 1881, incorporating a definition of cabotage to extend to coastal transactions between the Hamburg port located in the North Sea and a port situated in Konigsberg in the Baltic.

It is clear from these foregoing examples that there is a trend in customary international maritime practice indicating that the definition of the word cabotage has graduated from the class of coastal trade. Countries are now defining for themselves, through statute, what constitutes coastal trade, irrespective of the corresponding prejudice to the international law definition of the term, which contains certain limitations.

In order to streamline the diverse understanding, a new definition of the term cabotage was proposed by L. Oppenheim,⁷ who suggested the following meaning to the term:

Sea trade between any two ports of the same country whether on the same coasts or on different coasts provided always that the different coasts are all of them, coasts of one and the same country as a political and geographical unit in contradistinction to the coasts, of the colonial dependencies of such a country.

With this definition, cabotage is no longer limited to coastal trade, but nonetheless, the most significant attribute of cabotage remains that it is used as a fundamental tool in restricting coastal trade to the citizens of a particular country. If Nigeria, as a country, desires to attract the maximum level of growth and development required for the expansion of the strength of her major economic parameters then one indubitable possibility lies in her potentially vibrant and relatively underutilized maritime sector. Bearing in mind that the planet Earth inhabited by man is made up of over 70 per cent water, any country that has a coastline is blessed with enormous investment and economic potentials, because a large pool of revenue can be generated through inter-coastal trade and transportation. Nigeria’s vast coastline is, indeed, a goldmine that should play a very significant role in revenue generation for the government and wealth creation for its citizens, in the years to come, with anticipated income comparable to the oil boom of the 1980s. Cabotage policies have been described as the building blocks of the Nigerian local maritime infrastructure upon which the transport industry is dependent,⁸ and it should be taken very seriously considering that the ability of a country to invest in its maritime infrastructure would make an enormously positive and direct impact on economic growth. This would also provide meaningful engagement and exchange of technology with other maritime nations of the world. Thus, the introduction of cabotage regimes is highly desirable because they offer innumerable advantages to the maritime industry of a nation.

1.2 Maritime Cabotage

It is a matter of interest to observe here that the term cabotage may not only be used with reference to the maritime industry; but also finds application with the carriage of goods and engers by air, land, and rail. Consequently, it is not unusual for sovereign states to enact statutes to reserve all transportation activities for citizens of a particular country. In practice, these kind of activities are regulated or controlled by statutes or treaties conferring on the host country the right to refuse entry, departure, or outright participation in certain commercial activities. For example, Article 7 of the International Convention on Civil Aviation 1944, held in Chicago, USA, empowers sovereign states to deny any foreign aircraft permission to carry cargo or engers within its territory. Thus, it can be seen that the term cabotage extends to the aggregate of a country’s legal and istrative machinery put in place to secure the transportation of people and merchandise by whatever means within a territory and preserve it as a source of business opportunities for its citizens.

In addition, maritime cabotage is used in another important context. According to Mike Igbokwe, it refers to short sea shipping or regional shipping within a specific economic group by way of coastal ships, ferry services, and port services such as tugs, dredgers, maintenance. and repairs of crafts, pilotage, bunkering, and supply vessels.¹ It is strongly submitted that the extension of maritime cabotage to include interstate transport is noteworthy because it provides an enabling environment that would foster trading activities within a country. These activities are not sensu stricto concerned with the actual act of transporting cargo and engers within a country; they refer to other industries associated with the business of shipping. It is strongly submitted here that any purported extension of the definition of maritime cabotage to include any of the aforementioned activities are issible because it provides a wide scope of investment opportunities available to any potential Nigerian or foreign investor.

1.3 The Cabotage Regimes

It is an acceptable argument that the availability of revenue is of foremost consideration in deciding the appropriate legal framework for a state to adopt in order to govern indigenous maritime participation. However, a more germane view is that the aspirations and economic goals that a country desires to achieve should ultimately dictate the choice of its cabotage structure, which is important for policy purposes. In practice, the experiences of several regimes suggest that once a country is serious in its objective to reap the benefits associated with a coastline, economic prosperity can be achieved irrespective of the legal platform governing its cabotage practice. The most important factor here is that such a country must take its cabotage operations seriously. There must be clearly spelled-out policies and strategies to achieve this and, it must be subject to periodic review to monitor the implementation of government policies on maritime performance.

Put simply, legal framework concerning coastal trade connotes the extent to which restrictions are invoked to the participation of foreigners in trading activities along a country’s coast. The level of restrictions should depend upon fundamental national interests and the availability of maritime infrastructure. Thus, countries with poor infrastructure usually adopt a less restrictive preference.

There are two identifiable limitations based on modern maritime practice, worldwide: strict cabotage and relaxed or liberalized cabotage legal platforms, which are discussed in the ensuing sections.

1.4 The Strict Cabotage Regime

In a strict cabotage regime, three levels of legal restrictions exist on vessels aspiring to participate in coastal trade. Such vessels must be built, owned, and crewed exclusively by citizens of the particular country concerned. As an example, the United States adopts a very strict cabotage practice. This strict platform functions to regulate the carrying of cargo, engers, and merchandise within the United States to US ed, built, and crewed vessels. The United States of America’s Merchant Marine Act of 1920¹¹ was enacted into law to enforce the promotion, protection, and maintenance of the US domestic marine activities. Section 27 of the Act provides as follows:

No merchandise, including merchandise owned by the United States Government, a State (as defined in section 2101 of Title 46, United States Code), or a sub-division of a State, shall be transported by water, or by land and water, on penalty of forfeiture of the merchandise (or a monetary amount up to the value thereof as determined by the Secretary of the Treasury, or the actual cost of the transportation, whichever is greater, to be recovered from any consignor, seller, owner, importer, consignee, agent, or other person or persons so transporting or causing said merchandise to be transported), between points in the United States, including Districts, Territories, and possessions thereof embraced within the coastwise laws, either directly or via a foreign port, or for any part of the transportation, in any other vessel than a vessel built in and documented under the laws of the United States and owned by persons who are citizens of the United States, or vessels to which the privilege of engaging in the coastwise trade is extended by sections 18 or 22 of this Act.

The reason for the extent of US restrictions in domestic shipping is attributed, by the Act, to policy considerations¹² aimed at strengthening the defence of the United States and to foster proper growth in foreign and domestic commerce.¹³ The section further provides that, it is the policy of the US government to do all it can for the development of its fleet and to encourage the maintenance of its

merchant marine. It even goes as far as prohibiting the sale of a vessel in the US merchant marine fleet to any foreigner without authorization from the US Secretary of Transportation. Such a sale can only be approved if, after careful investigation, the Secretary of Transport is of the view that keeping the vessel is unnecessary to the promotion and maintenance of an efficient American merchant marine, and after diligent effort, the secretary has been unable to sell to a US citizen.¹⁴

According to Mike Igbokwe,¹⁵these laws represent deliberate US policies put in place to protect its domestic and maritime industry from foreign participation and control, at the expense of its nationals.

1.5 Liberalized or Relaxed Cabotage Legal Regime

In this legal framework, the restriction on foreign participation in coastal trade is more relaxed, typically creating a liberalized regime, in which foreign participation can either be permanent or temporary. In the latter case, a temporary license is given to a foreign vessel owner, where there are no local vessels capable of performing the specific functions. This type of license is usually valid pending the time it would take for the host country or its nationals, to buy or build a similar vessel suitable to perform the functions required.

In 1992, India relaxed its cabotage laws by giving a five-year cabotage concession to foreign shipping lines to enable them practice in the business of consolidating containers for export and transhipping them to their foreign destinations. However, after the expiration of five years, the foreign shipping lines began to lobby for the total freedom to participate within the Indian coast including the right to carry cargo and engers from one Indian port to another. They argued that such freedom will strengthen the capacity of Indian domestic trade.

However, local Indian shipping companies vehemently opposed any further relaxation of the platform on grounds that if the local Indian companies did not benefit from the 1992 relaxations, there were no guarantees that they would benefit from any further proposed concessions.¹

The Nigerian regime is somewhat more complicated. While on paper the country appears to practice a strict Cabotage legal framework, section 9 of the Coastal and Inland Shipping (Cabotage) Act of 2003 empowers the Minister, with sole discretionary powers to grant a waiver to any foreign vessel upon receipt of an application stating that no Nigerian owned vessel is suitable or available to perform the services required. What is worrisome is that majority of Nigerians

have always lacked the capacity to invest in shipping vessels leading to insufficient Nigerian owned vessels to perform the local marine related activity and now the exception is now the rule. This has led to the arbitrary issuance of several waivers without adequate controls for monitoring and enforcement towards regulating their activities. The shortcomings in the Nigerian cabotage laws translate to the fact that Nigeria practices a very relaxed regime dominated by foreigners.

A similar section exists in the Philippines statutes, but the laws only provide that foreign vessels can be permitted to haul cargo and transport engers from any local port to a foreign port upon obtaining a special permit.¹⁷

In Australia, the provision of the Navigation Act of 1972 prescribes for 90 percent of its coastal trade to be carried out by Australian-crewed ships. However, this legislation prescribed stringent conditions for the 10 percent foreign vessel quota to be granted a license to operate along its coast. The Act also provided for single voyage permits to foreign vessels where there are no Australian flagged and crewed vessels with the specifications required to carry out the particular voyage.¹⁸ As pointed out by Igbokwe,¹ the single voyage permit was abused by foreigners who devised a method to evade the provisions of the 1972 statute. The prevalent practice at that time was to wait for whollyowned and manned Australian vessels to set sail out of the country before quickly approaching the Australian government to grant permits for foreignflagged vessels. By this arrangement, shippers avoided the provisions of the Australian cabotage regime by chattering foreign substandard ships with thirdworld, low-paid crew, thereby putting Australian ships and seafarers off work.

The aforementioned led to a major shipping reform in Australia instituted by the Rudd Gillard labour government, which after a thorough investigation recognized that the depreciation associated with the Australian merchant marine fleet was caused by the misuse of the single voyage permit and other policies that promote an absolute and open free sea-trade environment. The reform package also addressed the following issues.

• Taxation incentives for Australian owned shipping companies and vessels

• Promotion of shipping-related activities to stop accelerated depreciation

• Preference of cargo business to be carried by Australian-owned general license holders

• New procedures for granting temporary licenses

• A new for international vessels²

1.6. Latent Advantages of Cabotage Operations in Nigeria

A lot can be said about the benefits that a nation like Nigeria could derive by the introduction of robust cabotage policies to regulate its coastal trade practices. It is noteworthy, for example, that the Coastal and Inland Shipping (Cabotage) Act was ed in 2003, and already investors have started to reap the benefits of its introduction. The shipping industry still remains a key sector in the economy of any country. While some Nigerian citizens benefit from the protectionist policies regulating the business of coastal transportation, the reality is that Nigeria still loses a lot of money to foreign shipping interests for the simple reason that Nigerian citizens neither have the capacity nor the required capital to build or purchase enough vessels to satisfy the nation’s cabotage needs.

When reflecting over the fact that Nigeria, as a consumer-nation made up of over 170 million people, imports most of its commercial needs, one can try to anticipate the volume of importation and distribution business potentials, which should otherwise be reserved solely for Nigerian companies. The unfortunate reality is that foreign interests dominate Nigerian local sea-transportation business and have enjoyed this privilege in exchange for a measly fee charged by the Ministry of Transportation as a waiver fee. In other words, Nigeria has sold its domestic cabotage rights for a proverbial pot of porridge.

In summary, it may be suggested that the government of Nigeria can still protect and arrange its shipping business and manage the same in such a way that it would be highly beneficial to the average investing Nigerian by introducing and enforcing adequately planned policies into her local shipping sector.

Since the unavailability of Nigerian vessels for the transportation of cargo has been identified as the problem, a short-term solution may involve a strategic partnership with a country like Greece, which has a high percentage of under-

utilized vessels. Such collaboration would immediately eliminate the ability of foreign interests to dominate Nigeria’s shipping economy while a more sustainable future can be planned for building vessels locally in a controlled environment. If the proper protectionist policies can be put in place to create a shipping structure that will deflect most of the income to local interests, states would be at liberty to exploit the benefits of domestic trading and enjoy the guaranteed adequate Return On Investment (ROI) from collaborating investors.

Nigeria is blessed with a coastline of about 870 kilometers and about 3,000 kilometers of inland waterways. It is also endowed with numerous natural resources. According to a statement issued by the former Minister of Mines and Steel of the Federal Republic of Nigeria, Alhaji Musa Sada, Nigeria has over 400 different minerals.²¹. Table 1 portrays the details of the reservoir of such mineral wealth of Nigeria – very impressive and heart-warming potentials.

Table 1: A list of the Mineral Resources in Nigeria and the States where they can be located.

S/N States

Natural Resources

1

Abia

gold, lead/zinc, limestone, oil/gas, salt

2

Abuja

cassiterite, clay, dolomite, gold, lead/zinc, marble, tantalite

3

Adamawa

bentonite, gypsium, kaolin, magnesite.

4

Akwa Ibom clay, lead/zinc, lignite, limestone, oil/gas, salt, uranium

5

Anambra

clay, glass-sand, gypsium, iron-ore, lead/zinc, lignite, limestone, phosphate

6

Bauchi

gold, cassiterite (tine ore), columbite, gypsium, wolfram, coal, limestone, li

7

Bayelsa

glay, gypsium, lead/zinc, lignite, limestone, maganese, oil/gas, uranium

8

Benue

barite, clay, coal, gemstone, gypsium, ironore, lead/zinc, limestone, marble

9

Borno

bentonite, clay, diatomite, gypsium, hydrocarbon, kaolin, limestone

10

Cross River barite, lead/zinc, lignite, limestone, manganese, oil/gas, salt, uranium

11

Delta

clay, glass/-sand, gypsum, ironore, kaolin, lignite, marble, oil/gas

12

Ebonyi

gold, lead/zinc, salt

13

Edo

bitumen, clay dolomite, phosphate, glass/sand, gold, gypsium, ironore, lign

14

Ekiti

feldspar, granite, kaolin, syenite, tatium

15

Enugu

coal, lead/zinc, limestone

16

Gombe

Gemstone, gypsium

17

Imo

gypsium, lead/zinc, lignite, limestone, marcasite, oil/gas, phosphate, salt

18

Jigawa

butyles

19

Kaduna

amethyst, aqua marine, asbestos, clay, flosper, gemstone, gold, graphite, ka

20

Kano

gassiterite, copper, gemstone, glass/sand, lead/zinc, pyrochinre, tantalite

21

Katsina

kaolin, marble, salt

22

Kebbi

gold

23

Kogi

cole, dolomite, feldspar, gypsium, iron-ore, kaolin, marble, talc, tantalite

24

Kwara

cassiterite, columbite, feldspar, gold, iron-ore, marble, mica, tantalite

25

Lagos

bitumen, clay, glass/sand

26

Nasarawa

amethyst (topaz garnet), barytex, barite, cassirite, chalcopyrite, clay, colum

27

Niger

gold, lead/zinc, talc

28

Ogun

bitumen, clay, feldspar, gemstone, kaolin, limestone, phosphate

29

Ondo

bitumen, clay, coal, dimension stones, feldspar, gemstone, glass-sand, gran

30

Osun

columbite, gold, granite, talc, tantalite, tourmaline

31

Oyo

aqua marine, cassiterite, clay, dolomite, gemstone, gold, kaolin, marble, sili

32

Plateau

barite, bauxite, betonite, bismuth, cassiterite, clay, coal, emeral, fluoride, ge

33

Rivers

clay, glass-sand, lignite, marble, oil/gas

34

Sokoto

clay, flakes, gold, granite, gypsium, kaolin, laterite, limestone, phosphate, p

35

Taraba

lead/zinc

36

Yobe

soda ash, tintomite

37

Zamfara

coal, cotton, gold

[Source:http://www.nigeria.gov.ng/2012-10-29-11-05-46/2012-11-05-09-52-15]

Thus it can be seen clearly that apart from the colossal importation potential of Nigeria as a consumer-nation, which is a yardstick to secure strategic collaboration to facilitate foreign investments, Nigeria also has enormous export potentials. Those potentials can only be fully harnessed if all her resources are mined for commercial purposes.

However, regardless of this vast array of economic opportunities, the systematic economic exploitation of most of those mineral resources can best be described as disorganized because only three of the above listed minerals are produced in enough (voluminous) quantities that can be exported to generate any substantial revenue for Nigeria. In 2006, crude oil which dominated export activities ed for over 90 percent of the commodities exported from Nigeria. In that same year, Liquefied Natural Gas (LNG) was responsible for 8.1 percent of Nigerian export commodities while cocoa made the most revenue of all agricultural crops sold and exported. Goods like machinery, chemicals, transportation vehicles and food had the highest volume of products imported into Nigeria.²²

Regardless of the high percentage of exportation derived from oil and gas, only a few Nigerians seem to have benefited from the business of transportation of oil and gas. The fact that Nigeria exports a large volume of crude oil automatically presents another opportunity for the Nigerian government to reserve the business of transporting oil exclusively for Nigerian-owned Shipping companies. If this is done, high net-worth Nigerians would be encouraged to invest in the local building of oil-carrying tankers because they would be assured of enjoying lucrative business monopolies on transportation thereby securing adequate profit and robust return on investment (ROI).

Figure 1.3. Map of Nigeria indicating its 6 Geopolitical zones with the Mineral Resources that can be obtained from each zone.

The benefits that cabotage would aggregate to the country include the underlisted advantages among others.

1.7. Expansion of the Nigerian Domestic Fleet

A bonanza that may occur as a result of a possible boom in cabotage trade due to fleet expansion would have two dimensions. First, one consequence of a decision to implement an efficient cabotage platform within the coasts of Nigeria, is that there is bound to be restriction of trade to wholly Nigerian-built and owned ships. This would lead to the availability of cargo and engers for transportation. Thus, once goods and engers are always available to be shipped, and participation in the business of transportation is restricted to Nigerian citizens, then the natural law of supply and demand immediately creates a vacuum consequent upon which the assurance needed by investors willing to participate is guaranteed. The ultimate benefits derivable from those planned arrangements are massive returns on their investment. Cabotage guarantees cargo for indigenous operators who meet the standards set by the host country.

Steady cargo translates into an increase in turnover, which in turn results in efficiency and creditworthiness. Banks and financial institutions are often prepared to finance individuals and corporates when there is a constant demand for the type of services they render with an assurance of steady cash flow. Foreign participation in trade activities along the Nigerian coasts needs to be discouraged because this would lead to lopsided competition with less sophisticated local vessels.

Second, the introduction of cabotage would increase the number of Nigerian national vessels and the total percentage in tonnes, carried by Nigerian vessels per year. If Nigeria can start off by controlling waterborne commerce, more Nigerians would consider it beneficial to participate in the shipping industry by acquiring vessels. This would lead to an increase in Nigerian-owned vessels. A developed and home-grown domestic fleet becomes an appropriate entry point into the international shipping market by Nigerian shipping companies and will prepare them for competition with foreign shipping companies.²³No doubt, this

strategy would create jobs for the Nigerian workforce.

For the Nigerian Cabotage Laws to impact on the economy, the government has to be assertive and creative in policy implementation. The business of shipping must be taken seriously. A nation’s merchant marine is built over time and not without adequate planning. However, once the right foundation on which the Nation’s shipping industry will be built is strong, there is a potential that this singular economic activity would boost the Nigerian economy beyond imagination and cause the generation of more wealth than previous experiences. Appropriate and immediate steps to be taken may include the following:

• Amending certain key provisions of the Coastal and Inland Shipping (Cabotage) Act of 2003.

• A committed intention to implement the provisions of the Act.

• Setting up an executive istrative arm of government solely for developing and implementing key cabotage policies for the growth of the Nigerian merchant fleet.

• The istrative body must be given specific roles and duties, and its performance should be periodically examined by the executive arm of government.

• There must be a long-term plan for the training of seafarers, shipbuilders, and any other technically associated industry.

• The Federal government may in the short run, start up by sending, say, ten thousand graduates from secondary schools, universities, and polytechnics to the best ship-faring and ship-building schools around the world.

• Such a plan may also include setting up such schools in Nigeria, where foreign teachers and experts can be employed to teach in the long term.

• Simultaneously, the government must firmly resolve to be the bedrock behind the Nigerian shipping industry.

• Make plans towards financing the building of a set of one hundred Nigerian vessels.

• Employ the trained shipbuilders and seafarers in the building and manning of the first set of such one hundred locally-built vessels.

• Duplicate the vessel-building capability periodically.

• Make plans for the periodic maintenance of those vessels.

• Secure cargo and enger transportation for those locally built vessels.

• Invite the international community to invest in local recruitment, training and re-training of seafarers, the building of more vessels and the maintenance and repair of all existing vessels in Nigeria.

It is apt for the government to consider these and other long-term goals, and put in place, a structure to enforce them in order to get on the right track of reaping the enormous benefits associated with cabotage.

As a result of the meticulous, long-term planning of the US government and its unwavering resolve to build a prosperous merchant marine fleet, as reflected by the provisions of the Merchant Marine Act of 1920, the US Maritime Cabotage Task Force, one of such structures put in place by the US government to enforce its cabotage aspirations, made the following report:

• Between 1965 and 1995, the Jones Act fleet doubled in size and tripled in productivity.

• At the time, the Jones Act was responsible for the annual transport of more than one billion tonnes of cargo and one hundred million engers through American ports.

• The Jones Act created more than 125,000 jobs for American citizens.

• The private sector contributed $26 billion for developing the US merchant marine fleet.²⁴

1.8. Invigoration of Water-borne Transportation

In the Nigerian context, the encouragement of water-borne transportation cannot be overstated, as the road transport system is not only inadequate but also overburdened and, congested. Furthermore, the traffic situation is somewhat chaotic and unbearable, to say the least. Thus, the introduction of cabotage for the carriage of goods and engers would definitely take a lot of pressure off the Nigerian roads. Waterborne transportation is the most under-utilized form of transportation in the country. The only sector that has taken advantage of waterborne transportation is the oil and gas sector. This is most unfortunate because a single, average-sized barge can carry the same volume of goods as about fifty to one hundred Stretch-Trucks, and yet it attracts less cost, fewer risks, and less time.

Once the Nigerian government takes steps to adequately plan and enforce progressive cabotage laws and policies, and it is seen to be taking its cabotage aspirations seriously, the Nigerian economy will attract local and foreign investors interested in participating in the business of waterborne transportation. Encouraging waterborne transport systems would further reduce road-traffic problems and also provide enormous investment opportunities in the following ways:

• In states like Lagos, Rivers, and Bayelsa, an effective sea traffic management machinery would help to reduce the congestion created by the over-dependence on road transport. Intra-state transportation schemes can be very effective because they can move a large number of people across traffic prone areas and in a more comfortable manner. If such schemes are well run by the private sector and monitored by the State or Local governments, they have the capacity to solve transport problems and contribute effectively to the growth of the economy.

• Another significant way in which cabotage would benefit the economy is through inter-state and intra-state water transport. This opportunity would be available to all coastline states in Nigeria. At present, there are few options for inter-state travel open to Nigerian citizens. Either one embarks on the long but inexpensive road journeys, which are not very comfortable, or one elects to pay an exorbitant alternative air travel fare. Waterborne transport creates another option for inter-state travel. The business of carrying engers and their luggage through sea channels have become so prevalent internationally that a special legal istration, the Athens Convention of 1974, was developed to govern the carrier and the enger on a voyage. Such voyages are usually performed by big enger seagoing vessels, with the capacity to carry about one thousand people, their luggage, yet have space to carry a large amount of cargo interests, in one single voyage and at one fell swoop.

The issue of enger-lodging is different in sea voyages as compared to the clustered environment in road transport and it may even be a better experience for a potential traveller than air transport in the following respects: Seafaring enger vessels are gigantic in size and are more spacious. This guarantees that each enger has a comfortable experience. The vessels also have the advantage of creating other forms of recreation for potential travellers with the inclusion of certain facilities on board that are not available on road or air travels. For example, a swimming pool can be easily incorporated in addition to other facilities like cinemas, restaurants, and bars.

This immediately creates enormous revenue generation potential for businesses incorporated to transport en mass intra-state to and from Ikorodu to Lekki, Ikorodu to Lagos Island, Epe to Lagos, Lekki to Badagry, Yenegoa to Nembe, Yenegoa to Brass, and inter-state to and from the Riverine areas of Lagos to Bayelsa and Rivers state. Transportation of people and cargo may also be extended to service communities that have access to the River Niger and Benue.

• The same opportunities exist with respect to waterborne transportation from Nigeria to other countries. In discussing this, emphasis should be focused on

collaborate economic development efforts between Nigeria and other West African coastal states, which should eventually spread to the whole of Africa. Nigeria should champion a movement for the development of tourism industries between coastal countries through sea transport. This platform would create an opportunity for the shipping sector of each coastal state to work with indigenous associated industries like hospitality, tourism, and culture to provide an ultimate tourism package for any potential traveller within Africa, travelling for leisure, vacation, leave or holidays. The rationale behind this is to deflect some of the income made by countries in Europe and America from travellers who take yearly vacations to those countries. Such an initiative would create an alternative for travellers to spend their vacations in other African countries, and by a t effort, the economies of Africa would develop themselves with respect to shipping and tourism. Thus in summertime, a Ghanaian banker may opt to set sail around West Africa on a luxury boat cruise package which would consist of a chance to experience the robust Lagos night life, a visit to the pre-historic buildings and parks of the Ivory Coast and ending up in the sunny beaches of the Gambia, instead of heading for cliché shopping visits to the US or Europe.

Rest assured, such Nigerian water-borne tourist transportation package would be swamped with patronage by American and European citizens. One can imagine the huge income as Americans and Europeans being curious adventurers and vacationists would embrace what had not been available hitherto.

A reliable and efficient maritime transportation system is vital to the sustenance and growth of any economy in the business of international trade. It is impossible to overlook the Nigerian export and trade potential of our undeveloped mineral resources. However, the correct strategy should be for the government to first secure the growth of its shipping sector in preparation for the economic boom associated with the development of our natural resources. When indigenous resources are successfully developed, a need then arises to market them to the international community as well as deliver minerals and other unprocessed materials to their overseas destinations. In the quest to improve the Nigerian shipping sector, several other related issues are bound to appear and must be tackled as they arise. For example, due to the shallow depth of Nigerian inland waterways, many cargo vessels cannot ply them. The challenge is to

facilitate the dredging of the waterways to accommodate those cargo-carrying vessels, as well as the construction of inland container depots.

A progressive step has been taken by the National Inland Waterways Authority by dredging coastal waterways and silted channels of about 3,000 kilometres. Furthermore, the rehabilitation of the Onitsha Port and the Oguata Lake River Port, is a welcome development because it will enhance national economic growth through the contribution of domestic shipping to gross domestic products.²⁵

1.9. Economic Development

The economic benefits accruable through the operation of a cabotage regime are numerous. Once again, let us re-visit the American example. Upon the promulgation of the Jones Act, the United States recorded an obvious and strategic development in its economy. In 1997 alone, over one billion US dollars was generated from the oil and gas operations alone, and another one billion US dollars on marine-related activities, dredging, patrols by coast guards, and environmental services.

Furthermore, through the Jones Act fleet, the United States has employed about 124,000 people. Thus, cabotage systems don’t only generate income but also spawns numerous job opportunities. From the employees’ salaries alone, the United States make about $1.1 billion in federal income tax and another $272 million in state taxes, annually. In addition, the clusters of industries that the Jones Act fleet contribute about $300 million and $55 million in Federal and State taxes, respectively.² One can now see why the task force gave the plan the cliché “Full Speed Ahead”.

Economies of nations thrive when there is a great volume of money in circulation. The economic opportunities available from a properly implemented cabotage regime have the potential of accelerated industrial development as the benefits cut across different important sectors of the financial system of a country. Such a system is strengthened when wealth is created from productive activities, and this would result in a chain reaction of positive outcomes having far reaching implications.

A well-structured cabotage outfit is one of the backbones of economic advancement because the benefits attainable are spread across various key sectors of the economy. For Nigeria to attain economic affluence, effort has to be

made by the government to strengthen the pillars of the economy, and this would be the significance of a Nigerianisation system. It is imperative that the concepts of Nigerianisation and local participation guide the direction in which Nigerian statutes on cabotage should take. To be borne in mind is the fact that world powers in the shipping industry are competitors in the carriage of cargo and engers, and that the only way Nigerian shippers can create some sort of monopoly on Nigerian cargo, is if they are assured of legislative protection. In addition, considering the fact that the underlying principle of a cabotage regime is local participation, the restriction made on the flag of a ship before it can operate in the Nigerian coastal waters would almost guarantee the availability of cargo and engers. Thus, Nigerian shipping companies and businessmen can work in partnership and harmony, in order to invest in providing shipping services to fill this vacuum, because there would be a steady demand for local shipping services. If those shipping companies get listed in the Nigerian stock market, it would lead to the influx of investors whose shares would be guaranteed by the availability and demand of shipping services with the implication of creating wealth not only for the shipping companies but also the investing public.

Furthermore, the banks will benefit from cabotage practices because they would be called upon to finance shipping companies and shipping services by providing long-term loans for the building of ships, the acquisition of ships, and the repair and maintenance of coastal vessels, which would in turn generate profits for the banks and thus strengthen their asset base and capacity to invest.

The insurance companies are not left out: they would be engaged in the insurance of cargo and vessels on a daily basis, thereby increasing their income and patronage. In addition, architectural firms and construction companies would profit from the design, construction, expansion, and repair of ports, as well as the dredging of the inland waterways.

In addition to the foregoing, Nigerians engaged in communication engineering and telecommunications would be employed to supply and maintain radio

communication equipment and radar systems for coastal navigation. Freight forwarders, shipping agencies, shipping consultants, maritime lawyers, and other ing services needed in the maritime industry will benefit through patronage from a regulated cabotage regime.²⁷

Vintage cabotage activities in Nigeria will create a wide range of employment opportunities for Nigerian citizens, especially in the restive Niger Delta region. Employment here is not limited to jobs flowing from vessel employment but includes multiplier effects on sectors such as supply and services, consultancies, stevedoring, construction of jetties, and fishing in that exclusive economic zone.

If Nigeria can successfully run an efficient cabotage system, the benefits would be huge and would go a long way in developing the economy, thereby elevating the country from a disappointing third-world status to a vibrant economy. Competent participation in this type of industry affects different sectors of the economy as it cuts through diverse professions that add value to the maritime industry. The effect is that each of those participants earns income from the contributions made in the regime by creating wealth that ordinarily had not existed, thereby increasing the volume of money in circulation. When this money is banked locally, the availability of funds increases the banks’ capacity to undertake other major profitable projects not limited to maritime, thereby causing widespread fiscal advancement through re-distribution of capital. The Nigerian government would have to play a significant role in supervising and intervening in port istration and development, with a view to ensuring economic advancement and securing the Nigerianisation objectives while working closely with the private sector, which should be more focused on the day-to-day running of the ports.

The Japanese government realized that shipping activities are a lynchpin of regional development, and this fact is clearly espoused and highlighted in the quality of its legislations and policies governing the establishment and istration of Sea-Ports. At present, Japanese ports are not run merely as

commercial enterprises, but the establishment of a new port or modernization of existing ports ultimately leads to the development of the communities around the ports and this is regarded by the Japanese government as sufficient returns on port investment.²⁸For example, the Japanese government expenditure on investment in the development of the ports in Kashima, the Ibaraki prefecture, and the wider areas of Japan, together with the various industrial projects in those areas, had immediate and astounding social and economic results.

There were rapid, dramatic changes in the absolute size of the population and in the number and composition of the labour force in those areas, which could be evidenced by the increase in population from 57,000 in 1960 to 300,000 in 1975; the population of the maritime labour force also increased from 20,000 to 122,000 within the same period.² Those numbers represent a rapid transformation from an agricultural area into one of commerce and industry.

However, the economic returns were not to be exhausted yet. Urbanization ultimately brought about modernization and the provision of public infrastructure such as roads, waterworks, and sewage, resulted in the depopulation of other major neighbouring cities like Tokyo and Osaka, from where people migrated to settle in the new city of Kashima.³

Furthermore, the direct impact of the investment made in the Kashima port on maritime trade was most remarkable: the number and tonnage of foreign ships increased dramatically from zero in 1968 to 980 ships and 24,302 total tonnes in 1975. Moreover, the domestic traffic increased from 104 vessels with a tonnage of 24,000 in 1965 to 7974 vessels and 7.56 million tonnes in 1975.³¹

1.10. Dockyard Development

By virtue of the provisions of Sections 3 and 7 of Nigeria’s Coastal and Inland Shipping (Cabotage) Act of 2003, all vessels participating in coastal trade must either be Nigerian-built or Nigerian-rebuilt. The positive impact of this provision magnifies itself in the Cabotage Act’s intention to operate as a catalyst to increase patronage of the Nigerian dockyards by Nigerian shipping companies, which would have their ships built or repaired locally. Furthermore, the restriction would also lead to the development and growth of Nigerian shipyards and dockyards.

The benefits of local shipbuilding and repair are copious. They take full advantage of the local knowledge of Nigerian waterways, and they provide ready access to service facilities without the need to undertake long voyages to the FarEast and Europe. A large market would most assuredly increase efficiency and capacity building.

At a maritime workshop held in Lagos state,³²Mr. Nkpubre, the Managing Director of Nigerdock, affirmed that Nigerdock had at that time built 26 vessels that were mainly waterway vessels, with the highest tonnage of 150 tonnes. He reported that they had upgraded its facilities to a capacity to build vessels of up to 30,000 gross tonnages, comprising of tugboats, coastal tankers, and supply boats, which are in high demand in the west and central African sub-regions, because there is a potential market for them. Due to the quick development of Nigerdock, the shipbuilding company would have the capacity to build a different variety of ships ranging from tankers, bulk carrier tugs, barges, container ships, roll-on-roll-off vessels, ferries, cruisers, and dredging vessels.³³

Other Nigerian dockyards are following the precedence laid by Nigerdock in providing world-class shipbuilding and maintenance services to cater for the

Nigerian cabotage demands.

On October 9, 2008,³⁴ the Daily Trust newspaper published a story on the completion of an ultra-modern dockyard called Ibom Dock at Ikot-Abasi in Akwa-Ibom State, which was described as the most ambitious and bold marine project in the shipping history of the country at that time. The company revealed that it had kicked off the building of special service vessels and fast craft boats to cater to the burgeoning requirements of the oil and gas sector. According to a statement made by the chairman of the ultra-modern Idom Dock, celebrated industrial banker, Alhaji Umaru Mutallab,

“Whatever specification and choice of boats requested, this privately run company is capable of satisfying. We are the only company capable of building specialized ships to go offshore, you tell us what you want and we will give it to you.”

According to the chairman, the Idom Dock prides itself as a well-prepared and well-equipped company, with capacity to fulfil all of the various shipping needs in the maritime sector. The locally-owned dock was established to meet all of Nigeria’s cabotage needs.

While the increased capacity of Nigerian dockyards and their mission to indeginously provide their quota of locally manufactured boats to satisfy Nigerian cabotage needs is a welcome development and a huge step in the right direction it must be emphasized that Nigerian docks still haven’t achieved their full potential. In practice when comparing the number of vessels which are constructed in the Nigerian dockyards and are engaged in day to day business with their foreign counterparts operating along the Nigerian coast it is clear that a great shortfall still exists in local shipbuilding despite the increase in our local dockyard capacity.

1.11. Employment Opportunities

The Nigerian shipping community suffers from avoidable employment competition in two ways. First, local ship-owners enter into competition from the more technically advanced flagged ships when it comes to charter for sensitive shipping operations such as those required for the oil and gas industry. Since the purchasers of crude oil and its extracts are big multinationals from more developed countries with advanced shipping companies, the local ships are usually neglected or sidelined in favour of their foreign counterparts. As such, foreign ships are seen as more competent and more sophisticatedly constructed with more experienced crew than local ships, thus they win the confidence of these multinationals doing business with Nigeria. Nigerian shippers lose vital employment to foreigners for their failure to prove their competence on a level playing field. One may ask how Nigerian shipbuilders attain perfection and competitiveness when they are not given the job to do. As they say, practice makes perfect. This is a classic example where the protectionist nature of the Nigerian cabotage policy comes in handy.

Second, third-world foreign vessels also deprive Nigerian shippers of employment because they provide haulage services of goods in and around Africa with inferior boats, which manage to get the job done with outrageously low charter prices. The reason is that the boats used are usually battered, derelict and decrepit consequent upon which they are chartered for less. In addition, the crew is satisfied with being low-paid, thus they are stiff competitors with the more modern Nigerian crew in of the charter price.

A strictly enforced cabotage law would eliminate this competition. However, it is suggested here that the government should play a major and enduring role to develop the Nigerian domestic fleet in order to bring it up to par with those of foreign competitors. The next step is to insist on strict compliance with local content and Nigerianisation laws. Cabotage laws are to be protected by the government at all costs. The business should be run as a monopoly strictly for

the benefit of Nigerians.³⁵

According to the International Transport Workers Federation (ITF), cabotage laws are made and enforced to secure a long-term, sustainable, and fair distribution of employment opportunities for seafarers as a valid method of eliminating unfair competition.³ The ITF stated that in many countries where the national fleet has virtually disappeared, the introduction of “a cabotage arrangement represents the main, and sometimes the only serious, possibility for seafarers to secure employment. It stated further that in the labour supply countries”,” the bulk of seagoing personnel are employed on board foreignflagged vessels, and to those countries, the need for cabotage might not be obvious at first but will definitely have significant advantages in the long run.”³⁷

Through cabotage, employment and training opportunities will be available not only to the builders, crew , and those providing ship maintenance services, but also to all other cabotage-ed activities and all maritimerelated activities. Considering that Nigeria itself is an oil producer, the availability of crude oil for export is guaranteed; a well-enforced cabotage regime would secure employment opportunities for the high percentage of unemployed youths and graduates from Nigerian universities, polytechnics, and other institutions of higher learning.

1.12. Fair Competition for Participating Vessels

It is noteworthy that the modern global maritime business is comprised of different ships from diverse countries and flags competing with each other for the right to carry cargo on the sea. Over the years, the governments of most developed countries the shipping companies through subsidies, incentives, and tax holidays; in appreciation of the need to boost maritime business opportunities because of the overall economic advantages accruable from the sector.

Furthermore, those foreign ships, whose operational overheads are highly subsidized and are usually involved in cartel-liner alliances with larger ships, are manned by more experienced crew and have superior maneuvering skills.³⁸ When comparing this situation to the state of affairs in Nigeria, it is easy to understand why the Nigerian domestic shipping industry is dominated by foreigners. According to Mike Igbokwe,³ the introduction of well-implemented cabotage laws will ensure that all shipping companies engaged in domestic transportation will have a level playing ground to compete under similar conditions and benefits with regard to the responsibilities to their workers, regulatory bodies, and taxation system. He further argued that the unfair competition, which cannot exist where there are highly subsidized vessels exempted from local tax, will force the shipping companies to improve their productivity and endeavour to render more efficient services.

1.13. Government Revenue

The Nigerian government would be the major financial beneficiary once it successfully implements a pragmatic cabotage istration. It is a firmly established fact that Nigeria is an oil-producing country, and since crude oil trade involves billions of dollars in daily transactions, it is conceivable that cabotage activities in the oil sector attract several millions of dollars on a daily basis. In practice, the quantum or value of any particular transaction is the determinant of the capacity of the vessel carrying it.

A transaction involving crude oil CIF principally involves a seller and the buyer first agreeing to the quantity, price, and time of delivery of the cargo. The seller, at his own cost, is obligated to charter a vessel and load it with the product before producing the bill of laden showing the amount of product the vessel is carrying, an insurance policy, and a charterer’s invoice. Ownership of the product es when the ship has set sail and the seller exchanges those three documents for the price. Consequently, payment is determined by the quantity of cargo recorded on the bill of laden probably after some form of quantity and quality inspection is performed. In addition, the buyer of any particular cargo not only buys the crude on board the vessel, but is also obligated to pay the price of chartering the vessel for a single voyage to any destination of his choice for delivery.

The unfortunate reality is that in Nigeria because most huge seagoing vessels that have the capacity to large amounts of barrels of crude at a time are foreignowned, the income that should otherwise accrue to the indigenous shippers in the business opportunity (resulting in the sale of Nigerian crude oil) is earned by foreign shipping companies, who transfer the income made in Nigeria to their overseas s in their home countries. As a result, Nigeria loses both the benefit of more money in circulation due to capital flight and government tax that would otherwise have been collected if an indigenous company performed the activity.

Thus, Nigeria loses substantial foreign exchange on a daily basis, which would have otherwise been available revenue if a stringent cabotage system is in place. Moreover, the multiplier effect is that Nigerian shipping companies would pay less corporate tax because foreign shipping companies make the income that should have been restricted for our domestic shippers. In addition, Nigerian dockyards would pay less corporate tax because there would be no security of cargo to encourage more Nigerians to invest in the building and repair of vessels.

Furthermore, the seafarers pay less personal income tax because the income that ought to have been otherwise subject to tax is paid directly to the foreign crew . The Nigerian government’s indifference towards effective planning and execution of strict and developmental cabotage and shipping policies are hampering the growth and development of the Nigerian economy.

1.14. Training and Protection of Seafarers

In the United States of America, a large part of the Jones Act addresses issues concerning the safety, training, and welfare of seafarers, who are seen as special citizens that provide a national service by choosing to spend the most productive period of their lives away from their families at sea, in order to ensure the smooth running of the country’s shipping industry. This aspect of cabotage has been completely neglected in the provisions of the Coastal and Inland Shipping (Cabotage) Act of 2003, and in Nigerian law as a whole, despite developments in International Law on this issue.

Available evidence suggests that a successful cabotage istration would be impossible to attain without ensuring the welfare and continuous training of a critical mass of seafarers. If strictly and faithfully implemented, cabotage offers an opportunity to train seafarers locally instead of sending them abroad for training. According to Mike Igbokwe,⁴ such local training will be advantageous not only if it meets international standards of competence, but also because it can be tailor-made to meet the local circumstances and maritime needs in the Nation’s inland waterways and domestic ports. He further states that the Maritime Academy, Oron, and the Nigerian Institute of Transport Technology, Zaria, will be very useful in this regard.

CHAPTER 2

EVOLUTION OF THE NIGERIAN CABOTAGE ENVIRONMENT

2.1. Cabotage and Colonial Nigeria (Elder Dempster Case Study)

Historically, cabotage practice in Nigeria can be traced to the mid-nineteenth century, when, in 1852, the Elder Dempster shipping line was inaugurated in West Africa. The British government came to Nigeria as part of a colonial policy aimed at exporting and developing indigenous untapped natural resources. The colonial economies eventually developed, and West Africa witnessed the creation of a shipping industry and the influx of foreign shipping lines to West Africa, which resulted in a monotonous increase of sea traffic in and around the region. The demand for commodity transportation was huge as European manufacturers generated vast income from the exportation of European goods, including those manufactured from the raw materials and mineral resources derived from West Africa. Those raw materials were carted away from the West African colonies under the excuse and auspices of development.⁴¹

Thus, in the area of commodity haulage by those European shipping lines, there exists little evidence of the practice of a cabotage system because the goods and minerals hauled from West Africa were in such a large quantity that the business of those colonies would be slowed down tremendously if a monopoly was in place regarding transporting those goods and minerals to Europe.

This was not the case with enger transportation. The success of the British colonial activities in West Africa simultaneously created the need for major British and other European companies to set up subsidiaries in local territories to enable them conduct business effectively. In order to run those and other associated ventures, there was an immediate need for European manpower to be deployed to the region, and this resulted in the availability of enger transportation as a business that the British crown successfully secured for local British shipping companies. Upon consideration of the business histories of the Elder Dempster shipping line, especially with regards to the business of enger shipping, it is evident that there was a strong statutory presence involved in the preservation of enger shipping in favour of the shipping company, even in the face of intensive foreign competition. The Elder Dempster

business notes also unequivocally presents evidence of the existence of the first cabotage system operational within Nigerian coastal waters.

A distinguished Nigerian professor of History, Professor Ayodeji Olukoju, traced the business and financial history of the Elder Dempster line in his work “Helping Our Own Shipping,” where he reported the outcomes of an empirical investigation on British governmental policy aimed at securing the enger transportation business interest of the Elder Dempster line. This analysis is imperative for a proper understanding of the role the home government plays in the enforcement of a cabotage system.

The government of every successful maritime world power must be actively involved with the day-to-day running of its shipping industry. In addition to creating governmental agencies for the istration of its maritime industry, the business of the industry should be controlled by oversight and directed by policy.

Problems are bound to arise in the daily running of such a specialized industry, and as such, the government must have a competent team of technical, economic, business, and legal experts to proffer solutions to issues as they arise.

During the period covered by the study under reference, the British Imperial Government, headed by her Majesty the Queen, controlled shipping activities through the British Ministry of Finance. Although the imperial government made laws and statutes that were binding on the colonial regions, they still expected their colonies to run independently of the imperial government, and the protectorates were also required to pay the requisite taxes to Her Majesty’s Crown. In the area of shipping, the Crown influenced the policies put in place in the West African regions through the Ministry of Shipping in a bid to develop a monopoly in favour of the Elder Dempster line.

Available evidence suggests that the British government monitored the day-today running of the Elder Dempster line and directly controlled all issues, including those related to individual fare and enger rates to be charged by the line, in order to generate profit. Commenting on this fact, the then chairman of the Elder Dempster firm, Sir Owen Phillips, remarked;

The latest increase in the age rates was made at the request of the Ministry of Shipping in order that the enger steamers should not show deficit balances. Freight and age money now goes to the British Government who are always urging us to see that the vessels are run at a profit.⁴²

Thus, one can see at once that the structure adopted by the British government to run its colonial system was to create an independent territory that was required to sustain itself, and all existing business interests were also intended to operate independently of their parent companies and on separate financial systems, each paying tax to the central British government. With regards to the Elder Dempster line, the imperial British government adopted the position that the target market and indeed, a large percentage of the proposed customer base of the line was British colonial officers and workers returning from annual leave or taking up fresh appointments, and so enger shipping should be preserved exclusively for British lines.

However, this directive was not positively received by the colonial government, which objected at once due to the fact that it was directly responsible for handling travel expenditure for its workers, and the prevailing rates at that time were outrageous when compared to what was charged by non-British lines.⁴³According to statistics supplied by Messrs Elder Dempster & Co to the Chief Secretary to the Government on 28 January 1918,⁴⁴the charges imposed on a single voyage from Lagos to Britain had increased by 128 percent from thirty pounds on 29 June 1916 to sixty-eight pounds, ten shillings by January 1918-for a first-class cabin.

The second-class cabin had a 127 percent increase from twenty-two pounds to fifty pounds within the same time frame. Agitations at that time by the colonial British government on ground in Nigeria was that not only were charges exorbitant, but the accommodations were not as comfortable as the French liner to Bordeaux.⁴⁵

Commenting on the increase, Secretary of State Walter Long, observed that not only was the increase unprecedented (as it did not appear justified by any increase in shipping costs), but it also had the semblance of a tariff unnecessarily foisted on the imperial protectorates in the West African sub-region.⁴

As a result of those agitations, a discount of 25 percent was given to all ages booked by the West African colonial government and all crown agents proceeding to or returning from Britain; this took effect 1 May 1918.⁴⁷The British Shipping Ministry explained that such a rebate was given not only to ease the financial burden on officials who paid their way but also to cushion the effect that those prices had on the colonial government. However, the British government was determined to gather all possible revenues from the enger shipping business, and it soon cancelled the rebate. In fact, the rebate only lasted until 19 June 1918, when the requisition was terminated.

2.2 The Effect of World War I on the Elder Dempster Monopoly

On a general note, World War I had a negative effect on shipping practices worldwide. After the war, there was a global economic decline in the international shipping trade, which inevitably led to a paucity of freight and engers for haulage.⁴⁸ The British Imperial Government recognized this early and strengthened its resolve to restrict the right to carry British engers and reserve it exclusively for the British-owned Elder Dempster shipping line. In addition, the Elder Dempster line faced stiff competition from vessels of other flags, including, , and Italy, who were prepared to compete with the British for the right to transport engers not only within West Africa but also from West Africa to Europe by offering ridiculously cheaper enger rates, more comfortable carriages, and services better than what was hitherto offered by the Elder Dempster line. The fact that those competing shipping lines offered a much better product than the Elder Dempster line, did not affect Her Majesty’s Government’s restrictions on enger shipping, because British colonies were still bound by law and policy to ensure that British colonial officers and workers did not patronize those foreign lines. In fact, the only instance in which any colonial officer at that time was permitted to patronize foreign lines was when a British-owned enger vessel sailing at the same time as its foreign competitors was overbooked or congested.

Commenting on this fact, the acting Chief Secretary to the Government, Mr. Scott, explained the position of the government while addressing the Colonial Workers Association. He remarked that the British government was not prepared to have public money paid to non-British steamship companies in the absence of sufficient justification to warrant such actions.⁴

Due to persistent pressure by colonial officials, who were relentless in their quests for better services onboard seagoing enger vessels, the colonial government eventually lifted some restrictions concerning the patronage of nonBritish vessels. However, the revised conditions were so stringent and unrealistic

that they operated as a further deterrence to colonial officials wishing to utilize the services of a foreign vessel.⁵

First, officials intending to travel on foreign steamers were required to notify their heads of department two weeks before the intended departure date and the officials would be responsible for booking their own age. Second, the maximum rates approved for such voyages were based on the so-called Elder Dempster’s AB and Cl rates, as there were no concessions given for ages that would have otherwise gone on Al rates via the Elder Dempster lines. Third, the timing of the official’s annual leave was calculated according to the sailing schedule of Elder Dempster ships. General Order No. 335 stipulated that if an official travelled by a foreign line, his leave would commence in the case of a vessel taking off from Victoria twenty days from the date of disembarkation.⁵¹ With regard to British officials intending to use foreign vessels sailing from Calabar, Forcardos, Bonny, and Lagos, their annual leave was deemed to have commenced nineteen, eighteen, seventeen, and sixteen days before the date of boarding, respectively. It should be noted that these restrictions did not apply to ages booked by the Elder Dempster, which magnified the punitive intent of those provisions, making them clearly manifest. Therefore, if the voyage took twenty days, such officials would forfeit eight days of annual leave if the age was booked from Victoria, and so on. The rationale behind this directive was to give each colonial officer the option of patronizing foreign lines with the knowledge that such actions would automatically translate to a shorter period for annual leave.

Fourth, such officials were denied the balance between the charges saved when patronizing a foreign line as compared to ages booked with Elder Dempster steamers.

It can be seen clearly from the above that the advantages of the concessions were calculated to be nullified by the stringent conditions attached to them. Also, none of the directives issued by the British Imperial Government or its colonies compelled the Elder Dempster line to provide better services to its loyal

clientele. Owing to that inconsistency, the association of European Civil Servants, which was a pressure group comprising of colonial officials in the diaspora, increased the clamour for drastic change in the abuse of the Elder Dempster cartel.⁵²

2.3. Post-1920 Reforms

Owing to the conservative attitude of the British Imperial Government with respect to their refusal to compel Messers Elder Dempster& Co to provide a better travel experience for colonial officials, as well as their unwavering stance towards exposing the cartel to fair competition, the Association of European Civil Servants launched a campaign against the Elder Dempster monopoly. This was reflected in the publication of a seven-page pamphlet published in April 1923, where the association expressed profound dissatisfaction in the quality of service onboard the shipping line and the unfair pricing of tickets. The frustrations of the colonial officials were aggravated by a firm conviction that the foregoing unacceptable reality was as a result of government protection of the shipping line, which discouraged “Messrs Elder Dempster &Co. from moving with the times and lowering their fares to such an extent as to bear a reflection to the pre-war charge”⁵³.

Although the association expressed a resolve to encourage and assist British trade, they re-affirmed that they refused to be exploited by “any monopoly such as Messrs Elder Dempster & Co, has held since 1914”.⁵⁴ The major grounds of objections, as stated in the pamphlet, included the fact that the fare of fifty-five pounds and ten shillings for a sixteen-day journey from Lagos to Plymouth was overpriced and exploitative, and it was made more objectionable by the fact that engers were compelled to share ill-ventilated, two-berth cabins with three people, which made for a very uncomfortable journey. Also, the association complained that cartels vessels were always over-crowded and that in October 1922, for example, twenty first-class engers of the Elmina had to take their meals in the lounge because there was no space in the dining room.

They concluded that the Elder Dempster line did not have enough vessels to meet the demand of the engers who needed to be transported overseas, but they self-indulgently held on to the monopoly because they were more concerned with profits, and so they gave little consideration to the welfare of

engers as well as the quality of services.

Furthermore, they protested against what they described as the “offensive and insanitary practice” of taking on “the lower type of African humanity” on the decks between the first- and second-class compartments. Other complaints bordered on the exorbitant prices of drinks, unsavoury cooking, substandard sanitation, and discourteous attitude of staff towards engers.⁵⁵

In reply to the association’s observations, Elder Dempster denied all charges contained in the pamphlet and maintained that it did not engage in the practice of keeping cabins empty while confining engers to over-crowded cabins. It also attributed the high cost of fares to increased operating costs and heavy port dues imposed on ships visiting Nigerian ports.⁵

Regardless of these denials, the Secretary of State for the colonies made representations to the Elder Dempster cartel on behalf of the West African colonial governments, instructing them to reserve a certain number of berths for colonial officials at the approved rates.

The Elder Dempster line re-assured the Secretary in a reply to the letter that 80 percent of the berths would be reserved at the approved rate, as the addition of the ABA and ADDA vessels to the Elder Dempster fleet had provided accommodations in excess of the immediate requirement. The shipping company further attributed complaints about services to poor understanding of a new system that would be ameliorated if colonial officials booked their ages on time.⁵⁷

Thus, the cartel successfully evaded the critical issues and strengthened its grip on enger transportation monopoly in West Africa, which was further reinforced by the Secretary of State’s instruction of 19 July 1923 that no official

should be allowed to make any financial gain by being paid entitlement if the actual fare in travelling via a foreign vessel was less.⁵⁸ This was ed by a statement by the Secretary, Southern Provinces, Lagos, to the Resident, Owerri Province:

The general orders concerning the leave of European officers are based on the assumption that officers will travel by the normal mail route- i.e. by a vessel belonging to Messrs Elder Dempster &Co. When an officer desires to travel by a vessel belonging to any other steamship company, the general principle is to decide what would happen, if he travelled by the usual mail route and then apply that knowledge to existing facts.⁵

2.4 West African enger Shipping Practice between 1923–1929

Rebates on the prices of tickets on official ages characterized the agitation of colonial officials towards the Elder Dempster cartel between 1923 and 1929. The colonial officials argued that they never got beyond the periodic fare reduction, which was otherwise open to the general public and demanded exclusive concessions. The Nigerian colonial government was the best customer of Messrs Elder Dempster & Co because they received, at that time, a yearly income of £116,000. They further remarked that the government had never received any spectacular treatment from Elder Dempster and urged the cartel to reduce rates generally.

Considering the above submissions, Lord Kylsant of Elder Dempster lines and Secretary of State Leo Amery entered into private negotiations, where the Elder Dempster cartel put forward a reduction scheme for the colonial government’s perusal. It was proposed that in exchange for a guarantee that all colonial ages would be given to the cartel, the company would grant a special rebate of 10 percent on all government fares and put on thirty-nine express sailings from Liverpool every year. This, they pledged, would translate into increased weekly sailings if a reasonable and long-term agreement could be reached. ¹

This proposal was received with mixed opinions from the colonial officials. A school of thought was of the opinion that a 10 percent reduction on official ages would have a desirable effect on the colonial official’s savings. Furthermore, the prospects of weekly sailings would aid commercial activity and would make it possible for colonial officers to extend their leave.

On the other hand, the argument was that even at a 10 percent decrease, the fares were still higher than the amount charged by the foreign competitors of the cartel. They still maintained that there should be freedom to use other lines,

because the offer from Lord Kylsant of Elder Dempster lines was an insufficient inducement to enter into a binding monopoly with the firm; to do so would be a deplorable acceptance of the firm’s over-priced rates. ² The colonial government eventually made a counter-proposal demanding a 25 percent reduction and a special 30 percent concession for the wives of officials in exchange for an assured monopoly of governmental ages. ³This was vehemently refused by the Messrs Elder Dempster & Co, and an ime set in until the Great Depression.

2.5. The Great Depression

Just before World War II, international business recorded a global decline in trading activities caused by the Great Depression, which negatively altered shipping practices around the world. At this time, the British Imperial Government still recognized enger shipping as a business that was more or less unaffected directly by the global slump in trade, and it considered it a major source of revenue. In an attempt to appear to secure the much-needed colonial official ages, the government approved to offer a 5 percent rebate in 1930, which was half the price that the officials had rejected in 1928.

Regardless of this fact, the concession only applied to homeward engers and was contingent upon purchase of return tickets. ⁴The colonial government rejected this offer, and for the first time since 1852, through a temporary order dated January 1932, delivered by the Secretary of State for the Colonies, it permitted its officials to travel on ships of their choice in exceptional circumstances. However, he appealed to the Nigerian government to ponder over a proposal by the sister colony of Sierra Leone to negotiate a ten-year agreement based on a 10 percent rebate. ⁵

Based on the Sierra Leonean proposal, a secret agreement (which was effective for only three years) granted a 10 percent discount for first- and second-class ages and a 5 percent rebate for third-class courses was executed during a secret meeting between the Nigerian colonial government and the Elder Dempster line on 7 July 1933. In consideration for this concession, all official ages by the Nigerian colonial government was offered to the cartel, and it was only when the firm was unable to secure all colonial bookings that the colonial government was allowed to patronize foreign shipping companies.

The colonial officers were enthused by that offer and welcomed those

improvements. The Elder Dempster made a further and unusual unilateral cutback on AB rates from fifty-one pounds to fifty pounds ten shillings, the reduced amount still being higher than the cartel’s foreign competitors. ⁷

Although these rebates were eagerly accepted by colonial officials who were thrilled at the prospects of further rebates, some Nigerian officials opposed a substantial reduction of Elder Dempster fares based solely on competing prices offered by foreign competitors. They argued that such competitors attracted foreign patronage by proposing ridiculously low amounts – made possible because shipping practices in such countries were subsidized by their home governments. Thus, those foreign companies could operate effectively and undercut the Elder Dempster’s prices without suffering any loss at all. They advised that the government should press for greater rebates with the goals of reducing budgets, helping British shipping and ensuring that foreign shipping companies did not enjoy undue advantage at the expense of the British. ⁸ Despite these reservations, a new secret agreement dated 1 July 1936 granted an increase in rebate to 12.5 percent on first-class saloon and cabin ages, 10 percent on second-class ages, and 5 percent on third-class ages.

2.6. Official ages During World War II

During the outbreak of World War II in 1939, Elder Dempster policy forced a 33 percent increase on enger fares in addition to a war surcharge of 20 percent on all engers and goods, levied by the imperial government. This surcharge was raised to Thirty Thousand Pounds on 1 October 1939.⁷ The effect of this was that the colonial government bore the burden of an additional Thirty Thousand Pounds on its annual bills for official age, which according to the governor constituted “a heavy burden on the resources of Nigeria in those stringent financial times”.⁷¹

A further increase of the war surcharge to 50 percent caused Nigerian officials to demand for concessions by the Elder Dempster Company in 1936, which was refused by the Secretary of State, who claimed that the increase in the cost of age was caused by the exorbitant bills of insurance, increase in shipping costs, deviation from traditional routes based on security reasons, and a general increase of 33 percent in age rates among British shipping firms.⁷² A new agreement was reached with the Elder Dempster cartel, effective from 1 July 1939, which only considered rebates to cover inter-colonial ages. Although clamour for the reduction of prices persisted, the next rebate was not effected until 1942, when the Ministry of War and Transport granted a rebate of 5 percent on all ages between West and South Africa.⁷³ However, the cartel soon withdrew all rebates on colonial official ages, and on those they renewed agreements with the colonial government, which took effect on 1 April 1943, thus strengthening their monopoly again, till the end of World War II.⁷⁴

2.7. Concluding Remarks

One notable outcome of this chapter concerns the pivotal role played by the British Imperial Government in securing a shipping monopoly for the Elder Dempster line. In order to achieve the t development of both the colonial economies of Africa and the British international shipping business, the British government set forth favourable policies to guide the Elder Dempster line to economic prosperity and to give them sole carriage rights in the enger shipping business.

Active participation in the cartel-related business by the British government suggests a harmonization of interests that were deliberately secured through governmental policies and oversight. Indeed, the exercise of oversight control by the British government on the day-to-day running of the shipping line extended to issues of pricing of official age fares in a bid to ensure that those shipping companies recorded maximum profit despite the global economic climate.

The Elder Dempster case study also illuminates the close relationship that the shipping company had with the imperial government on the one side and with the colonial government on the other, which provides an illustrative example of the need for a country’s government to , encourage and over-see its shipping activities.

From the analysis given above, one can see at once how British colonial policy was framed to accommodate the Elder Dempster monopoly, even in the face of cheaper and more comfortable carriages provided by foreign competition. The importance attached to enger transportation is evident because the British considered it an enterprise of immense imperial and colonial importance that necessitated business collaboration between the colonial government, the imperial government, and the shipping enterprises.

The monopolistic manner in which the government set a path of favourable policies to grow the British marine economy even through difficult times, is worthy of commendation. Shipping is, indeed, a sensitive and serious business; any country that may reap the maximum economic benefits of its coastline must give the sector serious attention.

It is also important to recognise the “Buy British” mentality of the imperial and colonial governments, which insisted that foreign competitors should not usurp any income that should otherwise, be made by its citizens. Furthermore, the colonial government made certain regulations that prohibited foreign patronage. Even when they were forced to allow officials to utilize foreign vessels, indeed, very stringent conditions were attached to diminish and discourage such practices. British policy not only created an enabling environment for their local shipping companies to thrive, it also protected their income by creating security and availability of business for those companies. Although there were numerous complaints on the quality of service, the British did not waiver in for their own shipping, and they secretly negotiated better deals with the shipping companies when agitation for foreign patronage was increasing.

Moreover, the British totally abandoned the practice of opening up the colonial economies to foreign competition and they reserved enger transportation for British companies, especially during the inter-war years and the years of economic adversity. This practice is not peculiar to the British government; the way other European governments ran their colonies and business shows a trend in preserving significant sectors in the colonial economy exclusively for their nationals.⁷⁵

Worthy of note also, is the subsidy enjoyed by Elder Dempster’s competitors. Other European governments granted their local shipping lines various subsidies with a view to breaking the Elder Dempster’s monopoly by introducing better and more comfortable vessels to engage in enger transportation at cheaper rates. Shipping as a pillar of national development may be run at a loss, and

through the help of government, such losses can be mitigated in order to secure and establish a country’s fleet in the world market. This can be done only if the government chooses to initially subsidize the cost of maritime operations by offering access to financial for setting up and strengthening shipping companies in their quest to securing profitable charter and carriage agreements.

If Nigeria is to attain the desired aspirations as a world shipping super-power, the Nigerian government has to pay significant attention to the requirements of the shipping industry and formulate policies that will jealously guide and guard the survival and profitability of its cabotage operations. When taking the experience of the British into consideration, it is pertinent to bear in mind that even as early as 1892, the British had developed a cabotage policy through the Elder Dempster monopoly in order to secure enger transportation in British colonies exclusively for British citizens. In that vein, the Nigerian government should develop mega-shipping companies and encourage the rehabilitation of all Nigerian vessels so that the Nigerian fleet will be equipped to perform all cabotage operations before going ahead to compete for a place in the world’s shipping economy. Political will and enactment of relevant cabotage law would be a positive and veritable step towards integrating Nigeria into the World Economic Order- which is the focal point of this work.

It should be noted that in sustaining Elder Dempster as a world brand, the first step was to create a monopoly in an enterprise over which the British had complete control. That is to say, the transportation of British colonial officials from Britain to its West African colonies. Once this was accomplished, the British went further to ensure that such business was only engaged by British citizens. Taking this into consideration, it should be pointed out that Nigeria has a political advantage in which it can create a monopoly. As an oil producer, Nigeria is constantly engaged in the transportation of Nigerian explored crude oil to countries that purchase this essential commodity. A good starting point in the establishment of cabotage aspirations is for government to plan, assist, and secure the transportation of crude oil from various terminals to overseas buyers solely by Nigerian vessels. Nigeria has to learn to deal with its resources with the motive of reaping maximum benefits to its citizens in order for her maritime sector to catch up and overtake the accomplishments of already established

shipping companies, including the likes of Elder Dempster. However, there is a need to study the business practices of those companies and apply their successes.

Nigeria should be managed with an entrepreneurial mindset, requiring the government to secure multiple sources of income. Once a source of income has been identified as lucrative, the superiority nature and authority domiciled in governmental structure should be applied to intensify the exploitation of that economic source. There must be a rigid, unquestionable, and identified motive by the government to achieve economic benefits through the protection of certain industrial activities and pools of income solely for Nigerian Citizens and Companies. In this vein, enger and cargo transportation should be jealously guarded through bold legislation aimed at securing those activities for Nigerian businesses to practice exclusively.

Finally, it is suggested here that the Nigerian government should develop stringent enforcement machinery designed to ensure that only Nigerian individuals and corporates engage in coastal operations. This goal can be attained by a simple process of ing every cabotage transaction performed within the Nigerian coast. The rationale behind this practice is that the process of registration of transactions would ensure each voyage is documented, together with, the name and flag of the vessel embarking on the operation with a view to ascertaining specifically, the collective cabotage needs of the Nigerian economy. Once every commercial transaction has been identified, it would enable government develop a master plan for the local shipping industry; like a puzzle where every piece eventually fits into the grand scheme of things. In the event that a Nigerian citizen or corporate body subsequently secures the acquisition of a vessel, it should be viewed by government as not only the asset of the individual but the asset of the government and the role of government must be to ensure that the most benefit can be made out of the acquisition by securing steady and profitable jobs for the vessel and monitoring its performance through oversight istration.

CHAPTER 3

A SEAPORT IDEOLOGY FOR NIGERIA

3.1. Cabotage and Seaports

Seaports are windows to the world. They provide the possibility of accessing most part of planet earth, which is dominated by 75% water, and this inherent feature serves as a business advantage, especially when considered with reference to international cross-border trade. The choice to invest in the building of a port in any component state is crucial as it would be highly beneficial to the country as a whole, and it also directly impacts development in that region. It immediately creates numerous business opportunities and possibilities for communities within and around its location.

Accordingly, an advocacy for the establishment of seaports in every component state of Nigeria that shares the coastline cannot be over-stressed. Studies show the numerous benefits accruable to coastal regions as a result of investing in the development of seaports. The economic impact of port development can be identified as follows:

First, the establishment of a port immediately creates the possibility of numerous economic streams through local and international businesses and trade relationships. Put simply, the establishment of a seaport creates an opportunity for the country as a whole, the coastal region or state (where it is established), and the individual citizens to participate in the business of international trade. Second, if ports are windows to the world, then the establishment of a port immediately creates an opportunity to access the world through the sea and through the trading of commodities peculiar to that region. For example, if a port were to be established in Ondo State, Nigeria, it would create the opportunity to participate in international business of trade for the supply of products, which are in demand and available locally, according to the basic principles of economics. The possibility of creating international business interaction is assured because every region in Nigeria is blessed with numerous natural resources. Ondo State alone has about twelve natural resources – namely, bitumen, clay, coal, dimension stones, feldspar, gemstones, and glass-sand. Others are granite, gypsum, kaolin, limestone, as well as oil and gas. Thus in

Ondo State, there exist twelve natural-God given potential business categories where income can be generated and marketed internationally for any interested citizen who wishes to invest in them.

Furthermore, each of those categories will produce numerous avenues for direct trade relations, whereby potential buyers can be identified from the utility of the resource. As an example, gypsum is used in several industries: In construction, gypsum boards are used to finish building works; in the medical industry, it is used in surgery, dentistry, and rendering. In agriculture, it is used for soil conditioning.

Gypsum is also used in the creation of clay tennis courts in sports, creation of sculptures in art, as a dietary supplement, for baking, in Chinese traditional medicine, and in the production of foot creams, and shampoo. Thus by merely enumerating the uses of gypsum, insight is provided with respect to the potential profitability of the mineral resource which guides to potential markets where it can be sold. Further research would identify companies around the world that serve as potential end s and buyers for Nigerian gypsum.

The establishment of seaports in state regions would have a direct impact on the economy of the nation as a whole in the following ways:

• Once the seaports are in place, the Federal government (usually with private sector investment) can immediately begin to enjoy the immense profits accruable in mining Nigerian mineral resources and their sale to local and international industries. In this regard, the government has to incur mining expenses in order to enhance exportation, because the real resource is a naturally generated gift. The sale of those products would thus provide income for the government and the economy.

• Interested private citizens who have the means can also engage in private exportation of mineral resources after obtaining the necessary mining licenses, thus earning extra income to strengthen the economy.

• This may inevitably lead to other local businesses engaging in processing those natural resources into finished products, and thereby earning income from the sale of those products both locally and internationally.

• When a particular good or resource is generally regarded as profitable and in high demand, over time, one sees the creation of other industries in the business of facilitating the process of manufacturing, marketing, distribution and, sale. For example, we may see the establishment of numerous trading houses and marketing firms engaging in the business of identifying potential buyers for the locally available resources.

• This may also lead to the creation of other services industry required for elaborate mining activity, such as transportation, legal, labour, and advertising.

• Above all, thousands of jobs are created by the mining and selling of any one of those resources, quantifiable in billions of dollars yearly.

Additionally, the establishment of seaports within a state or region causes an accelerated development of the region in of job creation, infrastructural development, and communal developments. Apart from having a direct economic impact on the region, because they provide a platform to exchange goods and merchandise between that region and the rest of the world via ocean transport, they also constitute a huge catalyst for the development of the hinterland and foreland. Studies reveal that the establishment of a seaport in a particular region causes an immediate ripple effect in the development of the

region in of an increase in size and population, an increase in value of property, industrialization, and infrastructure.

Besides, the establishment of ports would have a direct impact on the economy of the region and the Federation in of foreign exchange directly generated by the exportation of products and transportation of engers.

In this chapter, an attempt is made to justify the establishment of seaports in every coastal state of Nigeria, by carefully examining the efforts of the Japanese government in building its economy, after World War II, through direct investment in building seaports in almost every region.

Also worthy of analysis, is the direct and indirect result of port creation in various regions, and the overall financial impact of seaports on the Japanese economy. The main purpose of accentuating the Japanese government’s commitment to invest and grow its port and cabotage policies (through enactments that focus on the importance of local content participation) is to give evidentiary justification to the premise that countries that develop their internal maritime infrastructures are automatically rewarded by a chance to participate in international trade via sea channels. A strong case can be argued in this regard, using Japan’s profitable maritime industry as a case study. A study of this nature is germane to appreciate the position of Nigeria, which has the potential of not only dominating the African shipping industry but also can be a major player in the world’s maritime sector. If the Nigerian government can exploit the Japanese experience, it would be a stimulant in enacting appropriate legislations that would catalyse investment in seaport construction. By vigorously pursuing that frontier the almost total dependency on oil and gas related revenue in the Nigerian economy would pale into less dominance.

Although Nigeria and Japan are fundamentally different in of location, size of coast, access to regions through waterways and the availability of natural resources, it ought to be noted that a study of this nature is not a futile exercise,

because some fundamentally similar characteristics exist between the two countries;

First, both countries were under allied occupation at about the same period. Second, both countries have similar figures with respect to their population and civil service strengths. Due to the aforementioned similarities, an evaluation of this nature would achieve desirable results, especially with reference to public policy formulation, management, and implementation.⁷ Nigeria would have a lot to learn from the highly dedicated and motivated Japanese workforce, the implementation of policies relating to the development of ports, ship-building industries, Japanese mercantile marine, and the Japanese central government’s participatory policies with the private sector. A comparative study of this nature elucidates the areas of achievement of the Japanese maritime experience, which would serve as a point of reference to Nigerianisation pursuits to harness the developmental and growth potentials of Nigerian ports and other supplementary maritime industries through cabotage.

The commonly accepted argument on the growth-pole potential of ports and ancillary industries has been captured by Paul Hanappe and Michel Savy.⁷⁷In their view, the maritime sector if properly harnessed plays a critical role in the development of regional, national, and global economies. Hanappe and Savy also explained that in order for this goal to be accomplished, the government of any maritime country must be aware of the potential of shipping practices and the relevant role it plays as “a pillar of economic development”. This chapter attempts a historical comparison between Japan, which would be aptly described as a world maritime superpower, and Nigeria, a country that is blessed with maritime potential but has yet to find an effective means of harnessing and exploiting even a quarter of her prospects.

The aim of this analysis, therefore, will be to establish the motives behind maritime policy formulation and implementation, how to create regional development through maritime policy, the relationship between industrialization and ports, the essence of good maritime planning and the need for the

government to prioritize its disposition towards a thriving maritime practice.

The humble but firm submission, which is ed empirically here through facts and figures, is that maritime practice is a pillar of economic prosperity for any country naturally endowed with a coastline, and it has the potential of propelling Nigeria from third-world status as an economic under-achiever to becoming a nation that will have enough resources to be integrated into the world economic order; if attempts are made by Nigerian citizens and government to transform the country into the maritime commercial core of Africa – and maybe even the world.

3.2. Ports as Catalysts of Regional Development

According to Ayodeji Olukoju, seaports constitute the hub of the maritime sector and of a nation’s economy because they are “generally regarded as gateways between their hinterland and forelands-the overseas territories to which they are linked by commerce and other elements”.⁷⁸The importance of developed, well organized, and well-equipped ports cannot be overstated, because they have been aptly described as conduits of trade. In this regard, the rate and ease at which commercial activities are successfully conducted at a port will affect the extent of trade and economic activity that takes place in that particular region. The economic affluence of a region would be affected by the traffic of its ports and the regularity of its shipping transactions as ports exert a developmental impact on associated hinterlands.

A good example of the effect that the development of a seaport has on its surrounding hinterland can be captured by considering the influence the Apapa port has on the Apapa district of Lagos, and on its surrounding environment. Merely driving through the area would reveal the predominance of economic activity associated with shipping and port-related enterprise. For example, the port has created the availability of cargo for haulage and, in turn, the establishment of various companies engaged in cargo haulage and delivery via land transportation. As a result, there has been an availability of cargo for transportation both to and from various states around the country to the ports. This is an example of one commercial activity ancillary to the development of the Apapa port.

Furthermore, the development of the Apapa port has enhanced the value of real estate around the region because of the proximity of residential real estate to the international seaport. Also, because many ancillary industries associated with the smooth running of a port are specialized activities, there has been an influx of expatriate foreigners and the creation of mixed communities that reside close to the ports. The creation of foreign communities has increased the value of

property around the area with many commercial estates dominated by expatriates and regarded as upper class communities. Also of note are the numerous businesses including logistic companies and law offices specialized in maritime activity and also the predominance of foreign schools and other small-scale businesses catering to the services of the community of foreigners who have migrated to this region.

While it is an established fact that ports facilitate the development of the hinterland, the more pertinent endeavour is to evaluate the developmental impacts of ports. In this regard, the Canadian Ports Corporation developed a computerized economic impact model that measures the economic benefits of freight-handling activity. The model creates realistic and defensible assessment of the economic contributions of ports based on the following observable consequences. As a result, the JRI model, which stands for Job (creation), Revenue (generation), and (personal) Income, was created in an attempt to quantify the economic effect accruing from the establishment of seaports (with its related activity) and the contribution of ports to the overall economy of the region where it has been introduced.⁷ The argument canvassed here is that upon comparing the JRI of a particular community before and after the establishment of a port in a particular community with regard to the number of new jobs, revenue, and personal income (JRI) attributed to the port, an assessment of the growth level and development impact after the introduction of the port, can be accurately ascertained.⁸

However, it should be noted that the reliance on the JRI module as a formula to determine the impact of ports on the development of a region, has been sturdily criticized by various writers. Some authors, in adopting a vigorous opposition to the JRI module, have argued that port impact studies are designed by port authorities themselves with a view to justifying and attracting port investment,⁸¹while others maintain that because the ports are only one element in a large number of parameters in the production and distribution systems, it is misleading to attribute regional development to ports alone.⁸²

Although the points criticizing economic impact models may have some truth in them, this does not negate the fact that ports have a tremendous impact on the development of the economies of their host communities. Ports and port-related activities create jobs, revenue, and income for the region in which they are located. This, in turn, induces economic growth that can be reflected in the industrialization of those territories over time –the aftermath of which is wealth creation and economic prosperity attributable to port-induced industry. The submission here is that government policies characterize the creation of the human agency responsible for maximizing the potential of ports and port-related activities in the mission for industrialization and development. Although the development of the maritime sector – and, indeed, the economy at large – reflects in the degree of harnessing together of technological, political, economic, and physical factors,⁸³it can be proved empirically (by the study of the Japanese situation) that once the political factor, through the creation, implementation, and close monitoring of policies to industrialize the shipping sector, is considered by the Nigerian government, then the expedition to develop the industry (and, in turn, the Nigerian economy) would be halfway accomplished. It is only an institution like the government that can implement well planned legislation and policies, enforce strict observance to rules and have the required capital to absorb the long gestation period of an initial low return upon investment in port development.⁸⁴

3.3. The Japanese Maritime Policy

It is imperative to point out that the nature of countries’ maritime and seaport structures depend upon the size of their coasts and the relationship between their landed territory and the sea. As mentioned above,⁸⁵ the United Kingdom, by claiming the Isle of Man as part of its territory, arrogated the benefit of including its cabotage policies to affect the independently geographically located island, and as such, it claimed all cargo and enger transport rights required to service the Isle of Man, (see Fig.1.2).

Furthermore, the unique geographical location of allows the extension of local content elements to sea transport, which in practice is performed by vessels taking routes that involve the crossing of two seas, (see Fig 1.1).⁸ The significant characteristic here is that, every country with a coast takes economic advantage of the unique relationship between its geographical territory and the sea. Although maritime economies and societies are affected by their relationship to the sea, several other factors exist that strengthen the growth potential of their maritime sector, namely;

• Length and nature of the country’s coastline

• Population

• Availability of manpower

• Magnitude of mercantile marine

• Enormity and sophistication of port-related activity and equipment

• Development of internal communication

• Purchasing power of its citizens

• Political and economic framework in which these developments take place⁸⁷

If any maritime nation has the boldness and political will to develop, strengthen, and institutionalize policies that will capture the import of the above-stated factors, then its maritime industry will reap associated economic benefits. The Japanese are currently reaping the fruits of economic foresight and planning from a seed planted in 1950, five years after the devastating experience of World War II. They decided that the appropriate principle behind their national shipping practices was not only profit-oriented; but it was to develop their state also, by making maritime activity the epicentre of each region that shared the benefits of the Japanese coastline.

3.4. The Port and Harbour Law of 1950: Japan

The visible growth and direct impact that the establishment of ports have on the economy of Japan are attributed to the promulgation of the Port and Harbour Law of 1950. This was the first time that the institutional framework for Japanese ports was developed, and the istrative structure of each class of ports was legally configured. From the wording of the legislation, the revolutionary character of the law is evident, and its application delivered favourable consequences to the lives and fortunes of the Japanese people.

For a proper analysis of the law towards systematically establishing its consequential effects, it is first necessary to bring certain facts about Japan to fore.

Figure: 3.1. Map of Japan archipelago aligned along northeast – southwest axis (i.e. islands of Hokkaido, Honshu, Shikoku and Kyushu).

[Source: Maps generated by, Geography Department, University of Lagos.]

Japan is an archipelago consisting of several islands, which makes for several seaport outlets for trade to Asia and the world as illustrated in Fig. 3.1. There are four main islands in Japan: the islands of Hokkaido, Honshu, Shikoku, and Kyushu. They are aligned along the northeast-southwest axis. There are also other deeply indented islands lying in the direction of China, including the Okinawa chain.⁸⁸Considering the fact that Japan is nearly almost covered by water, the legislation to govern economic development was based on three fundamental principles:

1. The coastal advantage of Japan can only be expressed through the establishment of seaports, which belong to local residents. 2. The need to develop the economy of Japan can be achieved through a collaboration of the central government and the constituent states to establish seaports in every region. 3. The central government should play a firm, decisive role in dictating the running of the ports through oversight functions, policy formulation, scrutinising, and enforcing technical standards.

In an attempt to capture the rationale or reasoning of the Japanese government at the time of the promulgation of the law, historians recorded, “It was understood that port and harbour improvements were the responsibility of the national government, which in line with the national interest should plan, improve and manage ports.”⁸

For the first time, the Ports and Harbour Law of 1950 classifies Japanese ports according to their potential importance. The reason for this classification was to

determine the extent of the Japanese federal government’s financial involvement in the establishment and operations of the ports. This was also the first time that the roles, powers, and obligations of each class of port authorities were clearly spelt out. The law classified Japanese ports into major ports and local ports. Major ports were further divided into first-class major ports and second-class major ports. Article 2 of the Ports and Harbour Law of 1950 defined major ports as those ports which are of great economic significance to the interest of Japan. Every other port apart from a major port was a minor or local port. The extent of federal government financial involvement in the different classes of ports can be summarized as follows:

• With regard to first-class major seaports, the Japanese central government was directly involved with the operation of the ports. However, they were financed through a consortium of the central government and local public authorities, with the central government directly responsible for major construction work and the purchase of equipment. Thus, the central government was usually responsible for jobs like the construction of breakwater, seawalls, other facilities aimed at protecting the ports, anchorages, basins, channels, and port facilities, and it usually bore most of the expenses on projects aimed to reclaim land lost to the sea.

• The central government also played an active part in funding the activities of second-class major ports, usually by bearing 50 percent of the cost of port construction in the guise of a subsidy. However, this subsidy did not extend to land reclamation projects. Furthermore, the second-class ports were devoid of central government operation and management, because the Ports and Harbour Law of 1950 empowered the local public authorities to perform those functions in its stead.

• Local ports, on the other hand, were managed and operated by independent public bodies with no financial assistance from the federal government. ¹

The Port and Harbour Law provides for the istration of seaports through “Port Management Bodies or Port Authorities”. These were made up of a board of directors composed of seven . In situations where the management bodies or port authorities were made up of three or more local public entities, hip of the board was permitted to be increased to eleven. A person cannot be a member of the board except appointed by the Chief of the local public entity with the consent of its assembly. Such persons must be appointed after due consideration of the pool of persons adjudged to possess sound knowledge and experience on the relevant field, and they must not have conflicting interests in their duties. Indeed it is suggested here that criteria for election into all Federal or State Government office including the office of president, governor, federal or state legislature and other top government positions as exemplified in Section 131 of the 1999 Constitution (for the president) should be replaced by proof of successful experiencing the top universities and polytechnics in Nigeria. This however should only be the first step. In addition anybody seeking office should also belong to the pool of persons adjudged to possess sound knowledge and experience in a professional capacity in one or more fields with quantifiable results. It should be strictly merit based.

People expressly excluded from such appointment by the law include of the National Diet, of the Assembly of Local Public Entities, and private contractors engaging in port works. An appointment to the board could be revoked before the end of the three-year tenure by the chief of the local public entity, with the consent of its assembly, if the director is adjudged to be incapacitated or unsuitable to perform his official functions. ²

The Port and Harbour Law of 1950 further provides for two types of port management bodies. The first is a port authority established in accordance with Article 4 of Section 1 of the second chapter of the law. The article provides,

Any public entity which actually manages port facilities at the port concerned, which has borne expenses for establishment or maintenance and management of

port facilities at the port concerned or whose area (hereinafter referred to as “the interested Local Public Entity”) or combination of such local public entities may establish a Port Authority after making out the articles of incorporation separately and tly.

From this provision, one can easily infer that the attitude of the central government of Japan at the time of the promulgation of the Act was to statutorily equip local public entities or local government and encourage them to come together to initiate the establishment of seaports for the development of their regions.

However, if the port to be established was considered to have the potential of a major port, then the approval of the Minister of Transportation was needed. ³

The second class of port management bodies were those established by virtue of the provisions of Article 33 of the law, and they were intended to contemplate a situation where a port is established by private individuals but would be run for the benefit of the public as a whole through the concept of public trusts. ⁴

The Ports and Harbour Law of 1950 also detailed the powers, duties, and responsibilities of the port management bodies. Article 12 provides,

(a) Preserving and maintaining the port area and the port facilities under its management in good operable and usable condition (including removal of obstructions to navigation);

(b) Making plans for the construction and improvement of port facilities considered essential to port development and the preservation of areas ading

the port;

(c) Executing port construction work necessary to implement approved port plans, reclaiming land, and engaging in related activities in the port area;

(d) Managing on trust those port facilities (including the land necessary for port operation) owned by the State or local public entity and which would be offered for general public use;

(e) Operation, of the mooring facilities for public use, those necessary for promoting the public convenience and effecting the necessary regulations over vessels using those facilities, including assignment of berths;

(f) Provision of necessary equipment for fire-fighting, rescue and guard;

(g) Conducting or preparing investigation, study, or statistical data necessary for port development, and giving publicity to the utility of the port;

(h) Providing services to vessels such as water-supply or aid to vessels in mooring or unmooring, if those services were not rendered properly or sufficiently by others;

(i) Leasing out those port facilities under its management which were not ordinarily meant for public use or which were unsuitable to be operated by the port authority itself;

(j) Regulating the use of port facilities, such as sheds and cargo handling gears under its management, by persons who render services necessary for port operations using those facilities, to achieve smooth movement of cargo or effective use of port facilities;

(k) Rendering good offering of services necessary for port operation, including the loading, unloading, storage terminal service and transportation facilities for goods within the port area and the water-front;

(l) Establishing or managing facilities to improve the welfare of ships’ crews or port workers such as rest-houses;

(m) Making and publishing up-to-date tariff showing scheduled rates and charges covering services or facilities necessary for utilization of the port; and

(n) Engaging in other activities necessary for ensuring the success of the preceding ones.

The law further provides for “a crucial supervisory and interventionist role” that the Japanese central government, through the Ministry of Transportation would play in the development of its shipping industry. Such oversight and arbitration roles are captured in what follows.

(i) Formulating national port development policies, and making necessary laws and regulations for port istration and development;

(ii) Offering advice to Port Management Bodies on port development and istration;

(iii) Examining and coordinating the port and harbour plans of major ports;

(iv) Financing port construction works;

(v) Executing port construction by itself;

(vi) Developing and maintaining channels out of port areas;

(vii) Establishing technical standards for port planning, design, and construction;

(viii) Pursuing technical innovation in ports. ⁵

On the subject of the financial istration of the ports, the act gave the port istration bodies significant financial autonomy with regards to raising funds and securing finance for investments. Articles 28–32 governed the financial istration of the authorities and provided certain duties and obligations, including those listed below.

• Only sponsors of port authorities could invest in them.

• All other expenses, except those incurred for the purpose of port construction, would be defrayed through port charges, rents, and associated income.

• Port authorities were empowered to issue bonds and raise funds for construction, improvement, and rehabilitation of facilities.

• Port authorities were also empowered to levy charges, but this had to be approved by the Minister of Transportation. The Minister, in performing this function, may also conduct a public hearing where objections made by aggrieved parties with respect to the levies or charges issues would be considered, and the charges may be revised or removed if they have been issued unreasonably.

• With respect to mutual sharing of expenses, the law provided that project costs would be shared equally by the state where the management bodies undertook major and important construction work. Where the port was considered as one important to foreign trade, the government was to bear all expenses if the project was for the installation of water and contour facilities, and as much as seventy five percent of expenses if the work was for the installation of mooring facilities. The ratios of subsidy for the construction of port traffic improvement facilities were seventy-five percent for a 1st class major ports, fifty percent for 2nd class major ports and forty percent for local ports if the construction was aimed at improving water, contour, or port facilities. ⁷

Also worthy of emphasis is the fact that the Japanese government appreciated the position that, the transformation of the economy of Japan was not going to happen overnight. The process would require planning and putting in place adequate problem-solving machinery to tackle the issues that may arise in the day-to-day running of a highly technical and technologically driven maritime industry. In this regard, evidence exists to show that the Japanese government’s strategy to solve anticipated maritime issues that were bound to occur as a result of its resolve to develop the country through investing in her seaports, was to put together a team of experts made up of representatives of the central and regional

governments, stakeholders, and experts in the private sector who worked in close collaboration with the Japanese tertiary and higher level technical and educational institutions. The think tanks created by the Japanese government were of two kinds, namely:

• Port and Harbour Research Institute

• Ports and Harbour Bureau

Not only did the government-created organizations act in a problem-solving capacity, but their research also resulted in inventing machines and equipment to aid port activities, leading to remarkable technological advancements in Japanese port development. The choice was to target development of indigenous manpower which was the focal point of the Port and Harbour Research Institute, as evidenced by the motto of the institute: “To work together with field engineers.” ⁸Its achievements over the years in technological advancements, problem solving, manpower development and port development justified the enormous investment by the Japanese central government in the institute, which was recorded as one hundred million US dollars in 1984. The mode of recruitment of the bureau’s engineering staff is also worthy of emphasis. Apart from recruiting the best minds from tertiary and higher level institutions on a merit basis, a large percentage of its engineers were recruited after retirement from relevant academic and business fields and they were seen internationally as the world’s largest and strongest group of port engineers in 1984.¹ Those governmental institutions played crucial roles from planning to implementing the Port and Harbour Laws, and they have been actively involved in port and harbour development in Japan to this date.

It should be emphasized that in attempting to develop a national economy, port development as a form of cabotage is not a quick fix; any successful attempt to make ports the conduit of regional development cannot be achieved without adequate planning, policy making, and strict policy implementation. Port

development plans are usually considered for the long term and may take ten to fifteen years to achieve evolutionary economic results. It is here suggested that the first step towards achieving an adequate legislative basis for the development of a country’s ports, is to properly define the ideological foundation from which port policy should naturally derive. Several factors typically inform the ideology behind port development as exemplified in what follows:

• Concerning the spiral use of coastal space we recall an earlier allusion to the fact that Japan is an archipelago; a consideration that was pivotal to the formulation of the country’s port development ideology, which is dominated by provisions inspired by the geographical characteristics of Japan. The country is made up of several islands, and so port policy in Japan focussed on the creation of an avenue where all states and territories could be linked through shipping for the purpose of trade, transportation, and communication. The alternative of isolating some particular territory was considered an economic disadvantage, especially where it was surrounded by water, and as such, it only had the option of intra-territory trade. The fact that Japan is made up of 3,500 islands, possessing an indented 300,000-kilometre coastline, meant that the Port and Harbour Law of 1950 led to the creation of about 2,000 seaports of various descriptions.¹ ¹

• There must be an extensive study of natural, geographic, and social needs of the region where a port is intended to be developed. Of suitable consideration also is the potential growth of the population in and around the hinterland, as well as the availability of land for the development of new societies and cities around the port as an aftermath of port creation. In order to properly ascertain the needs of those regional societies, there must be an adequate means of communication between the central government and the regional states.

• There must also be extensive planning in order to accommodate the broad range of activities conducted by the port. In this regard, plans must show the anticipated utility of the port to be created. It must be ascertained at this stage whether the port is to be an industrial port, a foreign trade port, a domestic

distribution port, or a port of refuge.

• Once this is ascertained, there must be an adequate consideration of potential traffic volumes of seagoing vessels coming to and from the port, and the construction of facilities to cater for the potential amount of vessels making use of the port.

• There must be comprehensive consultations with experts and stakeholders. This would require frequent communication and cooperation with shipping lines, government agencies, and the local community.

• Once all these are done, the government will be able to articulate policies to guide port management bodies in the performance of their functions.

• At this stage, port and harbour councils are established to give expert advice to port management bodies.

• There must be a harmonisation of port plans to reflect the needs of the region and governmental policy.

• Those draft plans are then incorporated by individual port authorities and are examined thoroughly by the local port council; after approval, official plans are formulated. However, if the plans are for the establishment of a major port, then the consent of the Minister of Transportation is required to set the plans into motion. Upon approval, Port and Harbour Councils perform supervisory roles to ensure compliance.

Ayodeji Olukoju, while commenting on other technical activities essential to the planning of a port, remarked that

“In the final analysis, a port facility plan is drafted to incorporate the following elements:

(i) Protective facilities, such as breakwaters;

(ii) Mooring facilities, such as piers and landing sites, dolphins and buoys;

(iii) Water facilities, for example, waterways, basins for small craft, and mooring basins;

(iv) Freight handling and storage and enger facilities;

(v) Port traffic facilities, such as roads, railways, and parking lots in and around the port; and

(vi) Facilities relating to port environmental improvement: waste disposal and pollution prevention facilities.¹ ²”

3.5. Funding Port Development in Japan

The Japanese government developed a highly effective yet flexible approach to funding the development of its ports. Various bodies are statutorily empowered to raise funds, and such funds are utilized in a manner that reflects the principles of cooperation between government, its agencies, and its regions, for the development of the economy. The private maritime sector and the entirety of the citizenry are guaranteed opportunities to invest in port development; in collaboration with the government, they share the burden of improvement in the following ways:

• The Japanese central government raises funds through taxes and bonds, burden charges are raised from local public bodies, and burden shares are paid to beneficiaries.

• Port management bodies are empowered to raise funds through direct port charges, funds transferred from local public bodies, central government treasury disbursements, beneficiary burden charges, and local government bonds.

• Private interests are also expected to raise funds from business operations.

• When a regional port requires construction, maintenance, or improvement, funds are raised through bonds issued by port management bodies. Kino bonds are used where the work done involves upgrading and expanding port facilities.

• Where the investment is to be applied to land reclamation projects, funds were

raised through the issuing of Rinkai bonds.¹ ³

In practice, the Japanese funding policy is highly strategic and depends on the importance of the project. For example, if the port project proposed for construction is for port improvements and repairs, and as such it doesn’t have a direct or immediate beneficiary apart from the port itself, variations in the proportion of the total cost of the project can be incurred by the port management bodies and the central government.

Moreover, where the project is directly beneficial to certain private interests, the cost is shared between the private sector, central and regional governments, and the local port management body. However, if the cost of improvements substantially exceeds the revenue generated by the local port management body, then the balance is covered with the help of parent port management bodies and other external sources.¹ ⁴

The Port and Harbour Law of 1950 contained sixty-two articles, whose provisions may be described by the following distribution:

• Articles 4–11: Mode of establishing a port authority.

• Articles 12–13: Prescribed activities of port authorities.

• Articles 14–27: Organization of port authorities.

• Articles 28–32: Finance and funding.

• Articles 33–36: Transportation of local bodies to port authorities.

• Articles 37–41: Regulations governing construction work in seaports.

• Articles 41–62: Issues of financial management, port charges, sharing of expenses, subsidies, review of developmental port plans, role of the Minister of Transport and the Transportation Council, penalties for violation, and all other sundry issues.¹ ⁵

The Port and Harbour Law of 1950 was revised four times: in 1951, 1952, 1954, and 1957. Together with the Law of Emergency Measures for Port Improvement, it contributed immensely to the economic evolution of the Japanese’s maritime sector and the rapid development of the Japanese regions.

3.6. Economic and Regional Impacts of the Port and Harbour Law of 1950

The Port and Harbour Law of 1950 has become a statutory point of reference for the economic prosperity and infrastructural development of Japan and its territories. Apart from income generation and job creation, the aftermath of the legislation is characterised by the growth of infrastructure in the Japanese region, expansion of communities, and the education of the populace to satisfy highly technical roles needed in such a diverse industry. In order to achieve its desired result, the leaders of governments in Japan adopted the position that it was not in all circumstances that port activities should be run at a profit because even if the income of the port is not sufficient for it to run independently, the desired impact on the development of the regions and the job creation associated with port activity are enough reasons to and promote the development of the port.¹

As an example, on the island of Honshu, the region of Kashima was, prior to the promulgation of the statute, one of the most underdeveloped areas of Japan. However, because the coastline of the island was exposed to severe waves, the Japanese government decided to invest in constructing an inland excavation port for the region. Consequently, a twelve-year construction plan was developed for the region, beginning with the construction of breakwaters in 1963 and the overall completion of construction activity related to the port in 1969, while adopting unique port engineering methods.¹ ⁷What followed was an immediate impact on the region of Kashima, evidenced by the tremendous economic, social, and regional changes between 1960 and 1975:

• The population of the region rose from 57,000 to 300,000.

• The creation of jobs increased from 28,000 to 122,000.

• The number of people employed in secondary industries increased from 3,000 to 58,000.

• The number of people employed in tertiary industries increased from 5,000 to 52,000.

• The gross tonnage in of amount of cargo coming to and from the port increased from 26,000 in 1965 to 31.9 million in 1975.¹ ⁸

These facts the position that development of a region through seaport investment yields tremendous financial returns, as can be seen from the transformation of Kashima into what is now known as the Kashima Seaboard Industrial District, a hub of business and industrial activity.

Amazing development figures were also recorded in the Tomakomai region after the Japanese government decided to invest in the construction of a developer port in the region. The economic, social, and regional improvements here are characterised by a dramatic increase in the volume of industrial output and the number of jobs created within the region, as evidenced by the following figures.

• The Number of factories rose from 70 in 1951 to 270 in 1975.

• Labour force in the port increased from 5,000 in 1951 to 12,000 in 1975.

• The number of commercial stores increased from 500 in 1952 to 2,000 in 1972.

• The volume of commercial sales tripled from 50 billion yen in 1958 to 150 billion yen in 1972.¹

With respect to the economic impact associated with direct port activity, the following table provides information for further analysis.

Table 2: Revenue and Expenditure in Major Ports, Fiscal Year 1980

Revenue Breakdown (Million Dollars) Port Revenue

Treasury Outlays

Transfer of General

80.6

175.4

253.4

(9.7%)

(21.1%)

(30.4%)

Expenditure Maintenance and Management

Port Facility Improvement Cost Bond Redemption

96.5

505.2

217.5

(11.6%)

(60.6%)

(26.1%)

[Source: Ryuji Nakamura, “Port Development System inJapan”, in ESCAP, Proceedings (Bangkok, (1983), 70.]

3.7. Towards Developing a Successful Port Ideology for Nigeria

In an attempt to suggest an all-embracing ideology for port creation in Nigeria, the first step would be to consider the nature and characteristic of the Nigerian coastal space in order to ascertain the possible spiral use of the coast as a whole. Nigeria is not an archipelago; In fact, its coastal space is limited to 853 kilometres.¹¹

Figure 3.2. Map of West Africa showing of Nigeria’s potential windowto Africa and the rest of the world via Gulf of Guinea and the Atlantic Ocean.

[Source: Map generated by the Department of Geography, University of Lagos.]

However, several significant characteristics can be identified from the geographical set-up of the country. First, its limited coastline happens to be at the base of a very fertile and naturally endowed hinterland. If, for the purpose of this discussion, the whole of the coast is considered as one single window to the world, thus being operated as a single seaport, the development impact of the port on the region has the potential of first industrializing the south-south, southeast and south-west regions of the country and the effect of such development is bound to positively impact on the central and northern regions. Second, from the location of the coast, it can be seen clearly that Nigeria has direct access to the whole of Africa, and indeed the rest of the world, through the Gulf of Guinea and the Atlantic Ocean, as depicted in Fig. 3.2. Upon further perusal, it can also be seen that access to the seas is not limited to the coastal states. This is because the rivers of Niger and Benue meet at the centre of Nigeria and eventually confluence directly into the Gulf of Guinea, thereby creating water channels that extend from Kwara, Niger, Kogi, and Benue in the north-central to the northeastern states of Taraba and Adamawa. This means that the coastline in the south can directly service the rest of the country. The benefits enjoyed by the coastline can be of immense economic importance to the north if sea transport is encouraged within the Nigerian internal rivers, and if smaller seaports are constructed along the river channels.

Figure 3.3. Map of Nigeria indicating its internal sea channels and state boundary.

[Source: Map generated by the Department of Geography, University of Lagos.]

Figure 3.3.B Map of Nigeria indicating its internal sea channels and state boundary 2nd option.

[Source: Map generated by the Department of Geography, University of Lagos.]

In addition, our attempt at developing an all-encoming port ideology for Nigeria may also consider the need to initiate an overall national economic and business development model simple enough for every Nigerian to understand, utilize, and apply. Economic prosperity is dependent on the strength of its local and international trading activities. With respect to international trade, the sale of crude oil contributes the bulk of foreign exchange, and it is almost the exclusive source of funds for running governmental activities. Our fortunes do not have to depend on oil alone. The idea behind the economic business module is to provide ways in which Nigeria can duplicate the economic success that we have experienced through the exploration and exportation of crude oil to other numerous mineral resources available in Nigeria. In this regard, an advocacy can be made for the establishment of other national-oriented PPP corporations aimed at specific economic deficient areas of the economy including agriculture, importation, mining, and the regulation/sale of all other natural resources available in Nigeria similar to the structure of the NNPC. A good start would be to identify the top twenty most profitable resources available in Nigeria and, in conjunction with the private sector, establish special purpose PPP national companies charged with getting those resources mined/produced and ready for exportation.

Once these companies have been identified and purchase of resources negotiated with potential international corporations and governments that need the minerals for their businesses and industries, they can go ahead to publish of participation for the general public, encouraging Nigerians to invest in their exportation.

As an illustration, if the average Nigerian knows for sure that he can purchase a container full of charcoal from the proposed Nigerian Charcoal Company for N1, 600,000.00, transport it via land, rail, air-cargo or through the identified sea routes to the seaport for N300,000.00, pay for its carriage to Europe and for marine insurance at N500,000.00 and N200,000.00 respectively; and upon

arrival in Amsterdam it will be purchased for about 17,000 Euros, then every Nigerian can aspire to secure an investment portfolio and participate full-time in multiplying his investment, in collaboration with the National Charcoal Company.

i. N1, 600, 000.00 – cost of Nigerian mined charcoal.

ii. N300, 000.00 – transportation cost.

iii. N500, 000.00 – freight cost.

iv. N200, 000.00 – insurance cost.

v. Total: N 2, 600,000.00

Compared with the value of 17,000 Euros on the 2nd of September 2016 =

N5, 982, 470.00

Here, the government has provided a “get out of poverty plan” or a “what to do after retirement plan” for its income earners and pensioners to work with. Those various national companies should be structured in such a way that branches are located in each state endowed with that particular resource and accordingly, the job of those national companies will be to initiate and run an effective system whereby each mineral can be identified, mined and transported to the southern

part of Nigeria in preparation for exportation and the average Nigerian can earn income by directly investing in the scheme through participation in the prescribed economic activity.

Furthermore, any reasonable national economic and business development module must also be built upon an agricultural foundation. Nigeria has a large expanse of fertile land, and as a country, it should be actively involved in growing crops and rearing animals for local consumption and export. The Nigerian government should directly finance massive agricultural projects aimed at feeding the whole of Nigeria, and later it should expand these to a larger scale to feed Africa and the world. The growing populace must be viewed as potential manpower and workforce, and the advantages of the size of such a populace must be identified and harnessed by the government to achieve success through leveraging on the benefits from creating robust agricultural systems. When examining the number of Nigerians in different parts of the world alone, in view of their needs to eat in order to stay alive, it can be established that they constitute a potential market for some specific food products that have peculiar qualities when grown on Nigerian soil. These include “Ofada Rice” (a popular and delicious rice grain locally grown in Ofada town in Ogun State of Nigeria) or “Garri Ijebu” (a popular and crispy meal made from cassava particles i.e. “Garri” expertly prepared by the “Ijebu” people, a large community in Ogun State, Nigeria). Also, the Nigerian soil is fertile for growing various cash and food crops that have high international commercial value. In addition, we propose that the Nigerian government should not just create an enabling environment for business activities to thrive but rather should be involved in direct investment and financing of specific economic deficient yet highly profitable areas. Government parastatals and ministries need to be restructured from performing merely istrative work and reinvented as a tool to channel the majority of the population to economic activity. The Nigerian government needs to stop the practice of merely encouraging development but should encourage, initiate, monitor, and implement positive economic development.

Following this module, it is clear that the successful development of the Nigerian indigenous resources would ultimately create a need for distribution after international sales which would result in increased tonnage for the Nigerian

Shipping Industry. We can see how shipping is interwoven with economic growth and international business. Port development must be the bedrock of our economic aspiration, and an attempt must be made to commercialize existing ports, get them ready for international business, and then attempt to construct a commercial seaport in each of the states that share the coastal and inland water ways.

From the analysis of the Port and Harbour Law of 1950 of Japan elucidated earlier in this chapter, this would in itself foster development for all the regional states that share the coast and it would in addition service the whole of Nigeria in preparation for the economic boom associated with developing internal natural resources and the agricultural products.

It is worthy to magnify the position that investing heavily in the agricultural sector and the mining of resources with an international commercial demand would have similar and significant characteristic that is of tremendous benefit to Nigeria especially if all the processes needed to commercialise the assets are performed locally. Lack of jobs and cheaper wages ensure that the cost of production is significantly reduced and this translates into increased profits as return on investments. Any potential decrease in value of the Naira as a currency in the world market does not automatically increase the cost of indigenous manpower and such devaluation would ultimately profit the Nigerian economy. As an illustration, if an international contract for the sale of groundnut was $20,000 US dollars in August 2013, it would still be $20,000 US dollars by August 2016 because the US dollar is a more stable currency,

However, the decrease in value of the Naira would serve as an advantage if an international sale was performed in 2016/2017 because the exportation of groundnuts does not involve an international process and the cost of indigenous manpower needed to get the groundnuts ready for export would relatively be the same in 2017 as compared to 2013. However, because of the devaluation, $20,000 which was worth about 3.1 Million Naira in August 2013 is worth almost 10 million naira in 2017. As such, any potential devaluation translates to

an economic advantage once Nigeria can heavily invest in the development of the indigenous capacity to deliver on a large scale

It is obvious that any discussion aimed at advising the Nigerian government on the steps to be taken to secure economic prosperity must begin in the development of the ports and maritime sector. The direct and indirect advantages of making ports an integral part of economic development cannot be overstressed. Nigeria must make the most of its coastal advantage in a bid to move the economy forward so as to make life more abundant for all Nigerians such that the economic prosperity would unfold rapidly across the country. The government must immediately embark upon the development of the maritime industry and establishing it as the foundation or bedrock for a Nation primarily involved in the business of production and sale of Agriculture value chain products and mining mineral resources in commercial quantities to be processed and exported.

3.8: Universal Exports

Popularized by arguably the most prolific cover up agencies (MI-6) which the British Secret Service used for espionage activities in the fictional, yet, internationally acclaimed block-buster James Bond 007 franchise, the Cliché “Universal Exports” was intelligently coined by author, Ian Fleming to justify James Bond’s presence in even the most remote areas across the globe. Universal Exports was first mentioned in Ian Fleming’s Second novel, Live and let die and appeared frequently in other movies/books like Moonraker, On Her Majesty’s Secret Service, The Man With The Golden Gun, Dr. No, The Living Daylights, For Your Eyes Only, License To Kill, The World Is Not Enough, Die Another Day and the Quantum Of Solace. The phrase has been adopted in this work to show that the business of exportation is really a universal business and immediately opens up the potential of doing business with every country in the world.

The problem with exports in Nigeria is a humongous one. Nigeria is 100 percent import driven and is viewed by the international community as a dumping ground for finished products because of its failure to produce for its populace. In fact, Nigeria consumes everything. The discovery and economic boom recorded in the exploration, refining and sale of crude oil has left the political class lazy, mostly corrupt and bereft of ideas. The Nigerian ports have borne the brunt of those negative practices.

For example, all sophisticated and vibrant international sea ports are divided into import and export terminals. In practice, one of the reasons handlers of vessels may accept or decline a charter is the availability of export bound cargo in the port of discharge. As such, it makes more economic sense for a vessel to travel across the world to deliver goods with the knowledge that he will surely secure business to carry persons or cargo on his return journey. However in the Nigerian situation, this practice is more or less distorted because the export agencies in Nigerian seaports are dormant. In actual fact the Import terminals in

most Nigerian commercial seaports have taken over the space, staff and infrastructure ordinarily reserved for the export division because of the virtually non-existence of export bound cargoes. Thus because of the non-existent export bound cargo potential, foreign shipping companies charge Nigerian charters over the odds for import charters which leads to the Nigerian consumer, the average consumer, having to pay more money for the use of imported goods. In this regard the Nigerian government has to address the issue of export and the availability of export bound cargo to build a vibrant economy centred on universal exports. While the strategy of expanding existing seaports and building new ports are acceptable, the Nigerian government must successfully strategize, initiate and execute favourable economic policies aimed at intensification of the agriculture and mining sectors in other for our seaports to thrive. More education, sanitisation and must be given to businesses involved in the production, transportation and trade of commodities for export. This immediately magnifies Nigerian export potential and would reposition Nigeria as a vibrant import destination in the eyes of the international community. A list of Nigeria’s most profitable and often exported commodities and brands with high demand both in Africa and internationally is provided for a more detailed and practical study.

Finished plastic products, charcoal, leather, green coffee beans, finished leather, coffee beans, cocoa beans, plastics, engine oil, cocoa beansshells, wood tiles, zinc dross, zinc skimming, wood floor tiles, monosodium glutamate, slippers, cotton, sesame seeds, polyester staple fiber, hardwood railway(sleepers and bearers), wood strips cotton lint, polybags, cashew nuts, tomato paste, foam products, sugarcane, vegetables, female hair accessories, cassava chips, mineral water, nylons, ginger, fabrication of printing cylinder of (Maggi cube & source tangui mineralwater), nichemvip, printed fabrics, lead ingots, detergent powder, toothpaste, corn starch, manganese ore, air freshener, cocoa butter, cocoa cake, cocoa liquor, dustbins, rubber, wooden floor(apa), wooden floor tiles, soap, pharmaceutical products, grains, aluminum coils, cycle spinning lathe, aluminum cooking pots, hibiscus flowers, rose bushes (dormant), processed hardwood, zinc ore, long concrete mixer truck machine and carrier touch rider, peanuts, telecommunication equipment, Shea-nuts, lead ore, used machine equipment, raw material pancake and outer audio cassettes, aluminum alloy, lead-tin alloy, tin alloy, tin alloy ingots, palm kernel meal, copper ingots, lead ingots, copper powder, nickel alloy ingots, aluminum ingots(throbs), beachcombers, empty

polypropylene sacks, telecommunication tower accessories, cotton yarn, tin(solid mineral), columbite, tantalite, perfumes, Arabic gum, soft drinks, empty bottles, frozen sea food, electrical switch-board for low voltage equipment, cook uniforms, security uniforms, cow horns, salt, turmeric, lead battery plates, cashew palm kernel extraction meal, bees wax, liquid soap, indomie instant noodles, strepsils, fragrance, deodorants, exhaust fibre, zircon sand, ram horns, processed wood products, refrigerator, a/c, microwave & washing machine, evaporated milk, cosmetics, inhaler/ ointment, petroleum jelly, hair relaxer, pine & castor oil, white glue, powdered milk, seeds, diapers, zinc ash, copper wire bars, bailed kraft paper, sole fillets/blocks, plastic house-hold wares, beryl ore, biscuits and sweets, lubricant, lubes products, fertilizers, ethyl alcohol, roofing sheets, golden morn, recovered waste & scrap papers, maltina, star, gulder, polypropylene tubes, woven valve bags, recycled pp pellets, power and control cables, zirconium ore (sand), hair, attachment creams, carpets & rugs, yam tubers, caterpillar spare parts, lantern books, goatskin, synthetic hair, cigarette, calcium carbonate, gold ore sand, generating sets, insecticides, charcoal, uncoated paper in reels, refurbished stainless steel tanks, disinfectants, sulphonic acid, health care products, yam flour, evaporated milk, milk powder, skimmed crowns cocks, compatible solvent for ink, animal feeds, alumina granules, confectionery, macaroni, spaghetti, cement sacks, la casera apple soft drink, liquefied petroleum gas(cooking gas), liquid co2, corn (maize) gluten meal, moringa leave powder, tissue paper, garlic, curry, ginger powders, bitumen, wax prints, cast iron, glass louvers, steel billets, sulphuric acid, sodium silicate, soya meal (de-oiled cake), Sheba (spirogyra).¹¹¹

In addition, further leakages in revenue exist from the present port operational structure and as such the Nigerian economy suffers a colossal loss of revenue where it should ordinary benefit. This is caused by irregular seaport practices obtainable in Nigeria. Those leakages stem from the fact that the landlocked countries around Nigeria would rather operate through the seaports of other neighbouring countries in West Africa because of the peculiar practice of concessional seaports in Nigeria. In an interview conducted by Channels television on the 15 of December 2016,¹¹² Mr. David Iweta, the president of the Chamber of Commerce, Sapele division explained that, in practice, Nigerian seaports are operated through a concession agreement where the Nigerian Government as owner, contracts out the day to day operation of various Nigerian seaports to private companies that function as Custodians/Managers of the Port.

According to the of those agreements, the Nigerian Ports Authority (NPA) collects a periodic fixed concession fee to licence private companies to operate the seaports. However, the concession contracts also provide that the NPA is to provide basic amenities like power, security, infrastructure and other basic services to make the concessioner function properly. In reality, the Nigerian government through the NPA often fail to honour its contractual obligation to provide amenities and the concessioner is left with a situation where it has to pay the fixed concession fee and still pay privately for amenities, while trying to operate the seaport at a profit. When comparing the costs of doing business with a concessioner port to that of smaller ports of neighbouring countries which don’t have concession agreements tied to their operation, one will see that making use of foreign ports is way cheaper than Nigerian ports and as a result the neighbouring seaports attract the bulk of shipping business while the Nigerian economy losses foreign exchange which would otherwise have been accruable to the Nigerian government. For example, the Nigerian Customs and seaports have not benefited as anticipated from the fact that the country is one of the highest purchasers of used cars globally. This is because the used car importers servicing the Nigerian market find it cheaper to import through the Cotonou Port and smuggle the vehicles into the country via land routes. Unfortunately, the penalty for getting caught by the Custom border patrol is a fine usually paid on the spot and not remitted to government coffers. In any event, the fine is a mere slap on the wrist, just a small fraction of the profits made by those used car importers and smugglers.

Other problems limiting the effectiveness and success of seaports in Nigeria are both istrative and infrastructure related. In Warri port, for example, the draft and entry level of the port is at a depth of 5 meters 6 centimetres when the sea-tide is at its maximum level. However, the minimum draft level for a large merchant vessel to successfully access the Warri seaport should be between 7 to 9 meters. As it stands, international merchant ships can neither enter into the Warri port to discharge nor load cargo for international trade. This seemly minute infrastructural problem has stagnated the growth potential of the Warri port for several decades. Furthermore, the port in Sapele which was built by the Federal government and has been a source for universal exports revenue through the international trade and carriage of timber and rubber has been completely taken over by the Nigerian Navy. It is strongly opined that there is no reason whatsoever for the Nigerian Navy to usurp the responsibility of the Nigerian

Ports Authority except in situations of war. This practice suggests the possibility of illegal trading activities conducted by the Nigerian Navy who now operates a seaport free from the enforcement of NPA or Custom rules, checks, and standards. It is high time the Nigerian government took back the Sapele port from the Nigerian Navy and repositioned it for import and universal export. It is intrinsic to point out that the Sapele port previously serviced Onitsha, Benin, and the rest of the South East and can be described as one of the centres of trade activities within the Igbo community.¹¹³

Another issue to be considered towards developing a successful port ideology for Nigeria is the issue of infrastructure for the Nigerian ports. Let us assume Nigeria intensifies the agricultural sector and large tonnage of commodities and minerals are available for export, there exists an immediate need to transport export commodities from the hinterland directly to the seaports. In order to successfully move goods from the hinterland to the seaports, three things must be in place including, rail, road, and air cargo haulage infrastructure. First, a good railway system is mandatory for the istration of our ports. For one thing, it is very cheap. Furthermore, any proposed rail system to service the seaports must be planned in such a way as to ensure that the rail system has terminals that discharge cargo within the vicinity of the seaport directly. Second, an efficient and reliable domestic air cargo system must be created. It is also suggested that were applicable, Nigerian commercial seaports should have designated areas where cargo planes can land successfully and their goods transported directly to export terminals for carriage via sea channels for universal export. Third, the issue of revamping our road system especially trunk A roads must be immediately considered. Road haulage involves the movement of several tonnes of goods at a time by heavy-duty trucks. In order for the smooth operation of road haulage, roads leading to commercial ports should not be built on asphalt as it is done at present, rather it should be built with “heavy concrete” in order to withstand the heavy traffic as the road would then not deteriorate quickly.

3.9. Practical Solutions Towards Port Prosperity in Nigeria

The horrendous problem affecting the Nigerian port system articulated above needs a holistic solution with all aspects being addressed in synchronism. While it is understood that these problems may not all be solved at once and may involve long term planning and enunciation of favourable policies to push the Nigerian economy forward, the government of the day must at least start by coming up with a vision of the Nigeria of our dreams which can be sold as a socio-political agenda that the ordinary Nigerian would be proud of, understand, and work to achieve its fruition. Furthermore, practical solutions must be put in place through well thought out government policies aimed at achieving the following.

• Nigeria should endeavour to revisit all laws and legislations and amend the same to reflect the interest of the generality the population of Nigeria.

• Ensure all political and istrative institutions are established to resolve problems that critically affect the needs of Nigerians.

• Nigeria should channel the majority of its resources in growing food crops for local consumption and expand to grow sufficient crops for universal export.

• Cash crops and commodities production should be massively re-vitalised for extensive export.

• Mining should be urgently addressed. Mining industries should be massively

funded in order to achieve steady mineral production for export.

• Iron and steel production should enjoy serious political will to take off immediately.

• All revenue loopholes and leakages should be addressed and istered to protect the well-being of Nigerians as a whole and not just the interest of the elite and political class.

• Massive infrastructural development should be addressed in a determined, continuous, and sustained basis.

• Roads leading to ports should be built on solid concrete and should not be asphalt based in order to avoid incessant breakdown.

• Ports should be modernised and extended to have Imports and Exports terminals clearly separated and identified. The port s should ensure that both terminals of the ports are kept busy all year round.

• The practice of concessioner ports should be immediately revisited.

• Manufacturing industries should be re-vitalised not only to produce for local consumption but also for universal exports.

• Trunk A roads should be massively reconstructed across the nation to transport

export products to the ports from the hinterland.

• Railway haulage is vital. Our rail system must be modernised with standard gauges for the transport of export products directly to the ports and for effective transfer of imported products to the hinterland.

• Air transportation of commodities to and from the ports should be visited and cargo haulage both within and outside the ports should be revisited.

3.10. The Proposed South Atlantic Trade Organisation

Today, South-Atlantic trading routes and monopolies are virtually non-existent. The core of British imperial colonialist policy was focused on developing West Africa only in ways that will open up the region to resources extraction, thereby securing maximum benefits by the exploitation of their colonies. As a result, the British government was not interested in developing potential trading opportunities across the south of the Atlantic. After Nigerian obtained independence and through to the 1970s Nigeria still omitted to develop SouthAtlantic trading routes despite the enormous successes and material benefits countries in Europe and North America have enjoyed from trading in and around the Atlantic. Even in the late 1970’s when the Nigerian Fleet was one of the most equipped and indeed dominated West African trade, it only operated five major international routes namely United Kingdom/West Africa, Continent/West Africa, the Middle East/West Africa, Mediterranean/West Africa, America/West African.

It would seem that Africa and South America have to introduce trade alliance between the continents. Between the 16th to the 19th century the so-called technologically advanced countries of Europe and North America developed a well thought out and sophisticated triangular trading economic system along the North of the Atlantic. This trading route was extremely effective in achieving its goal of extracting from Africa and developing an erudite production and exchange chain, servicing the United States of America, North America and the European continent. This practice was the most advance international global trade business practice in operation at the time and individuals and companies who participated in these practices were given an edge in the global economic order and have gone ahead to dominate world trade. The system involved a cycle which began with invading Africa to capture slaves to be transhipped to the fertile American continent to act as labour in large farms and plantations. An European vessel will dock in West Africa to buy slaves which would be transported together with other precious minerals to America to be sold to work on the farms and plantations of white owners. When the slaves are off-loaded in

an American port, the same vessel loads harvested food and cash crops like sugar, rum, hemp, tobacco, and cotton from the American farms to the industries in Europe for them to be manufactured into finished goods. The same ship then carries finished goods to Africa to exchange for slaves and the cycle repeats itself over and over again.¹¹⁴Apart from the huge sums received through the trading of goods and slaves, European slave traders also made a killing from the chartering of their vessels, as seamen fees and for transportation of cargo and slaves around the triangle. At present, every activity north of the Atlantic is closely monitored by what exists today as the largest military alliance consisting of Twenty Nine countries cut across Europe and North America, NATO.

There exist a desperate need for the borders and parameters of the Nigerian economy to be expanded and new economic frontiers developed by thinking outside the box in a bid to ensure maximum utilization of human capital, material, and mineral resources. This can be achieved through creating effective and modern triangular trading economic monopolies with areas that have not yet been exploited. A successful trading economic cycle similar to what has been described above can be achieved by extensive research on the demand and supply chain of various economies in different continents, with a view to establishing a commercial common ground and exploit the same to enhance and facilitate trade across continents. This may include the establishment of an effective trade coalition between countries in West Africa on the first part, the African countries towards the south of Africa on the second part and the continent of South America on a third part. It is thus intrinsic that a South Atlantic Trade coalition between West-Africa, Southern Africa, and South America should be established to deliver proper and effective economic triangles to match the exploits of the Europeans and Americans towards the North of the Atlantic. This position becomes pertinent upon consideration of the historical, geographical cultural and traditional similarities between the two continents.

i) Continental Drift: A German-born geographer, Alexander von Humboldt expounded the theory that several thousand years ago and maybe even before humanity the continent of South America was ed together with Africa through the West African Coast.¹¹⁵ This theory finds adequate from the fact that a perusal of the maps of both continents through

a detailed comparison of the edges of their respective continental shelves will show that the coastline of South America seems to fit perfectly into West Africa, like a Jigsaw.

Furthermore, Alexander who had visited South America noticed at once when he came to Africa that the mountain ranges near Buenos Aires in Argentina was exactly like the mountains of South Africa as if the same was an exact duplication by mother-nature. He further pointed out that similar mountain ranges which extend to seashores can also be found in Ghana and Brazil and these two collections of mountains on separate continents appear to be the same age and cut from the same kind of rock. These discoveries prompted Alexander to undertake further tests on fossil specimen from West Africa and SouthAmerica which recorded tremendous similarities and provided efficient scientific for the theory that both continents were once neighbours but drifted apart as the earth evolved. The first scholar to propose the theory of continental drift was American geologist Frank Taylor. In 1908 his work showed that the study of the soil structure and landscape in certain parts of South America were almost duplicated in West-Africa.¹¹

Figure 3.4. Map of Africa and South America showing Continental Drift A

Figure 3.5. Map of Africa and South America showing Continental Drift B

[Source: Map generated by the Department of Geography, University of Lagos.]

ii) Historical and Cultural Similarities: The South Americans and Africans were colonialized by the Europeans at about the same time. Spain and Portugal started this practice in 1519 when Spanish born Hernan Cortes invaded Mexico followed by the occupation of Peru by Francisco Pissarro in 1524. Two years later Pedro de Mendoza followed suit with the colonisation of Rio de la Plata.¹¹⁷ After establishing farms and plantations in South America, the Europeans also came to West Africa, especially the Western parts of Nigeria to capture slaves to work as labour on the farms established in South America. The Yoruba-speaking people of South-West Nigeria were most adversely affected by this practice as they were kidnapped and scattered all over South-America and forced against their will to work on the European plantations. The labour plantations which recorded a large number of Yoruba slaves include Spanish plantations in the south of South America, Central America, Cuba, and Hispaniola, British Plantations in English speaking Caribbean, American plantations in the south of South America, Dutch plantations in the Dutch Caribbean and the south of South America and the French plantations in Haiti. As slaves on the European plantations, the Yoruba speaking captives were given new names and forced to learn new languages and new religions as it was illegal during that time to speak or practice indigenous languages and religions. However, those slaves practiced the Yoruba culture in secret and were able to preserve and develop the Yoruba tradition sometimes together with the religion handed down to them by their captors. As a result the Yoruba culture grew and has influenced almost every modern South American religion practiced today. For example the Cuban Santeria, Haitian Voodoo, Brazilian Candomble, and the Trinidad and Tobago worship of Shango are all influenced by the Yoruba religion and therefore Orisha based.¹¹⁸

The point being canvased here is that, if the geographical histories of Africa and South America are so intertwined and there also exists a similar cultural, traditional and spiritual compatibility, surely this is evidence that these two

continents possess sufficient similarities to warrant direct trade and cross border relations. Africa already has a lot in common with South America and over the years, the two continents have proved to be compatible and more than likely to warrant cross-border trade policies which can be mutually beneficial to the economies of the vast and highly fertile continents. In this regard, it is proposed that the regional countries that make up this continent should come together and establish a South-Atlantic Trading Organisation whereby trading activities between the continents can be exploited and developed in an attempt to create lucrative trading triangles similar to what is being practiced north of the Atlantic Ocean.

CHAPTER 4

A REFORMATION AGENDA

4.1 Reforming Nigerian Local Content Legislations

Nigeria is a peculiar economy. Although endowed with diverse natural resources, the country earns most of its income through virtually only one source, oil. Over the years, the Nigerian government has, for some reasons, neglected to pay adequate attention to other economic opportunities that abound, and it has focused attention mainly on crude because of the value and international demand for the product. When considering the fact that the product is scarce, in addition to the crucial importance of oil in the running of modern, large-scale industries worldwide, it is understandable why a country’s crude oil sector should be of paramount importance to its economy.

Nevertheless, it is economically absurd for any country to totally abandon all other potential avenues to earn income while concentrating on only one source, no matter how profitable the one is. It is clear that ambitious countries adopt diligent concentration on multiple sources in order to consolidate and diversify their income. The sad reality is that, in Nigeria, because the price of oil has been highly profitable over the years, government has hitherto omitted to create essential awareness to other industries such as education, sports development, exploration of precious stones, agriculture,¹¹ mining, liquefied natural gas(LNG), tourism, and shipping. Wealth is a possibility only where there is diversity of income.The clear-cut nexus between income diversity and wealth creation is unquestionable.

It is interesting to note that Nigerian crude oil experience commenced as far back as June 1956, when crude was discovered at Oloibiri town in the Ogbia Local Government Area (LGA) of Bayelsa State, where the first oil well was drilled to a depth of twelve thousand feet (see Fig.4.1). Indeed, Fig (4.4) shows the Oloibiri well location with the author while Fig. (4.3) portrays the inaugural pump valve of the Oloibiri Oil well used in 1956. This discovery was treated with positive and unbridled enthusiasm in the exploration of oil and gas, which led to even more discoveries at several other states in Nigeria.

The Federal government revealed in 2003 that the Nigerian crude oil reserves were estimated at 34 billion barrels.¹² The reserve base is anticipated to record a massive surge because shortly after that survey, additional exploration and drilling concessions were awarded. In November 2007, the Nigerian National Petroleum Corporation (NNPC) group posted on its website that 900 million barrels of crude oil and recoverable reserves had been identified, and a target had been set to achieve 40 billion barrels by 2010.¹²¹

In addition, it has recently been proved that Nigeria is amongst the nations with the most natural gas endowments in the world, with an estimated reserve of 159 trillion cubic feet. Unfortunately, Nigeria today still flares about 40 percent of the natural gas produced while it re-injects 12 percent to enhance oil recovery.

Image 4.1. Oloibiri Oil Well Location

Worthy of commendation is the strategy adopted by the government for the collection of associated gas for processing to liquefied natural gas while simultaneously reducing carbon dioxide emissions. But the reality of the situation is that, the government has failed on its promises to end gas flaring completely by 2008. The World Bank still estimates that Nigeria s for 12.5 per cent of the world’s total gas flaring, which amounts to about 2 billion cubic feet annually.¹²²

Image 4.2: Oloibiri Well location showing date and depth of first ever oil well drilled in Nigeria.

Although Nigeria has benefitted immensely from the exploration and production of its crude and natural gas reserves, which have virtually solely funded government spending, it is submitted here that such benefits are only a mere fraction of the benefits accruable to Nigerians if the government runs the oil and gas industries as well as the maritime sectors more efficiently and productively. The remunerations accruing from effective monitoring, legislation, and implementation strategies on those products are unimaginable. The untapped economic advantage has the potential of elevating Nigeria into a world power – and, indeed, the economic hub of Africa. The player of the piper should naturally dictate the tune, and accordingly, the melody of economic prosperity and international political influence should ordinarily be enjoyed by all Nigerians, bearing in mind the fact that crude is a powerful political tool that can be used to an advantage in manipulating potential oil consuming nations to enter into treaties and formulate favourable policies that will be beneficial to Nigeria. Unfortunately, the multinational corporations of America and Europe have purchased the economic birth rights of Nigerians with a muscle of porridge, and accordingly they have controlled the exploration and mining of the nation’s reserve, which are performed with impunity and exclusively for their benefit without regard to content laws, or even the environmental sanctity of the neighbouring communities were oil is explored thereby reducing Nigerians to mere spectators in their own economy.

The fact that the Nigerian Federal government revenue consists purely of the funds derived from those petroleum activities does not help matters. The economy is so dependent on oil that any punitive measures inflicted on oil companies in order to enforce content laws –in the form of suspensions or total revocation of exploration, prospecting, or drilling rights – would adversely affect the revenue otherwise accruable to the Federal government, which in turn would impact negatively on the running of government business. In order to effectively outline a solution to those problems, the concept of local content must be properly analysed.

Nigerian local content has been defined as,

The quantity or amount of composite value added or created in the Nigerian economy through the utilization of Nigerian human and material resources for the provision of goods and services to the petroleum industry within acceptable quality, health, safety and environment standard in order to stimulate the development of indigenous capability.¹²³

It has also been defined as an initiative on the part of the Nigerian government to help develop local capacity building in the Nigeria oil and gas industry, and to enable Nigerians to actively participate.¹²⁴

Local content legislation in Nigeria attempts to enhance Nigerian participation in the oil and gas industry with programs designed to enable Nigerian citizens attract preferential treatment in filling vacancies in all jobs required for the exploration, production, and refining of Nigerian petro-chemicals. Although this definition is effective and accurate in of local content practice in the Nigerian oil and gas sector, the reality is that in comparison with principles behind content laws adopted in developed countries, Nigerian content laws merely scratch the surface.

As suggested in the previous chapters, the need to diversify sources of fiscal revenue accruable to the Nigerian government is crucial for visible economic prosperity. In order to achieve this, the government in all regions need to secure investments for the development of key economic activity directly, by cutting down on frivolous expenditure. In addition, there is a need to look up to the international community to invest in the development of key economic sectors through t venture participation. However, the right to participate in the Nigerian economy must be for the benefit of Nigerians, and with an undertaking made by the international community to commit to the development of those key sectors. In comparison to the Nigerian content practice it may appear expedient to review content participation in t venture agreements by multinationals in the Chinese economy.

Image 4.3: Inaugural pump station valve of the Oloibiri Oil Well first operated in 1956 with the author [pumping out 5,000 barrels per day during 1956]

Image 4.4: Oloibiri Oil well commissioning memorabilia with the author.

4.2. Local Content and China

If one considers the Chinese experience and the development made in the country’s economy, especially in the last fifty years, one has to focus attention on the governmental strategy to increase content quota participation in the Chinese economy by her citizens. Unlike what obtains in Nigeria, content laws in China are not only located in general legislative statutes but have also been identified as conditions inserted in most t venture agreements between China and foreign partners interested in doing business in China. Once a particular sector has been identified in which the Chinese government anticipates would be profitable to the Chinese economy and its citizens, the Chinese government first creates a suitable and attractive working environment that will encourage foreign investments and participation, before securing the interest of its people through legislation and contracts aimed at providing numerable benefits to the Chinese people. The Chinese government also organises development programs designed in such a way as to encourage carefully selected multinational corporations to participate in the Chinese economy. This is done by entering into governmentmonitored t Venture Agreements with local Chinese companies. The new JVA companies would then have exclusive rights to enjoy numerous benefits attached to doing businesses in China, such as the rights to use the highly motivated, skilled, and relatively cheaper Chinese labour force, access to the very generous Chinese Local and Federal governmental subsidies, and preferential treatment in the Chinese market. Those incentives border on investment opportunities in the Chinese stock exchange and government-assisted growth for participating companies.

It would be necessary at this point to carry out a detailed examination of the Chinese experience, especially as it relates to economic participation of foreign companies in China. Although China is not an oil-producing country, its attitude of jealously guarding the interests of its citizens in every economic activity is not only worthy of commendation but also serves as a veritable factor for emulation. As such, we must carefully study governmental policies from the stage at which government identifies potential industry it wants to be associated with through

the process of creating enabling environments, while strictly enforcing policies to safeguard the interest of citizens through content participation. Accordingly, a major venture here is a comprehensive scrutiny of content laws as they relate to the wind power technology industry of China and the Chinese automobile industry which are the two candidates employed here as illustrative examples for the sake of clarity.

Motivated by the significance of the two aforesaid paragon Chinese models, the remainder of this chapter 4 is structured as follows. Sections 4.3 to 4.7 deal with the impressive Chinese wind power industry experience while sections 4.8 to 4.11 address the invaluable Chinese automotive industry experience. Presented in the last section 4.12 are the highlights of the Chinese mission in intellectual property. Particular emphasis is placed on the lessons derivable from the two models. The chapter concludes with a commentary on the need for human capacity development especially with reference to celebrating the achievements of notable and successful Nigerians in their various fields of endeavour.

4.3: Local Content and the Chinese Wind Power Industry Experience

The political situation in China prior to 1949, when the Communist Party took over the government, was that of war and destruction. An eight-year battle with Japan was followed by civil war, where the victorious Communist Party ascended to take control of government after defeating the Guomindang Clan in ethnic confrontations that lasted more than three years. Upon resuming control of government, the Communists embarked on various centrally driven industrial and economic policies that were safeguarded from the international community, possibly for fear of scrutiny and criticism.

Evidence abounds of a form of re-orientation program aimed at increasing the individual internal capacity and production ability of each region, by teaching individual citizens the importance of developing unique crafts and instilling concepts of personal development. This ideology was replicated in government, where policies were implemented with a view to developing raw materials and putting into place all natural, material, and economic resources in preparation for a time when the collective development of each region would translate the country into economic prosperity.

This process was done with carefully thought out, planned, and implementable legislations. In 1958, the spirit behind governmental policies was in anticipation of a “Great Leap Forward” in economic activity, where the Chinese government aspired to catch up with western economies in the production of key industrial materials including steel, metallurgy equipment, and machine tools. The policy gave a fifteen-year period in which China was expected to do so. The Central Committee of China focused on increasing the annual output of steel and the achieved this by doubling production from 5,350,000 tons in 1957 to 10,700,000 tons in 1958.¹²⁵

In order to achieve this feat, many new factories were established, and other existing factories, schools, and institutions were encouraged by government to commence iron and steel production; also technical colleges were eventually transformed into factories or had factories attached to them.¹² At present, the economic and industrial growth in China from the year 2000 to 2012 has been a source of inspiration and encouragement to industrialists, multinational corporations, academics, and governments around the world. With the major economies of Western Europe, Japan, and the United States recording an alarming decline recently, most industries, governments, and multinationals have been looking towards tapping into the investment potentials in China.

The Chinese government, on the other hand, is seizing those opportunities to increase local production capacities (especially in relation to technology transfer) instead of importing already finished products into the country for sale, as is done in other third-world countries, including Nigeria.¹²⁷ The rationale behind this is that, instead of being used as a dumping ground for finished products, where the multinational companies simply remit citizens’ capital out of circulation, the JV partners will be forced to come into partnership and establish a local presence for themselves, as well as share the intellectual property and production secrets with the citizens, thereby empowering them to produce goods for themselves. Thus, the aforementioned companies only have the right to sell the goods they produce in the host country. However, the success story of the Chinese experience is that the foreign multinationals later discovered that the cost of production in China was far less than what they had; even in their home countries, and they consequently set up more production factories in China.¹²⁸

In 2002, the Chinese government made efforts to fully harness their economic potentials by applying for accession to the World Trade Organization. In order to achieve this, the Chinese government had to open up and allow for a review of most of its content protection laws. Existing of the WTO would scrutinize them to see whether or not, China was in conformity with international best business practices. It was through this process that a lot of protective policies and legislations, which were previously kept secret by the Chinese government, were exposed, and they have formed the basis for discussion into what content laws in China entail.

In her publication titled “A Review of the Potential International Trade Implications of Key Wind Power Industries and Policies in China,”¹² Joanna I. Lewis gave insight into the discriminatory and protective characteristic of the Chinese internal legislation as it relates to Chinese content laws. She commented on trade implications arising from the Chinese government’s resolve to locally expand domestic utilization of renewable energy as well as develop local renewable energy technology with a view to establishing industries out of them in accordance with China’s accession to the World Trade Organization.

The global trading system is controlled by a group of 149 countries called the World Trade Organization (WTO) and as such if China were to develop its tremendous economic potentials and attain its status as the most efficient and fastest growing economy of the world, ing the WTO was imperative.

However, in order for China to become a member of the WTO, it had to first, phase out many tariffs and technological transfer requirements in its local commercial legislations, negotiate bilateral concession agreements with any WTO member nation that required one, and also had to sign all prevailing contracts. For example, in bilateral negotiations with the United States, the US congress agreed to stop its annual review of Most Favoured Nation Status, thereby granting China a permanent normal trading relationship status in return for the Chinese government’s acceptance to give a reduction on import tariffs and quotas for specific industries in which the United States had special economic interests, including the automobile Industry.¹³

A cursory perusal of those t venture agreements would provide insight into the status quo as regards content laws and legislations in China, and how the government uses legislation and policies to guide the growth of profitable economic activity with the sole aim of protecting and promoting the Chinese economy.

4.4 Intellectual Property and Technology Transfer Requirements

As a matter of policy, no foreign company can access the very lucrative Chinese economy without agreeing to enter into some form of transfer of technology and intellectual property agreements. The rationale behind this is that any corporation wanting to establish itself in China must be ready to teach the Chinese how to produce all goods manufactured for sale. These tactics give the Chinese citizens the requisite knowledge and insight into such manufacturing operations, thus empowering its indigenous capabilities. By teaching the Chinese how to fish, so to speak, the government has ensured its citizens are intellectually equipped, financially secured, and economically stable.

As an example, in 1997 the Ministry of Science and Technology, through the State Development and Planning Commission, was looking into developing wind power technology. It created two t ventures to domestically manufacture wind turbines in China.¹³¹ First, there was a consortium between Spanish wind turbine manufacturers known as MADE and the Chinese tractor machinery company called YITUO. Second, there was a venture between German wind turbine manufacturers identified as NORDEX and the Chinese Aero Engine Corporation, whose trade brand name is XI.¹³²

Under the agreements, companies were short-listed based on their resolution to transfer wind turbine technology in return for financial incentives in the form of the Chinese government research and technology grants. The conditions attached to those transfer requirements and clauses are such that those programs would commence with a 20 percent content prerequisite, which would ultimately increase to 80 percent as time went on.¹³³

Although content provisions in Chinese legislation would have to be unenforceable as a corollary to hip of WTO, the fact still remains that if a

foreign company weighs the economic incentives and gains in participating in the Chinese economy, the low cost of production, added to the fact that once local content and technological transfer incentives are agreed upon by multinationals, they would be in the good books of the Chinese government and enjoy other numerous financial incentives, any decision to transfer technology seems like a worthy consideration for an opportunity to expropriate a slice of the Chinese market share.

It can also be seen that agreeing to technological transfer provisions was a small price to pay to secure participation in the fast-growing Chinese economy. The reality is that, JV multinationals are encouraged and happy to transfer technology so long as they retain their intellectual property rights. For example, at present Motorola Incorporated has invested more than 300 million US dollars into 19 technology research and development centres in China. Siemens AG has also reportedly invested more than 200 million US dollars in China from 1998 to date and Siemens is working with a Chinese academic institute to develop mobile phone technology for the Chinese market.

Another example of a company investing heavily in technological development in China is Microsoft, which has set up a centre in Beijing, employing over 200 researchers.¹³⁴ The size of the Chinese market, coupled with the low cost of production and various other economic factors, makes the Chinese market irresistible to private sector corporations. Private sector executives have even been quoted as saying that they are accustomed to negotiating an exchange of “technology for market” with the Chinese government, or trading “short-term sales for long-term competition.” It is their own opinion that China is pushing for strategic collaboration from the crown jewels of technology interested in accessing China’s exploding marketplace.¹³⁵

4.5. Control through Taxation and Import Tariffs

Another strategy of controlling economic activities and participation is through taxations, tariffs, and duties. Thus, if the government wants to encourage a particular trade – for example, the toothpick manufacturer – it may impose duties on the importation of the product so that by the time the imported product reaches the final consumer, its cost doubles the price that it should have been if manufactured locally. This strategy of imposing tariffs on the importation of certain products into Nigeria, if adopted, would give the local manufacturers business leverage because with time, they would be able to take the importer off the Nigerian market because of price competition. With this powerful tool, the Chinese government has succeeded in effectively curbing the influx of foreign goods into China. The Chinese government frequently varies taxes on imported products to encourage or discourage importation of finished products. When the Chinese government wants to develop a particular industry, its strategy is to impose lower tariffs on components than on finished products; by this act, it encourages manufacturers to assemble them locally.¹³

An examination of wind turbine–related tariffs would reveal that between 1990– 1995, in a bid to promote wind power development, the Chinese government exempted imported wind turbines from custom duties. In 1996 the Chinese government’s expectation in domestic wind turbines grew, and in order to encourage local assembly of turbines and local turbine manufacturing, the government imposed a higher import duty on completed turbines and a very low duty on imported component parts. In 1998, a further variation was effected when component parts were exempted totally from valued added tax (VAT) and turbines were not.¹³⁷

Also, in a bid to ensure that the materials and manpower for assembling a car is locally sourced, the Chinese government raised the tariff on imported auto-parts. As a result of this policy, the tax imposed on an imported spare part was equivalent to that of a complete automobile where the car fails to meet the

stringent prescribed content criteria. This policy decision sparked several international trade disputes in March 2006.¹³⁸

4.6. Local Content Requirements in Legislation and t Venture Agreement (JVA)

A fibrous and recurring requirement in most t venture agreements (JVA) between local Chinese manufacturers and foreign multinationals companies is the stiff prerequisite inserted into agreements to ensure that, the Chinese citizen benefits immensely from the alliance of the companies. This is exemplified in two ways, disseminated as follows:

1. First, a percentage of the staff employed as a result of the venture, must be Chinese citizens. It is noteworthy that the legislations and under these t venture agreements provide for an increase in the percentage of Chinese citizens employed as time goes on, anticipating that with time, the Chinese employed under those agreements will learn the process of production, manufacturing, and distribution and more citizens will be employed and trained under that scheme. 2. Second, there are provisions to the effect that materials and components used to assemble the products manufactured and sold in China, must be sourced locally. This is crucial. It can now be understood why various China-made components and products flood the developing world market today.

Between the years 1996–2000, the Chinese National Development and Reform Commission (NDRC) made laws requiring established wind turbine factories to purchase 40 percent of locally made components. In an attempt to privatize the NDRC in 2003, a stringent criterion inserted into the concession was a 50 percent content provision mandating companies given concession to develop the large windfarms previously owned by the NDRC to employ 50 percent Chinese workforce and 50 percent of locally made parts. The concession provided for a further 20 percent increase in 2004.¹³ At present, there is a 70 percent content requirement provision that applies both to government-run concessions and also other private wind farms operating in China. The strategy being adopted by China is to ensure that any company or foreign firm interested in selling turbines

in China must develop strategies to ensure wind turbines to be sold or used in China are manufactured locally to meet local content requirements.¹⁴

It is worth emphasizing that, other countries have followed the Chinese example in granting concessions for wind power development by giving stimulus to the use of local content in project selection. These countries include Brazil, Spain, and Canada. The Canadian Hydro Quebec, for example, embarked on a project to develop two large wind farms in Quebec. In an attempt to promote economic development, it only accepted bids of tendering companies that met the 70 percent local content criteria.¹⁴¹

It should be noted that any provision mandating a foreign company to employ or utilize local resources as a prerequisite or obligation under an international memorandum of understanding (MOU), or JVA, is frowned upon by the WTO. Although international disputes regarding the imposition of content quotas on the wind power industry, have not yet been the subject of an international trade dispute, it is worthy of emphasis that imposing mandatory content requirements has been the subject of international trade disputes in the automobile industry. In the year 2001, for example, the United States and the European Union received a judgment in their favour against local Indian regulations that imposed mandating the foreign manufacturers to utilize 50 percent local content in all automobiles made at the end of the third year of the MOU, and no less than 70 percent at the end of the fifth year. ¹⁴² The WTO Dispute Settlement held that the above practices violated existing WTO agreements, including Article 3, Section 4 of the General Agreement on Tariffs and Trade, which forbade the imposition on automotive manufacturers any obligation to use a certain proportion of local parts and components in the manufacture of cars and automotive vehicles.

4.7. Governmental for Capacity Development through Subsidies

A discussion on Chinese governmental intervention in of capacity development would not be complete without highlighting the programs established to enrich their local content capacity through financial incentives like subsidies. These include

• direct subsidies for government capacity building;

• research and development grants;

• tax-related incentives; and

• pricing incentives.¹⁴³

Although some of those incentives are available for both Chinese- and foreignowned projects, most of them are specifically reserved for Chinese-owned technology. For instance, the National Development and Reform Commission, as well as the Ministry of Science and Technology, have directly subsidized research and development in key renewable energy components. At present, the Ministry of Science and Technology funded basic science research through two national research and development programs, Program 863 and Program 973.¹⁴⁴ Furthermore, subsidies exist for demonstration projects¹⁴⁵ and training courses organized by various governmental departments and ministries, including the Chinese National Development and Reform Commission, the Ministry of Finance, and the Ministry of Technology.¹⁴

4.8. Local Content and the Chinese Automotive Industry Experience

An attempt to view the Chinese economy, through an economic lens, especially with reference to the automobile sector, would reveal that the economic growth and industrial development attained between the years 2000 and 2012 can be traced to three definite actions of the government. These include

• Efficient governmental supervision

• Centralized planning structure

• Innovative legislation backed by distinct and unambiguous industrial policies.¹⁴⁷

In this regard, and in order to properly appreciate the accelerated growth and development of this peculiar economy, it is germane to undertake an excursion into history and examine the key phases in the development of the Chinese Automotive Industry.¹⁴⁸

According to Oliver Mathias Holweg,¹⁴ the history of the automotive industry can be surveyed in of four key phases in Chinese economic development:

• Phase 1: The Central Control and Planning Era (1949–1979) – Shortly after the end of World War II in 1945.

• Phase 2: The Proliferation Phase (1979–1994)

• Phase 3: The Phase of Concentration (1994–2004)

• Phase 4: Controlled Economic Affluence (Post-2004)

4.8.1: Phase1: The Central Control and Planning Era (1949–1979) – Shortly after World War II

In 1949, China was in a state of ruin because they had just come out of an eightyear war against continental powerhouse Japan, followed by a three-year civil war. Thus, when the Communist Party came into power, there was definitely no automotive industry. The Communist Party benefitted from political allies like the USSR, who provided technological and financial assistance through investments in 1953, to establish the government-owned First Automobile Works (FAW). The FAW was the premier automobile-producing company, located in Changchun, the Jingling Province of China. Production of the Jiefang Liberation Trucks began in 1956, with 1,600 units assembled that year alone. In 1958 the Hongqi Red Flag Limousine, which was a high specification automobile used by Chinese senior government officials was also at the time, produced by the First Automobile Works Company.¹⁵

The economy of China developed quickly between 1950 and 1957, and the Communist government anticipated that someday, they would aspire to catch up with Western economies. In order to attain this aspiration, they resolved that they must be producers and not reduced to consumers, like the fate of other thirdworld countries such as Nigeria. The “Great Leap Forward”¹⁵¹ of 1958 was a reflection of this goal, and economic policies identified key industrial products. Consequently, attention was focused on increasing the output capacity of those important materials within a period of fifteen years. The materials included iron, steel, metallurgy-related products, power generators, and machine tools. The criteria used to assess progress were the output capacities of those materials. For example, the output of steel in China in 1957 stood at 5,350,000 tons. The Chinese central committee aimed at doubling the output to 10,700,000 tons in 1958.¹⁵²Thus by keeping an eye on the annual production capacity of specific materials and industries the Chinese government was able to monitor the growth of the identified sector and ignite their advancement by concentrating investments on those sectors.

However, in 1960 relations between the USSR and China deteriorated so badly that, the USSR ultimately withdrew 1,390 experts and rescinded 3,343 contracts, thereby ending their alliance with China. This understandably led to a governmental change of economic strategy in China. At the second People’s Representative Conference, the Chinese government decided to pay back all debts owed to the USSR before 1965, and to pursue a policy of selfdevelopment.¹⁵³

Chinese international foreign relations worsened as China was involved in the Vietnam War, ing North Vietnam against the United States immediately after border wars with India in 1962. However, the war effort had its advantages in the evolution of the Chinese automotive industry. China set up a series of heavy- and medium-duty truck plants, including what is today identified as the Second Automotive Works (also known as DONGFENG), the Sichuan Automotive Works, and the Shaanxi Auto Works. Political relations had broken down with the USSR, and so the new automotive plants and automobiles were designed, constructed, and operated by personnel from the existing auto plants, although it was inevitable that those companies would someday compete in business against each other.¹⁵⁴

4.8.2: Phase 2: The Proliferation Phase (1978–1994)

The developmental period, or what can be regarded as the season of abundance, began in the early 1970s when international relationships with China improved. China regained entry into the United Nations in 1971, which was followed by a visit by US President Richard Nixon in 1972. The rest of the world stopped seeing China as a country that was always at war. The Chinese leader, Mao TseTung, died shortly after, in 1976. This was followed by the endorsement of Deng Xiaoping as the de-facto leader at the third plenum of the Eleventh Chinese Communist Central Committee in 1978, which gave way to political stability in the region. Thus, a new dawn with fresh ideas emerged in governance, which focused attention on economic issues of developing productive capacity instead of class struggle.¹⁵⁵

In this regard, a transition began from a planned economy to a market-driven economy. Provincial and municipal governments and ministries finally had the freedom to make decisions without fear of being labeled anti–Communist. It can be empirically identified that government and ministries incorporated principles of entrepreneurship, and they started to run their affairs in a manner that would ensure self-sufficiency consequent upon which independence was guaranteed. Regional governments and ministries started delving into business activities, using their governmental status to enter into contracts and embark on projects in such a way as to secure profits (although usually in the long term), educate, and develop the region – and consequently empower the region economically. It is then understood why many regions chose the automobile industry as an economic weapon to explore trading opportunities that would alleviate poverty.

Prior to this time, there were existing facilities like the FAW and Dongfeng, but those establishments were controlled centrally by the government, and as such, they lacked flexibility and offered neither the quality nor diversity of products to satisfy the Chinese growing market. At the proliferation stage, many small automotive factories began to engage in vehicle manufacturing under the

supervision of municipal and provincial governments, and in machine factories under the control of the ministry of weapons. The aviation ministries then started the production of light trucks, minivans, and enger cars. Between 1979– 1985, the number of automobile factories increased to an all-time high from 55 to 114.¹⁵

4.8.3. Phase 3: The Concentration Phase (1994–2004)

Prior to this time, the Chinese automotive industry was protected by high tariffs and was centrally planned. This meant that the Chinese Central government decided production ratios, predetermined targets, and even the prices of automobiles. The disadvantage of this practice was the absence of market-driven plans to mediate between demand and supply. Although the secondary effect of this was that, the missing link enabled small scale industries to survive but the reality of this situation was that practice hindered the development and growth of large-scale automobile plants because the resources of those small factories were spread so thinly that they could not compete favourably with foreign auto manufacturers.¹⁵⁷

In 1994, the Chinese government identified a number of industries as pillar industries that would drive the national economy, and that included the automotive industry. The reason for that decision cannot be far-fetched if one bears in mind the fact that an automobile is composed of more than ten thousand parts, and that the industry is closely associated with other industries such as metallurgy, petroleum, the petrochemical industry, coal, light, electronics, and textiles. That ambition was reflected in the Automotive Industry Policy, published in July 1994, which was prepared in conjunction with the State Planning Commission, the State Economic Commission, the Trade Commission, and the Ministry of Machinery and Industry. The targets set by this policy included the following;

• establish large-scale groups of saloon and light truck producers to replace the small-scale scattered manufacturers;

• improve the component industries;

• create automotive product development capabilities; and

• encourage individual car ownership.

4.8.4: Phase 4: Controlled Economic Affluence (Post-2004)

Following the Chinese accession into the WTO in 2002, the central government had to take major steps to open up the economy through tariff reductions and to abolish unfair local content requirements. The effect of this resulted in unprecedented economic growth in the entire automotive sector, including other service-related sectors like machinery, rubber, petrochemicals, electronics, textile, automotive service, and repairs, as well as automotive distribution.

Overall production increased by 38.8 percent in 2002 and by 36.7 percent in 2003, making China the fourth largest auto producer and the third largest auto market in the world.¹⁵⁸ The monumental growth attracted considerable foreign investments and inspired existing manufacturers who had subsisting operations to invest in the expansion of their businesses. Ultimately, the capacity proposed to be installed in China by these investors and existing manufacturers soon superseded the demand ratio of the goods made. Thus, at the beginning of 2004, the Chinese proposed the implementation of certain policies that were aimed at reducing the growth of Chinese car manufacturers in of the number of cars produced, in order to reflect actual demand and sales figures. Those policies indirectly discouraged bank lending to those manufacturers and also slowed down approvals for investments. Regardless of these policies, the total output still increased 14.1 percent in 2004.¹⁵

The National Development and Reform Commission released a New Automotive Industry Policy in 2004 that had several objectives, including the ability to;

• promote harmonious development of the automotive and associated industries;

• drive industrial structural adjustment; and

• encourage self-reliant product development and local brand development, with a view to building up globally competitive brands.¹

4.9. Vehicle Manufacturing

The Chinese automotive industry experienced unprecedented growth through production and sales of Chinese-made automobiles, and this practice birthed a spiral increase in 1994, where a record growth percentage of 15 percent annually, was recorded between 1994 and 2002.

Between 2002 and 2003, overall production increased by 38.8 percent and 36.7 percent, respectively. enger car production also recorded an increase of 55.2 percent and 85.0 percent, respectively. As mentioned earlier, although the policies of 2004 were aimed at slowing down production, the total output of automobiles still increased by 14.1 percent in 2004 to 5.07 million units, including 2.32 million cars, 1.51 million trucks, and 1.24 million busses.

According to the Chinese Automotive Engineering Association (CAEA), the domestic auto market is anticipated to exceed 10 million units annually by 2010 and 16 million units by 2020.¹ ¹

Table 3 Visual illustration showing, volume of cars, trucks, and vehicles in China, 1950–2002.

[Source: Holweg, Matthias, JianxiLuo, and Oliver Nick, “The Past, Present and Future of Chinas Automotive Industry: A Value Chain Perspective.”]

It is clear that various political factors led to the evolution of the Chinese industry. The submission here is that if one studies this evolutionary process empirically, a blueprint can emerge as to how one can transform the Nigerian economy through proper content planning. At this stage, it would be necessary to summarize the Chinese experience with reference to the Nigerian context.

In 1953, the First Auto Works (FAW) was established in China, and in five years a few municipal government-ed plants were established. Such plants can be exemplified by the Shanghai Auto Works and the Beijing Auto Works. During the war periods, military demands required the Chinese to establish a “second wave of state auto plants” like the Dongfeng, Sichuan Auto Works, and Shanxi Auto Works. It can be seen that the modern way of development is usually through t ventures initiated by the state. Considering the fact that the state, especially in Nigeria, may be the only parastatals or organization that may have access to major funds for development, either through their robust budgetary allocations or by virtue of their borrowing power as institutions of government. It therefore follows that the Central government ought to be the backbone initiating t ventures.

Once a state enters into any endeavour not limited to the maritime industry, they themselves must be the initial customer of their products, and they must encourage and jealously protect the sanctity of their goods through policies, taxes, duties, and tariffs. If any Nigerian government would have the political will to start making vehicles or other heavy machinery locally to serve the country’s needs, the municipal government would have a major role to play in attaining economic prosperity. For example, they must make sure they patronize locally made goods, and any other citizens who desire or prefer foreign goods may have to pay double for it. All tiers of government, from the Federal to the Local level, must take the lead to inspire major economically viable projects to

their regions, and to allow the private sector and the whole international investment community to financially benefit from our economic systems. The state itself must prepare the blueprint.

The Chinese government achieved unprecedented success in vehicle manufacturing through well-thought-out policies usually initiated by the central government, which were principally dedicated to regulating automobile production. Furthermore, Local and Regional governments were also determined to contribute their quota to regional development. Miraculously, as the Chinese economy evolved and the political situation changed, economic factors informed the development of corporate and governmental ideology as the main focus switched from regulation to marketization. t ventures were used as industrial tools for marketization, and they played significant roles in the development recorded in China. Accordingly, international t ventures became the cornerstone of the Chinese automotive industry, involving local participants. This local participation is typified by trans-departmental and trans-regional enterprise groups, showing ingenuity in business activities through corporate practice evidenced in mergers, acquisitions, and cross-share-holdings. For example, the First Automotive Works acquired the Tianjin Automotive Industry Company in 2002, which at the time was the largest partner of Toyota in China, and thus FAW succeeded in strengthening a formidable alliance with Toyota by that decision. Furthermore, as a matter of internal policy, the Shanghai Automotive Industry Company also acquired control over various local companies like Shangdong Yantan, Qingdao, and Guangxi Liuzhou. In addition, SAIC practiced a positive compulsion to acquire shares in foreign assemblers. At present, it holds 10 percent in Daewoo and 49 percent in Sangyong Korea. The group also bid for MG Rover and eventually purchased some intellectual property rights in 2004; they competed with Nanjing, who bought the remaining MG Rover assets in 2005. In addition, Changan, popularly known as Chana, based in the economic centre of western China, became the third largest vehicle manufacturer in China, in 2004. It achieved this through mergers and acquisitions with other local companies, as well as t ventures through foreign collaborations with global power brand names such as Ford and Suzuki.¹ ²

Although the acquisition of assets and collaboration between local auto

manufacturers is a general feature in the global auto industry, the unique feature about the Chinese mergers is that they were government driven and controlled. They frequently encouraged smaller manufacturers and assemblers to consolidate and regroup with the aim of establishing viable economic sales.¹ ³

4.10: The Chinese Automotive t Ventures

Modern economies thrive on the ability to structure favourable t ventures through well-thought-out business agreements. A t venture, in this context, is where two establishments tly enter endeavours to develop business relations with firm intentions that each uses what it has at its disposal to collaborate in participation for specific or named endeavours for their mutual commercial benefit. In this regard, obligations and duties of each party are clearly spelt out, and each party is bound by the provisions of the t venture.

The Chinese experience has shown us that where the government is the initiator of a t venture with foreign business interests, it becomes a Public Private Partnership and the originating government can use its superior contractual status as the bargaining power to force development in its regions by attaching developmental obligations to such contracts and making use of mutually favourable governmental policies to fuel the business activities of JV companies.

In China, t venture agreements have been used as potent tools to harvest technological transfer and rapid industrial growth –in this regard, establishing a t venture with the Central or Regional governments was a “sine qua non” for foreign business operations within the Chinese territory, thereby making it mandatory for foreign companies to inaugurate operations in China.¹ ⁴ Thus, the Chinese government eagerly and successfully promoted t ventures while prohibiting auto plants from being fully owned by foreign manufacturers. This paved the way for Chinese citizens not only to enjoy the enormous financial benefits as t producers, but also to learn from the wealth of experience of foreign manufacturers by actively participating in the production processes. Besides, all international partnerships were ed either through the Chinese Central government partnerships or through t ventures with Regional governments.

The first t venture in China was between the Chinese-owned Beijing Automotive Industry Company (BAIC) and Chrysler Motors, which was then known as American Motors. This alliance, known as the Beijing Jeep Company, was so profitable to both parties that in September 2000, Chrysler renewed t cooperation by approving a contractual extension of that union until 2030.¹ ⁵

Other mutually beneficial t ventures alliances include the merger between Shanghai Automotive Industry Company (SAIC) and Volkswagen AG, to establish Shanghai Volkswagen in 1985. This t venture is still the largest in China with an annual capacity of 450,000 automobiles per year, which is astoundingly about the same output recorded in Volkswagen’s main site in Wolfsburg, .¹

Yet another highly successful association was the Guangzhou Peugeot JVA, which was created in 1985. Unfortunately, that t venture collapsed as conflicts arose between the foreign partners and Guangzhou; the latter’s lack of manufacturing knowledge was exposed after Peugeot ended their alliance with that company. Peugeot’s termination of that contract stemmed from their reluctance to build modern and technologically advanced vehicles in China for fear of loss of intellectual property rights. This angered the Chinese government and led to the termination of the agreement in 1997.¹ ⁷

Additionally, the government-owned First Auto Works has embarked on various t ventures. First, was a technological tie-up with Audi, followed by an alliance with Volkswagen to produce the Volkswagen-Jetta Salon in 1992. At present, apart from retaining those alliances, FAW also has t ventures with Toyota and license agreements with Mazda to produce several models.¹ ⁸

A range of noticeable t ventures has also been recorded in the small car segment involving technological tie-ups with foreign automakers and local Chinese interests. In 1980, for example, the Suzuki Mini car technology was brought into China, and this was shared by a few small local companies,

including Changan, Changhe, Hafei, and Liuzhou Wuling. The Tianjin Automotive Industry Company licensed the Xiali (Charade) from Daihatsu and Toyota, and it came back as a sales champion in 2005. Changan, on the other hand, set up a t venture with Suzuki in 1993 to produce the Alto, the Gazelle, and the Swift. It produced several Changan-badged minivans as a result of some license agreements with Suzuki.¹

The entry of China into the WTO, in addition to the government’s resolve to build its internal capacity, resulted in a revolution in the Chinese economy. Almost all other remaining global automakers established operations in China. Although technological transfer requirement was an expressly prohibited condition discouraged by the WTO, all those foreign automakers teamed up with Chinese local partners despite technological transfer provisions in the t Venture agreement, as they discovered that the collaborations were not only highly profitable and successful but also beneficial to their own economic fortunes.¹⁷

Even companies like BMW, which over the years has been protective of their vehicle technology (as evidenced by a salvo of various exclusive luxury products), eventually entered into a partnership with Brilliance instead of stateowned enterprises recommended by the Chinese government. This allayed their fears that their intellectual property rights might leak to BMW’s international competitors if they participated in a t venture with the Chinese government, knowing fully well that the Chinese government had various other shared t venture agreements with competitors.

One very significant feature of the post WTO accession was the freedom of international automotive companies to choose which of the indigenous companies to partner with.¹⁷¹

There is an influx of multinationals into China almost on a daily basis because of its well-planned economy. As pointed out earlier, the Chinese citizens are very

industrious people who would never like to take anything for free, thus they are committed to hard work. Besides, under communism, they were able to develop a system built on principles that ensured that every Chinese is either a producer or is versed in a particular trade.

All the factors enumerated above have, over the years, strengthened the purchasing power of an average Chinese (and in turn the Chinese economy), even before the invitation of multinationals to the economy. For example, the government had anticipated that it would mass produce vehicles and identified steel as an essential raw material for the auto manufacturing industry. They endeavoured to increase and monitor the annual production of steel as part of government policy. In order words, once they discovered that they had a shortfall in the production of steel needed for the industry, they tackled the problem of steel and endeavored to increase and monitor the production capacity on a year by year basis. Accordingly, when multinationals who had the financial power to cause an industrial revolution in Chinese economy were invited, they discovered that there was sufficient manpower and raw material to execute production and manufacturing projects locally. The cost was cheaper than in their home countries, and the multinationals enjoyed from the Chinese host government. The Chinese government, who were themselves stakeholders, had a lot to benefit from the success of the alliance. Regardless of that fact, the auto industry is a very capital intensive industry, and the utilization of production capacity is a vital performance index.¹⁷²

Multinational automotive makers continued to invest tremendous amounts of resources, money, and technological know-how in China. Capacity utilization today is above 80 percent, which is as good, and sometimes better than the utilization of capital in the Western world.¹⁷³ As an example, GM Motors’ sales percentage in China in 2004 ed for 6.25 percent of GM’s global sales and also 10.8 percent of the company’s global profits, making China the second largest market for GM after the United States.¹⁷⁴ The evidence of strong earnings and profit-making has caused international automakers (including Daimler, Chrysler, Toyota, GM, Ford, and Volkswagen) not only to establish but also expand production capacity in China. For example, in 2008, Volkswagen invested six billion pounds to build a FAW-Volkswagen plant in Sichuan

Province, China, in an attempt to double annual production capacity to 1.6 million cars at the end of 2008. GM also announced its plans to spend $3 billion to double annual production capacity to 1.3 million vehicles by 2007.¹⁷⁵

An attempt is made here to distil the tactical approach employed by the Chinese government in ensuring the phenomenal success of the Chinese auto industry. Lessons from such distillation will form some of the crucial indices to formulate an enduring cabotage law in Nigeria to achieve similar results.

4.11: Financial Performance and Profits from those JVA

Based on the successful tactical strategy adopted by the Chinese government in arriving at the highly profitable automotive industry in China, that venture is here selected as a candidate for further illustration. In this regard a reference is made to Table 4 below:

Table 4. Revenue of major vehicle manufacturers, 2004.

Revenue of Major Vehicle Manufacturers, 2004.

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17.

Companies 2004 Revenue (billion Yuan) First Automobile Works 135.64 Shanghai Automotive Industry Corp 119.53 Dongfeng Motor Corp 96.07 Beijing Automotive Industry Holding Co. 46.90 GuangzhouAutomotive Industry Group 40.14 Changan Automobile Group 38.43 China Heavy Automobile Group 23.38 Brilliance Automotive Holding Co. 22.65 Anhui Jianghuai Automobile Group 10.78 Hafei Automotive Holding Co. 6.10 Zhengzhou Yutong Co. 5.94 Southwest Automotive Industry Co. 5.46 Chery Automobile Co. 5.11 Shanxi Automobile Group 5.01 Chongqing Isuzu Automobile Co. 3.62 Geely Automobile Holding Co. 3.42 Chongqing Hongyan Automobile 3.40

18. 19. 20.

Hunan Changfeng Automobile Co. Dandong Shuguang Automobile Co. Baoding Greatwall Automobile Co.

2.90 2.86 2.69

[Source: JianxiLuo and Nick Oliver Mathias Holweg, “The Past, Present and Future of China’s Automotive Industry: A Value Chain Perspective”.]

Before examining the data provided in Table 4, it is pertinent to remark, abinitio, that the Ministry of Commerce recorded phenomenal profits in the automotive industry during the years 2003 and 2004. Although there was a 6 percent loss in profit revenue recorded in 2004, the revenue from vehicle assemblers and part suppliers tly amounted to 72 billion Yuan, which is equivalent to 8.7 million US dollars. The top thirty firms recorded revenue of 551.4 billion Yuan in 2003 and 638.3 billion Yuan in 2004.¹⁷

As depicted in Table 4 above, First Automotive Works topped the list of revenue earners with a record of 135.64 billion Yuan, followed by Shanghai Automotive Industry Corporation, which made 119.53 billion Yuan in 2004. Dongfeng Motor Corporation recorded 96.07 billion, while 46.90 billion and 40.14 billion Yuan were the recorded profits realized by Beijing Automotive Industry Holding Company and Guangzhou Automotive Industry group, respectively. The Changan Automobile group was the sixth highest profit earner in 2004, recording an annual profit of 38.43 billion Yuan.

4.12: The Chinese Mission in Intellectual Property and Lessons.

The Chinese government’s top priority in the aforementioned t ventures was not only to make healthy and handsome profits but also to acquire the intellectual property needed to produce and design products for themselves, especially in highly complex and technological industries. Looking through an investigative prism, it can be clearly seen that this was their tactical mission.

4.12.1 Intellectual Property Mission and Reverse Engineering.

In contrast, the foreign automotive multinationals’ major concern was the protection of intellectual property rights under those t ventures. Considering the complex structure of those t venture agreements, a foreign company may, as an example, have to share the same Chinese partner with one of their competitors and the fear existed that vital intellectual property information and trade secrets could be ed, albeit inadvertently, from one foreign partner to another. For example, Nissan and Honda share the same local Chinese partner, Dongfeng. Also, Volkswagen, Mazda, and Toyota build cars with FAW. The apprehension is that because the intellectual property of Toyota has to be shared with Dongfeng in order to build Chinese Toyota models, there is a possibility that such intellectual rights may be inadvertently ed on to Mazda either through governmental policies or through weak or improper safeguarding measures.¹⁷⁷

Another complaint by international JVA partners was that the supplier networks in China were often shared between manufacturers. Thus, manufacturers were put in a difficult situation where they receive supplies of components from the same supplier as their competitors. For instance, the Chery used components parts that had the Volkswagen logo on its Feng Yun Sedans, because those parts were purchased from a supplier of Shanghai Volkswagen, which was close to the Chery plants. Although Shanghai Volkswagen was compensated by Chery for the transfer of knowledge from this action, it is unquantifiable, if not making it almost impossible to compensate.¹⁷⁸

Furthermore, there have been various complaints associated with reverse engineering of completed cars due to the desperation of competing manufacturers to acquire the intellectual property of new model vehicles. In 2002 Honda filed a 100 million Yuan lawsuit against Shuanghuan with the Beijing People’s Senior Court, alleging that the Laibao sports recreational vehicle was a copycat of the Honda CRV SUV.¹⁷

4.12.2: Lessons Derivable from the Chinese Experience.

From the study of the Chinese automotive industry above, several practices adopted by the government in implementing t ventures are commendable and worthy of emulation. A run through those modus operandi is highlighted in what follows:

• Arguably, the journey to create the largest concentration of auto-manufacturers began with the government’s resolve to develop the Chinese indigenous capacity. This was done in two parts.

In the first instance, the Chinese government chose to invest in formal education and developing the vocational skills of the Chinese potential labour force. This practical approach was envisaged to reap numerous economic benefits due to the fact that China was heavily populated. A choice to build the skills of Chinese people would ultimately strengthen the capacity of its labour force. The number of Chinese students taking technical and advanced courses in the top universities in Europe, America, and the MiddleEast, gives authenticity to that aspiration, and it is a reflection of the Chinese attitude towards human capacity development. Furthermore, the government also made substantial investments in developing its material resources, especially those that are essential to the specific or identified sector. With regard to car manufacturing, the government made sure there were enough steel, textiles, metals, iron, and other materials for the car manufacturing process; it kept the materials steadily available by strengthening those associated industries. The Chinese government monitored the progress of essential materials by keeping track of the total quantity produced annually throughout China.

• The Chinese experience also highlights the need to create a strong foundation so that any anticipated social, institutional and infrastructural development can

be sustained. The peculiar economic successes attributed to China would not be possible if the government had built up human capacity without paying adequate attention to the building of infrastructure and steady availability of raw materials. The international automobile communities have benefitted from the availability of indigenous raw materials and the relatively cheap labour force associated with China.

• Another significant feature of the Chinese experience is the role played by the Chinese Central government in running the automobile industry. The government played a visible role in every stage of developing the industry, particularly in of planning and tariff setting. The Chinese did not just invite foreigners to come and participate in the economy without adequate payback. In order to produce jobs, they created a criterion which made participating in certain economic activity only possible through strategic t venture Public Private Partnership partnerships. The government, on the one hand, recognized the fact the Chinese indigenous workforce comprised of individuals, each sufficiently skilled for productive economic activity. On the other hand, it was obvious that the large population created the need to satisfy various human desires and the action of government in guaranteeing an exclusive right to satisfy that need provided sufficient incentives to secure lucrative foreign partnership deals. The argument canvased here is that if the Nigerian government can emulate the actions of China in this regard and apply same to the running of its cabotage industry and indeed every other economically deficient area, they can duplicate such successes not only for the benefit of the economy as a whole, but also the economic aspirations for the well-being of the ordinary Nigerian.

In reality, Nigeria share similar characteristics with China in of population strength, the difference being that the Nigerian educated work-force is currently being under-utilised. It is possible that communities with a high percentage of poor and uneducated people can still be productive if these communities can be guided in channelling their population into the right economic activity. By emulating these methods, the government will provide a scheme whereby the population can work to earn income through jobs and use these same mediums to educate them and transform their lives.

• The issue of the Chinese accession to the WTO is also a significant point for consideration. Prior to the accession, the Chinese labour force had been developed over the years and had increased in number and capacity. However, the Chinese people were lacking in the area of technological development. Although they were not sufficiently developed with respect to technology, they were skilled in duplicating already existing products through a process of reverse engineering. What this means is that the Chinese practice was to purchase finished goods, especially electronics or other goods which for example require computer programs to function, like mobile phones, tablets, and laptops; with the intention of dismantling them to their core in order to figure out what makes them function, and then, attempting to reproduce the products commercially. The reproduced products were often made to be used in China and were also exported to the under-developed countries of Africa and other third world countries en masse. It can be recalled that even in a third world country like Nigeria the tag “made in China” was more or less infused with the lingo as a synonym to a copied or inferior product. Another problem with that practice is that it breaches universal patent ownership rights of the original producers, especially when such rights are patented or copyrighted. Put simply, the Chinese were cheating, as the Americans asserted. Facilities and materials needed to duplicate products were so readily available that it was difficult for foreign companies based abroad to successfully identify the entities involved in the breach of their rights with a view to seeking legal redress. In this regard, China’s accession to the WTO was a vital opportunity for foreign companies to nip sharp practices in the bud, and consider the advantages of going into business with the so-called enemy. The rationale behind the decision is premised upon the underlining fact that it costs less to produce goods in China as compared with other countries, because the raw materials are readily available, and the manpower relatively cheap but technically skilled. Moreover, at the time most automobile manufacturers chose to invest in China, the purchasing power of the population as a whole had been recording steady growth with the country’s economy growing at a fast pace. As a business decision for the foreign companies, it became more profitable to produce in China even with the anticipated shipping costs required to supply their existing clientele all around the world. China would not be put in this advantageous business position if the government did not give priority to the development of human and material resources. This indeed is the point being canvased here.

• From the Chinese experience, the fact that the government paid adequate attention to the issue of technology transfer in implementing all JVAs, should also be highlighted. This shows that even at that stage, the Chinese government sought to improve the quality of its labour force.

• It can also be seen, that the Chinese Central government was on top of every business decision associated with the t ventures and often sought to control their monopoly on trade activities thereby controlling the JV companies. As an example, it may be recalled that the cooling down policies of 2004 attempted to ensure that auto manufacturers didn’t over-produce, in order to keep a balance between demand and supply.

• Furthermore, the government used taxes and duties as a medium to control commercial behaviour.

• Worthy of note is the fact that from time to time, the Chinese government still subsidizes the activities of JVA companies. Business activities are so lucrative in China that most manufactures deem it advantageous to make ostentatious investments in the development of production capacity, and sometimes such plans have to be controlled by government.

The above expose exemplifies a new standard of global content participation. In the Nigerian context, the government needs to redefine its objectives, and the legislature needs to provide better enabling laws. Government needs to be more aggressive in its economic strategy. The executive must develop innovative and well-documented policies. It must make long-term plans which must be achievable, well spelt out, and easy to access. Furthermore, the judiciary must interpret laws impartially. Nigerians must decide to build the country’s economy from its foundation.

In order for Nigeria to replicate the economic successes of the Chinese economy the government simply needs to emulate Chinese policy which produces desirable results and apply the same to our indigenous circumstance. In this regard, the first step of the government towards integrating Nigeria into the world economic order should be aimed at developing the Nigerian indigenous capacity through a revamp of all educational institutions especially primary, secondary, and vocational schools across Nigeria. It would be more acceptable if the bulk of the Nigerian recurrent expenditure is spent on educator’s salaries rather than being used to satisfy a senator’s lifetime expensive tastes. As practiced in China, factories should be constructed into public secondary schools, technical colleges, polytechnics, and higher institutions to prepare them for future employment in a specialised professional industry. A lot of attention should be targeted towards formalizing vocations such as mechanics, plumbing, welding, carpentry and an attempt should be made to institutionalise local apprenticeship and trainings. For example all informal traditional forms of apprenticeship and mentoring like the Igbo apprenticeship system “Imu Ahia/Imu Olu/Oru” translated as “To learn to Trade” should be institutionalised in an attempt by government to build business systems around indigenous cultural models.¹⁸ The advantage of a highly skilled and sophisticated workforce cannot be overemphasized and polices which border on strengthening public education will be very effective and its impact on development quickly evident because of the heavy Nigerian population and its young labour force. Furthermore, if government encourages the building of factories in public institutions to channel the students to economic activity it means that every student can earn some money for his family as some form of bonus which will be paid to parents and would certainly be a motivating factor to encourage education especially in the Northern parts of Nigeria. While investing in Education the government must simultaneously invest in the development of modern infrastructure, the availability of power, and other government services and also raw materials for industry and businesses.

Another very significant step the Nigerian government must make following the example of their Chinese counterparts should be to reform the istration of economic deficient areas. In this regard, government must play a visible role in the development of new industries. In sectors where the Nigerian economy is

performing poorly like shipping, manufacturing, mining, and agriculture, the government may choose to establish strategic PPP t Venture (JV) Companies which will be run privately but made subject to government supervision, checks, and even oversight. In fact, over a prescribed period the government should ensure that participation in that activity can only be secured through the prescribed JV Company of any particular sector. While this may appear to be new its application has shown to be of enormous success. A perusal of the Chinese government’s automotive industry experience will show that the Chinese government did not allow any big automobile manufacturer to make cars in China without first of all entering into a t venture with local Chinese manufacturers. In some cases the government will have to fuse a few local manufacturers together to increase the capacity of the local company in order to make them at per with their foreign partner. To be put simply, a PPP is essentially a merger of three institutions of society i.e. foreign investment and expertise, government and the indigenous labour force. The establishment of these kinds of companies automatically create two things. First, the JV Company empowered to invest or secure investment for the sole development of the activity is assured that once he has invested his money in that activity he is assured of some kind of favourable business monopoly as either the sole participator or one of the few participators in a controlled economy. In addition, a JV company empowered to perfect the production process in a particular activity immediately becomes visible to international institutional investors or other private investors and recognised as suitable conduits to channel investment. In practice, foreign investors are more comfortable in embarking on PPP projects with credible government institutions because of the protection and security in doing long term business with the Nigerian government.

Following the example of the British Imperial government’s collaboration with the Elder Dempster Shipping line mentioned in chapter two above it can be seen that the British economy benefited immensely from the creation of t Ventures with the shipping company evidenced by the imperial government’s action in securing official age right of carriage via maritime monopolies. Through the introduction of sole carriage rights the imperial government was able to secure economic activity solely for one company and harmonise the interest of both the government and Elder Dempster through government policy and oversight.

It is also imperative to insist that the government must be involved in recruiting personnel to manage and staff these JV companies which policy should provide shall be done only on merit basis. Professionals involved in the intensification and development of certain economic deficient industry through JV Companies should be the best in their field and must be given the challenging tasks to channel the labour force into economic activity. As shown in the example of China, the mere action of government to make available or create an exclusive right to satisfy needs within a society through controlled channels will translate into lucrative investment deals because government can use its power of policy and oversight to navigate the company to economic success. The goal of the company will be to channel the populace to economic activity by providing employment for the underutilised Nigerian labour force and to make sufficient return on investment for investors and the economy. Government may now use its superior bargaining power to ensure that these companies are not run in an extractive manner but are focused on the overall development of the country. The government must also provide oversight to protect the activity of the company together with other perks like tax incentives, tax holiday, subsidies, and duties utilised to control commercial behaviour. By this arrangement the government is assured of developing new frontiers for economic advancement and also make colossal revenue for itself, the labour force, and the international investor.

As evidenced by the practice of the Nigerian shipping industry it is a terrible sign and indeed a red flag pointing to deficient policy provisions of a host country when foreign shipping companies, vessels, and crew usurp income otherwise to be made by citizens. As such since the application and implementation of local content and cabotage laws in Nigeria has not remedied this unfortunate occurrence it may be safe to conclude that content participation as practiced in Asia, Europe, and America has evolved from merely increasing the amount of composite value to the economy using indigenous resources. From the above, it can be concluded that the mischief behind cabotage and content laws being practiced in developed countries is to create a system whereby the nation’s workforce involved in a particular industry is constantly upgraded so it possesses all modern and requisite skills required to be effective in the management of the local economy. Content laws should also be traceable to

policy decisions indicating collaboration between government, the local labour force, and investors aimed at securing lucrative business monopolies especially in economic deficient areas. Situations where local economic resources remain untapped and even when they are developed they are controlled and usurped by foreign companies within the Nigerian space has become unacceptable. Any effective effort being made to rectify this situation must commence with governments resolve to develop the human capacity of the Nigerian youth and Labour force.

Today Nigeria has the largest concentration of black people on earth. During the exploitation, abuse, and forceful acquisition of Nigerian resources through colonialism, the region was regarded as the primary location globally for capturing slaves to be utilised as manual labour overseas and the term coined for Nigeria at the time was“the Slave Coast”.

The powers that gave names to the regions of West Africa chose names bearing an audacious and impudent reference to the prevalent commodity they exploited from the region. Thus, Ghana was called the “Gold Coast” because of its gold reserves, Guinea was known as the “Guinea Coast” because of its resources and Cot d’Ivoire was coined from the colonial-term“Ivory Coast”. The name Nigeria was first suggested by Flora Shaw, who published her submission in the London Times on 8 January 1897.¹⁸¹Flora Shaw was the girlfriend of Sir Fredrick Lugard, the High commissioner of the Northern Nigerian Protectorate in 1902.¹⁸²She later became Lugard’s wife.

The derogatory names given to the colonies of West Africa bear no reference to the great empires and kingdoms that existed in the region before the unlawful encroachment of Europe and America. The great empires of Guinea, Ghana, Mali, Fulani, Benin, and Songhai ruled West Africa and determined and developed the trade and economic growth of the region. To a large extent, the Songhai and Fulani empires made up what is known today as Nigeria.

Although those kingdoms expanded primitively through conquests and warfare, they were well-advanced in the areas of trade, farming, and dispute resolution. For example, as far back as AD 476, when Europe was experiencing the Dark Ages, the people of West Africa could already smelt iron ore to make powerful tools for warfare and agriculture.¹⁸³ The Nigeria of those times was a hub of trading activity where traders brought merchandise from across the Sahara Desert in the north and along the River Niger where the riverine communities developed trading systems along the Niger. At the time, kola-nut, gold, ivory, spices, and precious wood were often exchanged in commercial quantities.

4.12.3 Pre-colonial Nigeria

The geographical area of the place presently known as Nigeria presents an example of one of the earliest dwellings of civilised human beings coming together to form an organised society. Evidence exists linking the Jos plateau presently located in the middle region of Nigeria as one of the earliest dwellings and hubs of human activity in West Africa. As far back as two million years ago, human beings were already dwelling in Jos as the area became known as one of the first sophisticated societies to emerge within Africa. Between 900 BC and 200 AD, the local dwellers in Jos had already developed their culture and were known as the Nok Stone Age settlers. These groups of people were so advanced at the time that they had utilised stone and iron to develop instruments of farming and war. Furthermore, they had also developed technology to produce intricate figurines made from precious metals and stones.

Around 100 AD, in the northern part of the country, the Hausa Bokwi Empire started to emerge as an enormous civil empire and they ruled over other smaller societies together with the Kanem Bornu who later emerged at about 1000AD and converted to Islam soon thereafter. Once converted the opportunity arose for the society to explore trading opportunities across the Sahara exchanging slaves, gold, textiles, and salt with other Muslim countries. By the 8th Century AD the Yoruba people of South-Western Nigeria had also established a functioning kingdom of their own operating from Ilé-Ifẹ and in less than three centuries they emerged as one of the most significant culture in Nigeria.¹⁸⁴

The Nigeria of today bears little semblance to the glorious, pre-colonial empire of Songhai and the Fulani. As representatives of black people all over the world, Nigerians have to work collectively to build the nation of their dreams, in order to achieve their full potentials. Rather than utilizing the governmental structure introduced by the British as a tool to drive rapid collective development, the Nigerian elites have, instead, unwittingly adopted the sovereign characteristic of a centralized government for the unjust enrichment of a few through corruption

and looting. This cancerous strategy has spread to almost every fabric of social existence, to the extent that it is accepted as normal behaviour. Absolutely, it is not normal, it should not be normal, it cannot be normal. Regrettably, in Nigeria today, an offender gets away with breaking the law if he can provide bribes allegedly given to the law enforcement agencies when he is caught. It is painstaking and time consuming to get anything done in ministries and parastatals of government without handing material incentives to key civil service officials. In most cases, it feels like government institutions intentionally sieve requests and hinge the success of applications on whether or not an incentive is provided. Some court judgements and injunctions are allegedly purchased like items on the shelves of supermarkets, and they are often affected by political affiliation. Jobs are secured, and contracts awarded, not because of previous performance or competence but on a “who you know” basis. As a result of those practices, in the Nigeria of today, mediocrity reigns supreme and is celebrated while merit is either dead or comatose.

4.13: Every Society Needs Its Most Brilliant Minds in Positions of Authority and Leadership

4.13.1: A SIR ISAAC NEWTON Case-study

(25/12/1642 to 20/03/1726)

Sir Issac Newton was born on the 25th of December 1642 at Woolsthorpe Manor in Lincolnshire, England as a tiny little lad. Between 1654 and 1659 he received his secondary education in King’s School, Grantham which taught a variety of foundational courses including Latin, Greek, and Mathematics. He was however withdrawn from school in 1959 by his mother who hoped to turn him into a farmer. Isaac’s mum eventually allowed him to finish school not only because of his visible dislike for farming but also because she was receiving a lot of pressure from Mr. Henry Stokes, the master of Kings School who made up his mind to bring Issac back to school. Upon graduation in 1661, Issac immediately secured ission to the prestigious Trinity College Cambridge. At the time the Trinity curriculum was based on the work of Aristotle but was supplemented with the modern philosophers like Galileo, Thomas Street, and Descartes. While he was at Cambridge he became exposed to the works of the German Mathematician, Johannes Kepler. In early 1665 Newton generalized the Binominal Theorem and began to develop a theory in mathematics which was later known as Calculus. He bagged his B.A Degree in August of 1655 but had to return home for two years because his college was closed down as a precautionary action of the Great Plague.

On returning home to Woolsthorpe he had the privilege to undertake a two year private study where he developed theories on Calculus, Optics and the Law of Gravitation. He received his MA degree in 1667 and barely a year later, he succeeded Professor Issac Barrow as the Master of Trinity. Newton formulated the Laws of Motion, the Laws of Universal Gravitation and was to set the standard with principles which was to become the state of the art and was to dominate scientists’ views of the universe for more than 300 years. From his mathematical description of gravity he was able to derive Kepler’s laws of Planetary Motion while using the same principles and formula to for

trajectories, tides, and comets. He removed all existing remaining doubt about the validity of the heliocentric model of the Solar System as his gravity principle also described how the earth and other celestial bodies were able to achieve their movement. Newton’s revolutionary predictions that the Earth is shaped as an oblate spheroid was later vindicated by the geodetic measurements of Maupertuis La Condamine who convinced the leading European scientists about the superiority of Newtonian Mechanics above any other conflicting theories.

In 1687 Newton published his first book titled Mathematical Principles of Natural Philosophy which was the first of its kind to break down and simplify classical mechanics principles.

Based on a fundamental theory he developed that a prism decomposes white light into the colours of a visible spectrum he built the first practical reflecting telescope by applying his sophisticated theory on colour. He published this and other personal developed theories on lights in his highly classical and influential work, Opticks in 1704. He is also credited for the first attempt to calculate the speed of sound, and a practical law of cooling, as he contributed his own quota in the development of Power in mathematics. In addition, he developed formulas to approximate the root of a function, to generalize the Binomial theorem to noninteger exponents and he classified most cubic plane curves we have today. Sir Isaac Newton is known for breaking further frontiers in the field of science which reflects his scientific genius. Apart from discovering the three famous laws of motion, he also provided the Grand Unification of Science theory and the Unification of Celestial and Terrestrial Mechanics. Of particular reference to this work are the lessons to be learnt from the life of Newton and a sample of these are articulated in what follows.

4.13.2. Newton 1676-“Standing on the shoulders of Giants”

This famous Newton’s statement was made in 1676 in a letter Newton wrote to his equally as decorated scientific mind and indeed one of Newton’s competitors in excellence, Robert Hooke. The phrase is interpreted as an acknowledgment of the debt they owed scientists that came before them. In reply to Robert’s earlier inquiry into how Issac Newton keeps breaking frontiers and producing revolutionary innovations, Issac said that he could not have achieved those heights if he was not standing on the shoulders of giants like Johannes Keplar and Nicholaus Copernicus who highly influenced his Work. This intelligent acknowledgment of the possibilities education brings into a nation and the field of excellence has been immortalized in honour of Newton. As a result, the phrase “Standing on the Shoulders of Giants” has been etched on the British £2 coin to serve as motivation to younger generations to stand on the shoulders of giants in the society and aspire to sur work done. Also etched on an alternative version of the coin is the phrase “mind the gap” which celebrates the highly successful, complex and effective railway system in England.

4.13.3. Sir Isaac Newton as a Sleuth, and London’s 1⁷th Century Dirty Harry

In 1696 when Newton had turned 53 years, he was appointed first, the Warden, and later promoted to the Master of the British Royal Mint. Although the appointment was meant to be a Sinecure (i.e. a political/cultural appointment which was to justify an extra salary without any real obligation to perform duties), Issac took the appointment very seriously. In the first few weeks of his appointment, Issac discovered that about 20 percent of the coins taken during the Great Recoinage were counterfeit. This was as a result of the actions of famous powerful counterfeiters like William Chaloner. The Warwickshire born confidence trick-star had over the years pulled off elaborate coinage and royal mint scams and had amassed enough wealth to buy himself a sufficient degree of political power. The problem Issac Newton faced was that although counterfeiting was a treasonable crime punishable by death it was very hard to prove and Chaloner knowing this went about his business as usual with open disregard for Issac Newton. To convict Chaloner, Issac carefully built a rock solid case by tying all evidence and capitalizing on every mistakes made by the fraudster. He often disguised himself as a habitué of bars and taverns to gather evidence personally to build a case against him. He got himself appointed as a Justice of the Peace in other to be empowered to conduct prosecution and cross examine accused persons by himself.

He was able to secure a conviction against William Chaloner who was sentenced to death and eventually hanged despite all attempts to manipulate Issac through his friends and colleagues in power.

Note: “Dirty Harry” is the name given to the Los Angeles ace crime buster cop called Harry Callahan fighting crime committed by notorious criminals. That cop has as cast, the charismatic actor of western movies, Clint Eastwood.

Newton was knighted by Queen Anne in Cambridge in 1705 and on his death, he was buried at Westminster Abbey among the famous kings and queens of England. Apart from being the president of the Royal Society of London, a crater on the moon, considered to be the deepest on the moon, was named after him.¹⁸⁵

Before Newton was elevated into a position of leadership he was already well trained and fully developed intellectually. He also had visible success in his personal life as he continued to expand frontiers of excellence in his chosen field. When he got the opportunity to make a real difference he approached it with intellectual precision and achieved desirable results.

While it must be itted that in the Nigeria of today we have a handful of leaders who have performed very well in power and can be said to be among the smartest and most qualified for the job the reality is that most Nigerian Leaders are thieves and scoundrels-men who have no intellectual or moral integrity and they have scammed the system to get into power. An expose into the works Issac Newton together with other giants of Nigerian heritage will be undertaken by the Author in a subsequent work to justify two basic theories which are practical steps that must be taken towards integrating Nigeria into the world economic order.

First, the Nigerian electoral system must develop a structure which guarantees that only the most qualified and educated Nigerians ever get into positions of power. This suggestion finds authenticity from the fact that a person who has developed his brain to the capacity of being a visible producer and innovator is less likely to be a looter of public funds. The electorate must continue to evolve and become more enlightened to the point that they understand that they should only vote into power persons of high integrity, intellectual capacity and professionalism who have enjoyed success over time in their chosen field of endeavor. A suggestion on how the Nigerian government can use legislation and policies to ensure that only the best Nigerians can be put into positions of power

can be enumerated in what follows:

• The legislative arm of government may amend Nigerian Electoral laws to empower INEC to compel all aspiring Nigerians to submit all personal and business s for forensic tests and any person aspiring into political laws who possess income he cannot explain will be prosecuted and charged. The mischief behind this kind of law is to deter people with unquestionable wealth from aspiring into political office.

• The Constitution may also raise the requirement contained in Section 131 of the 1999 constitution which prescribes the minimum qualification to become President as a school certificate. Instead the constitution should insist that persons who want to contest at state and federal elections should possess an advanced professional or master’s degree or more than 15 years of hands-on professional and technical experience with evidence of personal success, growth, and development.

• The Nigerian government should also promote policies which encourage Nigerian professionals abroad to relocate back home to be treated as preferential expatriate citizens and potential candidates for technical arms of government tasked to solve real and pressing issues that will affect the people. These classes of people must have worked hard for decades to build professional careers and may not be as eager as a great number of our present crop of politicians to tarnish their image. The sad reality is that there are an enormous amount of Nigerians who are among the most brilliant in the world but are being integrated into foreign economies on a daily basis because Nigeria is not as economically attractive. Nigerian laws must ensure that even if the Nation must incur a high wage bill it should be expended on integrating Nigerians of high intellectual capacity into the Nigerian Economy to replicate the standards they have maintained abroad in the Nigerian polity. A step in the right direction was taken by the appointment of Kemi Adeosun as Federal Minister of Finance in 2015. Mrs. Adeosun previously worked as a Senior Manager in Price Water House Coopers London, Financial Controller of Chapel Hill Denham Management and

Managing Director of Quo Vadis Partnership. She was appointed as Commissioner of Finance Ogun State in 2011 before serving as the Federal Minister of Finance from 2015.

Second, it cannot be over-emphasized that the best path to guarantee that Nigeria develops and transforms its economic fortunes is through education and a meritbased system. A process must be developed whereby the younger generation of Nigerians can learn from the achievements and mistakes of previous generations. It has become common practice in Nigeria that most parastatals handling the most lucrative ventures of government are run in a top-secret way with little or no oversight or information to the public apart from the occasional whistleblower’s information. The lack of transparency in government business not only fuels corruption, it also presents the younger generation with insufficient data for them to learn from the mistakes of their forefathers. Education, the documentation of excellence, and the celebration of real merit and success is a positive path to guarantee the success of our nation over time. It should be entrenched into the hearts of Nigerians as our culture and presented as a cornerstone on which our nation is built.

In the 2016 edition of “the Report Nigeria 2016”¹⁸ the Minister of Trade and Industry of Singapore, Lim Hng Kiang was asked to reveal the secrets of the successes of Singapore’s fast paced industrialising economy in an exclusive interview captured by the Journal. The question was asked upon the back-ground that Singapore obtained independence about the same time as Nigeria but today they operate a much more successful and diverse economy. His response reveals that the Singapore government got two things right. He remarked that the people of Singapore understood that the priorities of government after independence were first to strengthen local institutions tasked with creating a pathway to development. The country was able to achieve this by strengthening the public and istrative systems, making the right laws and enforcing them and ensuring the efficient provisions of public service. He also remarked that building strong stable institutions creates a favorable environment to do business.

The Minister of Trade further explained that education and skills development was the other primary investment of the government which realized quickly that growth in capacity must be matched with growth in capability. The government of Singapore also developed policy to ensure that the local workers periodically upgraded their skills and were kept at pace with fast moving global technological and regulatory trends. In conclusion he explained that the government also ensured that the work force was trained to the local industrial activities and public institutions. This was achieved through constant dialogue with industry professionals and private sector participators ensuring that the knowledge and skill imparted through the educational sector were relevant to the industry needs.¹⁸⁷

4.14 The Kind Of Education Nigeria Needs: A Call For Transforming Nigerian Policies on Education

Nigeria has a challenge on her hands. The country’s population is estimated at one hundred and eighty four million with about one hundred and thirty six million people below the age of thirty years. Furthermore from the seventy seven million Nigerians that comprise our Labour force twenty two million five hundred thousand are either unemployed or underemployed.¹⁸⁸ What this means is that there exist an annual increase in demand for jobs required to service the Nigerian force which the market cannot . The situation is more deplorable in the north where a large percentage of the work force is under skilled and uneducated. The problems associated with an uneducated and idle north will be suffered by all tribes in Nigeria, the worst of which was evidenced through the Boko Haram experience. The situation of illiteracy in the north is not only a Northern problem, it is a Nigerian problem. All good heads must be put on deck to ensure that the highly volatile and idle manpower in the north is immediately channeled to economic activity. It would seem that a fundamental part of Colonial policy was to ensure that the north remains uneducated in some kind of ludicrous and cruel scheme to consolidate power through the indirect rule system. Unfortunately, after independence there has been no reform and the policy of keeping people uneducated in a bid to control them is still being indirectly applied in political systems in the Nothern parts of Nigeria. Commenting on the nature of pre-colonial policy just before the Nigerian Independence, Obafemi Awolowo, in Chapter 12 of his Auto biography opined:

• The powers-that-be appeared determined to ister the north in isolation from the south, and at all its events to prevent the Northerners from being contaminated politically by the educated Southerners. Southerners who had made efforts to start a newspaper in the north were unsuccessful. Educated Northerners who visited the south was done so under the close supervision of white officials. No Northerner was allowed to take part in politics and Southerners resident in the north were obliged to confine their political activities to areas set aside for the abode of strangers. Above all, the average enlightened

Northerner looked down on the Southerners as Kafiris (unbelievers).

Whatever the reasons for the encouragement of this kind of policy were, it takes nothing away from the fact that there exists a desperate need to immediately channel the north and indeed every part of Nigeria into economic activity. In order for this to happen the Nigerian youth must not only be educated but also equipped with skills that will make them relevant and immediate earners in the Nigerian labour market. The Nigerian education system also requires a complete policy overhaul in order for it to instill skills that will make students competitive both locally and internationally. As a means of suggesting and justifying examples of practical policies that will enable us achieve this reform, two personal experiences become appropriate.

In 2016, when wrapping up this work it became more apparent that the need may arise to provide an example of a practical policy that can be applied to reform the Nigerian educational system and this engaged a part of my mind. However, things became clearer when I had to move houses and was obliged to engage the services of a painter. I bought the paint and other materials myself but engaged a painter to do his work. The first painter I got was highly skilled but very unprofessional and dishonest. After receiving half his payment he painted on the first day and totally absconded from the entire job. I quickly engaged another painter but on different who agreed to collect payment at the end of each day’s work. When the painter came to paint the interior and exterior of the house he came with four kids, 21, 19, 17, and 14, respectively. Although I was surprised that the painters were so young I had no idea they were educated partly because they wore dreadlocks. These kids finished the work in four days. On the morning of the third day they had already completed the exterior so I went out to congratulate them on a remarkable job so far. Before I entered the room they were painting in the house I overheard them speaking to one another with impeccable English and they were very polite to one another. I was so surprised to hear them speak so well. I went into the room to meet them and find out more about them. They revealed to me that they were educated and painting for them is a hubby. They said that some of their friends play football, some athletics, and some basketball but as for them they paint. They started their company with their elder brother who is about twenty four years old and they make extra income

from painting part-time.

During the conversation with the young painters I immediately ed a few years before, when I was researching into the Chinese auto-manufacturing industry and discovered policies made by the Chinese government which prescribed for factories to be built inside public secondary schools to equip its students with relevant skill needed by the automobile manufacturing industry.

At once it became obvious certain steps which once applied will reform public education in Nigeria and encourage more people to get an education especially in the north. They include the following:

• The Nigerian government should immediately identify economically profitable activity like the mining of over 400 identified mineral resources like agriculture, real estate, telecommunications, IT, energy, etc. with a view to understanding the various processes needed for value to be transferred in the identified industry.

• There are several industries where government can training and education of students with a view to impact special skill which will make them immediate earners in today’s labour market. For example, the real estate market boom enjoyed in Nigeria has come to stay because of the steady growth in the Nigerian middle class and their need for basic human amenities like housing, feeding and clothes considered in regard to the population size will ensure that skills in real estate development and agriculture for example will always be of high demand in Nigeria.

• Using real estate as an example, several activities make up the value chain in a real estate project such as plumbing, welding, painting, carpentry, electrical works, marketing, agency, sales, etc.

• Government should encourage public schools to impact upon their students this kind of training on an extra-curricular basis where a student can practice daily and in a few months be able to earn value in the Nigerian labour market.

• Government should also encourage the training of its students from primary and secondary school level in other IT related activities that will ensure every pupil is self-sufficient from an early age. These include animation technology training, codding, web development, video game development, etc.

• Government should establish and encourage the establishment of technical schools or convert public schools to centers whereby the curriculum and timetable are such that students get a regular education between 9 am and 1 pm. From 2 pm to 6 pm they are taught certain skills which are impacted on them to enable them compete in the real estate sector within the shortest possible time.

• It is advised that it is only well-articulated government policies that can rework the methods of impacting students to make it possible for the student to earn a salary from the works of their hand while at school.

• The public schools that embark on this kind of training should also be encouraged to instill principles of business istration, hard work and professionalism which the present uneducated freelance artisans available in the Nigerian market today lack.

• Government must immediately develop public schools into factories where students can get educated and also participate in some form of economic activity or value process.

• In this kind of arrangement government must also attempt to secure employment contracts for those new breeds of public-institutions by appointing the schools as contractors to government and private sector driven projects achieved through tax breaks and incentives for real estate developers that engage the services of Nigerian public academic institutions for their work.¹⁸

• Government must also discover the best way to attract investment to develop the north into farms and industries and use their untapped collective manpower as an economic advantage.

The argument being canvassed here is that if students in public schools, technical colleges and universities can be well trained in relevant economic activity and practices and jobs are secured for their benefit, then the average student as part of school can earn a salary from the proposed public school system with a fraction of the income paid to their guardian at the end the month. The other part will be saved for the students and given to them once they graduate. Once Nigerian parents especially in the north get paid just because their children go to school then they will encourage the children to go to school and with time, education will be an effective tool for poverty alleviation and the empowerment of families. This may prove a more effective and sustainable policy than the government simply feeding children once a day in school. Instead, teach them how to fish.

4.15 Concluding Remarks

In conclusion, it must be emphasized that the most important resources the country possesses are the people itself. Therefore, the fundamental undertaking of any government must be to develop its human resources. Polices should be people-driven. The government must make sure talent is spotted at a young age and is harnessed and exercised until it can achieve its full potential. There must be a governmental structure through special programs to identify talent in various fields throughout the country. The Local governments should be empowered in this regard. Sports and talent development should be run as a big business. The government must work closely with its universities in its quest for economic and social development, because therein lies the largest congregations of the nation’s intellectual resources. As highlighted above, the Japanese government heavily funds engineering research through Japanese universities, and this has become a powerful tool for seaport and regional development.

With respect to specific areas of development, it is suggested that the government performs its duties by creating structures similar to regular corporate structures which should be government controlled and co-owned. There must be active collaborations between the private sector and public sectors to form organisations in certain economic deficient areas. The achievements of the private sector and their contributions to the economy over the years cannot be overemphasized and should be applied to areas like agriculture, production of steel, and power in Nigeria. This is mainly attributed to the fact that the success of private businesses and the factor that determines its existence or survival is its ability to make profit by adding value. It is this intrinsic factor that has led to more prudently managed private business enterprises across the country. The notion that the government should not participate in business should be modified and applied to the circumstances of the nation in the quest for development.

It can be suggested that the government should undertake the development of key economic areas including the mining of over 400 mineral resources by

setting up special-purpose corporate-like Public Private Partnership institutions for the implementation of development programs in identified sectors. For example, in the area of agriculture, the government (through the Ministry of Agriculture) should create a national-oriented company tasked with the establishment of industrial farms in every state of the federation that Nigerians can call their own. The Nigerian farms project should have the following prescribed objectives:

• Its primary goal should include the development of large quantities of land for agricultural purposes in each state of the federation.

• Government should invest directly in setting up farms in every state of the federation.

• It should equip each farm with modern agricultural equipment and state-of-the art irrigation technology.

• It should sensitize the public about the purpose of the farm projects and the individual benefits derivable from participation in the projects.

• To achieve this, the management of the Nigerian farms project must work closely with the local governments in order to create public ownership sentiment around the project.

• Government must also employ citizens after they have been adequately trained which should be ed by graduates and experts from various Universities of Agriculture across Nigeria. Financial experts should also be employed to manage each farm with the directive to implement strategy to foster regional

development as well as profit making.

• The farm project should design participatory packages for workers in the farms to encourage its growth. This would ultimately evolve into a scheme where the workers in the farms are rewarded over time with farms of their own.

• The farms project should also design participatory packages for existing farm owners in a bid to incorporate them under the national farms umbrella.

• It should provide investment packages for aspiring farm owners and encourage technological development on every farm.

• The farm project should also be involved with the harvesting, preserving, packing and packaging, and marketing of finished farm products.

• To achieve this, the project must anticipate the need to create a structured supply chain to all the major markets in Nigeria by working closely with market unions.

• It should source for new local and international buyers for Nigerian farm products.

• It should encourage transparency in all businesses involved in the Nigerian farms process, as well as easy access to financial information.

A structure such as this immediately provides numerous advantages; First, the activities of the companies can easily be monitored and managed by the government; financial misappropriation can be checked, and corruption reduced. The government can also ensure the success of the project by using policies to drive the objectives of the corporation thereby guaranteeing its success.

Second, the activity of government parastatals can be channelled to simply supervising these projects thereby injecting life and purpose to the already existing Nigerian ministries. Third, the nature of this type of project is such that the government can undertake the t development of territories and create a nationalistic spirit in each region of Nigeria. Fourth, millions of jobs are created annually, throughout every region of the federation.

Most importantly, the government would have succeeded in creating a visible structure that can be internationally recognised, as a one-stop shop for a particular economic activity and identified as a visible channel through which foreign investors interested in participating in the local economy can invest.

From the study of the Chinese auto-manufacturing and windmill production sector, it can be seen at once that those type of government controlled organizations would be better equipped to dictate to foreign interests operating locally and negotiate that would trigger economic and regional development. Such institutions also have the backing of government and are more attractive to an international investor who will value the security and continuity of his business interests.

CHAPTER 5

A CRITIQUE OF THE NIGERIAN CABOTAGE ACT 2003

5.1: A Comparative Analysis of the Nigerian Cabotage Act and the relevant provisions in the US Jones Act

As indicated by the various items of evidence advanced earlier on, the level of a country’s economic success depends upon its ability to empower the general public by protecting and preserving select economic activities for its citizens. This utilitarian principle is at the centre stage of economic and capacity development, and it plays a significant role in ascertaining economic performance. Nigeria is endowed with an abundance of natural and mineral resources, but in the highly technical sister sectors of oil and gas and shipping, there is a dire shortage of professionals and trained technical personnel to fully harness the economic and productive potentials of its resources.

In practice, the sad reality is that foreigners who have better trained technical professionals and better equipment to perform highly technical operations are the dominant and preferred workforce employed in Nigeria. Accordingly, foreign interests are neither keen to down trade secrets nor willing to teach Nigerians how to build for themselves the tools needed for the economy in a bid to stay relevant. One cannot blame the foreign companies, because trade secrets are painstakingly developed over years through hard work, and if they are easily disseminated, they lead to competition for business.

There has to be a trade-off somehow. The companies need reassurance of some sort, and that holds the key to the development of this argument. Ordinarily, the multinationals engaged in oil exploration and other -related activities would have huge bargaining power when it comes to contract negotiations, and they would be solely responsible for running the internal affairs of their companies, including employment of workers to take part in their operations. If the host government fails to identify and properly define their limits of operations, then the foreign companies will have a field day.

The host government needs to provide an enabling environment and take charge of overseeing and continually monitoring the operations of foreign economic participators while plugging identifiable loopholes. This should be done by enacting legislation, governmental policies, and implementation guidelines that will empower its citizens, thereby making them compulsory participants in their country’s economic activities. Benefits accruing from such an arrangement are unquantifiable. To achieve this, the host government needs to build a structure whereby its bargaining power is not only assured but well protected.

In that connection, the recent efforts of the Nigerian Federal government in identifying the need to restrict and control foreign participation in the Nigerian maritime and oil and gas sectors are particularly worthy of commendation. In the last 19 years (i.e. from 1999 to 2018), the Nigerian government has achieved several monumental successes by increasing global participation in the oil and gas industry, through the enactment of the Nigerian Content Development Bill of 2003, with amendments in 2005 and 2008. Efforts made in this regard cumulated in the Nigerian Oil and Gas Industry Content Development Bill of 2009, which was finally ed into law in the year 2010 after decades of attempts by the Nigerian government and stakeholders in the oil and gas industry to maximize benefits accruable to Nigerians from indigenous oil and gas participation. In the area of coastal trade and its reservation or restriction for Nigerian citizens, the Nigerian government, under the presidency of Olusegun Obasanjo enacted the Coastal and Inland Shipping (Cabotage) Act No.5, Laws of the Federal Republic of Nigeria.

It is noteworthy that Nigeria ranks among the top ten nations with large quantities of oil and natural gas reserves. At present, Nigeria can boast of at least nine oil and gas producing states in three southern geopolitical zones – namely, south-west, south-south (Niger Delta), and the south-east. Indeed, Lagos State has recently ed the league of oil producing states in Nigeria. It ought to be kept in mind that the south-south geopolitical zone alone has a monopoly of six oil-producing states exemplified by Delta, Bayelsa, Rivers, Akwa Ibom, Cross River, and Edo, ing for an impressive 91.5 percent of the gross oil production in 2008. In the late 1990s, the majority of oil and gas production was from on-shore and shallow-water field networks.

As of 1 January 2009, the estimated crude oil and natural gas reserves were 36.2 billion barrels and 182.4 trillion cubic feet (TCF), respectively. Crude oil production has expanded, growing from its initial daily output of about 5,100 barrels in 1956, when the first Oloibiri well was drilled in the present-day Bayelsa State, to as high as 2.5 million barrels per day in the late 1970s and again in 2004 and 2005. In 2006, the Nigerian government announced plans to increase the country’s oil reserves from 2.5 million barrels per day to 4.0 million barrels in 2010 through continual investments, economic, and policy incentives. At current extraction levels, Nigeria has a production equivalence of about 30years. ¹

It should be noted that when considering content laws and local participation in the oil and gas industry, it is hard to ignore cabotage and coastal protection laws because the maritime sector is not only a industry but also plays a pivotal role in the oil and gas practice.

In addition, a discussion on capacity development and content participation in the oil and gas industry cannot be complete without focusing attention on cabotage laws and the maritime industry. The reason is that the maritime sector plays a critical role in the prospecting, exploration, and drilling for oil and gas. First, it should be understood that most of the oil and gas extractions in Nigeria are carried out offshore.¹ ¹Second, the transportation and sale of extracted crude oil are in such high volumes that they are usually performed by huge seagoing vessels and this fact alone creates economic opportunities in of availability of cargo for transportation. This assertion justifies the practice of restricting transportation of cargo within the Nigerian territorial waters to Nigerian owned, manned, and crewed vessels and Nigerian-owned companies. If these restrictions are strictly adhered to, it may be economical to invest in the building of seagoing oil tankers locally, because there would be an assurance of steady availability of oil for cargo and this would lead to the security of a requisite return on investment. We may discover that colossal amounts of money in form of investment would be easily raised from professional or ordinary investors once they are assured that upon completion the vessel will belong to a class of

vessels which shall enjoy exclusive lifting right on Nigerian crude for sale or swap transactions. Furthermore, the restrictions immediately bestow Nigerian companies with a business monopoly strong enough to attract technical and financial collaborations channelled to the building of seagoing vessels locally because of the assurance of work guaranteed by the strict enforcement of Cabotage laws.

It should be borne in mind, however, that the maritime industry includes several services not limited to the transportation of oil and gas for sale. Marine services include short- and long-term repairs in dockyards, salvage services, towage services, tugboats services, coastal tankers, and supply boats. There is an immediate dire need to provide cabotage protection to all marine services to substantially harness the economic benefits accruable to Nigeria and its citizens from the business of shipping.

5.2: The Coastal and Inland Shipping (Cabotage) Act No. 5 of 2003: Laws of the Federal Republic of Nigeria

An excursion into the Laws of the Federal Republic of Nigeria reveals that the 2003 Cabotage Act was a timely response to the need to protect indigenous participation by Nigerian citizens in the very lucrative coastal shipping practice. It can be extrapolated that the intention of its drafters was to increase indigenous tonnage and to enable Nigerian-owned companies and vessels to compete favourably with other coastal superpowers of the world. One can draw the conclusion that the undesirable developments prior to the promulgation of this law were the practices or malpractices of foreigners and foreign vessels dominating the Nigerian coastal trade by exploiting the lack of restriction in our indigenous shipping. Indeed, the exploitation of the loopholes, evidenced by the predominance of foreign vessels lifting cargo from Nigerian ports prevented Nigerians from competing favourably in the Nigerian cabotage arena. This was most unfortunate.

Promulgated as an attempt to change the reality of foreign domination of the Nigerian coastal trade practice, the Cabotage Act 2003 aforementioned, was a timely intervention. Prior to the Act, there was a shortage of qualified Nigerian crew and seamen, thus leaving indigenous maritime business at the mercy of foreigners. According to a survey carried out by the Nigerian Maritime Authority in December 2003,¹ ²234 out of 245 vessels operating at the Onne free-zone axis were owned by foreigners. This highlights a large shortfall of Nigerian participation. Also, 106 out of the 109 vessels operating at the Port Harcourt and Bonny axis belonged to foreigners. In addition, a predominance of foreign vessels also existed at the Calabar and Eket axis (54 out of 61 vessels). In the Warri axis, 842 vessels out of 843 vessels were owned by foreigners, and 278 out of 452 vessels were foreign-operated vessels in Lagos.¹ ³The imbalance was colossal.

Thus, after numerous petitions and appeals to the Federal government, President

Olusegun Obasanjo finally signed the Cabotage Act to law on 30 March 2003. This was a welcome development and a colossal achievement by the istration. At present, the Nigerian coastal trade is governed by two legislations, namely,

• Coastal and Inland Shipping (Cabotage) Act No. 5 of 2003

• Guidelines on the Implementation of the Coastal and Inland Shipping (Cabotage) Act of 2003

Other relevant legislation and monitoring agencies include the Merchant Shipping Act (MSA), National Inland Water Authority (NIWA), National Maritime istration and Safety Agency (NIMASA), t Maritime Labour Council (JOMALAC), the Nigerian Navy, and the Nigerian Ports Authority (NPA). Those legislations and statutory regulatory bodies are supposed to strictly follow the provisions of the Act, and any provision inconsistent with the Act is deemed null and void, to the extent of its inconsistency.¹ ⁴

5.3: The Merchant Marine Act of the United States of America, 1920 (The Jones Act)

The US Congress enacted the Merchant Marine Act in 1920. It is more popularly referred to as the Jones Act, named after the then chairman of the Senate Commerce Committee, Senator Wesley Jones from the state of Washington. The Act was birthed right after World War (WWI) and was conceived as a result of an intellectually intensive analysis of the best use among probabilities of the numerous vessels acquired and operated by the US government during the war. The US Merchant Marine Act of 1920 was conceived as an attempt to effectively re-channel US marine investments and manpower, which would otherwise have been idle after the war for lack of use.¹ ⁵ The policies behind the Act include a comprehensive and strict restriction of all coastal maritime activities and the preservation thereof exclusively for American citizens and residents. Worthy of note is the fact that the US maritime cabotage laws are made up of thirty-one separate enactments governing the transportation of goods and people within the coast of America. The act also restricted all other maritime activities and services within the US territorial waters for US citizens and residents, including dredging, towing, salvaging, and fishing.

Prior to the Jones Act, there had been various other cabotage laws enacted to restrict and protect, but they did not jealously guard or offer total restrictions on all non-US vessels. The Cabotage Statute was ed into law in 1789 and the trust of the legislation was the imposition of a heavy tonnage duty on the entry into the United States of any vessel, transporting cargo, that was not built in the US or owned by a US citizen. The Cabotage Law of 1817 was the second legislation enacted to confine coastal trade, and that law reserved transportation of merchandise between US ports to only US vessels, with a penalty imposed on non-US vessels engaged in merchandise transport, which included forfeiture of cargo found on board. The 1817 act also extended the levy of tonnage duty to US vessels that failed to employ the required percentage quota of US citizens as crew.

The spirit behind US cabotage policy and practice is evident when one considers the preamble of the Merchant Marine Act of 1920 with the intention of determining the mischief behind the legislation. It is contained in what follows;

It is necessary for the national defence and for the proper growth of its foreign and domestic commerce that the United States shall have a merchant marine of the best equipped and most suitable types of vessels sufficient to carry the greater portion of its commerce and serve as a naval or military auxiliary in time of war or national emergency, ultimately to be owned and operated privately by citizens of the United States; and it is declared to be the policy of the United States to do whatever may be necessary to develop and encourage the maintenance of such a merchant marine, and, in so far as may not be inconsistent with the express provisions of this Act, the Secretary of Transportation shall, in the disposition of vessels and shipping property as hereinafter provided, in the making of rules and regulations, and in the istration of the shipping laws keep always in view this purpose and object as the primary end to be attained.¹

The equivalent legislation that restricts the carriage of engers along the coast of the United States of America is the enger Service Act of 1886.¹ ⁷ The Act was enacted on 19 June 1886 by the Forty-ninth Congress, and it was codified under Chapter 421, Section 8, 24 Stat.8.¹ ⁸ This legislation imposed a fine of two dollars per enger, on any foreign vessel found transporting engers between places or ports in the United States when such engers have been taken on board in the United States. On 7 February 1898, the Fifth Congress amended the Act, which was codified under Chapter 26,¹ section 2, 30 Stat. 248. The amendment increased the fine imposed by the 1886 statute from two dollars to two hundred dollars per enger. The original enactment with the amendment state that, no foreign vessel shall transport engers between ports of places in the United States of America, either directly or by way of a foreign port in the US. The enactment further prescribes a penalty of two hundred dollars for each enger so transported and landed. The law now appears in the United States Code under 46 App. USCA 289 (1996) as, “No foreign vessel shall transport engers between ports or places in the United States, either directly

or by way of a foreign port, under a penalty of $200 for each enger so transported and landed.”²

A lesson that can be learnt is the fact that, over the years, the United States has maintained its restrictive maritime and cabotage policies, and the of cabotage restrictive laws constitutes a major part of the political agenda of presidential aspirants.

Indeed, President Barrack Obama declared, “I ed the reauthorization of the Jones Act, and I maintain that the merchant marine fleet is vital to our economy and natural security°… I would oppose any move to undermine the Act.”

It is a good illustration to buttress the argument being canvassed in this essay. Indeed, Senator Hillary Clinton declared, “I am strongly committed to using American products as a way of spurring the creation of new jobs in this country. When we use American products in our coastal industry, we spur more jobs for hard working Americans.”

In order to further accentuate the argument, Governor Bill Richardson affirmed, “The Jones Act plays a valuable role in sustaining American projects for American Workers. Without the Jones Act, the US share of global commercial shipbuilding which at one point reached zero percent would return to that level.”² ¹

5.4: Restrictions under the Coastal and Inland Shipping (Cabotage Act)

The Cabotage Act was designed to control the economic activities involving maritime vessels within the coast of Nigeria, and to restrict the participants of the maritime activities to Nigerians. Section 2 of the Act defined the word vessel to include

any description of vessel, ship, boat, hovercraft or craft, including air cushion vehicles and dynamically ed crafts designed, used, or capable of being used solely or partly for marine navigation and used for carriage on, through or under water of persons or property without regard to method or lack of propulsion.

The English courts in the case of R v Goodwin [2006] 1 Lloyds Rep 432, [2005] EWCA crim 3189 made an attempt to interpret a similar phrase “capable of being used for marine navigation” which was contained in the Section 313 of the English Merchant Shipping Act 1995. The courts held that since a wave runner jet ski was created to be used as a recreational vessel it was not capable of being used for marine navigation. The courts held further that the word Navigation used in this context depicts planned movement from place to place.

Applying this to the context of the Nigerian Cabotage Act and its restriction to vessels benefiting from our marine business, it can be seen that the Act does not restrict business offering leisure services with a jet ski or other recreational vessel within the Nigerian Coast from foreign ownership, and even this activity should be reserved only for Nigerian citizens.

Notwithstanding the above, the wide definition of vessel contained in the

Cabotage Act will include any seagoing vehicle that can be employed, leased, or hired to perform services in Nigerian waters for commercial purposes and profits. Section 3 of the enactment further attempts to prohibit non-Nigerian vessels from participating in trade within the Nigerian territorial waters.

A vessel other than a vessel wholly owned and manned by a Nigerian citizen, built and ed in Nigeria shall not engage in the domestic carriage of cargo and engers within the coastal territorial inland waters or any point within the waters of the exclusive economic zone.

This restrictive section protects four separate sources of income from the reach of foreigners and the international community, and it intends to preserve them for Nigerians.

• Wholly Nigerian owned vessels: This restriction was designed to give Nigerian-owned vessels priority of participation in trade along the coast of Nigeria. The effect was to encourage more Nigerians to be economically involved in the maritime transportation business and invest in acquiring seagoing vessels for commercial purposes. Accordingly, the Act protected participation with a view to securing the interest of Nigerian shipping companies and private ship-owners by sheltering the Nigerian cargo transportation business for those companies and, in turn, securing their profits. It is safe to conclude that since a ship is made up of sixty-four parts, once majority of the parts are owned by Nigerians, the vessel may succeed in acquiring permission to engage in the coastal trade monopoly.

• Wholly Nigerian manned vessels: By this restrictive condition, the act attempts to provide security of jobs for Nigerian seamen interested in working on-board seagoing vessels as the ship’s crew. Seamen have been properly identified and protected by the Cabotage act. In the more developed countries, they are treated and protected as special classes of citizens, principally because they play important roles in emerging economies by electing to spend a great deal of their

lives at sea away from friends and family which is in itself a sacrifice necessary to ensure that the maritime economy of any nation prospers.

• Wholly Nigerian built vessels: This provision was designed to ensure that only vessels built in Nigeria would participate in commercial activities in and along the coast of Nigeria. The restriction, aimed at securing ship construction, building, and maintenance jobs and business opportunities has been provided for by the Cabotage act and reserved for Nigerian-owned companies. When considering this restriction in line with the establishment of the Cabotage Vessel Financing Fund provided for under Section 44 and 45 of the act, the tremendous economic possibilities initiated by this act can be easily ascertained. The CVFF as constituted in the act is empowered to collaborate with indigenous dockyards to initiate projects to build large seagoing tankers that would be given priority in the lifting of cargo and engers. CVFF-built vessels may also be given protective lifting rights for the transportation of all petroleum products within the Nigerian coasts. Accordingly, the economic activity of shipbuilding is protected under the act and only vessels which are wholly built in Nigeria can perform cabotage operations.² ²

• Nigerian ed vessels: Furthermore, the act was designed to protect income for the Nigerian government in their quest to provide vessel registry services for vessels operating in Nigerian Coastal Waters. Rules of International Law and the Law of the Sea both emphasize the fact that all seagoing vessels involved in international commerce must have a country of registration or flag country, in order to operate legally in international waters. Ship registry services are established to provide a system whereby all vessels performing shipping operations in the country are identified, ed and monitored to satisfy the need for ability of vessels engaged in maritime activity. Accordingly, countries are at liberty to provide for flags of registry for vessels in an attempt to promote the economic strengths of their shipping industries.² ³ In order to qualify to operate a registry, the participating country has to be a member of the International Maritime Organization (IMO).² ⁴The requirement for countries to operate ship registries derives its validity from universal maritime practice. Such uniform practices led to the emergence of the International Maritime Organisation in 1948 as an organ of the United Nations. The IMO, through the

various registries of maritime countries aims to constantly develop a comprehensive regulatory framework for shipping and covers concerns like maritime safety, environmental protection, technical training of maritime personnel, security and salvage, in a bid to strengthen shipping practices and to make shipping more efficient.

The IMO further provides for a standard that must be implemented when operating a valid registry. First, the flag state must be an IMO member nation and must have adopted all IMO’s maritime safety resolutions and conventions. Second, evidence must exist that the flag state has an established maritime organization with the capability to enforce all international and national regulations. It is worthy of note that flag states have certain rules and requirements for vessels that fly their flags, including crew nationality, crew composition, owner’s nationality, and training. Thus, a country can use its registry as machinery for enforcing cabotage laws to restrict external participation in its shipping business. The flag state has the primary responsibility of ensuring that its vessels meet all international guidelines and comply with standards of other internationally recognized conventions.

An example of other international obligations that need to be enforced by a flag state’s registry include, the International Convention on Safety of Life at Sea (1974) (SOLAS 74), amended in 1998, which requires, for example, that enger ships carry an approved life jacket (personal flotation device or PFD) for every person on-board the ship. It further provides that seagoing vessels must carry a number of PFDs that is equal to 10 percent of the total number of engers on-board suitable for use by children. This law maintained that the number of children’s life jackets carried must not be less than the number of children on-board.² ⁵

Section 5 provides that the beneficial ownership of any Nigerian vessel, tug, or barge engaged in the carriage of materials or supply services to and from oil rigs, oil platforms, and any other installation (either on-shore or off-shore), must reside with a Nigerian citizen. This provision corroborates the fact that an oil rig

or installation, even when built off-shore, is still within the Nigerian territory and it anticipates that Nigerians would eventually earn income through supply services and carriage of materials through and from the oil rigs. However, it should be emphasized that this provision does not envisage a total restriction, meaning that it does not confine this economic activity to vessels wholly owned by Nigerians, locally manned, and built in Nigeria. What is required by Section 5 is that beneficial ownership of such a vessel, i.e. the right to share out of the profit on that vessel resides in a Nigerian.

Section 6 exempts all specifications of vessels from engaging in domestic trading in the inland waters of Nigeria unless they are owned by Nigerian citizens. The Act further imposes a fine of 10 Million Naira for the breach of Sections 3, 4, 5, and 6.² The referenced section further provides that when the breach is continued, by a vessel for more than one day, each day the breach is continued would be construed as a separate offence, which would attract a separate penalty.

5.5: Degree of Restriction

It is particularly noteworthy that the degree of restrictions on foreign vessels operating in Nigerian waters differs from section to section, depending on the type of maritime jobs with which the vessels are engaged in. The ultimate restriction imposed on foreign ownership, foreign crewing, and foreign building contained in section 3 only relates to enger transportation and cargo haulage jobs. The Act specifically provides that such vessels shall not engage in the “domestic carriage of cargo and engers”, making the restriction only applicable to the aforementioned jobs.

Section 4 of the Act provides that any tug or vessel owned by foreigners shall not tow any other vessel carrying any other substance, thereby making the restriction in section 4 only applicable to vessels, tugs, or badges leased to perform towing services. Considering that this restriction is only applicable to towing jobs, it is our firm submission here that section 4(2), which exempts foreign vessels from the provisions of the Act when rendering assistance to persons, vessels, or aircrafts in distress, would not apply if such a vessel was also to perform towing services for the distressed vessel or craft. Also, section 4 merely exempts “foreign-owned” vessels from towing any other vessel carrying any other substance and makes no reference to vessels partly-owned by foreigners. Thus, it is submitted here that, according to the strict and literal interpretation of this section, a vessel ed with majority of the shares held by a Nigerian-owned company cannot be exempt from performing towing services within the Nigerian coast.

Section 4 of the Nigerian Cabotage Act further restricts any tug or vessel owned by a foreigner from towing any other vessel carrying any substance whatsoever, or from operating within Nigerian waters. As mentioned above, section 4(2) exempts foreign vessels from the provision of section 4, if operating for the sole purpose of rescue and rendering assistance to persons, vessels, or aircrafts in danger or distress in Nigerian waters. As a result, Section 4(2) immediately

differentiates towing operations from salvage services and can be applied to permit foreign owned vessels or companies to evade the restrictive provisions of the Act if they are solely in the business of performing salvage operations, thereby authorising them to operate in Nigeria. It should be noted that in contemporary International Maritime Law and Practice, there exists only a very slim distinction between towage and salvage as an act of towage can easily be turned to a salvage in a matter of seconds due to a marine peril.

In the English case of Ward V. McCorkill (TheMinnie Haha) [1861] Lush PC 335, the Minnie Haha, a vessel at sea encountered some fault during a voyage from New Orleans to Liverpool and was stuck in very dangerous circumstances. The captain of the vessel accepted help from the United Kingdom tug attempting to tow, but came across some problems due to a sudden, yet, violent change in weather. As a result, the anchor of the MinnieHaha gave way causing the vessel to drift rapidly and it thumped violently upon a shoal. At this point, the captain accepted the services of the Storm King tug who also sent in a line in an attempt to tow her but the MinnieHaha continued to drift to shoal and the two tugs encountered great difficulties. The two tugs expended considerable energy to ensure that the MinnieHaha does not drown especially in their attempt to tow the vessel across the shoal. The tugs had to wait for the making of tide and immediately moved the vessel while preventing it from drifting leeward to Fomby Bank. Also, a third tug had to come in to successfully get the MinnieHaha to the port. During the proceedings, the MinnieHaha argued that the agreement between them and the tugs were agreements to perform towage services and the tugs were only entitled to 30 guineas as stated in their contract. On the other hand, the tugs argued that the transaction performed was more of salvaging in nature and they were entitled to a lot more money.

The courts held that the onus was on appellants (i.e. the tug operators) to prove their case, which they failed to do, as the respondents had shown that there was no salvage operation performed by the appellants and what transpired was an ineffectual performance of a contract of towage.

Moreover, the danger if any was occasioned by the negligence of the appellants, which immediately deprives the service of the salvage character. The courts held further that it is only in extra-ordinary circumstances that a towage may be converted into salvage. Such circumstances occur only when the performance of the original towage services becomes impossible or complete or there exists a risk of loss of life and property involved in saving the vessel.

The rule developed in the MinnieHaha has received global acceptance and recognition. Article 17 of the Salvage Convention 1989 provides that no payment is due under the convention to a person under any contractual obligation towards a vessel (like a towage service contract) unless the service rendered can be seen to exceed what can reasonably be considered as the due performance of the contract entered into before the danger arose. Following this principle, the courts held in the Sandefjord [1953] 2 Lloyd’s Rep. 557, that a pilot who had completed his contractual duties and was waiting to disembark was entitled to modest salvage reward because he gave very important direction to save the vessel from grounding while he was waiting. Also in the San Demetrio (1941) 69 Lloyd’s Rep 5, a vessel carrying petrol in a wartime convoy was set on fire and the master gave an order to abandon ship. A short while after, some crew courageously turned back, re-boarded the vessel, put the fire out, managed to repair and re-start the engine and sail it for 700 miles to the port of refuge. The court held that they were entitled to a substantial salvage reward.

Section 5 provides that the beneficial ownership of any Nigerian vessel, tug, or barge engaging in the carriage of materials or supply services to and from oil rigs, oil platforms, and any other installation (either onshore or offshore) must reside with a Nigerian citizen, thereby making it possible for a foreign-owned, foreign-manned, and foreign-crewed vessel to operate in the carriage of materials and supply services to oil rigs and platforms in Nigeria, if the beneficial ownership resides in a Nigerian. Accordingly, the literal interpretation of Section 5 is that a vessel may be allowed to participate in Nigerian coastal trade once its operations are limited to the servicing of an offshore rig or installation, if the vessel is an asset of a Nigerian-ed company whose equity is shared with Nigerians and foreigners.

Section 6 provides that “A vessel of whatever type or size, shall not engage in domestic trading in the inland waters of Nigeria, except as a vessel that is owned by Nigerian citizens”. This is another total restriction that only applies to domestic trading. The fact that the act recognises and attempts to protect domestic trade is very significant. In global shipping practices, goods to be sold on-board a vessel, are traded together with voyage rights to accept delivery of goods on-board the transporting vessel. In other words, the seller of goods to be transported via sea channels not only sells the goods itself but considers the costs of arranging sea transport for the goods, which are incidental to the right to accept delivery from the vessel where the goods are transported, before communicating a price to the buyer. Thus, in calculating the price for the goods, it is expected that the seller would consider the incidental freight costs and add that cost to the price of goods to be sold in his negotiations with the buyer. As far as CIF (Cost Insurance Freight) transactions are concerned, legal title to the goods es when the seller exchanges the Bill of Laden, Invoice and the Insurance Policy document in exchange for the price.² ⁷ In the celebrated English case of Manbre Saccharine V Corn produce [1919] 1 KB 198, it was held that even if the goods are destroyed in transit to the knowledge of the seller, there is still a valid CIF transaction and the buyer is liable to receive goods and pay for its cost once the seller tenders the Bill of Laden, Invoice and Insurance Policy.

Accordingly, it is commendable that section 6 of the Act identifies the practice of buying and selling goods via sea transportation and protects same for Nigerian citizens.

5.6: Exemptions and Waivers under the US Merchant Marine Act of 1920

The United States takes a conservative approach in the granting of waivers to foreign-owned and foreign-operated vessels engaged in commercial activities within the US coast. Waivers can only be granted in matters of extreme importance or in national emergency by the MARAD: (US) Maritime istration Department (MARAD), which is an establishment made up of government officials; of the US Coastguard, US Navy, and US shipping companies; and vessel owners. Waiver applications are treated on a case-by-case basis and can only be granted in matters of national emergencies or strategic interests. For instance, the trade decline in the 1980s prompted MARAD to grant waivers to operators of the 512-foot Chinese vessel Tai AnKou to tow an oil rig from the Gulf of Mexico to Alaska. This jack-up rig was under a two-year contract to drill in Alaska’s cook inland basin, and the waiver given to that Chinese vessel is said to be the first of its kind to be granted to a foreign owned independent oil and gas company.² ⁸ Further, in the wake of Hurricane Katrina, after due consultations with MARAD, Homeland Security Chief at the time, Secretary Michael Chertoff, temporarily waived certain restrictive Jones Act provisions to allow for foreign vessels carrying oil and natural gas to participate in the US coastal trade from 1–19 September 2005.² It should be noted here that, Jones Act waivers are usually granted for a single voyage, specific purpose, or a precise period and does not operate as a license to engage in coastal activities in perpetuity. Even in times of natural disasters or national emergencies, waivers are not granted arbitrarily, as intense investigations and assessments are carried out before waivers are granted, and this only occurs if the waiving authority deems it absolutely necessary. For example, following Hurricane Katrina, twenty-one agricultural groups, including the American Farm Bureau Federation, applied for a Jones Act waiver on the grounds that farmers would remain adversely affected if adequate and additional shipping options to transport grains and oilseeds were not open to American farmers. However, this application was denied as the farmers failed to show why American vessels could not be used for those operations, and hence, the applications of the farmers were deemed to be based on speculation.²¹

5.7: Exemptions and Waivers under the Nigerian Cabotage Act

Section 8 exempts foreign vessels from the requirement of the strict provisions of sections 3–6 by stating particular circumstances whereby the restrictive provisions would not apply. They include the following.

• A situation where the vessel in question is engaged in a salvage operation and such operation has been determined by the ministry to be beyond the capacity of Nigerian-owned and operated salvage companies.

• Where a foreign vessel is engaged in activities related to the regularization of damage caused by marine pollution, and it has sought the approval of the minister or relevant government agencies.

• Where a vessel is involved in any ocean research activity commissioned by the Department of Fisheries or other government departments responsible for such research.

• Where the vessel is operated or sponsored by a foreign government that has sought and received the consent of the Minister of Foreign Affairs to conduct maritime scientific research.

5.8: Waivers under the Nigerian Act

Apart from the exemption provisions, the act also permits foreign vessels to operate in Nigerian waters, if they have obtained a waiver from the Minister of Transportation.

Section 9 of the Nigerian Cabotage Act gives the minister the sole power to grant a waiver to a foreign vessel from the requirement of Nigeria ownership where he is satisfied that no wholly-owned Nigerian vessel is capable of performing the service required.

Moreover, the Minister is empowered to grant a waiver from the provisions that require vessels participating in coastal trade to be Nigerian-manned or Nigerianbuilt, respectively, when the Minister is satisfied that there is no qualified officer or crew for the position required, and no Nigerian shipping company has the capacity to construct the particular types of vessels needed.²¹¹

It is humbly here submitted at this juncture, with all due respect to the drafters of the Cabotage Act, that the enormous power granted to the minister encourages corruption. If enactments like these stated waiver provisions keep finding their way into our legislations, Nigeria is not likely to ever move forward and harvest economic affluence. ²¹²

5.9: Registration under the Cabotage Act

Section 22(2) provides that a vessel intended for use in domestic trade, either in the coastal or inland waters, shall obtain all necessary licenses and permits that shall be determined from time-to-time by the minister and other relevant agencies.

Section 22(3) further empowers the minister to collect information and keep records in a special containing the availability, specification, and use of all Nigerian vessels. Apart from the enforcement of international regulatory standards, it is clear that empowering the Minister of Transportation with a comprehensive list of all qualified Nigerian vessels that are available for lease can be used as a yardstick in awarding jobs involving carriage of goods, persons, and all other coastal services. Reading section 22(2) through section 22(3), it can easily be ascertained that the act intends that it should be the responsibility of the Minister to secure all trading activities within the Nigerian coast and to collate a containing all qualified Nigerian vessels that would be used to grant licenses to participate in the secured coastal activities.

According to the guidelines issued by the Federal Ministry of Transport with respect to the implementation of the Coastal and Inland Shipping (Cabotage) Act of 2003, there are several separate s for the different aspects of cabotage.

• Special for cabotage (Nigerian wholly-owned vessels)

• Special for cabotage (bareboat chartered vessels)

• Special for cabotage (t venture owned vessels)

• Special for cabotage (fully foreign-owned vessels)

• Special for cabotage (exempted vessels)

Vessels eligible for registration under this act include enger vessels, crew boats, bunkering vessels, barges, and fishing trawlers, offshore service vessels, tugs, anchor handling tugs, and supply vessels, as well as floating petroleum storage, dredgers, tankers, and any other craft of vessel used for the carriage of persons, property or any substance whatsoever via sea channels.²¹³Failure to any vessels, is an offence liable upon conviction to a fine of nothing less than N5,000,000.00.²¹⁴

5.10: under the Jones Act

Unlike the Nigerian coastal and Inland Shipping (Cabotage) Act, which provides for an all-encoming Cabotage Vessel Fund that is anticipated to finance loans for the building of new cabotage-friendly vessels, the United States has various statutory bodies and agencies recognized for providing subsidies for existing and intended US-owned and built vessels. For example, the US Federal Ship Financing Guarantee Program (FSFGP) was established under the Merchant Marine Act of 1936, and was the statutory structure adopted by the government to ensure that US flagged vessels and operators are constantly assisted in the procurement of private, long-term financing at favourably low interest rates solely for building ships in US shipyards for domestic and foreign trade.

The FSFGP program is a productive concept designed to increase the economic capacity of government, ship-owners, and dockyard owners and workers; in turn, it boosts the US economy as a whole. The rationale behind this program is that the government invests in securing business for shipping companies by granting preferable access to loans if they are utilized for building seagoing vessels in the US dockyards. Over time, they created an industry around the construction activity needed to build American-made vessels alone and the availability of vessel construction jobs secure the necessary employment needed for the growth of American Dockyards. Simultaneously, the government secures the right to carry cargo in the US for the American-made vessels and continually deflects cargo traffic to shipping companies through organised business monopolies. They protect the huge investments required to run an efficient shipping company. They create job-security for the ship builders and dockyard workers.

Another example of a financial facility available exclusively for Jones Act participants is the Operating Differential Subsidy (ODS). Here, the US government provides for subsidy based on the difference between the fair and reasonable cost of insurance, maintenance, and repairs that are not compensated

by insurance, wages of officers and crews, and estimated cost for operating US vessels that have been granted license to participate in foreign trade.²¹⁵

5.11: under the Nigerian Cabotage Act

Governmental is a very crucial issue in invigorating economic activity, especially when one bears in mind the financial implications of capital intensive projects involved in shipping and shipbuilding. Indeed, the government has a major role to play in initiating maritime development policy and creating an enabling environment for the private sector to participate. It is the duty of government to be the driving force of those projects by providing the structure and necessary manpower, as well the financial , for indigenous economic activity to thrive. The fact that the Coastal and Inland Shipping (Cabotage) Act of 2003 has identified the need for a fund is, therefore, a welcome development and a step in a progressive direction in creating a thriving maritime economy.

Section 43 of the Act establishes a maritime fund called the Cabotage Vessel Financing Fund (CVFF), created in order to indigenous shipping companies. The Act provides that the fund shall derive its revenue from a tax or charge constituting 2 percent on the total sum of every contract issued and performed within the Nigerian coast. It further makes provision for additional revenue generated through tariffs, fines, licensing, and waivers.

Furthermore, interests on loans granted by the fund shall also be paid into the Cabotage Vessel Financing Fund (CVFF). The Act appointed NIMASA as controllers and managers of the fund but went on to provide that the National Assembly had the duty to determine and approve the removal of any amount to local shipping companies in accordance with the guidelines prescribed by the minister. Perhaps it may be in order to X-ray the aforementioned disbursement provisions for the fund.

The act envisages that any participant seeking to access the CVFF for financial must be a Nigerian-owned company, and it must approach the National

Assembly with a proposal that will be presented and scrutinized. If successful, a loan will be provided to the Nigerian company to be paid by NIMASA. Thus by virtue of this provision, once a proposal has been submitted to and approved by the National Assembly, neither the minister nor the NIMASA has the power to refuse it. However, if the Nigerian company cannot fulfil the criteria as set out by the ministerial guidelines, then although the National Assembly has approved a loan to the beneficiary, that Nigerian company may not be able to access it. It is further submitted that the functions of those three bodies –the National Assembly, the ministerial body, and NIMASA – are vital to the management of the fund and are enumerated in what follows.

NIMASA (The Bank).

• Manages the fund.

• Pays monies approved by the National Assembly.

• Negotiates and conditions of the loans.

• Is in charge of monitoring the facility and reclaiming the loan amounts and interests.

• Prepares reports and gives a periodic audit of the .

NATIONAL ASSEMBLY (The Controllers).

• Scrutinizes proposals by indigenous shipping companies to access the fund.

• Approves or refuses proposals of indigenous shipping companies.

• When accepting or refusing proposals, the criteria should be the economic benefits to Nigeria as a whole.

• Controls the .

• No disbursement can be made from the without approval.

MINISTER OF TRANSPORTATION (Compliance).

• Makes sure the shipping company is properly ed under the CAMA.

• Makes sure the shipping company in question pays tax regularly.

• Investigates the integrity and competence of directors.

• Protects governmental interests in the project.

• Scrutinizes projects and ascertains whether or not the project will work, according to a body of experts in transportation.

• Prepares guidelines for the istration and implementation of the Act.

It should be noted that the CVFF is only available to Nigerian citizens and indigenous shipping companies.²¹ Thus, a t reading of sections 43 through to 45 of the Act would show that once any amount is disbursed without the approval of the National Assembly and to a beneficiary other than a Nigerian-owned company, such disbursement is an illegal and corrupt transaction.

5.12: The United States Coastguard

Informally referred to as the First Fleet, the United States Coast Guard was statutorily conceived on 4 August 1790 by Alexander Hamilton of the United States Revenue Cutter Service, which was under the United States Department of Treasury. Its alias was coined to describe its importance because the US Navy was not in existence in 1790, thereby making the guard the first and only naval force of the United States at the time. It had authority to collect taxes from the pioneer US shippers, and when at sea, it could capture pirates and rescue anyone in distress.²¹⁷ The guard was established to defend the coast, preserve trade, and protect the maritime interests of the new America.

The interesting thing about the legislative arm of government is that they have the power and capacity to create a predictable future. The legislature makes the law. Law guides human engagement within a society. Thus, a legislature with the gift of foresight, can use the content of the law enacted to anticipate a prosperous future or solve pertinent economic, social, and political problems that may arise in the course of governance. A wonderful example is the way and manner the US Congress caused the Coast Guard to evolve through legislation.

In 1915, for example, the Revenue Cutter Service merged with the United States Life-Saving Service and the US Congress gave birth to what is known today as the US Coast Guard. The powers, duties, and functions of the US Lighthouse Service were transferred to the Guard in 1939, and in 1942 the Bureau of Marine Inspection was also added to the Coast Guard. In 1967, Congress moved the US Coast Guard from the Department of Treasury to the newly formed Department of Transportation. This lasted until 2002, when the US Coast Guard was placed under the Department of Homeland Security as part of legislation designed to more effectively protect American interests following the terrorist attacks of 11 September 2001.²¹⁸

The United States Coast Guard can aptly be defined as a maritime, military, and multi-mission service, if one considers its functions with reference to the roles and duties given to it by the US Congress. The US, through several legislation, imposes special duties on the US Guard which are defined as special statutory missions that must be accomplished. Amongst its functions are the powers to operate as a maritime law enforcement agency with jurisdiction in both domestic and international waters, and also the power to act as a Federal regulatory agency. Although the US Coast Guard is a branch of the United States Armed Forces, it stands out peculiarly because it operates under the Department of Homeland Security in the United States during peacetime, and it can be transferred to the United States Navy Department by the president at any time, or by the US Congress in times of war. Moreover, while all other military services are only deployed in times of war, even though at peacetime they could be training for war, the US coastguard can be deployed at any time, operating simultaneously under Titles 10, 6, 14, 19, 33, and 46 of the United States Code.²¹

According to the provisions of USC, the Coast Guard has three basic roles divided broadly into maritime safety, maritime security, and maritime stewardship. In order to effectively perform the roles conferred to it by statute, the functions of the Coast Guard have been distinctly classified into eleven statutory missions divided under five Homeland Security missions and six Non– Homeland Security missions.¹⁷⁵. They are listed as follows for the sake of completeness:

Homeland Security Missions

• maritime law enforcement

• ports, waterways, and coastal security

• drug interdiction

• migrant interdiction

• defence readiness

Non–Homeland Security Missions

• marine safety

• search and rescue

• aids to navigation

• living marine resources

• marine environmental protection

• ice operations

5.13: The United States Coast Guard’s Authority as an Armed Service

By virtue of Title 10 USC, S101 (a)(4), five uniformed services make up the United States Armed Forces: The Army, Navy, Air Force, Marine Corps, and Coast Guard. Also, Title 14 USC S1 further provides that the Coast Guard shall be a service and branch of the armed forces of the United States at all times, and it shall be a service in the Department of Homeland Security except when operating as a service in the Navy. In February 2002, the United States Coast Guard was placed under the Department of Homeland Security, reporting directly to the Secretary of Homeland Security.²² In the United States, Coast Guard workers are well respected like other branches of the US Armed Forces, and they receive the same income and allowances with of equal rank in the other services. Erring officers are subject to court martial by virtue of the United States Uniform Code of Military Justice.²²¹

Having participated in every major US conflict since 1790, including World War II, the Vietnam War, and Operation Iraqi Freedom, the Coast Guard is an integral part of the US war effort. Recently, the coastguard ed hands with the Navy and the Marines to adopt a new maritime strategy titled “A Corporative Strategy for 21st Century Sea Power”, which defines the philosophical thinking of the US Congress by their unilateral position that the prevention of war is as important and should be treated in the same way as the conduct of war. This new strategy involves the US Coast Guard working directly with the Navy and the Marines in a collective effort to prevent man-made or natural regional crises from occurring, or reacting quickly when they occur to avoid destruction that could otherwise be avoided.²²²

5.14: Authority as a Law Enforcement Agency

It is informative to bear in mind that Title 14 USC S2 authorizes the US Coast Guard to enforce Federal law, which includes all cabotage laws as contained in the US Merchant Marine Act of 1920. In exercising those powers, Title 14 USC S89 gives law enforcement functions to all commissioned officers, warrant officers, and petty officers of the National Guard. This characteristic is what elevates the US Coast Guard above all other branches of the United States Armed Forces, which are prevented from acting in a law enforcement capacity by the US Posse Comitatus Act.²²³ The statutory law enforcement provisions include 14 USC S143 and 19 USC S1401, which empower US Coast Guard officers in active service as federal customs officers, and 19 USC S1589a, where such officers are empowered to carry a firearm and to execute and serve any order, warrant, subpoena, summons, or other processes issued under the authority of the United States.

Unfortunately, there is no corresponding agency like the US Coast Guard In the Nigerian system.

An overview of the Nigerian Coastal and Inland Shipping (Cabotage Act) of 2003, which is divided into nine parts containing a total of fifty-five sections, is outlined below for ease of reference.

• Sections 1–2 contain the definition of cabotage, state the legislative reasoning behind the Act, and also state the scope of the Act.

• Sections 3–8 provide the restrictive criteria for participation in Nigerian coastal trade. Thus, according to those sections, a vessel must be Nigerian owned,

manned, built, and ed in order to engage in cabotage.

• Sections 9–14 deal with the issue of waivers and specifies conditions a vessel must fulfil in order to be granted a waiver. This part of the act also empowers the Minister to publish guidelines to govern the granting of waivers.

• Sections 15–21 govern the licensing of foreign vessels and attempt to bring those participating in Nigerian trade under the control of regulatory agencies.

• Sections 22–28 deal primarily with registration of vessels. Those sections provide for the establishment of the Special Cabotage Vessel and also prescribe the condition a proposing vessel must fulfil before it is ed and is allowed to participate.

• Sections 29–34 prescribe an enforcement mechanism within the NIMASA to implement the provisions of the Act and ensure participating vessels comply with the requirements precedent in participating in Nigerian coastal trading activities. These enforcers are also given wide powers to arrest and detain nonconforming vessels in a bid to perform their functions.

• Sections 35–41 impose stiff fines for non-complying vessels, thereby criminalizing all acts in contravention with the act.

• Sections 42–45 establish the Cabotage Vessel Financing Fund (CVFF).

• The provisions of Sections 46–55 concern miscellaneous issues ranging from

the exercise of discretion of the minister, the application of the Act, and the procedure to repeal or amend its sections.

5.15. Effect of the Cabotage Act of 2003 on the Nigerian Maritime istration

It should be emphasized that the Cabotage Act was a bold developmental initiative aimed at transforming the economic realities of Nigerian citizens by securing local trade and port business for Nigerian citizens. The act was envisaged to give Nigerians a monopoly on the business of cargo and enger transportation, thereby opening up the business possibility of more Nigerianowned vessels. The 2003 initiative was designed to trigger economic boom in Nigeria and still remains one of the more creatively articulated policies and initiatives in the nation’s history, credited to the Obasanjo istration.

During the period leading to the promulgation of the Act, several distinguished public officers, captains of industry and maritime interests appreciated the ideology behind the Act and identified with the fact that such an initiative has the potential of instilling lasting transformation in the Nigerian economy.

In 2001 Dr. Okey Udeh, the chairman of the House Committee on Transport, remarked in a public hearing that the cabotage initiative represents the only serious possibility to cause rapid growth to industrial enterprise and to secure employment for local seafarers in nations where the national fleet has disappeared.²²⁴

E. Ihenacho also remarked that over forty-two developed countries around the world have various forms of cabotage laws in place, and if Nigeria is diligent in implementing its cabotage laws, it will go a long way in recovering economic benefits that Nigerians have abandoned; it will also strengthen the country’s national security situation.²²⁵

Furthermore, Mike Igbokwe identified that the Nigerian Cabotage Act, like the Jones Act, has the capacity to limit domestic coastal trade to Nigerian-owned, built, and operated vessels. He also explained that proper enforcement would ultimately lead to a situation where only Nigeria-owned vessels would control our domestic fleet, domestic marine transportation system, and national marine infrastructure.²²

A concise but apt summary of the description of the vacuum that the 2003 Cabotage Act is filling was made by H. Udeh in his work on Movement of Cabotage Regime in Nigeria.²²⁷, he remarked that “Most great nations have extensive coastlines. There is hardly any land-locked country that can be considered great. But the great nations first had to take control of their coastlines.”

The unfortunate reality is that the age of the Coastal and Inland Shipping (Cabotage) Act of 2003 into law has not yet reaped the desired fruits of economic prosperity and diversification from the dependency upon oil revenue as originally anticipated because Nigeria has still failed to take control of her coast.

At present, there is still a huge deficit in the number of indigenous ship operators compared with foreign-owned vessels. The reality of the situation is that in today’s shipping practice, the vessels operating within the Nigerian coast are still largely dominated by foreign-owned and foreign-crewed vessels. The underlining characteristic of a successful cabotage regime, which is to reserve trade and business opportunities for Nigerian citizens, has not yet been achieved. Thus, the revolutionary Coastal and Inland Shipping (Cabotage) Act of 2003 has been relatively ineffective- a toothless bulldog.

In 2011, the African Journal of Business Management recorded that about eight years into the age of the Cabotage Act, Nigerian coastal waters were still dominated by foreign vessels that control commercial operations in

Nigeria.²²⁸The reason for this dominance can be traced to the fact that the Nigerian indigenous companies do not have the financial resources to own vessels for deep-sea trade, and only a few have the resources to even operate a charter. In 2000, it was recorded that only 139 Nigerian-owned vessels were participating in coastal trade, which was less than 6 percent of the total number of vessels doing business within the Nigerian territorial waters. It is also alarming to note that the total annual cargo output recorded by Nigerian vessels in that year was 441,031 tons, which is only 1 percent of the total traffic output potential of cargo going in and out of local ports.²²

A subsequent survey conducted by the National Maritime Authority in 2004 revealed that only 11 out of 245 coastal vessels operating in the Onne oil and gas free zone axis in the year 2003, were owned by Nigerians. The survey also showed that 222 foreign-owned tankers were involved in coastal trade compared to 44 Nigerian-owned tankers. Thus, Nigerian tankers only amounted to 16.5 percent of the total number of vessels participating in coastal trade. Furthermore, with respect to the total metric tonnage of petroleum products lifted, Nigerian lifting participation amounted to 97,041 tons – merely 3.4 percent of the total output capacity of petroleum products lifted in 2003, which was recorded to be just below 3 million metric tons.²³

CHAPTER 6

MATTERS ARISING FROM CRITIQUE

6.1: Shortcomings of the Nigerian Coastal and Inland Shipping (Cabotage) Act No. 5 of 2003 Laws of the Federal Republic of Nigeria

Most of the pundits who have articulated and presented comprehensive critiques of Nigerian cabotage legislation chose to point out the problems by focusing on them without actually proffering solutions or amendments to the statute. Whilst those efforts are commendable in their own rights, nevertheless the detrimental effect of their style is merely focusing attention on a problem, magnifying its effects, and making it appear bigger than it actually is.

In order to highlight the shortcomings inherent in the Nigerian Cabotage Act of 2003 a close scrutiny of that Act is necessary at this stage. Such an exercise may reveal inadvertent flaws and in addition, propose suggestions for improvements. Furthermore, to be emphasized here are the unimaginable benefits guaranteed for every Nigerian, if the Nigerian coast is run in a business-like manner by Nigerian-owned vessels.

Further, while we criticize the act, it should be noted that the act is indeed a welcome initiative by the Nigerian government, which has rightly anticipated that Nigerian coastal laws would encourage development in the Nigerian economy through the maritime sector. Some learned authors have also articulated the numerous opportunities accruable to a country that manages its coast, including fleet expansion, enhancing water transportation, dockyard development, numerous employment opportunities, revenue generation, conservation of foreign exchange, training of seamen, strengthening of local banks and insurance intuitions, to mention a few. However, the Cabotage Act has a few identifiable shortcomings. These defects are articulated in what follows.

6. 2. The Act Merely Encourages Development; It Does Not Initiate Development

The government has the power to initiate policies that are economically beneficial to both the international community and its citizens, but effective policies can only be conceptualized through a well-articulated and precise national planning, as well as razor sharp political will. This is the sole reason why seasoned politicians and technocrats in a good mix need to be in government. As identified by the Chinese experience, it is very possible to initiate policies beneficial to both the international investing community and to a country and its citizens, but those policies have to be comprehensive, guided, and protected by the institution of law, which by nature has the status to protect the interests of government against those of the international corporations.

History has shown that international t venture agreements involving countries who are ive participators are usually taken over by foreign experts, and they more or less try to conceal the real knowledge behind their craft in order to stay relevant. Experience has also shown that the legislative arm of government must be well equipped to anticipate legislation and policies that would create a prosperous future for its citizens through adequate planning. Implementation strategies are very important because a law or policy that is not enforced or unenforceable is no law at all. As such, any mischief for which such laws are meant to discourage is left to flourish. In order to properly understand this concept, it is appropriate to reconsider the recent economic realities of China and America, as illustrative examples.

6.2:1 China versus America

As explained in chapter 4, the economic prosperity enjoyed by China today could only be attainable through foresight and planning. China, the United States, and Nigeria are blessed with one common advantage, and that is their strength in population. China decided to build from the bottom to the top by first and foremost, strengthening the individual indigenous capacity through policies that encouraged every Chinese man to get an education or at least learn a craft. As the population and the individual intellectual capacity increased, the government also worked on the collective production capacity, thus making it possible for the country to utilize its full production capability by exploiting all natural, human, and material resources to the advantage of its population.

Over the years, government policies protected and encouraged productive activity, and their population strength became an advantage as healthy competition arose in the business environment. Thus, China developed an advantage in business and productive activity because every individual had some skills set and each person wanted a piece of the market. Also, in the educational sector, the government made substantial investments in Chinese universities and technical colleges, and it also encouraged citizens to attend schools in all parts of the world. Upon the completion of their education, particularly from foreign institutions, government programs and policies in China provide for ample opportunities for foreign-trained students to come home and practice what they had learnt. In the technical sectors, the government would fund laboratories or factories, usually in collaboration with local universities, where the citizens could experiment, research, and replicate skills acquired abroad.

The implications of those policies over the years are twofold. First, a highly skilled and motivated workforce emerged in China, and because of its population and internal competition, the cost of production was relatively cheap. Second, the principles inculcated by the individual created a self-reliant mentality as opposed to an entitlement mentality. In 2002, when China had successfully

ascended to the WTO World Trade Organisation, China opened its economy to the international community, which quickly tried to exploit and make use of its workforce. At this point, the Chinese polices made it imperative for any participating foreign company to enter into a partnership with local Chinese businesses. Those business collaborations were monitored by the government and as such, the populace had the opportunities to partner in the process of production of goods which had been perfected by their foreign partners over the years. As stated earlier, technological transfer requirements were often inserted into the agreement in a bid to empower local citizens. China then became a t producer in various industries ranging from telecommunications, information technology, windmill technology, automobile design as well as assembly and production. Their foreign counterparts chose to invest hugely in production in China and transfer jobs from their home countries to China because the cost of production was very low. By appreciating simple principles of economics, the Chinese government showed that economic affluence can be created when a country produces what it consumes.

The recession and the recent economic realities in America can also be attributed to policy matters. In a bid to protect its citizens, the American government created an entitlement mentality in its citizens, who expect the government to solve all their problems for them. Policies like the American credit system, Medicare, and Social Security were abused over the years by Americans and those policies, as practiced in America today go against fundamental principles of human existence, such as “no work, no pay”, biblically recognized in Genesis 3:17. Over time, the United States of America has incurred enormous debt, and the weight of those debts was beginning to reflect on the economy. Apparently, instead of going into the root cause of the problem, in an attempt to create an economic solution, the United States adopted practices that merely reflected an illusion of prosperity through some quick-fix, private-sector projects lacking inventive activity or initiative. At that time, the US Congress policy seemed to take the easy way out, which is to spend more than they produced, borrow more money, and print more currency. The loopholes in the US economy were identified as far back as 1971, when President Richard Nixon, in a bid to solve the problem of too much gold leaving the country (because the American people were spending more than they consumed), converted the US dollar from real money backed by gold, to a currency.²³¹ This was the easy way out of a solvable problem, and the accumulated effect is what threatened the American economy

at the time of the recession.

As at 2006, the US Social Security debt was $10 trillion, and US Medicare debt was $62 trillion. The US trade deficit for 2006 was $423 billion. In other words, the United States of America was willing to spend an amount worth $423 billion on goods they could not produce.²³²

Interestingly, when a country chooses an easy way out without tackling the relevant economic problems, the effect of that unacceptable alternative tends to compound the problem, making it worse over time. For example, forty-two former presidents of the United States spanning a period of 212 years, from George Washington in 1780 to Bill Clinton in 1992, borrowed a combined total sum of $1.01 trillion from foreign governments and financial institutions. To compound the US borrowing policy, the September 11, 2001, attack resulted in the United States going to war, which ultimately led the Bush istration to borrow $1.05 trillion from 2000–2005 – more than all previous istrations combined.²³³ The growing trade deficit, the growing national debt, the falling US dollars, citizens’ entitlement mentality, and an increase in world oil prices at the time, were various issues US Congress ignored, and in an attempt to cut corners, the US economy continued to suffer.

In January 2009, President Barak Obama was sworn in as President, and what followed was an immediate economic reform process aimed at tackling the American economic problems from its nucleus. As a result, the United States adopted a strategy of development aimed at building human resources and indigenous capacity. Although the United States had lost a lot of jobs to China, the government identified various other potentially beneficial sectors and aimed to consolidate indigenous participation by investing in trade and human development. A summary of some vital steps taken by President Obama’s government on the American economy is highlighted in what follows:

• The Obama istration identified a certain demographic of the population

as vital to the success of the economy and immediately put policies in place to educate, strengthen, and empower them. These people are called the Millennials and are made up of the population born between the early 1980s and the early 2000s.

• US policies encouraged the employment of more teachers to improve the quality of education, especially for Millennials, in local schools.

• They cut subsidies to big banks and applied the same to the universities in an attempt to make college more affordable for its citizens.

• They increased scholarship through various grants similar to the Pell Grant.

• They created digital literacy for the modern tech-generation.

• They empowered and sponsored innovations and ideas and encouraged entrepreneurship.

• They unlocked consumer choices in relation to products by encouraging multiple choices for consumer goods and technological equipment, thereby creating healthy competition.

• They ed small and medium scale businesses, job creation, and economic growth through trade.

• They ensured US exporters gained access to billions of customers world wide.

• They provided productive pathways for trade liberation.

• They sought ambitious, comprehensive, and high-standard trade and investment commitments.

• They ed American jobs through increased services, manufacturing, and agricultural trade.²³⁴

For the first time in a long time, Americans have reduced their debt, started producing again, reformed their banking industry, injected life into their auto manufacturing industry, and collaborated with other trading powers of the world. The American economy is on the path to recovering its past economic glory and global dominance in world trade practices. All these have been made possible through proper policy implementation.

It can be seen that legislation and policies are important tools necessary to stimulate economic development, and they must be targeted at building indigenous capacity through investing in the human and material resources embedded in any nation. It is our humble but firm submission here that the Nigerian Coastal and Inland Shipping Cabotage Act seems to lack the inventive quality of legislation with foresight and purpose. This legislation, although a good first step, is deficient of that audacious characteristic to totally transform the fortunes of the Nigerian maritime sector. Legislation like this should have a long-term process of self-building and self-preparation, involving extensive training and anticipating preparatory measures in a bid to get Nigerians to repossess economic activity within its coast. There has to be a long-term plan where the government creates a methodological strategy.

The first step is to assemble specifications of all seagoing vessels that are frequently leased in maritime operations within the coast. The second step is to plan to work with indigenous ship owners of Nigeria to build the Nigerian maritime capacity, which would require Nigerians to build ships locally that are needed for most operations within the coast. The legislation must either set goals and targets or prepare machinery to do so, and the government must use its universities and institutions of learning to participate directly in the building of those vessels in Nigeria. In doing so, the government must create an enabling environment for experts to thrive and heavily fund research, training, and the quality of education in institutions of higher learning. The Act must provide facilities for training and educating seafarers who are given the sole capacity and responsibilities to navigate any vessel participating in coastal trade. Indeed, the Act should not only create a stricter criterion for foreign participation (which must be primarily beneficial to the Nigerian citizens on a short- and long-term bases), but also create a structure whereby those participants are actively involved in training Nigerian seamen.

6.3 NIMASA is Presently Overburdened

It is arguable at this stage of the book’s development that the Nigerian shipping industry ought to be vibrant, profitable, and guaranteed to provide adequate returns on investment. The potential of the industry is overwhelming, and it is unimaginable that the average Nigerian does not feel the impact of the multibillion-dollar industry. For the four year period spanning 1997 to 2000, freight revenue alone was recorded as 627 million USD, 1.62 billion USD, 1.9 billion USD, and 2.056 billion USD, respectively.²³⁵ Considering the fact that NIMASA is the solely recognized technical and statutory establishment created by the government to regulate the Nigerian maritime sector, the bulk of the blame for the ineffective implementation of the Cabotage Act – and for the lack of visible empowerment programs aimed to promote citizens participation in the Nigerian shipping sector – appears to be borne by NIMASA.

In his work “Cabotage: Still in the Woods”, B. Bernard²³ remarked that NIMASA had not lived up to its responsibilities as the body responsible for managing the cabotage regime, and it had failed to achieve its aims. He further identified the failure on the part of NIMASA to create value and impact by inspiring performance-driven programs. However, he concluded that Nigerians do not have the indigenous capacity to absorb the available opportunities in the coastal and inland shipping industry, and thus, they have failed to benefit from the available opportunities prevalent within the coast. Also, V.O.S. Okeke and E. T. Aniche²³⁷ are also of the view that the weakness of the Nigerian cabotage system is attributed to NIMASA’s lack of institutional capacity to monitor and enforce compliance and to bridge the capacity gap between foreign and local participation. To ameliorate that inadequacy there ought to be proper implementation, eradication of alleged corruption that seems to be prevalent among NIMASA officials, and proper building of the nation’s maritime capacity.

Apart from the issue of corruption and managerial incompetence, which has crippled the laudable implantation programs of NIMASA over the years, it is

humbly submitted that those allegations and accusations on NIMASA are a bit excessive. As presented above, the real problem behind the Nigerian unsuccessful cabotage adventure is the fact that the shipping industry is highly capital intensive, and Nigerians lack the requisite capital to invest in shipbuilding or acquisitions. Moreover, the Nigerian banks themselves don’t have the requisite capital to fund the purchasing of deep seagoing vessels. The appropriate question here is whether or not it is reasonable for NIMASA to perform all its statutory functions and still create capacity, ensure growth of the Nigerian fleet, create more jobs, ensure greater participation, maintain a cabotage , manage the CVFF, and ensure technological transfer in the maritime industry – all at once.²³⁸

The Nigerian Maritime istration and Safety Agency (NIMASA) is an agency of the Federal Ministry of Transport that was created by a merger of the National Maritime Authority (NMA) and the t Maritime Labour Industrial Council (JMLIC). The mandate of NIMASA is derived from the following statutes:

• National Shipping Policy Act

• Nigerian Maritime istration and Safety Agency Act of 2007

• Merchant Shipping Act of 2007

• Coastal and Inland Shipping (Cabotage) Act of 2003²³

Section 3 of the National Shipping Policy Act charged NIMASA with the following responsibilities:

• Promote the acquisition of shipping technology by creating and diversifying employment opportunities in the shipping industry through the stimulation and protection of indigenous shipping companies.

• Improve Nigeria’s balance of payment position by enhancing the earning and conservation of foreign exchange from the shipping industry.

• Encourage the increase of ownership of ships and the achievement of indigenous skills in maritime transport technology.

• Promote the training of Nigerians in maritime transport technology and seafarers.

Other statutory functions of NIMASA include the following:

• Restrict the use of foreign vessels in domestic coastal trade.

• Promote development of indigenous tonnage.

• Establish a cabotage vessel financing fund.

• Reserve the bulk of coastal trade for vessels built, owned, and ed in Nigeria, and manned by qualified Nigerian seafarers.

• Stimulate and expose Nigeria’s indigenous shipping firms to shipping business in the coast as a stepping stone to deep-sea or international shipping.

• Encourage acquisition of shipping technology by creating and diversifying employment opportunities in the industry.

• Improve environmental safety.

• Protect the nation’s security interests.

• Enhance domestic waterborne transportation.

• Increase the national fleet or tonnage.

• Develop shipbuilding and repair capability.

• Create opportunities for employment.

• Conserve foreign exchange.

• Protect national economy and security.²⁴

It is almost impossible for one government parastatal to perform all those functions effectively at 100 percent efficiency and success rate. It is opined here that the real issue that is affecting the Nigerian maritime industry is the lack of capacity through capital, for investing in the domestic fleet, and this setback is more of a business decision to be made by the Federal government than a regulatory issue for NIMASA to answer. From the study of the Chinese auto manufacturing JVA/PPP business module, articulated, earlier in Chapter 4 of this book, and by applying its principles, it can be seen, that there must be some form of initial direct investment made by the Federal government with respect to funding the building of vessels locally in order to successfully project Nigeria as being serious in its capacity-building, indigenous human resources development and in order to serve as the catalyst for the international investment community into participating in the development of the Nigerian cabotage sector. This would automatically create jobs, encourage ownership and participation, build indigenous capacity, and ensure the enforcement of the much needed technological transfer all at once. Justification for this assertion can be identified by perusing the state of affairs when the Nigerian Federal government was directly involved in investing in the shipping industry through the direct acquisition of vessels.

An article titled “Facts about NNSL You Should Know”, credited to the Public Relationship Department of the Nigerian National Shipping Line disclosed that the 51 percent Federal government–owned NNSL was incorporated as the National Shipping Line (NSL) in 1959 and dominated West-African maritime trade. Originally, the NNSL was incorporated with two technical partners, Elder Dempster Lines Limited and Palm Line Limited, but the assets of those partners were compulsorily acquired by the Federal government in 1961. Although the Federal government–operated shipping establishment commenced business with a meagre staff strength of only twenty employees and merely three old vessels plying just two trade routes, the company grew to be the largest shipping line in the whole of the West African sub-region at that period. The growth of that company can be traced to the 1977 initiative of the Federal government’s policy decision to invest in the purchase of nineteen deep-sea vessels consisting of nine twelve-ton deadweight vessels and ten sixteen-ton deadweight vessels. In just three years, the size of the NNSL’s fleet increased to twenty-seven vessels,

which operated through five conference lines described as,

• UKWAL: United Kingdom/West Africa Line

• COWACL: Continent/West Africa Line

• FEWAC: Far East/West Africa Line

• MEWAC: Mediterranean/West African Line

• AMWAC: American/West African Line

Before the emergence of the National Shipping Policy Act, which established the National Marine Authority (presently known as NIMASA) as the apex regulatory agency of Nigerian maritime policy, the NNSL was solely responsible for implementing Nigerian policy decisions. The fact that it was actively involved with several shipping conferences put it in a position to understand the robust business of shipping and took decisions that initially appeared to be detrimental to the company but eventually were seen as paramount for the greater economic interest of the country. For example, in 1987 it mounted pressure for lower freight rates at several freight negotiation meetings, which turned out to be economically beneficial in the long run. The national fleet also made extra income when the Federal Government mobilized them for emergencies and special assignments, like movement of troops, evacuation of aliens, and providing logistical for the Nigerian Navy.

Unfortunately, the prospects of the NNSL eventually dwindled through apparent corruption and mismanagement by the military.²⁴¹

It is proper to reaffirm here that the notion suggesting that government should not engage in business through economic activity is ineffective, primitive, and unrealistic. This book’s case study of the Chinese economy unequivocally shows that it is effective for government, in collaboration with the private sector, to create and closely monitor direct channels of trade in exchange for the private sector’s commitment to properly manage those channels for profit and for the collective economic good. Engaging economic development through such a proposed structure, immediately builds capacity because it is partially funded by the Federal government. The most notable of other copious advantages are as follows.

• Funds can be easily monitored through independent audits in the same way a company can be audited for fraud. Thus, if such a company is run transparently and is merit based, it can be used by government to channel economic activity while closely monitoring the s to forestall acts of corruption.

• This channel consisting of a Federal government and private sector consortium can easily be identified as a profitable medium to invest in, because it has a monopoly on future prosperous economic activity.

Others ideas on this policy approach include

• NIMASA should be retained as the technical s of the Nigerian maritime industry.

• The government in conjunction with the Indigenous Ship-owners Association should immediately establish a single shipping company, as proposed above, where all Nigerian cabotage business ventures must be performed.

• The goal of this company will be to provide enough vessels for the company to be the sole participator of 100 percent coastal business.

• The government should enter into long concessionary investment agreements with two foreign technical partners which will involve them investing certain sums in Nigeria for a fixed period. Such an agreement should be very lucrative to investors, almost doubling their investment sum and still giving them long perpetual shares in the PPP Company. They ultimately open and tly manage conduits of production, factories, shipbuilding industries, institutes and universities, maritime and seamen training academies and turn Nigerians into shipbuilders.

• The indigenous shipowners’ existing and future vessels should be run as separate arms of the proposed company, and all existing assets should be utilised independently of equity contributions made by foreign partners.

• It may be a condition that consideration for participating foreign companies desiring to enter into the consortium would include a donation of twenty deepsea vessels to be used as assets of the proposed companies.

• The immediate requirement from the company would be to build ten deep-sea vessels, locally.

• The government must fund those ten projects heavily.

• Foreign partners would provide technical and technological including local personnel for on-hand training, in the local building of the vessels.

• The vessel should be built in the presence of Nigerian welders in Nigerian docks and should be documented for educational purposes, thereby resulting in the transfer of technology.

It is pertinent to underscore the importance of this last point. For example, if these middle-level man-power artisans and technicians are not planned for, the industry will end up employing foreign artisans and technicians which constitute another drain on the Nigerian economy. However, if some provision is made for them, the industry expands, more jobs will be available for Nigerians.

• Thus, after a few of the vessels are locally built, Nigerian dockyards may attempt to build vessels on their own, without foreign technical .

• Upon completion, locally built vessels should be given priority to lift cargo and over time the financial books of the company compiled and taken to the world investment market for funding for expansion; the financial books will serve as evidence that Nigeria is a profitable place to invest in building as well as commercial operation of seagoing vessels.

• The policy of the government with regard to the company would act as a further incentive in procuring foreign investment for the building of vessels in Nigeria. The government can embark on relevant policy decisions to secure the availability of cargo for business and in that sense, predict the economic future of the company.

• The company should invest in duplicating status quo with a view to be eventually listed on the stock exchange so that ordinary Nigerians can benefit from its profits.

• Over time, the company can control unfair foreign competition and would succeed in capacity building, creating several jobs, and presenting the opportunity for Nigeria to benefit substantially from its coastal business.

The company should also be charged with the following:

• The company should be given the mandate to lift Nigerian crude to international and local buyers.

• The establishment of a universally recognized seafarer and pilot training institute, in the various geopolitical zones of the federation.

• It should act as technical partners to the various institutes of technology and provision should be made for periodic practical training for students.

• It should provide private security for oil companies and products.

• It should work together with its indigenous arm and the Nigerian Army as cabotage enforcers.

It must be mentioned that NIMASA has done very well in the training of seafarers in order to empower Nigerian youth with the technical expertise required for content participation. However, in the area of ship acquisitions, NIMASA faced problems of disbursement even though loans were available through the CVFF to indigenous ship-owners to expand their fleet. It is worthy of note that a lot of Nigerian ship-owners are from wealthy families who are naturally conservative, and as such, they refuse to tie themselves to the commitment and exposure of loans generally, and the risks attached. Thus, NIMASA faced the uphill task of convincing indigenously established shipowners to expand their fleet from the CVFF – an action seen by local shipping companies as an unnecessary business exposure. The suggestion above and its approach to indigenous capacity building may appear to be much more effective.

The development of indigenous capacity, building a highly professional workforce and the transfer of technology are the fruits of successful cabotage planning and they constitute an imperative mission for the Nigerian government to undertake in order to ensure that Nigerian companies compete favourably in its own shipping. The maritime aspirations and goals of the nation must be properly articulated and contemplated, and the Nigerian government must put all hands on deck, in making those aspirations a reality.

6.4: The Anomalous Issue of Waivers

On the one hand, the Nigerian Coastal and Inland Shipping Act prohibits Nigerian owned, manned, built, and ed vessels from engaging in commercial trade by supplying goods or carrying engers. It further restricts tugs and vessels owned by foreigners to perform towing services to any vessel operating in Nigeria. In addition, sections 5 and 6 provide that vessels whose beneficial ownership do not reside with a Nigerian citizen, cannot engage in supply services to oil platforms and installations (whether offshore or onshore), and that no vessel shall engage in domestic trading in the Nigerian inland waters, unless owned by a Nigerian citizen. The Act was designed to ensure that Nigerians reap and enjoy the economic benefits attached to a country endowed with a coast while attempting to increase local participation.

On the other hand, section 9 empowers the Minister to grant waivers to foreign vessels from the requirement of Nigerian ownership, if he is satisfied that there is no wholly owned Nigerian vessel that is capable of performing the service required. It is submitted here that the power to grant waivers from the provisions of sections 3–6, without providing for a procedure or process in which such waivers should be granted but providing that, the Minister has the sole discretion in the granting of waivers is an arbitrary provision which totally negates the benefits that would otherwise be accruable to Nigerians by the Cabotage Act. In other words, the act takes through the back door all the laudable benefits and lofty ideals provided to Nigerians through the front. Section 9 is an illegal and unwarranted addition to the Cabotage Act that encourages not only corruption but blatant impunity in the maritime sector. It is unfortunate that the drafters of the laws applicable in Nigeria do not fail to add illegal provisions, which often negate the contents and ideas of reasonable and forward-thinking enactments that would otherwise be imperative for the evolution of the Nigerian economy.

Well, this is not the first time. Arbitrary provisions usually find their way into Nigerian law and even the almighty constitution either by intelligently cunning

drafters or by mere naivety.

Section 175 of the 1999 constitution provides:

“The Attorney-General of the Federation shall have power

(1)(a) to institute and undertake criminal proceedings against any person before any court of law in Nigeria, other than a court-martial, in respect of any offence created by or under any Act of the National Assembly;

(b) to take over and continue any such criminal proceedings that may have been instituted by any other authority or person; and

(c) to discontinue at any stage before judgment is delivered any such criminal proceedings instituted or undertaken by him or any other authority or person.

(2) The powers conferred upon the Attorney-General of the Federation under subsection (1) of this section may be exercised by him in person or through officers of his department.

(3) In exercising his powers under this section, the Attorney-General of the Federation shall have regard to the public interest, the interest of justice and the need to prevent abuse of legal process.”

These provisions, including the power of nolle prosecue contained in section

175(1) (c) empowers the Attorney General of the Federation to discontinue any criminal trial without any obligations to explain his actions of discontinuance to any other body, including the executive branch and even the courts. The crucial question to ask here is, why would the constitution – which provides for a criminal justice system that is built around the rule of law, and which includes principles that no person is above the law – go ahead and give a single personthe Attorney-General of the Federation, power to discontinue a criminal trial without any obligation to give reasons for the discontinuance? This would mean that under certain circumstances, a person guilty of the commission of a crime would go free once the Attorney General waives the state’s right to prosecute the accused person for his crimes. Even though it may be argued like the Supreme Court of Nigeria per Honourable Justice Kayode Eso, did in the landmark case determining the extent of prosecutorial powers of the Attorney-General, THE STATE V ILORI [1983] 1 SCNLR 94, that the Attorney General is in a preeminent and incontestable position as the chief law officer of the state. The courts described the AG as a master and the law to himself under no control whatsoever vis a vis his power of instituting and discontinuing proceeding and held further that the only punishment that can be meted on an AG who wrongly discontinues an action is for the President or the Governor, as the case may be, to terminate his employment. Thus at best we have a situation in Nigeria where in the event that a corrupt individual gets to the seat of the AG, some people may escape punishment for hideous crimes by bribing the AG and having him discontinue their trials and the worst that can happen to the AG is that he gets sacked. However, if on the other hand both the AG and his appointer are corrupt then they can strategically create a system whereby a whole lot of people are permitted to commit crimes and go free by granting mass discontinuances to political allies. In this case, the major tenants of the rule of law would be defeated and some people will live their lives above the law.

On the 26th of July 2011, the Vanguard published an article²⁴² about how a former Attorney General of the Federation used the powers enshrined in his office by the constitution to systematically take-over the prosecution of several high profile cases around the country, about fifty percent of cases handled by the EFCC during that period. The paper further claimed that this action was in a bid to protect powerful and rich friends from prosecution. A few of the cases taken over, at the time, are listed in what follows:

• Vaswani Brothers.

• Ahmed Bello (in his capacity as Controller General of the Nigerian Customs Service).

• Mr. Kenny Martin (in his capacity as chairman of the Police Equipment Fund).

• N16 billion corruption case against the House of Representatives Chairman of Rural Electrification.

• N5 billion fraud case against former Chief Executive of Nigeria Electricity Regulatory Commission.

• Ndudi Elumelu and the N5.2 billion REA SCAM.

Most of the cases taken over by the AG swiftly failed to secure convictions.

More worrisome are the allegations published by the Punch Newspaper²⁴³ where it was reported that the same AG was to be probed on a deal with a firm, Tidex Nigerian Limited. According to the report, the AG offered immunity from prosecution for an offence of importing toxins in the country. The firm was said to have paid Nigeria $6 Million Dollars to have obtained this rare privilege and an extra $300 000 Dollars as legal fees to a certain lawyer, who brokered the deal.

At this juncture, it is fair to point out that these are mere allegations and should not be considered as fact until proven in a court of law. However, if these allegations are true then it can be seen that our sacred nolle proseque principle is flawed and can be sold to the highest bidder to escape liability from breaking the law. It is also fact that the said AG has left the shores of Nigeria since President Buhari came into power in 2015 and has failed to confront his accs in a bid to clear his name.

Similarly, the power of the minister to waive the provisions of the Act is capable of being exercised arbitrarily and encourages corruption and impunity. It gives the Minister of Transportation power to waive the restrictive provisions of the act. The danger of granting sole power to the minister to grant waivers appears counter-productive because in practice, it immediately presents the opportunity for dubious foreign companies and foreign investors, to dishonestly persuade the minister by offering personal gratifications in an attempt to secure the right to participate in Nigerian multi-billion dollar coastal trade.

6.4.1 Waivers; A Cancer In Nigerian Legislations Causing Decay to the Economy.

In their compelling yet thought provoking comparison of the economic patterns of highly successful nations compared with notoriously poor/failed nations, “Why Nations Fail, The Origins of Power, Prosperity and Poverty, Daron Acemoglu and James A. Robinson show that the real reasons why some nations are highly successful and others in a state of collapse. According to them, the difference between rich nations and very poor ones stem from the structure of their institutions and the content of their policies. Their comprehensive investigation of the histories of nations dating as far back as 400 years show unequivocally that rich countries like the US and England prosper because they created a society where:

1. Political rights are more broadly distributed. 2. The institution of government can be held able and is responsive to the needs of the citizens. 3. The average citizen can take part in all economic opportunities.

Commenting on why some African countries, including Nigeria, have problems of scarcity despite the fact that they are richly endowed with various natural resources, both authors remark that those other countries are poor because they are “ruled by a narrow elite that have organised society for their own benefit at the expense of the vast mass of the people”. They reiterate that in these poor nations “political power has been narrowly concentrated and has been used almost exclusively to create great wealth for those who possess it”.²⁴⁴

In Nigeria, the concept of waivers which ordinarily should be applied as a

medium to promote the development of business and industry has been abducted from its lofty pedestal and has been used as a tool to rig the economic factors of the Nigerian society in favour of the political class and so-called elite. The impunity with which this happens is catastrophic and has decayed to a point that waivers are granted arbitrarily and sometimes without consideration of the destruction caused to the generality of the market. For example, a single waiver granted to an importer can twist the economic factors behind that product to the importer’s advantage and kill local manufacturing and production over time. It gives the importer an unfair advantage because he would be able to retail the same product for a cheaper price than competing local manufacturers. This often leads to the collapse of local manufacturing businesses and loss of the jobs in mass.

It should be understood that waivers are not necessarily designed for bad. In fact, waivers are an integral part of any taxation system. Governments of developed and serious nations usually use tax or duty waivers to positively influence economic and industrial development, especially in economic deficient sectors. Waivers work the same way exemptions and deductions work. The company, individual, or entity applying for a waiver formally s the tax or duty board, usually made up of representatives of the government’s taxation machinery and a cross-section of other stakeholders of the affected sector. Such an application must raise cogent reasons why the granting of the waiver may affect the overall benefit and development of the sector. After extensive deliberations on the impact the proposed waiver will have on the economy, a waiver may be granted if the tax or duty board is satisfied that permitting such waivers will further national objectives and encourage capital formation in the selected industry. In order for a waiver to achieve these desired effects it must be fair, transparent, and evenly handed across-board and implemented in such a way that all participants in the sector would equally benefit from the grant.²⁴⁵

The above narrative on the proper way to grant waivers in order to guarantee a good tax system and foster industrial development and economic growth is the exact opposite of how the waiver policy is applied in the Nigerian practice. In Nigeria, waivers are granted to a narrow demographic of elite and they are applied solely for the benefit of the political class at the expense of the vast

majority of the people. Another good example of a terribly implemented waiver policy in the maritime sector is the way and manner import duty waivers are granted in Nigeria. Rather than foster industrial development and economic growth, import duty waivers are used as a medium to misappropriate government revenue. The effect the Nigerian waiver system has on the economy in Nigeria is negative as it actually distorts economic and industrial development because import duty waivers are granted to privileged individual operators rather than the whole market and for the purpose of increasing profit margin and giving privileged importers an undue advantage in the market system. Thus the goal of economic and industrial development is usually defeated at inception.

The Nigerian policies on import duty waivers and the way and manner in which the waiver policies are implemented constitute a humongous problem resulting in economic wastage, colossal leakages to the government revenue and negligent sabotage of government income sources. At this juncture a thorough examination of the income lost through these negative government practices is vital to buttress the point made here.

On the 6th of February 2012, the Vanguard newspaper published an article titled “FG Stops Import Duty Waivers” by Godwin Oritse where it revealed that between 1999 and 2007 the Nigerian Economy lost 165 Billion Naira through the granting of waivers to 1,843 beneficiaries. An annual breakdown of the amounts lost on a per year basis during this period is provided in what follows:

• 2003 – N 18.394 Billion Naira.

• 2004 – N33.970 Billion Naira.

• 2005 – N41.650 Billion Naira.

• 2006 – N19.379 Billion Naira.

• 2007 – N42.598 Billion Naira.

• First 3 months of 2008 – N9.512 Billion Naira.

The beneficiaries of these waivers include Dangote Industries Limited, Vaswani, Stallion rice and other rice importers, The Redeemed Christian Church of God, Messrs Western Metal Production Co. Ltd, International Hotels, Mandarin Hotels, Le Meridian Hotels, Grand Ikoyi Towers and Resort, Federal Palace Hotels, and other “companies fronting for top government officials”. It was reported that Dangote Industries Limited got a life concession of 5% for raw sugar and was exempted from paying 10% of the statutory sugar levy. This sugar levy constitutes a statutory tax levied on all importers of sugar. The proceeds are to be used to develop the whole sugar sector and is kept in the Central Bank of Nigeria. By the 31st of March 2008, it was recorded that the sugar levy domiciled in the CBN had reached N2.24 Billion Naira. Unfortunately, Dangote Industries Limited was exempt either in whole or in part from the CBN contributions and was given a life time import duty waiver concession which is tantamount to rigging the financial or economic system in favour of the company thereby creating an unfair commercial advantage and business monopoly. What this means in practice is that through those waivers, Dangote Industries Limited is assured of importing and landing its sugar in Nigeria for an amount far less than its competitors. This in turn will give the company a market monopoly since they can retail their products way cheaper than any of their competitors. The publication also revealed that the same company was given a 2 year concession from payment of import duties for the importation of tomato paste. It is submitted here that there exist no reason whatsoever for granting the companies of the richest man in Africa import duty waivers and concessions which give him an unfair advantage in commerce to the detriment of other importers, local manufacturers and the Nigerian economy, as a whole.

In corroborating the huge loss to the Nigerian economy it was also revealed by the Nigerian Customs Service that the sum of N276.9 billion was lost through import duty waivers between the years 2000 to 2008. The report also revealed that beneficiaries of Federal Government Export Expansion received about N300 billion in grants which were illegally diverted to bring in finished products to the country. In fact, in the last quarter of 2011, the Federal Government approved the sum of 45 billion Naira for the Export Expansion Grant and a single company received a whooping N35 billion naira out of the approved sum. Furthermore, it was discovered that in 2011, the sum of N37.2 billion was lost as a result of import waivers granted to importers of raw materials alone.

Upon the assumption into the Office of the President by the Yaradua government there was an immediate move to check the abuse of granting anomalous import duty waivers. In September 2007, Shamsudeen Usman, who was president Yaradua’s Minister of Finance, inaugurated a committee to investigate the activities of the former istration in the granting of indiscriminate waivers, headed by Senator Udoma Udo Udoma. Upon the conclusion of its investigation, the committee recommended that the practice of granting waivers and tax exemptions should be suspended across board.²⁴

The House of Representatives Committee on Custom and Excise further asserted that in the run up to the 2007 elections, Nigeria loss over N380 Billion Naira in import duties which was waived by the Federal government for the benefit of crony importers. The verifiable House of Reps report also indicated that:

“The usual mechanism of operation was for sitting presidents to grant favours to ers of the ruling party who in turn donate generously to the party and his candidate”²⁴⁷

However, despite this uncontested evidence showing the negative impact of

import duty waivers to the nation’s economy, the decay to the development of commerce and the humungous wastage/loss of national revenue, former President Good-luck Jonathan continued with this unfortunate practice after the demise of President Yaradua in 2009. According to a Times publication²⁴⁸, the Nigerian economy lost N215 billion in import duty waivers between 2011 to May 2014 under the watch of the former president. The paper reported that most of those waiver deals were sealed during midnight visits to the presidential villa. Referencing data obtained by the Budget office of the Federation, it was remarked that the waiver policy implemented under the former president’s regime shows a “fiscal policy of recklessness, making duty waivers synonymous with cronyism, racketeering, political patronage and outright brigandage”.

The facts put forward by the publication show that in 2011, the Federal Government issued N56 billion worth of import duty waivers taking the form of the Ecowas Trade Liberation Scheme (ETLS), Comprehensive Import Scheme (CIS), and other charges to several undeserved beneficiaries. For example, the sum of N12.6 billion in import waivers was granted to a non-Nigerian owned company, Verod Steel Company, for the importation of iron rods. In the company’s waiver application document, the flimsy reason which the application was based was that the waiver should be granted on “comionate grounds”. Horrifically, this waiver was granted. Furthermore, in the agricultural sector the government lost N21.1 billion on waivers to Mc Sally investment limited. The company was granted a waiver to import 250, 000 metric tonnes of vegetable oil. This waiver was given without recourse to the effects of local manufacturing of vegetable oil and at the detriment to local manufacturers who at the time were “swimming against the tide and appealing for government protection against merchants flooding the market with imported oil”²⁴ . Needless to point out that this singular act killed local production altogether as indigenous companies such as the Nigerian oil mills and the Kano oil mills were forced to disengage thousands of workers and closed up their business.

Unfortunately, the Rivers State government under Rotimi Amechi ed the fray and imported 200 luxury cars made up of BMWs, Fords and Mercedes Benz, waiver free. By this act, the Nigerian economy lost N503.3 million. In the

waiver application there was neither any machinery for agriculture nor economic enhancement tool given as a reason for the waiver application.

The 2011 waiver document showed that a total of N502 million in waivers went to beneficiaries in the gas sector, N4.6 Billion to the health sector, N21 billion to agriculture, N9.1 billion to mines and steel, and N3 billion worth of waivers went to beneficiaries of other sectors. A total of N1.9 billion was granted as waivers to the Peugeot Automobile Company to bring in Completely Knocked down (CKD) and Completely Built Up (CBU) engines. According to the above referenced Time Publication, granting waivers for CKD engines is justified because this practice is synonymous with the importation of spare parts for onward assembly in Nigerian automobile plants. This would ensure local employment and valuable technology transfer into the market. However, the granting of waivers to Completely Built Up engines is totally unjustified because the beneficiary of such a waiver is Peugeot in with virtually no advantage to the Nigerian economy. It is worthy to emphasize that the Peugeot waiver application deliberately omitted to specify what part of the N1.9 billion in waivers applied to CKD and what part applied to CBU. Despite this anomaly, Peugeot was the recipient of a further N974.8 million in waivers the following year.

It was also reported that in 2011, one of the most trusted allies to the President and in fact his most qualified and highly decorated Minister of Finance Mrs. Ngozi Okonjo Iweala was irritated and incensed by the practice of the issuance of indiscriminate waivers that she played the whistle blower, publicly criticizing the President. In her outburst she denounced activities of individuals and corporates who in an attempt to obtain waivers visit the presidential villa in the middle of the Night. However, it would appear that her warnings were not heeded as data from 2012 would later reveal that in that same year, the Nigerian government lost N68.8 billion Naira in waivers which was more than what was lost in 2011 by about N7 Billion. A summary of the amounts conceded by the government on a per Sector basis is presented below:

Agriculture: 1.4 Billion

Aviation: N1.6 Billion

Gas: N1.8 Billion

Health: N5.9 Billion

Mines and Steel: N36.6 Million

Water Resources: N96.5 Million

Power: N3 Billion

Sports and other sectors: N24.3 Billion.

Other note-worthy waivers granted include a waiver for the Akwa Ibom State Government under Godswill Akpabio received for the purchase of a G450 5N 4241 Luxury aircraft. The economic necessity feature for the aircraft was not stated in the application.

Taraba State Government also purchased a Bell 407 helicopter and Cessna 208 5N aircraft that same year. Both purchases were waiver free. The Rivers State

government under Rotimi Amechi purchased a Bombardier Aircraft Global Vision 5000 aircraft and 2 Bell 412 Axis Helicopters. These 3 items attracted N2.2 billion in import duties, which remain unpaid. Furthermore, the Lagos State government under Babatunde Fashola purchased 300 units of vehicles made up of BMWs, Land Rovers, Range Rovers, Lexus, Mercedes, and Jaguars. The waiver application however showed that the vehicles were intended to be used for the 18th National Sports Festival. Regardless, a total of N722 million was lost in that transaction. In addition, several high-ranking officers of parastatals and government agencies abused waiver provisions by importing cars, furniture, and other items in their personal capacity without paying the statutory import duty.

The Budget office data showed that N64.9 Billion was conceded by the FG in 2013 and N25.8 Billion in the first 5 months of 2014.

History has now shown that waivers and other regressive Nigerian legislations have impacted nothing but decay, corruption, and recession into the Nigerian economy. This kind of legislation has been used to rig the factors of economics in favour of the elite who are disinterested in the impact on the generality of the populations. Nigerian can only thrive if it is built on an honest and fair legislative and constitutional foundation. It is high time the political class quits playing games and do what is required to push this country forward. Principles behind developmental legislations have been abused and twisted into the caprices of the master. The most discouraging fact about the waiver issue is that the people out there with intelligent and well thought out and sometimes successfully implemented business ideas and strategy that will never get access to the president so they will never get a waiver.

It must be magnified on this platform that the manner in which waiver provisions find their way into highly technical and otherwise progressive legislation in Nigeria is so pronounced that one can only reach the assumption that it has been intentionally attached to sabotage and manipulate economic principles. Thus because these provisions have been affixed and allowed to

linger they must have had and continue to maintain legislative protection. Another example of the corrupt manipulation of otherwise progressive economic systems through legislation can be found in the Cargo Insurance Policy under the Insurance Decree 1997. The strict application of the spirit of the legislation would have caused an immense revolution in the Insurance and Banking Industry through unrestricted monopoly to provide insurance services for all goods coming into Nigeria. Section 76 of the Act which deals with the Insurance of imports for all public and private sector contracts provides that the insurance of goods to be imported into Nigeria must be by an insurer ed under the Decree. The Section further provides that an insurer cannot be ed under this decree unless it is duly incorporated as a company or cooperative insurance society under Nigerian Law.²⁵

However, the legislation did not fail to include the almighty corrupt waiver window to sabotage the ideals of such a progressive and revolutionary legislation. Section 76 (4) of the Insurance Decree 1997 provides:

“Notwithstanding subsection (1) of this Section, where in any particular case an insurance broker satisfies the Commission that by reason of the exceptional nature of the risk in, or emanating from, Nigeria or other exceptional circumstances it is impracticable to effect the insurance with an insurer ed under this Decree, the Commission may in writing permit such a broker to effect such insurance with insurers outside Nigeria.”

It goes without saying that this provision immediately stifled all envisioned development in the Nigerian insurance industry and closed with the left hand all opportunities opened to Nigerian Insurers with the right. Thus the provision that all imports on private and public contracts must be made by a Nigerian ed Insurance Company, which was to operate as a very lucrative monopoly for Nigerian Insurers was side-stepped by the illegal insertion of the Section 76(4) waiver.

One may only appreciate the colossal amount of opportunities missed by the insertion of Section 76(4) into the Insurance Decree 1997 when considering the provision of the decree with reference to CIF (Cost, Insurance, Freight) transactions. An international seller of goods or cargo in a CIF transaction is legally obligated to pay for the cost of goods to be sold, the cost of transporting the goods (freight), and cost of insuring the goods in advance. The seller is then obligated to hand over three separate documents, each providing proof that each of those obligations have been performed by the seller. They are the Bill of Laden, Insurance Policy, and Chatterers’ Invoice. International Trade law and practice requires that those three documents are handed over to the Buyer in exchange for price.²⁵¹Infact the principle of exchange of documents for price is so fundamental to a CIF shipping transaction that the buyer is still liable to make payment even if he has knowledge that the goods have been destroyed prior to the time of exchange as long as the documents are intact.²⁵²

When the foregoing is regarded in the light of the fact that section 76 of the Insurance Decree 1997 primarily reserves the insurance of all goods imported in connection with all private and public contracts, to Nigerian Companies, it would appear that any good imported into Nigeria under a CIF contract will require a Bill of Laden, Charterers’ invoice and an Insurance Policy, issued by a Nigerian Insurance Institution in order for a seller to be entitled to receive payment. However, the mere insertion of Subsection 4 into section 76 of the Insurance Decree of 1997 has robbed the Nigerian economy of a huge market worth billions of dollars annually which would have developed into a very profitable insurance monopoly to be enjoyed only by Nigerians.

Commenting on the practice of arbitral issuance of waivers to foreign insurance companies, which followed shortly after the promulgation of the decree, Inam Willson in an article titled Advocacy Paper for a New Cargo Policy for Nigeria explained;²⁵³

“It is regrettable to note that while this provision was meant to grant exceptions in certain cases, it has been used as a general rule of insurance practice in

Nigeria. The Nigerian Insurer for reasons that may become evident shortly, are content acting as mere broker/agents for foreign insurers.”

6.5: Powers of the Minister

Nigerian cabotage policy adopts a ridiculously liberal approach in granting waivers to foreign vessels to participate in maritime business. In a nutshell, it can be affirmed that the policy of the Federal Government is, at present, to grant waivers to foreign investors/participants for a token waiver fee and this gives foreign vessels the right not only to compete with local vessels for the same jobs but also make use of all our internal facilities. Well, on paper, this right may appear as an opportunity to compete but in the real world, it is almost an exclusive monopoly and a right to dominate Nigerian Coastal trade, worth billions of dollars per year. We can hardly call it a competition because very few Nigerians own vessels. The more surprising thing about this policy is that it does not subject those foreign interests to some form of commensurate value to be added and enjoyed by Nigerians.

It is important to bear the above paragraph to mind when considering that the act confers enormous powers to the Minister of Transportation by giving his office the sole discretion in granting waivers. In addition the Law fails to provide for any other statutory body or mechanism to review or perform oversight functions on the activities of the minister in the forms of checks and balances. The pertinent question to be asked is that why would a Nation’s law grant enormous power to an office occupied by an ordinary human being, who is then required to engage very powerful and invariably adept international shipping corporations in his daily course of business? These multinationals have the knowledge that there is a paucity of vessels in Nigeria and they stand to make a lot of money if permitted to operate along the Nigerian Coast. Moreover, they are the best candidates to hypothetically stash a few hundred million dollars in an untraceable in some remote island in trust for a corrupt minister.

The disadvantage of granting a sole human very wide discretionary power cannot be overemphasized and such acts are to be treated as not only illegal but contrary to established principles of the rule of law, which is the foundation on

which the nation’s system is built. Needless to say that the rule of law is not only the bedrock of civilization but also a principle that has been universally accepted and acknowledged as the minimum standard of rules in which a government must adhere to when relating with its citizens. This principle remains the cornerstone on which virtually all legal systems are built.

According to A.V. Dicey,¹⁸⁵ who can be said to have been the first to propound the modern concept of the rule of law, there are three basic principles that must be adhered to when reflecting on the rule of law and the exercise of governmental power. First, the conception of the rule of law is that no man is above the law, and all actions of the government must be justified and authenticated by the law of the land. It also emphasizes that no person, even those in the highest positions, can disregard the law for whatever reason, including reasons of state. According to Dicey, every man, regardless of rank or status, is subject to the law of the land and is amenable to the jurisdiction of the courts.²⁵⁴

Second, the conception (and the one of particular relevance to this discussion) states that in every society, there must be an absolute supremacy and predominance of regular law as opposed to the influence of arbitrary powers and it excludes the existence of arbitrariness of prerogative and wide discretionary authority on the part of the government.²⁵⁵

Third, the conception of the rule of law talks about the role of the legislature in a free society, and it emphasizes the fact that the legislative arm of government is to create and maintain conditions that will uphold the dignity of man as an individual, which includes governmental recognition of civil and political rights and the establishment of social, economic, educational, and cultural conditions that are essential to fully develop personality.²⁵

Influence of arbitrary powers and the existence of arbitrariness of prerogative and wide discretionary exercise by the government or governmental officials

always lead to abuse of power. In this regard, it is firmly submitted here that sections 9–11 of the Nigerian Cabotage Act encourages the arbitrariness of prerogative because those sections give the minister very wide discretionary power in granting waivers, which are very sensitive acts that should ordinarily involve due consultations with the Senate, NIMASA, and the Nigerian Indigenous Ship-owners Association. All application for waivers must all also be ed with proof showing unquestionable evidence that the granting of waivers will benefit Nigeria and Nigerians in the short, middle, and long term.

It can be seen clearly that wide discretionary powers like the powers given to the Minister of Transportation would ultimately lead to the abuse of governmental powers. In modern oil and gas practices in Nigeria, vessels are loaded at the various port terminals to be sold to the international community through different marine procedures like CIF (Cost Insurance Freight), FOB (Free on Board) TTO (Tanker Take Over), and TTT (Tanker to Tanker Transfer). Thus, the availability of vessels to be used for loading is paramount to the Nigerian oil and gas trade. Unfortunately, there are not many indigenous vessel owners with the large capacity loading specifications, which are necessary for transactions. The Nigerian government has chosen the easy way out by granting mass waivers to foreign vessels instead of adopting economic policies to ensure that Nigerians are empowered to purchase or build those vessels with large capacity. The purchase or building of large seagoing vessels indigenously is imperative for any real financial impact to be felt in the Nigerian shipping system. A strong resolve must be made to deflect all opportunities to earn foreign exchange to local interests which in turn would discourage capital flight.

At present, there is a predominance of foreign vessels that participate in the Nigerian coast, especially in the lifting of crude oil and associated products. Understandably, Nigeria makes above 90 percent of its revenue from the sale of crude oil and associated products. To reform the maritime sector and to enforce cabotage laws as it should be, may undoubtedly lead to a reduction of oil-related revenue for a period of time, enabling Nigerian shipping companies to begin to acquire the necessary capacity to handle our cabotage needs. Regardless, this is an obligatory sacrifice as ultimately, we would reach the promised land of structural expertise for the Nigerian maritime economy.

Attention should be focused on ameliorating the untenable situation whereby the Indigenous Ship-owners Association of Nigeria do not participate in ministerial consultations before waivers are granted.²⁵⁷The rationale behind those consultations is rooted in superior logic when recognising the fact that the Cabotage Act has been enacted primarily for their protection.

Also, it is suggested here that ISAN should be actively involved in cabotage enforcement. of the ISAN have private security outfits with sophisticated armoured boats designed for the protection of sensitive marine equipment and offshore facilities, and they ought to be given a contractual mandate to enforce cabotage laws within the coast.

Another very significant and fundamental point is the issue of waivers on Nigerian-chartered vessels. The Act only permits foreign-owned vessels that have secured waivers to participate in the Nigerian Coastal trade. However, in practice, Nigerian indigenous interests do not have the capacity to buy vessels required for their operations, and they often lease vessels through charters. In this regard, the act may become a hindrance to numerous Nigerian interests if vessels on lease by Nigerians for coastal operations are subject to cabotage requirements.

6.6: Training and Development of Seafarers

A close examination of the nature of the sea and the complexity involved in the successful navigation of a seagoing vessel would reveal the need to put in place a protective structure for Nigerian seamen. Seamen spend most of their lives on the turbulent seas; they are usually away from friends and family for a greater part of their productive lives, and they are prone to injuries that may even lead to fatality while at sea. In this regard, it is appropriate that a governmental structure is put in place for the protection of Nigerian seamen’s physical and financial interests, which in itself must be commensurate with the risks involved when ing for the economic benefits associated with their trade. In other words, an enabling environment should be created that would encourage the unemployed Nigerian youths to serve as cabotage-required crew, operating vessels that participate in trade along the Nigerian coast. This is one of the invaluable solutions to the problem of youth unemployment in Nigeria. It is worth noting that the governmental structure mentioned here must not only make the work of a seaman financially rewarding, but should also protect them through adequate insurance policies peculiar to seamen, as well as other taxrelated benefits and rewards. Furthermore, it is essential that the act should dedicate a portion of the proceeds of the CVFF (Cabotage Vessel Financing Fund) to the education and training of seamen, which is vital, if Nigeria is to meet the demands of an organized cabotage regime.

The US Congress recently acknowledged, by statute, the need to further protect the rights of US seamen. In the 6 October 2006 session of Congress, the Marine Act of 1920 was adopted and amended with an addendum that provides,²⁵⁸

Any sailor who shall suffer personal injuries in the course of his employment may at his election maintain an action for damages at law, with the right to trial by jury and in such actions all statutes of the US modifying or extending the common law rights or remedy in cases of personal injury to railway employees shall apply.

By virtue of this provision, a US seaman can institute action against a shipowner based on claims of the seaworthiness of his vessel, or the negligent operation thereof. Commenting on the importance of statutory protection, John Hickey, a legal practitioner serving on the Coast Guard and Maritime Transport Subcommittee, remarked, “From the very beginning of American civilization, the courts have protected the seaman who the courts themselves have described as unprotected and in need of council because they are thoughtless and require indulgence.”

It is only appropriate at this point, to commend the efforts and successes of NIMASA in ensuring that the establishment of a pool of technically sophisticated and well-trained seafarers to service the local maritime industry has become an official performance target. NIMASA properly posited that the relevant provision of the act would create a vacuum when seafarers are sent for in-service training and continued education. Consequently, adequate arrangements have to be made to forestall the vacuum when seafarers are sent for training. NIMASA has made significant efforts to ensure that the necessary maritime workforce is available and technically capable to fulfil all cabotage needs during such periods. Continually, NIMASA is engaged in sponsoring various category of seafarers for training courses overseas and providing, hiring, and negotiating temporary and permanent on-board placements for students and graduates of the Nigerian Maritime Academy, located at Oron, in Nigeria. Also, the purchase of the MV Trainer for the sole purpose of providing onboard experience for trainee seafarers is commendable and worthy of duplication.²⁵

However, the Nigerian cabotage system has either unwittingly or disingenuously exposed itself to criticism by this waiver issue because once a waiver has been granted and money is collected from foreign interests with respect to such a waiver, it would be unlikely that those interests would be forced to take Nigerian seafarers in employment or training seriously. Without building the actual indigenous shipping capacity, this may very well be an exercise in futility.

In conclusion, the training, development, and protection of seamen should enjoy the deliberate efforts of the government through policies to adequately equip the populace to compete with seafarers all over the world. The government has to recognize that seafarers constitute an important part of our economic evolution, and it should elevate them so that their vocation can be seen as a prestigious profession and they are treated as such. Just as the white uniform of a navy official commands awe and respect among general civilians, the country should adopt a special uniform of our Nigerian seamen that would reflect the prestige and honour with which they should be treated. What’s more, the job of a seaman should have favourable economic benefits which are to be attached to it, in order to entice our unemployed youths to serve as seamen.

6.7. Cabotage Enforcement

In the absence of an official regulatory agency machinery to monitor and enforce the Nigerian Cabotage Act by providing highly advanced implementable strategy, the benefits accruable to the Nigerian economy, as a nation with a vast coastline, would remain a dream that would never materialize. Ordinarily, the Nigerian coastline should contribute significantly to evolving the Nigerian economy and be a recognized major contributor to the national coffers, but the sad situation, is that the law cannot in its present form, is not likely to facilitate the ability of cabotage in that connection. With due respect to the law’s drafters, it is not only fundamentally flawed and defective but also economically primitive. Any law that does not provide for a long-term plan for Nigerians to get their acts together by proper planning, training, and building coastal trade block-by-block would only lead to the same unenviable outcome. The steps suggested here, for implementation, are summarized in what follows:

• Articulating forward-looking policies and legislation that will build our country’s coastal income.

• Providing for a period of development of the material resources needed to sustain the anticipated development. As an example, the Nigerian government would enter into t venture agreements with local and international private sectors to invest in the local building of vessels to participate exclusively in the carriage of oil and gas, as well as all other goods and engers along the Nigerian coast. This should also include the exclusive rights to cargo over 400 existing mineral resources

• Participating companies should be public companies listed in the Nigerian stock exchange.

• Building large seagoing vessels gives Nigerians the confidence and experience to keep building and eventually build ships for sale to the international community.

• Fostering the need for Nigeria to reinvest in the production of steel.

• Commercializing all Nigerian ports.

• Investing in the human resources required for a functional cabotage regime through the training, re-training, and development of seafarers.

• Enforcing a total prohibition by the Nigerian government of foreign vessels and seamen from participation in the Nigerian coastal trade.

• Identifying a well-structured cabotage enforcement machinery and putting it in place for strict enforcement of the Nigerian Cabotage Act.

As mentioned above, without the aforementioned strategic steps in place, the Cabotage Act cannot fully reap its desired effects, and the anticipated evolution attributable to a country with a vast coastline like Nigeria, cannot materialize. On 25 June 2012, the then Speaker of the House of Representatives Aminu Tambuwal recognized that nine years after the enactment of the Cabotage Act, Nigerians have not reaped the benefits of the Act.² In other words, if the Cabotage Act was enacted to enable indigenous shipping lines to take exclusive control of domestic maritime operations – thereby creating wealth and job opportunities locally, and preventing capital flight – then the Act has failed.

It must be emphasized here that the enforcement of cabotage is principally the responsibility of the Federal government through the Nigerian Navy, and it cannot be totally delegated to NIMASA as technical regulators. ISAN should be partially responsible also for the enforcement of the cabotage laws as the government should encourage indigenous ownership of private security companies, which would create not only a medium for cabotage enforcement outsourced to the industry, but also an opportunity for foreign collaboration to ensure technological transfer to Nigeria. In addition, modern vessel tracking systems should be installed in cabotage participating vessels which should be monitored by the government through collaboration with the Navy and NIMASA, to ensure that every vessel operating in Nigerian waters is ed, for at all material times.

6.8: Freedom of Information

Another reason why the average Nigerian has not benefited from the implementation of the cabotage regime is the absence of critical information detailing the day to day practice of sensitive government departments and parastatals and also their lack of transparency and periodic financial disclosure. The Nigerian oil sector and the related maritime sector are run like top-secret missions. Lack of reliable information aids corruption and those in charge seem to be comfortable with tackling sensitive issues with an attitude of indifference and outright levity. Freedom of Information Bill (FOB) should be appropriately enforced in Nigeria. The rationale behind a democratic government is that the government is a creation of the people who have elected representatives to hold the powers of government in trust for the populace at large. The only way to ensure that such a trust is never abused, or broken is to ensure that all information concerning the activities of government is made available to the general public. The government must be made able to its citizens. Insisting that every citizen should be able to walk into any government institution and obtain copies of sensitive governmental correspondence may not be implementable; however, some channels should be created for individuals (especially professional media organizations, researchers, students, and law enforcement agencies) to access necessary data.

The essence of making governmental information free to access is essentially designed for progressive nations to reach maximum potential through the developmental progression of governmental policies. Thus, in one fell swoop, it affords Nigerians the opportunity to correct strategic government mistakes and to guide against corruption.

Also, in the interest of transparency, it may be ed into law that the powers of opposition government are increased to ensure that they participate in the development of policy to strengthen allegiance to the nation over the political party affiliations. In addition, they may be granted the power to independently

audit at least two Federal agencies and parastatals of their choice, annually. This would put the government in power on its toes and it would enhance the fight against corruption. The transparency in government activity is a sin qua non for a successful fight against corruption. It was only after the 2015 presidential election that Nigeria started to practice a system with any semblance of an organised society where credible newspapers and television stations give periodic updates of activity of people in close quarters of government, especially with regards to amounts missing from the coffers of government. Why this is a considerable milestone in the development of Nigeria, a lot still needs to be done when we consider that the same Buhari Government has continued to shield from publication the particulars of those who returned public money from their private s upon his ascension into power.

6.9. The Merger and Participation of ISAN under the Proposed JV Structure

There is strength in numbers. A nation’s fleet is made up of all the vessels carrying its flag, whether government or privately owned. In modern practice, they operate more effectively when operating collectively. For example, in the Lloyds London Market, the world’s most reliable marine insurance market, more favourable agreements with respect to and other contractual are available if negotiations are made for the collective. The Lloyds Market offers a wide variety of risk coverage, including aviation, transportation and haulage, as well as energy, and marine. Under regulation by Her Majesty’s Financial Service Authority, the market conducts its marine insurance business through seventyfive specialist syndicates. Each syndicate writes its business through an underwriting agent.

In England and across Europe, the emergence of Protection and Indemnity (P and I) Clubs is worthy of mention, and their structure and objectives, worthy of emulation. Modern P and I Clubs operate as mutual organizations where shipowners agree to be contractually bound to protect each other from liability against third parties. This is usually done by setting up a fund to which a percentage of agreed periodic donations are deposited, from participating ship owner’s profit, which is eventually used to aid the collective in times of liability. At present, P and I clubs protect against the risk of stowaways, collisions, pollution, wreck removal, and compensation payable to salvors. Considering the numerous other benefits involved in the collective participation of indigenous ship-owners, especially in the face of foreign competition, it is desirous that the Nigerian government creates a loose merger of the ISAN to ensure that the indigenous ships are run as one collective and effective unit, thus providing for various collective functions, including setting up private companies to enforce cabotage. With reference to the above prescribed t venture structure, ISAN should operate as an independent arm of the National PPP JVA Company, commissioned to build the vessels required for 100 percent participation in cabotage, and it should constitute a team of technical operators tasked with

sensitive assignments like advising the minister in decision making, such as the granting of waivers. The business interests of ISAN’s individual would also be protected because the JVA company would be actively involved in preserving cargo for ISAN and granting them rights of first refusal in the sale of a specified quota of shares in the parent JVA company.

This position was ed by the Chairman of the Shipping Association of Nigeria, which is the body representing all multinational shipping interests in Nigeria. In an article in the Daily Independent of 14 June 2014, titled “SAN Counsels Indigenous Operators on Cabotage”, he advised that indigenous Nigerian shipping companies jettison the outdated sole proprietorship module of doing business, and that they should embrace partnership in the interest of indigenous participation in order to benefit from the opportunities provided by the cabotage law. He further acknowledged that the real indigenous ship-owners need , and he encouraged the government to them. In his opinion, although the CVFF is a good step, the funds are too small to buy or build any vessel, and the government should either provide the money or guarantee its loans. It is submitted here that the proposed JVA company should attempt to provide a channel where this can be effectively achieved, and where funds are effectively monitored by the Nigerian government.

6.10. Other Suggestions by William Ubadire Agoha261

In his PGD dissertation, William U. Agoha made various interesting and detailed recommendations in his attempt to resolve pending Nigerian cabotage issues. Here are some of his very interesting positions:

• Automatic certification for Nigerian-flagged vessels under the cabotage law regime.

• Offering “right of first refusal” to Nigerian-flagged vessels for both coastal and international trade.

• Permitting owners of national-flagged vessels to bid for work without first owning the vessel against say 2% performance bond.

• Exempting charter fees from 10% withholding tax since this presumes a profit margin of 33.5%, which is not always the case.

• Reducing the import duty on “small” vessels (carried on board other vessels) to a flat 2.5% rather than duties etc. that currently amount to over 20%.

• Exempting income from international shipping on Nigerian-flagged vessels from tax, as is done in Singapore.

• Re-establishing the NSAF by lending money to banks for onward lending to shipping companies on commercial .

• Enhancing capacity building by funding the National Maritime Institute at Oron properly.

• Encouraging locals with term charters rather than voyage charters so that the risk of non-use because of unavailability of products is borne by PPMC rather than vessel owners.

• Giving directive to oil traders/3rd party buyers to give first right of refusal to vessels owned by Nigerian-owned companies.

• Encouraging the participation of foreign shipping companies through collaborative ventures with Nigerian companies and encourage skills transfer.

• Encouraging the use of Nigerian-flagged vessels by issuing say for example, 15-year letters of intent or contracts to willing and capable Nigerian-companies to facilitate the acquisition of Nigerian owned tankers and LNG vessels.

• Nigerian shipping companies should be given priority in the transportation of technical aid/bilateral and African regional petroleum cargo.

• Developing a petroleum cargo scheme to facilitate the development of Nigerian shipping companies to participate in identified market segments.

• Development of Nigeria’s tanker fleet.

• Provision for ready and available tanker fleet providing strategic control over the direction of the oil trade and assuring national security in times of blockades, regional conflicts, etc.

CHAPTER 7

STANDARDS AND ENFORCEMENT

7.1 The Need for Nigeria to Adhere to International Maritime Standards

For a country to effectively run its maritime industry, it must adhere strictly to the body of international shipping standards governing the global maritime industry. From time to time global and continental organisations made up of the top industry professionals and practitioners from various maritime power-house countries meet periodically to review the effects of the application of maritime standards and to either encourage strict enforcement of standards reviewed or amend or repeal as may be indicated by information items. This is especially so when we consider that the nature of maritime law is such that it develops progressively through eras of disasters and conflicts. In other words, the industry develops its rules when the application of laws in force either leads to a disaster, an unfair court judgment or upon the occurrence of a maritime dispute, or where at the occurrence of a maritime dispute there are no bodies of rules governing the type of disagreement. Thus it is safe to conclude that the international rules, which govern sea transportation, are amended from time to time to prevent catastrophe or the reoccurrence of conflict.

As examples, the Titanic disaster led to the SOLAS Convention, Torrey Canyon oil spills led to the 1969 Civil Liabilities Convention and 1971 FUND Convention, the House of Lords decision in The Tojo Maru [1971] 1 Lloyd’s Rep. 345 led to the 1957 Brussels Limitation Convention.

In addition to the above, the House of Lords decision in The Nagasaki Spirit [1997] 1 Lloyd’s Rep. 323 led to SCOPIC rules and the ERIKA spills together with the MSC Prestige dispute of 2002 led the European Commission to develop strict directives for oil spillage through Directive 2005/35/EC 17 September 2005, which includes the arbitrary imposition of criminal penalties for oil discharge if committed with intent, whether recklessly or by serious negligence.² ²

In order to ensure that Nigerian vessels, vessel-owners, ship-captains and seamen stay away from liability when participating in the global shipping business there exists a need to first identify the body of laws governing international shipping practice and educate the industry about appropriate global standards and practices which their vessels, ship captains, and seamen must adhere to during the course of navigating a vessel.

7.2. Identifying the Standard of International Laws and Legal Principles Governing the Totality of Maritime Practice

Questions as to the choice of law applicable in an international transaction are usually tricky. The reality of the situation is that, in practice, there might be several national and international interests in a single voyage, thus creating a need to ascertain which particular country’s laws govern the transaction in order for parties to align themselves with the relevant rules. For example, there may be a shipment of Nigerian crude oil from American sellers to German buyers. The oil could be transported on a French ship, time-chartered to a South African company, and delivered in Argentina. In situations like these, parties must make expressed agreement to which of the particular jurisdiction’s laws would apply in the resolution of disputes. When they arise, Article 3.1 of Regulation (EC) No 593/2008 (Law Applicable to Contractual Obligations) (Rome 1) is applicable in most parts of Europe, and it generally provides that parties are free to choose the jurisdiction which all parties agree should apply in case of resolution of disputes. A further perusal of the provisions of Article 4(1)(a)(b) would show that if there has been no clear selection of the jurisdiction’s laws governing disputes, then it is presumed that the law applicable is the law of the seller’s habitual residence.

Most international trade contracts contain choice of law provisions or clauses. In global international trade practices, most choice of law clauses select the rules of English laws to govern transactions because the English statutes are arguably the oldest, most comprehensive, and most predictable in the world today. It is for this reason that a detailed study of the English common law and statutes is necessary, in a bid to suggest a standard of laws that are a sine qua non to the development of the Nigerian maritime economy. It should also be noted that the body of rules that formed the foundation of the Nigerian legal system was adopted verbatim from English law through section 45 of the Interpretation Act of 1958, Cap. 89, of LFN, enacted at present as section 32 of the Interpretation Act of 1990, Cap. 192, of the LFN of 1990. Those sections provide that the English common law, the English doctrines of equity, and the English statutes of general application in force in England as of 1 January 1900 are applicable and

binding in Nigeria. These enabled statutes like the Sale of Goods Act and the Marine Insurance Act, and most major statues find their ways into the Nigerian law and those laws have strengthened the Nigerian legal system. As time went by, some of those laws were modified in England to adapt to development in trade, technology, and commerce – but the Nigerian legislature has failed to follow the trend. As a result, the prevailing situation in Nigeria today is that the laws applicable in Nigerian are not effective enough to govern the totality of local commercial practices. English Law should be an appropriate standard, and reference should be made to the laws of other jurisdictions, such as the US Uniform Commercial Code and the 1980 Vienna Convention (CISG), for proper comparative analysis.

7.2 Liability for Negligent Navigation

At this juncture, it is necessary to uncover what happens in practice when a loss has occurred in the event of negligent navigation. The body of rules governing negligent navigation is the Collision Regulations (COLREGS) 1972 as amended in 1981, 1987, 1989, and 1991. About a decade ago, English Law through Regulation 2 (1)(a) of the Merchant Shipping (Distress Signals and Prevention of Collision) Regulations 1996 (SI 1996/1975) adopted the latest form of the COLREGS as the present navigational standard which is binding on vessels within the United Kingdom and UK flagged vessels operating in International waters. Although in the strict sense of it, the COLREGS in itself does not create any civil liability, they represent the rules of good seamanship and failure to obey, even by a foreign ship outside the UK territory, is strong evidence of Negligence.² ³

By virtue of Article 3(a) of COLREG regulations, the law is only applicable to govern the conduct of ships or vessels. A vessel is further defined to mean “any description of water craft, non-displacement crafts, wig craft, and seaplanes, used or capable to be used in navigation”.² ⁴In R v. Goodwin,² ⁵ the question for determination was whether or not the defendant’s Wave Runner Jet Ski was a ship within the meaning of the act. The courts held that the word navigation is not synonymous with movement in water, because it only applies to planned movement from one place to another, and a recreational sea craft such as a Jet Ski, would not fall into the definition of a ship.

7.2.1. Overview of the International Regulations for Preventing Collision at Sea 1972 (COLREGs Regulation)

For the sake of clarity and the avoidance of doubt, highlighted below is a summary of the significant rules governing the COLREGs regulations.

• Rule 5 is known as the look-out rule. It provides that every vessel must maintain a proper look-out by sight and hearing during navigation and vessels must use every means available to make a full appraisal at all situations to avoid collisions.

• Rule 6, the speed rule, provides that every vessel shall proceed at a safe speed and maintain a safe distance in order to take evasive action to avoid collisions. It further provides the factors that affect safe speed and other factors to consider when applying a vessel’s radar system.

• Rule 7 generally provides that all vessels must use every available means to determine the risk of collisions. If there is any doubt, such risk shall be deemed to exist.

• Rule 8 provides specifically for actions to be taken to avoid collisions, especially in situations where the vessel chooses to alter its course or speed. It also prescribes a standard of conduct during certain navigational manoeuvres, like the alteration of direction, impediment of the age of other vessels, and changing speed.

• Rule 9, also known as the narrow channel rule, specifies certain obligations that a vessel captain must take when navigating in narrow or tight sea channels. For example, the rules provide that a vessel approaching a narrow channel must keep as near as possible to the outer limit, which lies on her starboard side.

• Rule 10 provides the standard of conduct in traffic separation schemes.

• Rule 13 prescribes the rules to be observed when overtaking another vessel. It provides:

(a) Notwithstanding anything contained in the Rules of Part B, Sections I and II, any vessel overtaking any other shall keep out of the way of the vessel being overtaken.

(b) A vessel shall be deemed to be overtaking when coming up with another vessel from a direction more than 22.5 degrees abaft her beam, that is, in such a position with reference to the vessel she is overtaking, that at night she would be able to see only the stern light of that vessel but neither of her sidelights.

(c) When a vessel is in any doubt as to whether she is overtaking another, she shall assume that this is the case and act accordingly.

(d) Any subsequent alteration of the bearing between the two vessels shall not make the overtaking vessel a crossing vessel within the meaning of those Rules or relieve her of the duty of keeping clear of the overtaken vessel until she is finally past and clear.

• Rule 14 provides the rules of navigation when vessels are in head-on situations or on reciprocal courses, so as to avoid the risk of collision.

(a) When two power-driven vessels are meeting on reciprocal or nearly reciprocal courses so as to involve risk of collision, each shall alter her course to starboard so that each shall on the port side of the other.

(b) Such a situation shall be deemed to exist when a vessel sees the other ahead or nearly ahead and by night she would see the mast headlights of the other in a line or nearly in a line and/ or both side lights and by day she observes the corresponding aspect of the other vessel.

(c) When a vessel is in any doubt as to whether or not such a situation exists she shall assume that it does exist and act accordingly.

• Rule 15 is also known as the navigational rules to be applied when vessels are in crossing situations.

• Rule 16 prescribes actions to be taken by a vessel in the way of another moving vessel (“way vessel”).

• Rule 17 prescribes the actions to be taken by “standby vessels”.

• Rule 19 prescribes the conduct of vessels in situations of restricted visibility.

In establishing liability for negligent navigation, the English courts have set certain standards in the application of the COLREGS. The reason for this is attributable to the fact that it is easy for judges to sit and apportion blame after an incident, and improperly apply laws of negligent navigations.

In The Transcolorado² , the courts expressly warned against the practice of judges putting themselves in the place of an “armchair iral” who has hours, days, or months to ascertain and conclude what was the right thing to be done in the few minutes leading to a collision. The court explained that in collision situations, two strangers who owe duties to one another, are placed in situations where there has to be a sudden choice of action within minutes to avoid a hazard. The courts further held that cases should be judged in the light of the choices suddenly forced on, by the negligence of one party seeking total absolution from fault.

In The Dundee (1823) 1 Hagg 109, 120, the courts decided (per Lord Stowell) that in determining fault in a collision, the faulting party must have taken an unreasonable step or refused to take an objective decision. It held that failure to take reasonable steps is equated to negligent navigation, which is the want of attention or vigilance due to the security of other vessels operating on the same sea. The courts also held in The Samco Europe v. The MSC Prestige that, VHF communication must not be a substitute for good seamanship. In this case, two vessels were approaching each other with speed, and instead of slowing down her speed and doing what was required by the COLREGS, the captain of MSC Prestige attempted to open VHF communication with the other vessel. The courts held that although VHF communication was intended to avoid collision, the parties should have followed the requirement of the COLREGS. Thus, the act of opening VHS communication was held to have caused a waste of valuable time, and that led to the liability of the MSC Prestige.

The English courts have also held that in applying the COLREGS, the owner of a vessel is not liable for damages caused to a vessel occasioned by the sudden breakdown of shipping equipment and apparatus.² ⁷

7.2.2. The Principle of Causation and the COLREGS

As a general rule, the mere fact that a party can prove the negligence of another party during navigation is not sufficient for an action for damages, because the defendant must also show that the negligence of the plaintiff was so significant that it directly caused the accident in question.

In The Merchant Venturer [1997] 1 Lloyds Rep.388, the plaintiff was responsible for installing lights to aid navigation around a port. The defendants submitted that the plaintiffs’ wrong positioning of the lights was the cause of the accident in question because the lights misled them to the place where it was run aground. It was held that because the plaintiff could also show that the defendants were speeding and steering too close to the buoys, they have shown that their actions may not have been the cause of the accident and therefore the defendants were not liable. Furthermore, it should be noted that coincidental causation is not enough to prove liability for an action in damages.

In The Estrella [1977] 1 Lloyd’s Rep 525, the courts held that although the plaintiff’s ship was at fault in navigating wrongly in the north-bound lane, both ships were in sight of each other, and as such the wrongful navigation could not be the cause of the collision.

Also, in the situation where two successive events caused the totality of damage suffered by the defendants, the plaintiff is only liable for damage and loss of profits suffered as a result of his own wrongful acts.

In Carslogie SS Co v. Norwegian Government [1952] AC 292 where the plaintiff collided with the defendant’s vessel and it undertook minor repairs before it

eventually sailed to another jurisdiction, obtaining further damage due to severe weather, the courts held that the plaintiff is only liable to pay the charges for ten days out of the fifty days the vessel spent in the drydock.

7.2.3. Novus Actus Interveniens.

This principle simply recognizes the fact that between the time of the negligent action and the collision itself, there might be other mitigating factors that break the chain of causation in such a way that it may not be prudent to insist that it was the collision that caused the accident. In other words, if there are certain incidents that supersede the acts of the defendants as causative factors, thereby resulting in a greater or total loss, the defendants cannot be held liable for those circumstances. In The Fritz-Thyssen [1967] 2Lloyd’s Rep, 199, a collision at sea led to the sinking of the plaintiff’s vessel, The Mitera Marigo. However, at the time of sinking, there was a tug in attendance guiding the plaintiff to its port of refuge, but the captain stubbornly refused to ask the tug for pumping assistance in a bid to prevent costs. It was held that where there was repeated and unreasonable refusal of assistance (which, if accepted might reasonably have been successful in the prevention of total loss), a vessel which is ordinarily to blame may be exempted for liability for subsequent loss.

In The Oropesa,² ⁸a collision occurred between the Oropesa and the Manchester Regiment and the latter was so badly damaged that the captain ordered the majority of the crew to leave the vessel to the Oropesa via the lifeboats. The captain was hoping to persuade the Oropesa to take the Manchester Regiment on tow or arrange salvage assistance. Unfortunately, the lifeboat capsized, and crew lost their lives. In an action instituted by the personal representatives of the dead seamen, the defendants contended that the act of leaving the damaged vessel in the life-boats was the actual cause of death and had broken the chain of causation. The courts disagreed with this reasoning and held that the action taken by the captain was a natural consequence of the actions of the Oropesa, and as such there was no break in causation.

7.2.4. Types of Damages to which a Defendant may be Entitled in the Event of a Collision

The general rule is that in the aftermath of a collision, a successful plaintiff is generally entitled to the following as compensation:

• Damage to property/cost of repair

• Loss of profit

In The Vicky1 [2008] 2 Lloyd’s Rep. 45, the defendants itted liability for the collision and assessment of the quantum of damages. The dispute between the parties arose out of a fixture contract into which the plaintiffs had entered before the collision in which they claimed that they were unable to perform. The courts held that once the plaintiff was able to show that the loss of the fixture was caused by the collision, he would be able to recover loss unless a situation was present which clearly broke the chain of causation.

However, it should be noted that in modern shipping practice, the standard “duty of care” test as practiced in the law of tort, is only curiously applied, and as such, it excludes pure economic loss from damage to property which “you don’t own or possess”. In other words a charterer cannot sue for pure economic loss.

In The Mineral Transporter [1986] AC 1, a vessel was on a time charter to the plaintiff and was involved in a collision with the defendant’s vessel. The collision was caused by the negligence of the defendants and resulted in the

vessel being put away for repairs for a long period of time. The hirers brought an action against the sum they would have lost in hiring the vessel. The courts held that a person who is not the owner of a chattel was not entitled to sue a person who damaged the chattel, and as such the non-owner was not entitled to recover damages for pure economic loss. According to Lord Fraser of Tully-Belton, a charterer cannot sue for loss of profits, because he owes no proprietary rights towards the vessel, and his rights are restricted to mere contractual rights. In his judgment, Lord Fraser held that it would be unreasonable to subject the wrongdoer to a chattel to damages suffered by every single person to whom the person has a contractual obligation because that would be so huge a burden to bear. He justified this position using the example of an individual who was negligently injured by a driver and concluded that it would be unreasonable for a doctor or a carpenter or any other person who may have suffered loss as a result of the accident to have a right of action against the driver.

The following principles are also necessary to note in the event of a collision.

• Where the negligence of a party has caused another to lose his vessel, the negligent party shall be liable to pay the present market value of the lost vessel (The Baltic Surveyor [2002] 1 Lloyd’s Rep729).

• In the case of partial loss, the defendant shall be liable to pay a reasonable cost of repairs for damage caused (The Pacific Concord [1960] 2 Lloyd’s Rep 270, The Sivan d [1998] 2 Lloyd’s Rep 97).

• Principle of betterment is irrelevant in collision cases. Thus it is irrelevant that the repair of such a vessel would put the plaintiff in a better place because the equipment to be replaced was worn out prior to the collision (The Gazelle(1844)2 WRob279, Oregon v. The Tug GoGetter,1973AMC243).

• The offending vessel is also liable to pay loss of profit in addition to either of the above mentioned remedies (The Argentino(1888) 14 AppCases519; The Vicky1 [2008]2 Lloyd’sRep.45).

• An alternative to loss of profit is loss of use. Thus the plaintiff has the remedy of loss of use where the injured vessel is a non-profit vessel (Brooklyn Eastern Terminals v. US,287US170: Birmingham Corp v. Sowsbery[1970]R.T.R.84); The Mediana [1900]AC113 The West Wales [1932]P165).

7.3.1. Ports, Docks, and Harbour Laws

According to the Harbour Docks and Piers Clauses Act of 1847, which is a statute of general application applicable in Nigeria by virtue of section 32 of the Interpretation Act, there is a strict liability regime for damages to port or harbour installations caused by a vessel navigating within a port. Section 74 of the Harbour Docks and Piers Clauses Act of 1847 provides:

“The owner of every vessel or float of timber shall be answerable to the undertakers for any damage done by such vessel or float of timber, or by any person employed about the same, to the harbour, dock, or pier, or the quays or works connected therewith, and the master or person having the charge of such vessel or float of timber through whose wilful act or negligence any such damage is done shall also be liable to make good the same; and the undertaker may detain any such vessel or float of timber until sufficient security has been given for the amount of damage done by the same: Provided always, that nothing herein contained shall extend to impose any liability for any such damage upon the owner of any vessel, where such vessel shall at the time when such damage is caused, be in charge of a duly licensed pilot whom such owner or master is bound by law to employ and put his vessel in charge of.”

By virtue of this statute, the port or harbour where the damage was done has an automatic possessory lien over the vessel that caused damage regardless of whether he can be said to be at fault or negligent in the situation.

In The Mostyn [1928] AC 57, while entering into the appellant’s dock, the respondents’ steam vessels dragged the anchor, and damage was done to electrical cables at the bottom of the dock. In this situation, there was no negligence on the part of the captain or any other person. It was held that the owner of the vessel that caused the damage is responsible for damage done to a

harbour whether or not occasioned by negligence.

Also, in BP Exploration Operation Co. Ltd. v. Chevron [2003] 1 AC 197, the courts held that section 74 is a strict liability offence, and as such it invokes that liability on the proprietor of a vessel whether or not the vessel is on hire. The courts also remarked that the owner in this instance is not synonymous with the charterer.

It should be noted that even with the promulgation of the Law Reform and Contributory Negligence Act of 1945, the position in England is relatively the same with regard to damage done to a harbour. Section 1 provides:

“Where any person suffers damage as the result partly of his own fault and partly of the fault of any other person or persons, a claim in respect of that damage shall not be defeated by reason of the fault of the person suffering the damage, but the damages recoverable in respect thereof shall be reduced to such extent as the court thinks just and equitable having regard to the claimant’s share in the responsibility for the damage.”

In WVH Rogers [1980] CLJ 124, the court held that there would be no such apportionment where damage is done to a harbour. The courts acknowledged that in other cases, when damage is caused by a public authority in exercise of its functions, modern law is to equate the authority with a private person or trading company, causing loss. In the case of damage to port and harbour facilities there is no such appropriation and the port or harbour facility does not share liability even when the damage was partially caused through faulty installations in the harbour. However, if the ship-owner can show that the fault is cause by a third party who allowed him to cause damage to the harbour, he has a right to recoup his liability from such a party.²

It should also be noted that the only occasion where a harbour authority can be liable for damages done around a harbour is when such loss is caused by a defect in the harbour that the authority is in control of and has a duty to rectify (See The Moorcock (1889) 14 PD 64; The Bally-alton [1961] 1 WLR 129; The Neptune [1938] P21; The Merchant Venture [1997] 1 Lloyds Rep. 388; Cf Stovin v. Wise [1996] A.C. 923.)

7.3.2 Wreck Removal

Section 252 of the English Merchant Shipping Act of 1995 empowers harbour authorities with the right to remove obstructing vessels in situations where a vessel inside or close to the entrance of the harbour is sunk, stranded, abandoned, or likely to become an obstruction or danger to navigation within that area. By virtue of section 252 (2) of the Act, such actions include the power to make the following actions.

• Take possession and raise, remove, or destroy the whole or any part of the vessel or any other property.

• Light or buoy the vessel or any part of the vessel or property until it is removed or destroyed.

• Sell the vessel or any part of the property removed.

• Reimburse themselves from the expenses used to remove the vessel or property from the proceeds of its sale.

The section further provides:

• Any surplus from the sale shall be held on trust by the harbour authority on behalf of the owners of the property.

• Unless property recovered is of a perishable nature, any sale shall be held by the authority to persons entitled to them.

• Any time before sale, the owner may be entitled to the property upon fair payment of the market value.

• The sum paid to the harbour authority may be treated as the proceeds of sale.

• Any proceeds of sale arising from the sale of a vessel shall be treated as a common fund.

Section 253 of the English Merchant Shipping Act confers similar powers to light-house authorities with respect to wrecks in and around the lighthouse. The statute empowers the authority to recover either through the sale of the res (subject matter of the action or case i.e. the wreck or remains of the vessel involved in a collision) or directly from the owner.²⁷ The section further provides that any expense not recovered by the authority shall be paid out of the General Lighthouse Fund provided for, under section 213 of the act. It should be noted that a similar provision exists which empowers the harbour masters to remove wrecks and other materials along the harbour. This principle is provided for in section 56 of the Harbour, Docks, and Pier Clauses Act of 1847, which qualifies as a statute of general application enforceable in Nigeria. The section also empowers the authority to sell wrecks and other property and to obtain refunds from the owner as the case may be.

Also, the International Convention on the Removal of Wrecks, 2007, was adopted by the IMO (International Maritime Organisation) in May 2007 during its diplomatic conference in Nairobi. Resolutions reached then include:

• Form a legal basis for coastal states to remove or have removed shipwrecks that may adversely affect the safety of lives, property, or the environment.

• Make ship-owners financially liable and require them to take out insurance to cover the cost of wreck removal.

• Provide states with the right of direct action against insurers.

The UK ratified this treaty with the promulgation of the Wreck Removal Convention Act of 2011 which is yet to be in force.

7.3.3 Pilotage Law

Basic principles of pilotage laws can be appreciated by considering the fact that the terrain or voyage paths leading to certain harbours may be tricky and must be expertly navigated. Thus, when a ship is coming from the high seas and is approaching a seaport, it is common practice to engage the services of a pilot who has local knowledge of the sea terrain and who can properly navigate the vessel to port. There is, however, a special legal regime to deal with the liability arising from navigation during the period which this type of service is offered, and it is considered below.

Section 2 of the Pilotage Act of 1987 creates harbour and pilotage authorities and statutorily empowers them with the responsibility of guaranteeing safe navigation along a particular jurisdiction. The section further provides that the authority shall keep consideration of what pilotage services need to be performed to secure safety while in and approaching the harbour.

An overview of the act is outlined below for ease of reference.

• Section 3 empowers the authority to authorize persons to perform compulsory pilotage services in areas designated and deemed necessary.

• Section 3(2) empowers the authority to determine the qualifications and screen persons to be appointed to perform pilotage services.

• Section 3(3) disqualifies persons without a renewable license from performing

pilotage services.

• Section 3(5) provides that the authority can revoke or suspend any license for incompetence, for lack of qualifications, and if the numbers of licensees exceed those authorized by law.

• Section 3(6) provides that notice must be given before a license can be revoked.

• Section 3(8) criminalizes the act of misrepresenting oneself as a pilot.

• Section 4 contains general provisions on the employment of authorized pilots.

• Section 4(2) provides for the employment of new pilots if the majority of the license holders agree three months prior to the appointment.

• Section 4(4) also provides that the competent harbour authority may refuse to authorize a person to provide pilotage services if he is not willing to perform his duties in accordance with the Act.

• Section 4(5) provides for payment of pilots by the harbour authority from a benefit fund established under section 15(1).

• By virtue of section 7, the authority is empowered to give a direction that, in effect, would insist pilotage services are obligatory to either all vessels or certain

classes of vessels, navigating in any specified or designated areas. However, the section further provides that a direction must be given after due consultation with the owners of ships and labour operators within the area.²⁷¹

• Section 22 provides that the liability of an authorized pilot for any loss or damage caused by an authorized pilot while acting as such shall not exceed 1,000 Pounds Sterling (GBP) plus the amount of pilotage charges in respect of voyages where the liability arose.

• The position in common law and most jurisdictions, is such that the owner, not the pilot, remains liable for actions performed by the pilot despite the fact that the pilot is employed by the authorities and not the ship-owner, by virtue of section 4. (See Oceanic Crest Shipping Co.v. Pilbara Harbour Services Pty. Ltd. (1986)160C.L.R.626; The Esso Bernicia [1989]AC643;and The Cavendish[1993]2Lloyd’sRep.292.)

• In the United States, the position is relatively the same, although there are no provisions that limit the liability of pilots directly. However, it is standard and customary practice for pilots to have inserted into the contract to the effect that they would have recourse to the ship-owner if sued by a third party (The Texaco Texas,773 F. 2d 1396 (1986).

7.4. Maritime Salvage Regime

The business of maritime salvage is of fundamental importance in today’s shipping world. An act of salvage is done by a third party after a marine accident or casualty in order to recover the vessel itself, its cargo or other property, and its crew. In the Nigerian shipping practice, the salvage regime is virtually nonexistent regardless of the fact that it has been provided for in the Nigeria Cabotage Act 2003 and its practice is not restricted to Nigerian owned companies or vessels. It is unfortunate that, at present, there are very few firms performing solely salvage services to cater for accidents, collisions, and other maritime disasters along the Nigerian coast. The casualties recorded from the illfated collision between MT Tank and Mt Elixir brings the point to bear thereby highlighting the necessity of the establishment of Nigerian salvage companies. What’s more worrisome is regardless of the fact that the incident happened just 10 nautical miles from the multi-billion dollar Bonga FPSO, there were no salvage companies servicing the area and as such, the burden of rescuing the trapped seamen was shifted on the already overburdened NIMASA and the Nigerian Navy. This, unfortunately, led to the death of 9 Nigerian seamen.²⁷²

Globally, the business of salvage and the performing of rescue operations in times of maritime disasters have been identified, protected, and institutionalised. As a result, various international conventions have attempted to create a universally accepted legal regime to protect the practice of the salvage business and its operations. There are two types of salvage business activities recognized globally:

• Non-contractual salvage

• Contractual salvage

7.4.1 Non-Contractual Salvage

Without the existence of a contractual arrangement between parties, a salvage claim exists only where

• the person performing the salvage acts is a volunteer;

• the salvage act is successful;

• the property salvaged must be capable of being salvaged;

• there is an element of danger involved.

7.4.1.1 Volunteer

In order for there to be a successful salvage claim, the person performing the salvage act must be acting as a volunteer. This means that there must be no preexisting duty owed by the salvor to perform any salvage act on the vessel. Thus, the master of the vessel or its crew and pilots, as well as parties performing towage acts, cannot perform salvage acts. This principle is recognized by article 17 of the Salvage Convention of 1989. People under a statutory duty are also precluded from receiving a salvage reward under common law and the Salvage Convention.

The exceptions to this rule will allow a person who has a contractual or statutory duty towards a vessel to receive a salvage reward if it can be shown that the person has exceeded his contractual or statutory duty.²⁷³

7.4.1.2 The Act Must be Successful

Coined from a popular phrase in the global salvage practice, “no cure, no pay”, this principle states that only salvage operations that have useful results give rise to a reward. Article 12 of the Salvage Convention provides that no payment shall be due under this convention, if the salvage act has had no successful result. However, article 14 of the Salvage Convention provides an exception to the aforementioned rule to permit special compensation equivalent to out-of-pocket expenses where the operation embarked upon, though not successful, involves damage to the environment (The Camelia (1883) 9 PD 27).

7.4.1.3 Property Must be One Capable of Being Salvaged

The common law position is that certain categories of property are not capable of being salvaged and cannot be made subject to a salvage reward. Thus, only a ship or vessel and its apparel, cargo, stores and bunkers can be the subject matter of a salvage operation. Section 313 of the Merchant Shipping Act of 1885, in defining a ship, provides that it shall include every description of a vessel used in navigation.

In The Gas Float Whitton (No 2) [1897] AC 337 (HL), the courts held that an unmanned lightship, although shaped like a boat and moored in tidal waters, is not property capable of being salvaged, because it was neither intended nor fitted for navigation. At present, it will be safe to conclude that the position has changed with the promulgation of the Salvage Convention of 1989, where Article 1 defines salvage property to include property not permanently attached to the shoreline. That would mean that such a light boat would today be considered salvageable property. However, Article 3 of the convention specifically exempts fixed or floating platforms, or offshore drilling units engaged in exploration of minerals, from the purviews of the convention.

7.4.1.4 Danger

In order for there to be a salvage act, the vessel or salvageable property must be at risk of loss or danger. In The Phantom [1886] LT 1 A& E 58, the courts held that there must be reasonable apprehension by the crew of danger before there can be a salvage action. It should also be noted that even if there was no express request by the captain, owner, or crew, expenses for a salvage operation can still be recovered if it can be shown that a prudent person in charge of the vessel would have accepted salvage service in that situation.

However, Article 19 provides that if there is a reasonable and express prohibition, it will not give rise to salvage compensation.

7.4.2: Contractual Salvage

In practice, most professional shipping organizations today use the Lloyds Open Form (LOF) 2011 Contract, which is usually supplemented by an arbitration procedure managed by the Salvage Arbitration Branch of London. The other standard form arbitration contract for contractual salvage is the BIMCO Wreckshire form. The courts held in Tryggingarfelagid Foroyar P/F v. T Empresas Maritimas SA (The M/V Athena) [2011] EWHC 589 that because the parties involved have expressly excluded the LOF 2011 to govern their contract it meant that the parties intended that the BIMCO form would govern the transaction. It held that global contractual salvage practice must be governed by either LOF 2011 or the BIMCO contracts.

7.4.3 Duties of Salvors

Duties of Salvors are exemplified in what follows.

• Duty to conduct salvage operation with due care

• Exercise salvage duties to prevent environmental damage

• To seek assistance from other salvors when circumstances require

• To accept intervention from others when reasonably requested²⁷⁴

It should be noted that by virtue of articles 13-14 of the Salvage Convention of 1989, the Lloyds Form through the Lloyd’s Standard Salvage and Arbitration (LSSA) Clauses and Lloyd’s Procedural Rules and the Special Compensation of Protection and Indemnity Clubs (SCOPIC Clause) have enacted universally accepted ways to calculate the exact amount due as compensation payable to a salvor after a salvage operation.

7.5 The enger Liability Regime

The business of enger transportation in Nigeria is prospectively lucrative but it is relatively untapped, and some people have advocated the need to properly identify, fund, and manage this activity as a branch of the cabotage regime, reserved solely for Nigerian-owned businesses. At present, the business of enger transport worldwide is governed by the Athens Convention of 1974 (as amended in 1976, 1990, and 2002), and various countries have enacted this treaty into local law. Thus, the convention can be said not only to apply on international waters but in the domestic waterways of most jurisdictions. In England, the Athens Convention has not only been enacted into English law by section 183 and schedule 6 of the Merchant Shipping Act of 1995, but the provisions have been adopted by the English Parliament to govern domestic enger transport via the Domestic Carriage Order of 1987. The international regulatory body charged with the implementation of global shipping and labour practices is the International Maritime Organization (IMO), which was adopted in the United Nations as one of its specialized agencies. The IMO is the “global standard-setting authority for the safety, security and environmental performance of international shipping”.²⁷⁵The IMO has 170 member states and 3 associate , including Nigeria, who ed in 1963. As such, the provision of its regulations, including the Athens Convention is applicable and in force in Nigeria.²⁷

Article 2 provides that the convention shall apply to any international carriage if:

• The ship is flying the flag of, or is ed in, a country that is a party to the convention.

• The contract of carriage has been made in a State which is a party to the convention.

• The place of departure or destination, according to the contract of carriage is in a state party to this convention.

The convention also specifies the types of contracts that are within its scope and jurisdiction. Article 1(2) provides that the contracts of carriage in this context refer to contracts made by or on behalf of a carrier for the carriage by sea of a enger and his luggage.

Also interesting to note, is that Article 4 provides that “the carrier” of the engers is legally responsible for loss at all times. However, the convention provides that there are two types of carriers that are tly and severally liable for loss, namely,

• The contracting carrier

• The performing carrier

In defining the word “contracting carrier”, Article 1(a) provides that a carrier is “a person by or on behalf of whom a contract of carriage has been concluded, whether the carriage is actually performed by him or by a performing carrier”. The article further provides that a “performing carrier” means a person other than the carrier – the owner, charterer, or operator of a ship – who actually performs the whole or a part of the carriage. The implication of this is very significant to note for Nigerians who intend to engage in the business of enger transportation in Nigeria. By virtue of the above provisions, it is both the company that facilitates the selling of fare tickets and the actual shipping companies themselves who own the ships that are liable for loss in the enger transportation regime occasioned by an accident. This provision is of extreme

importance, especially with the recent emergence of companies like Jaunt-Rocks Limited and Wakanow.com in Nigeria, who engage in ticket reservation and booking services. In the enger transportation regime via sea channels, those type of booking companies have to be insured against loss resulting from a maritime accident.

In determining the period within which the carrier is responsible for liability, article 1(8) provides that the carrier is liable for any loss of life or personal injury to a enger while onboard, during embarkation and disembarkation, and while in transit from land to the ship and vice versa, if the cost is included in the fare or is put up by the carrier.

With regard to loss or damage to property, the convention provides that the carrier is responsible while the goods are on board, during embarkation and disembarkation, while in transit from land to ship, and generally from the time it has been taken over by the agent onshore to the delivery to the owner in the destination.

Article 3 of the Athens Convention of 1974 also specifically provides what type of injuries or loss the carrier is responsible for and the extent of its liability.

• The carrier shall be liable for the damage suffered as a result of the death of or personal injury to a enger and the loss of or damage to luggage, if the incident which caused the damage so suffered occurred in the course of the carriage and was due to the fault or neglect of the carrier or of his servants or agents acting within the scope of their employment.

• The burden of proving that the incident which caused the loss or damage occurred in the course of the carriage, and the extent of the loss or damage shall lie with the claimant.

• Fault or neglect of the carrier or of his servants or agents acting within the scope of their employment shall be presumed, unless the contrary is proved, if the death of or personal injury to the enger or the loss of or damage to cabin luggage arose from or in connection with shipwreck, collision, stranding, explosion or fire, or defect in the ship. In respect of loss of or damage to other luggage, such fault or neglect shall be presumed, unless the contrary is proved, irrespective of the nature of the incident which caused the loss or damage. In all other cases the burden of proving fault or neglect shall lie with the claimant.²⁷⁷

Other important provisions under the convention include:

• Article 5 specifically concerns other valuables that a enger may have. It provides that the carrier is not liable for loss except when specifically given to the carrier for safe keeping.

• Article 6 provides that loss occurring out of the contributory negligence of the enger may cause the courts to exonerate the carrier either wholly or partly.

• Articles 7–8 provide for the means of calculating the carrier’s liability by limiting the category of injury suffered to specific amounts, thus creating a means of ascertaining the exact amount payable as liability in the event of an accident. The convention specifies each type of damage and attaches an amount to be paid in francs which is calculated in Article 9 with reference to the milligrams and the millesimal fineness of gold.

• Article 10 empowers the carrier to agree with the enger on a higher limit of liability.

• Article 13 provides that the carrier would lose his right to limit liability if damage resulted from an act by the carrier or his agents, performed recklessly or with the intention to cause damage.

• Article 16 provides time bars within which a enger who has suffered loss must institute proceedings with respect to his loss, or else he may lose his rights to sue.

• Article 18 provides that the carrier cannot attempt to contract out of the provisions of the convention in matters involving a reduction of the level of liability, shifting the burden of proof, and restricting the jurisdiction which a enger can obtain remedy.

Recent amendments to the Athens Convention in 1976, 1990, and 2002 have recorded the following fundamental changes.

• There has been a change in the medium used to calculate liability from francs to Special Drawing Rights, or SDR.

• There is a change to the quantum of liability with respect to personal injury and death claims to as much as 250,000 SDR.

• The amendments further provide the inclusion of loss of life due to war, civil war, hostilities, and natural phenomenon of an inevitable and irresistible nature to be included as loss, against which a carrier must be indemnified. It is presumed that this section was amended to cover protection against loss caused

by terrorist attacks.

• A compulsory insurance is required to protect against acts or omission of third parties with the intent to cause loss (i.e. terrorist acts).

• Also an increase of 25 percent has been made with respect to loss and damage to luggage.

It should be noted that the recent rules made in 2002 have been in force since 23 April 2014. The drafters provided that it would be in force twelve months following the date in which the tenth state ratified the treaty without reservation.²⁷⁸

Other developments in the EU include the following.

• In 2009 the European Union enacted into law Regulation (EC) No. 392/2009, which principally governs the liability of the carriers of engers by sea in the event of a maritime accident.

• The purpose of this was to achieve uniformity or harmonize enger transportation rules and regulations within Europe. The regulation applies both to international and local voyages within Europe.

• The regulation brought the Athens Convention of 2012 into force within the EU on 31 December 2012.

• Article 11 provides that states are empowered to defer the application of the regulation for some classes of vessels. For example, class B vessels that are engaged in domestic voyages no more than twenty nautical miles from the coast, have a deferred application date of 31 December 2018.

• The regulation also enhanced the position of engers with respect to the award of compensation.

• It instructs the carrier to make some form of advance payment in cases of personal injury and loss of life.

• There are also special provisions made for the mobility of equipment used by elderly engers or engers with reduced mobility.

7.6. Seafarers’ Rights

There are various reasons for the increased global focus on safeguarding the rights of men and women at sea. Seamen are seen as special classes of citizens who should have special rights and protection for the following reasons. First, they are considered as the lifeblood of every nation’s maritime industry. This stems from the fact that the seamen choose to spend a great deal of their productive lives at sea, working inside ships. Various international conventions have paid cognizance to this reality and have enacted various treaties aimed at ensuring that those seamen are constantly trained to keep up with global safety standards, and to ensure they earn their remuneration in a safe and comfortable place.

Second, there is a need to recognize and protect seamen because they are put in a very precarious situation in the event of maritime accidents. Third, the seafarers are the physical operators of the vessel, so in the event of an accident, they are the visible face of an accident, and criminal sanctions are easily enforced against them. Fourth, seafarers have been used as scapegoats even in situations where fault or negligence is caused by the ship-owners.

This aspect of seafarer protection is of increased significance, especially with territorial practices of criminalization of maritime accidents. In certain regions, once there has been a maritime disaster, especially one caused by a foreignowned vessel on another territory, the captain and the crew are immediately arrested and held hostage in a bid to bring out the owners.

The seafarers are put in a more unwarranted position if the theory propounded that maritime law develops through maritime disasters and court conflicts is taken into . This means that once a disaster occurs, international regulators and national legislators attempt to enact laws or amend existing laws

to plug the loopholes in a bid to cure the deficiencies in the already existing legislation: As examples,

• The Titanic disaster led to the SOLAS Convention.

• Torrey Canyon oil spills led to 1969 Civil Liabilities Convention and the 1971 FUND Convention.

• The House of Lords decision in The Tojo Maru [1971] 1 Lloyd’s Rep. 345led to the 1957 Brussels Limitation Convention.

• The House of Lords decision in The Nagasaki Spirit [1997] 1 Lloyd’s Rep. 323led to SCOPIC rules.

• ERIKA spills and the MSC Prestige in 2002 led the European Commission to develop strict directives for oil spillage through Directive 2005/35/EC 17 September 2005, which includes the arbitrary imposition of criminal penalties for oil discharge if committed with intent, whether recklessly or by serious negligence.²⁷

This emphasizes the need to examine the development of the international body of laws geared towards the protection of seafarer rights.

Historically, institutional protection of seafarers’ rights was viewed in a rather residual manner. The rights of seamen were only limited to situations where they suffered injuries while onboard or became very sick. In fact, it is safe to suggest

that in the area of labour rights, there has been a delayed reaction in the development of legal principles governing situations that occur at sea, as compared with the legal development of labour rights on land. For example, in 1953, despite the fact that the law governing false imprisonment had been developed, the British courts held in Hook v. Cunard Steamship Company limited 1953] 1 ALL ER 1021 that the master of a ship has the power to detain and imprison crew- who refused to work on a vessel.

Within the last two centuries (1850-1995), a trend emerged from the practice of countries with developed ocean economies in recognizing the fundamental premise that poor working conditions have a higher propensity to generate maritime causalities, as encapsulated in successive versions of the Merchant Shipping Act from 1850 to 1995 (145 years). Also, the emergence of certain international standards organizations like the International Labour Organization and the International Maritime Organization, as well as the proliferation of multinational institutions, have contributed to the development of rules protecting the rights of seamen and ensuring some degree of legal uniformity worldwide on the subject.

The modern frameworks with reference to the sources that protect seamen’s rights include

• The International Labour Organization [ILO]

• The International Maritime Organization [IMO]

• International and regional human rights bodies

• Laws made by regional organizations, especially the EU

7.6.1 The International Labour Organization

The ILO was established in 1919 to improve global labour conditions. Over the years, the organization developed a reputation for promoting labour-related issues, and it has consistently developed instruments aimed at protecting seafarers. Previously, a free-standing organization, it was eventually adopted into the UN family in 1946 as the first of its specialized agencies. The ILO has a very unique operative structure that gives representatives of government, employers, and workers equal opportunity and jurisdiction to propose measures to the ILO. The ILO affects global trade practices through two types of legal instruments. The first types are conventions, which become legally binding upon ratification; the second types are recommendations, which are more or less like guidelines or principles that countries must consider in deciding particular issues. At present, the ILO has adopted forty-one separate conventions relating to seafarers, with particular focus on training, remuneration, compensation, and welfare.²⁸ The most significant convention is the Maritime Labour Convention (MLC) of 2006.

The MLC came into force on the 20th August 2013, having been ratified by thirty states and securing a total of at least 33 percent of the world’s gross tonnage. Upon a review of its contents, it can be concluded that the MLC recognizes fundamental human rights:

• Freedom of association

• Freedom from forced labour

• Protection of child labour

• Freedom from discrimination

The MLC was birthed by the governing body of the ILO in Geneva on the 7thof February 2006 during its ninety-fourth session, which was called out of a desire to create a single coherent document that embodied all the up-to-date standards of International Maritime Labour Conventions.²⁸¹

A summary of the articles and titles of the MLC 2006 is articulated here for ease of reference.

• Article 3 creates an obligation for member states to satisfy themselves that the provisions of each state’s internal maritime labour laws reflect the following fundamental principles:

o Freedom of association and recognition of collective bargaining.

o Elimination of all forms of forced/compulsory labour.

o Abolition of child labour.

o Elimination of discrimination in respect of employment and occupation.

• Article 4 provides that member states should implement and enforce laws or

regulations that are enacted to fulfil its commitments under the convention, by exercising jurisdiction and control over ships flying their flags, establishing a system of ensuring compliance, performing periodic inspection of vessels, and instituting legal proceedings against offenders.

• Title 1 contains the minimum criteria for seafarers to work on a ship. Regulation 1.1 further specifies a minimum age of sixteen years for daytime work and eighteen years for night work. It also prohibits the employment of underage boys when the work is likely to jeopardize health and safety.

• According to regulation 1.2, a person shall not work on a ship unless issued a medical certificate after a detailed medical exam. It further provides that such a certificate is valid for only two years and should be according to ILO guidelines.

• Regulation 1.3 states that a person cannot work on a ship until adequately trained, qualified, and certified in accordance with ILO standards.

• Regulation 2.1 governs seafarers’ employment agreements, and it provides that the and conditions must be clearly written out; the seafarers must agree to all after given adequate opportunities to seek legal advice. The regulation also recognizes the need for collective bargaining provisions to be incorporated into the agreement and for member states to ensure that all vessels flying the flag have such agreements between the ship-owners and the crew. Also, according to Standard A 2.1 (5), adequate notice must be given before terminating a seafarer’s employment agreement.

• Regulation 2.2 governs the wages of seafarers, proposes ways to calculate the general and overtime wages, and contains provisions to establish and determine minimum wages by participating countries.

• Regulation 2.3 prescribes the minimum hours for work and rest while at sea for both adults and young persons.

Other regulations include the following.

• Regulation 2.4 –Entitlement to leave.

• Regulation 2.5 – Right to repatriation at no cost to the seafarers.

• Regulation 2.6 – Obligation of ship-owners to indemnify the seafarers and pay adequate compensation for unemployment due to loss of ship

• Regulation 2.7 – Obligation requiring that no vessel shall sail with less than sufficient crew necessary for the vessel.

• Regulation 2.8 – Adequate opportunity for the development of seafarer’s skills should be provided by the ship-owners.

• Regulation 3 – Deals generally with accommodation, recreational facilities and food and catering while onboard a vessel. It provides specifically the provision of adequate health and safety measures, the size of rooms, sanitary facilities, requirement of a sickbay in every vessel, provision of recreational rooms, exercise equipment, and reasonable access to telephone.

• Regulation 4.1 – Deals with Medicare both onshore and offshore. It further provides that ship-owners are strictly liable for sickness, injury, or death caused during employment.

7.6.1.1 Enforcement of ILO Standards

It should be noted that the spirit behind the establishment of the International Labour Organisation has been stated in the preamble to its constitution and in various conventions applicable to seafarers, including the Maritime Labour Convention of 2006 and the Declaration of Fundamental Principles of Rights at Work. According to the legal regimes, the ILO is established to protest conditions of work that are unjust and create hardship, and it recognizes that seafarers have fundamental rights and freedoms that should be protected.

One way of implementing such rights is by Articles 26–34 of the ILO constitution, which empowers member states, delegates to the International Labour Conference, and the governing body of the ILO to file complaints against a member state for refusal to comply with ILO standards. Upon receipt of a complaint, the governing body may form a commission of inquiry to investigate and make recommendations.²⁸² If a country refuses to adhere to recommendations made by the governing body, the ILO can advise on sanctions to be taken to secure compliance, under article 33. This is a very effective way of securing compliance of ILO standards.

In 2002, Article 33 was invoked to justify an act of force against the Republic of Myanmar by the governing body of the ILO in order to end forced labour and provide penal provisions and compensation for such acts.²⁸³

7.6.2 International Maritime Organisation

The IMO is formally recognized as the protector of the human element in the world’s maritime sector. Established in 1948, it was previously known as the Inter-Governmental Maritime Consultative Organization until 1982, when its primary purpose became to develop and maintain a comprehensive regulatory framework for shipping concerns, legal matters, technical cooperation, and maritime security, in a bid to create more efficient global maritime practices. It is worth noting that the IMO only addresses seafaring in a residual manner because it is more focused on improving working conditions generally, which may affect seafarers by default. Core aspects of the IMO include:

• SOLAS: Otherwise known as the Safety of Life at Sea Convention, the treaty seeks to ensure shipping is as safe as possible, and it creates initiatives like the compulsory radio and communication response to sinking ships, and the fire prevention and protection regimes.

• STCW: This refers to the International Convention on Standards of Training, Certification, and Watch keeping for Seafarers. It provides basic requirements for training, certification, and watch keeping for seafarers.

7.6.3. International Law on Human Rights

Over the years, the recognition of people’s rights both by home governments and the international community has led to the creation of a universally accepted standard of human rights that even global businesses must adhere to, and it is applicable all over the world. Those rights address labour-related issues of freedom, discrimination, forced labour, child labour, protection of collective bargaining, and other socio-economic issues. Worthy of note is the innovation by the regional conventions to operate the right of the individual petition, which gives an ordinary man the right to approach such a colossal institution in his quest for justice. This has been a very efficient tool in the hands of seafarers, as evidenced by the amount of applications to regional courts, especially under the European Convention of Human Rights [ECHR].

Article 34 of the European Convention on Human Rights [ECHR] provides that the court may receive an application from any person, non-governmental organization, or group of individuals claiming to be the victim of a violation by one of the high contracting parties of the rights set forth in the convention or any of the protocols. The article further provides that the courts will only deal with an application if:

• All domestic remedies have been exhausted and

• If the application is within six months after exhaustion of domestic remedies.

Other human rights conventions and treaties include:

• UN Declaration on Human Rights

• ICR and ICESR (which basically protect the right to campaign and freedom of association)

• Conventions concerning discrimination on race and gender

• UN convention on the rights of a child

• Regional regimes (ECHR, AHCR, African Charter)

• Regional regimes on social and economic rights

7.6.4 UN Convention on the Law of the Sea, 1982

This convention provides a platform for the protection of seafarers, although the individual’s access to the remedies is founded on a less individualistic basis than that of the ECHR and other human rights bodies. As examples,

• Article 73 provides that once a vessel and its crew have been arrested after the occurrence of a maritime accident, its crew should be released upon posting a reasonable bond while the res or remains of the vessel may be arrested to facilitate the enforcement of claims by various injured interests.

• The application of article 292 is to the effect that prompt release includes stipulations that court hearings should be within seven days of arrest.

• Article 230 imposes financial penalties only for environmental damage.

EPILOGUE

It is impossible to attempt to decipher a solution to the problems plaguing Nigeria and the endemic corruption prevalent in all arms of government and even the private sector without undertaking a thorough study of the Nation’s history to discover critical moments, which changed the direction in the istration of the country. In the same vein, one cannot appreciate the conflict in the middle-east with particular reference to Yemen, Syria and the gorilla Islamic State group (ISIS) without first appreciating the centuries of cultural conflict between Saudi Arabia and Iran. With regard to the Nigerian situation, it is general knowledge that the fortunes of the expanse of land presently known as Nigeria was significantly altered by an act of colonialism by the Imperial British Government. At this juncture it should be noted that an attempt to present colonialism and the pre-colonial slave trade system as the t acts leading to the endemic corruption suffered in Nigeria and arguably most of colonial Africa is not aimed at apportioning blame for the hopelessness of an unfortunate situation on the British government and their European counterparts. Instead, it is presented for critical intellectual analysis on the role and goals of pre-colonial and colonial institutions in order to appreciate the nature of the institutions they established in Nigeria and how that affected the fortunes of the country when it was transferred to our Nigerian fathers. It is also pertinent to point out that the system of colonialism was not all bad. It produced western education, exportation, and an example of a world-class system of public istration. For example, author Martin Meredith, in his work, “The State of Africa: A History of the Continent since Independence” reveals that Lord Lugard set out to ister the colony of Nigeria with only nine s and three thousand soldiers. The Nigerian government may want to learn a thing or two from Lord Frederick Lugard’s system of istration considering that the amount of money being spent on running present-day government in Nigeria is more than half of its annual budget.

Colonialism also opened up Nigeria to harness the benefits attached with a coastline and the possibility of integrating itself into the world economic order.

The English Oxford Dictionary defines the word colonialism as follows:

“The policy or practice of acquiring full or partial control over another country occupying it with settlers and exploiting it economically.”²⁸⁴

Colonialism was birthed out of modern warfare. It was the norm and standard practice in Europe. History reveals that the Europeans discovered gunpowder in the 15th century and immediately channelled their discovery to the art of war. Gunpowder was immediately developed to be utilised as a handgun, an explosive device, and an artillery mechanism for combat. Once this was achieved the Europeans immediately developed naval tactics and efficient ways to deploy gunpowder technology as naval artillery. This appears to be the mischief behind the coining of the 15th century as the age of modern warfare and the age of the sail, respectively.²⁸⁵ Gunpowder happened to be a very destructive discovery and as a result, countries like Britain, , Spain, Portugal, , Turkey, Russia, and indeed most of Europe and Asia engaged in various civil and territorial wars in an attempt to show regional might and territorial power with the sole intent of dominating bordering territories and unjust enrichment, through unbridled exploitation of resources. It is of no surprise that this period was characterised by various conflicts with devastating effects on both the population and economy of Europe such as the wars of religion which occurred between 1520 and 1640 made up of the Thirty Years War, Eighty Year War and the War of the Three Kingdoms. Others include the Franco-Spanish War from 1635 to 1659, the Northern Wars, the Polish-Swedish War, the Russo-Swedish Wars, the Russo-Turkish wars, the Ottoman-Hamburg wars and other Ottoman wars in Europe²⁸ .

During this period, most parts of Europe were in a state of destruction and this affected the continent’s economy. With insufficient men to channel to labour and little or no resources to fight for, they embarked on quests to extort, extract, oppress, and tyrannize North America and Africa. The strategy was to put the fear of God in the indigenous dwellers through the array of weapons channelled

to mass destruction, kidnap the indigenous people to work as slaves for the mass extraction of first gold, other precious metals and later several other food crops, cash crops together with mineral resources. The cumulative effect of this practice for over two hundred years led to the first Industrial revolution in 1760 when there was a transition in the European manufacturing industry through an upgrade from hand production to mass producing, with the aid of machines²⁸⁷. However in order to achieve this revolution Europe required a lot of gold, manpower, raw materials and slaves for labour which was provided for through an effective system of colonialism.

Colonialism started from the practices of the Spanish and the Portuguese as they descended on the North American continent. It kicked off in earnest in 1519, when Spanish born Hernan Cortes invaded Mexico which was quickly followed by the occupation of Peru by Francisco Pissarro in 1524. Two years later Pedro de Mendoza followed suit with the colonisation of Rio de la Plata²⁸⁸. In their erudite and enthralling commentary on the overall European colonial strategy adopted in the horrific adventure to North America and later to Africa, Daron Acemoglu and James A. Robinson in their international business bestseller, “Why Nations Fail: The Origin of Power, Prosperity and Poverty” reveal that the fundamental character of all colonial institutions was their extractive nature applied to milk the resources of colonial territory. They remark,

“The Spanish strategy of colonization was highly effective. First perfected by (Hernan) Cortes in Mexico, it was based on the observation that the best way for the Spanish to subdue its opposition was to capture the indigenous leader. The strategy enabled the Spanish to claim the accumulated wealth of the leader and coerce the indigenous people to give tribute and food. The next step was setting themselves up as the new elite of the indigenous society and taking control of the existing methods of taxation, tribute, and, particularly, forced labour.”

Their work also captured in detail the treatment meted out on the local kings, like the famous Aztec Emperor, Moctezuma, who upon extensive deliberations with his counsellors and war-chiefs decided to welcome Herman Cortes

peacefully when he arrived at the great Aztec Capital of Tenochtitlan on November 8, 1519. In an accurate of the activities of the famous Spanish wartime general’s escapades in the Aztec, Franciscan Priest Bernardino de Sahagun in his famous work Florentine Codices recorded:

“And when the Spaniards were well settled, they thereupon inquired of Moctezuma as to the entire city’s treasure…. with great zeal they sought gold. And Moctezuma thereupon went leading the Spaniards. They went surrounding him….each holding, each grasping him. And when they had reached the storehouse, a place called Teocalco, thereupon they brought forth all the brilliant things, the quetzal feather head fan, the devices, the shields, the golden disc…., the golden nose crescents, the golden leg bands, the golden arm bands, the golden forehead band…… they brought forth (Moctezuma’s) own property…. precious things all; the necklace with pendants, the arm bands with tufts of quetzal feathers, the golden arm bands, the bracelets, the golden bands with shells….and the turquoise diadem, the attribute of the ruler. They took it all.”

An extremely rare and reliable commentary with concise descriptions of the North American invasion makes it plain to see that the events at the Aztec were not a one-off but the standard practice of the Spanish colonial system. In fact, Bartolome de las Casa, a Dominican Priest who initially arrived in 1502, on the Island of Hispaniola, as part of the entourage of Governor Nicolas de Ovando went on to depict and deliver one of the most disturbing analysis of the Spanish colonial system’s overall strategy. De la Casa just could not understand the Spanish lust for gold. Even after being elevated to the position of the so-called elite of the day and entitled to enjoy the benefits of economic exploitation and extraction of the indigenous lands, De la Casa renounced all colonial privileges. His memoirs show his increasing disturbance by the cruel and exploitative treatment inflicted on the indigenous people and he began campaigns to reform existing Spanish colonial institutions²⁸ . The English also adopted extractive policies similar to the Spanish and applied the same to the running of their colonies during their first attempt at colonialism at Roanoke, North Carolina between 1585 and 1587. Another blunt and reliable commentary of the activities of the British at the time was obtained from the dairies of Anas Todkill who expressed frustration on the British colonial value chain system.

“There was no talk, no hope, no work but dig gold, refine gold, load gold.”²

The points being canvassed through this analogy are simple. On the one hand, the system of colonialism was designed to be extractive and exploitative in nature. In fact, this specific feature is the most visible sign of a colonial government. Thus is trite to suggest that all institutions within a colonial government are designed to extract as many slaves, natural resources, precious metals, precious stones, and every other valuable thing from the indigenous people at the fastest possible pace. These acts involved the implementation of an unfair, unequal, and manipulative policies aimed at the economy of the colony. In fact, a hallmark of all extractive colonies is the mass removal of natural resources without any provision for renewal, continuity, or regard to the environment. This remains the position in the Niger Delta with regard to the exploration of oil and remains the real reason behind the agitation of Ken Saruwiwa’s MASSOP in 1994. Most of the infrastructure built by the British like seaports, rail tracks, and road networks were done to increase the quantity of resources they could extract at a time.

The problem with Nigeria and indeed most of Africa is that upon attaining independence Africa neglected to undergo a reorientation, reform, restructure and transformation of the continents indigenous institutions and make them more aligned with the status quo. The real issue of the systemic corruption plaguing Nigeria arose because upon independence, extractive and exploitative colonial institutions were not restructured to ensure that the focus of government was on providing services for the benefit of majority of the populace and improving their quality of life. Instead, what transpired was a mere transfer of already extractive political and istrative institutions from one set of elite (British Colonial Government) to another (Nigerian elite) without tailor fitting their operations to the peculiar circumstances of the country. It can be easily seen that other nations which obtained their independence at about the same time as Nigeria but immediately embarked upon a restructuring of indigenous institutions in the prescribed manner like India and Singapore are more successful and appear to be operating a more buoyant economy even though they

are endowed with fewer natural resources. Upon their respective independence those countries immediately embarked upon political and institutional reform processes which gave their government a new lease of life and was promulgated into law to form the bedrock of their new constitutions.

The Nigerian elite who received power soon discovered that they inherited institutions, which continued exploiting resources without institutional checks put in place to ensure that the funds accumulated were being put to proper use for the benefit of the majority of the population. With their colonial sponsors acting in the background as potential customers and a colossal injection of funds into the country, corruption was bound to prevail. People in government soon found it very easy to manipulate government’s exploitative institutions to acquire personal wealth. It is most unfortunate that in countries like Nigeria corruption still thrives and is almost endemic as such checks and balances continue to be intentionally omitted from Nigerian Legislations till this day. Thus what would have been solved by a simple but thorough restructuring and overhauling process has been allowed to linger and this presents the reason why most African governments continue to operate corrupt systems.

On the one hand, we have the Nigerian elite who inherited powerful extractive and exploitative institutions with massive cash-flow and no measures to check the activity of government officials. The enabling laws of most of these institutions transfer enormous power without an obligation to give thereby making it easy and tempting to breach the trust of the people and organise society solely for personal benefit. On the other hand we have a situation where there has been an omission to reform Nigerian institutions from its role as cash cow used to milk resources for the benefit of an imperialist government to make them focused on providing services for the citizens, a decision which became fundamental when Nigeria moved from being a protectorate of Great Britain to being an independent state.

Daron Acemoglu and James A. Robinson,² ¹ make it very clear that this situation creates all the ingredients to ensure nations stay poor and ultimately fail. They

opined that the reasons why many African countries have become failed states are because:

1. Political power is narrowly concentrated among few people. 2. These few people revolve power amongst themselves. 3. They ensure that national economic institutions are run for their benefit and to give an unfair advantage.

The poor economic situation in Nigeria and indeed most of Africa is caused by the fact that political power is used almost exclusively to create great wealth for those who possess it. According to the authors, countries like Britain, , Spain, Portugal, and the United States of America became very successful and rich because:

1. Citizens overthrew the elites who had long controlled power and they created a different society for themselves. 2. Political rights were more evenly distributed. 3. Institutions were created where the majority of the citizens could take part in economic opportunity. 4. The governments they created became centred on the people, made government officials more able for offence/mistakes and more responsive to the needs of the population.

In those developed countries the primary aim of their government institutions is to provide services for the population and they take their job seriously. Furthermore, the best minds and most qualified people are staff of the ministries and parastatals of government and the personnel ensure that the society is well

developed with infrastructure to make life more comfortable for its citizen.

These are the fundamental differences between societies like the US and Britain as compared with Nigeria and most of Africa. In places like the US, citizens have access to all economic institutions tasked with continuously improving their standard of life. They also have access to schools to acquire skills and political institutions that allow them take part in the democratic process. As a result, government is keen to invest in the best technology which leads to higher wages for the populace. The people thus feel close to the government and have a nationalistic bond with their country. The afore-described society is a far cry from what is available in Nigeria.

The situation deteriorated in Nigeria. After a few years of uncontrolled corruption, the Military took over extractive institutions through coup de tat which in itself is an illegal and violent seizure of power from the existing democratic arms of government. The Nigerian Military government did not embark on a reform of its adopted extractive institutions but merely strengthened the institutions through fear, killings, and the threat of violence. During this period attention shifted from the people and only a distinguished few could take part in government and economic activity. It created a situation where merit was abandoned and government neglected to provide either the guarantee or the incentive for its citizens to thrive, invest, or innovate. The reality about the African situation under military rule was that in most situations where the military leaders across the continent had a choice between economic development and consolidating political power they often considered the latter. For example, in the 1967 Sierra Leone election, the incumbent Sir Albert Margai under the Sierra Leone Peoples Party (SLPP) lost narrowly to Siaka Stephen’s All Peoples Congress (APC). It would seem that the ruling SLPP underestimated the APC’s growing popularity in the northern side of the country because the majority of their base were the rich farmers and merchants of the south Mendelands. However, upon Siake Stephen’s assumption of power, he immediately pulled out the railway line servicing the Mendelands to cripple its exports and in an attempt to ensure that this action was total he sold the traintrack and the rolling stone.² ² Thus in one fell swoop he was able to sacrifice all potential export income from agriculture by destroying economic activity in the

south in a bid to cripple his opponent’s financial might and consolidate his hold on political power. This was the same influence at work when General Badamosi Babangida annulled the June 12 presidential election in Nigeria even in the face of threatened economic sanctions aimed at universal exports and trade. This action crippled Nigerian exports and manufacturing and those sectors have not been revived as of the date of this publication.

In addition to this, we can clearly see that under the control of narcissistic individuals and tyrants, extractive military regimes were used to commit the most hideous crimes against humanity like the Kangaroo trial and subsequent execution of Ken Saro-Wiwa and 8 others on November 10th 1995 because of their agitation against the exploitative practices of crude oil exploration in host community performed without regard to extreme environmental degradation² ³.

The unfortunate reality of the Nigerian situation is that although there was a successful and permanent transition from military rule to a democratic system of government in 1999, Nigeria again neglected to embark upon a reorientation, reform, and restructuring of the existing public institutions but instead adopted the same extractive institutions and made them more aligned with the status quo. Similar to the 1960 independence transition, what occurred in 1999 was merely a transfer of power from one set of elite (Military) to another (a new crop of politicians headed by former Military personnel and elite who were beneficiaries of past military and civilian regimes and their families). Accordingly, the institutions of government which were adopted by a democratic government in 1999 were also very extractive with no proper checks made in the overall ideology of government to ensure that government institutions were not run solely for the benefit of the elite in power. As a result, Nigeria still operates a system were lucrative government jobs and appointments are not obtained through merit but through business and personal relationship of the appointee in government to the appointer. It would seem that in Nigeria, the principles governing a free trading society are rigged through the anomalous use of waivers and other means to secure illegal monopolies in trading activities. Further, real justice seems only to be accessible by the ruling class and elite in society which also is a hallmark of a society with extractive institutions.

It is believed that the argument above presents the real reason why Nigeria still remains under-developed after over fifty years of independence. Fundamental questions have to be asked about the effectiveness of each arm of government and all other ministries, parastatals, and departments.

Even the 1999 constitution which is meant to be the official transitional document recognises the need for a thorough restructuring and immediately tells a lie against itself to cover up for its failure to conduct one.

The preamble provides:

“We the people of the Federal Republic of Nigeria

Having firmly and solemnly resolve, to live in unity and harmony as one indivisible and indissoluble sovereign nation under God, dedicated to the promotion of inter-African solidarity, world peace, international co-operation and understanding

And to provide for a Constitution for the purpose of promoting the good government and welfare of all persons in our country, on the principles of freedom, equality and justice, and for the purpose of consolidating the unity of our people

Do hereby make, enact and give to ourselves the following Constitution:-”

The preamble erroneously suggests that Nigerians or representatives of the people have sat down as freemen despite their differences, to consider, deliberate and negotiate the , which Nigerians intend to be bound by in the establishment of their constitution. Thus Nigeria is in breach of the most basic foundational principle and attempts to impose a constitution on the people of Nigeria without the fundamental process required whereby the people themselves sit down to deliberate on the of the union of Nigeria as a nation. This inherent anomaly disqualifies claims that Nigeria practices a democracy. The reality of the situation is that Nigerian citizens have not sat down as a collective to consider their diversity and peculiarity and set up for themselves the best workable structure to govern the collective. Instead of the people establishing government for themselves, an illegal military government has established a constitution for Nigeria and set it as the ruling authority over the people of Nigeria. This remain the fundamental anomaly of the Nigerian situation and provides the real reason for tribal conflict and the continuous agitation for secession by ethnic groups in Nigeria. The danger of allowing this situation to linger cannot be over-stressed as the government cannot be loyal to the people since it derives its authority from itself. Over time a society begins to emerge where the average citizen feels very far away from government and hardly ever sees the personal benefit of the government in power. In the Nigeria of today it will seem that politicians are only responsible to the masses during the time of elections and feel more responsible to themselves and their political alliances for the majority of their tenure in office.

Furthermore, the people have not been given a chance to make inputs with regard to the system and structure of government having authority over them and have also not decided for themselves to be bound by the constitution, which creates conflict between the government and the people. This is so unwise.

Another issue with the Nigerian system is that there are no proper institutional checks and balances to monitor and control the conduct of government and the success or failure of government is dependent upon the idiosyncrasy and peculiarities of each individual office holder. Thus if Nigeria makes the mistake of electing the wrong leader, a man without honour or conscience, the whole country might be doomed as there are no checks in place to protect the people

from the caprices of a corrupt and depraved leader. This theory can be ed by a consideration of the effects of both the narcissistic Abacha government on the nation vis a vis the effects of the lack of political will of the Goodluck istration to fight neither Boko-haram insurgents nor corruption, on the fortunes of the Nation. A situation whereby the actions of the government cannot be predicted through a system of organized rules and regulations put in place to ensure that government only uses its resources for the benefit of the masses has become untenable. Africa needs to establish institutions which are designed to work for the benefit of its people regardless of the peculiarities of the person holding political office.

As mentioned earlier in this Work, the Minister of Trade and Industry of Singapore Lim Hng Kiang revealed some of the positive steps taken by Singapore, which resulted in fast paced industrial development. He mentioned that after the Independence of Singapore the government decided their priorities were to strengthen local institutions i.e. public and istrative systems, secure the efficient provision of public services and ensuring the right laws are made and implemented.² ⁴

It is our humble submission that this very constitutional process and restructuring discussion where Nigerians will decide her priorities is what has been missing in Nigeria and indeed most other African countries under dictatorship, including those whose tyrant’s isters in the guise of a democracy.

Nigeria has been very lucky with the quality of leadership it has enjoyed over the years. One may only feel the real disadvantages of Nigerian extractive institutions when a truly depraved and reprehensible individual assumes the mantle of power. It can be shown that in extreme cases extractive institutions lead to failed states characterized by the complete breakdown of law and order, riots, conflicts displacements, famines, and epidemics as evident in countries like Zimbabwe and Sierra Leone.

As Daron Acemoglu and James A. Robinson rightly point out² ⁵, extractive institutions are the main reasons why countries like Angola, Cameroon, Chad, DR Congo, Haiti, Liberia, Nepal, Sierra Leone, Sudan and Zimbabwe and indeed Nigeria have suffered some form of economic stagnation in recent years and are poorer today than they were in the 1960s.`

For example, between 1950 and 1960, while the British and other European colonialists were leaving Africa, several white communities around Rhodesia came together under the leadership of Ian Smith and declared independence from Britain in 1965. Although the State of Rhodesia was quickly recognized by a few countries, the idea behind European colonialist staying back in Africa to declare independence thereby creating a sovereign state in Africa was frowned upon by the United Nations. Between 1965 and 1980- when the State of Zimbabwe was officially created, there existed two separate political groups clamoring for independence who eventually negotiated the countries right to self-governance. They were the Zimbabwe African National Union led by Joshua Nkomo and the Zimbabwe African Peoples Union led by Robert Mugabe. Robert Mugabe was elected into power as Zimbabwe’s first Prime Minister in 1980 and from his first day in office, he took all possible steps to consolidate political power permanently. He immediately embarked on a mission to secure the alliance and of strong opposition and when he could not buy their loyalty he violently eliminated them altogether, in mass. For example, in the early 1980s, Mugabe ordered and orchestrated the violent deaths of twenty thousand ZANU ers from Matabele land, the stronghold of the opposition. Once this was done he was able to convince the remaining ZANU party on the threat of violence to merge with his party to create ZANU PF. By this action, he successfully sidelined Joshua Nkomo to create a one-party state.

Soon after, Mugabe was able to amend Zimbabwe’s constitution to appoint himself as President instead of Prime Minister and he also abolished the white voters roll both in breach of agreed to during the independence negotiation. By 1990, he had abolished the Senate altogether and created roles in the National legislature he could appoint persons into. As a result of Robert Mugabe’s hold on an extractive Zimbabwean government, in 2008 the country’s

GDP was half of what it was during independence leaving Zimbabwe in a state of collapse. That year, the state was so broke that it stopped providing virtually all public services. For example in the 3rd quarter of 2008 into 2009, deterioration in the health sector was so bad that a mere outbreak of Cholera recorded over ninety eight thousand cases with about four thousand two hundred and ninety three deaths. Also in 2009, the United Nations Office for the Coordination of Human Affairs estimated Zimbabwe’s unemployment rate at a staggering 98 percent.

Perhaps one of the most astonishing events that occurred in Zimbabwe which reflect the visible deterioration suffered when extractive institution are in the control of men who lack prudence happened in January 2000. During that period, the state-owned Zimbabwe Banking Corporation or Zim Bank organized a National Lottery which was open to all citizens who had saved up to five thousand dollars in their . The amount to be won by the Zim Bank lottery was one hundred thousand dollars and in what turned out to be a public show of shame the Master of Ceremony, Fallot Chawawa of Zim Bank drew a ticket and announced His Excellency Robert Mugabe as the winner of the lottery. The amount Mugabe won was five times the annual per capita income of the country and Mugabe at the time was not short of cash as he had only just increased his salary and that of his cabinet by 200 percent.²

The example of Robert Mugabe’s Zimbabwe only goes to show the amount of control one man had on the institution of the government and how he could turn it to benefit personal interest because the intuition operated without proper checks. Commenting on the peculiar identifiable characteristic of African failed and economic stagnant nations, Daron Acemoglu and James A. Robinson conclude:

• Nations fail today because their extractive economic institutions do not create the incentives needed for people to save, invest and innovate. Extractive political institutions these economic institutions by cementing the power of those who benefit from the extraction. Extractive economic and political institutions,

though their details vary under different circumstances are always at the root of this failure. In many cases, for example, as we will see in Argentina, Colombia and Egypt, this failure takes the form of lack of sufficient economic activity, because the politicians are just too happy to extract resources or quash any type of independent economic activity that threaten themselves and the economic elite.

From the analysis and conclusion presented above, it is clear that Nigeria has highly extractive economic and political institutions in operation.

Extractive institutions are at play in the Nigerian Import Duty waiver system and the negative effect it has on the economy. This system tells a story of how government officials negatively distort economic and industrial development and rig society in favour of a few privileged individuals. It shows how a free market is sabotaged by policies designed to give the elite illegitimate advantage by increasing profit margin and giving a few privileged importers undue advantages in the market system.

Extractive institutions are at play when people in sensitive government and public posts could simply amend a law to increase their income and benefits arbitrarily even at a time when the nation is in recession.

Extractive institutions are in operation were a set of people are seeking for amnesty for all previous corrupt acts of looting government funds to personal pockets.

Extractive institutions are at play when it seems impossible to convict high ranking government officials for clear cut corrupt practices but very easy to convict the ordinary citizens for less severe offences containing similar elements.

Extractive institutions are in operation when the Attorney General of the Federation is given the power to discontinue criminal cases unilaterally without being legally obliged to give a reason for his actions.

Extractive institutions are at play where a public servant in position of authority can award contracts to unqualified secret associates and enter into a dangerous conspiracy not to remit government money amounting to over 1.7 billion dollars without the alleged knowledge of every other cabinet member in the country including the President.² ⁷

The trick to identifying extractive institutions is to ask whether the success or damage made by the institution in any given istration is determined by the checks and balances put in place by the internal structure of the institution or by the personal and peculiar characters of the leaders of the institution. Thus it is safe to conclude that because the Ministry of Petroleum was allegedly so corrupt under the Former Minister and she could successfully run an SAA swap contract without remitting money to the NNPC coffers for that length of time with no one to stop her, it means that highly sensitive institutions operating in Nigeria are very extractive. The same narrative describes agencies like the office of the Attorney General of the Federation, the DG of NIMASA, FIRS, NIPRID, DPR, NNPC, and many other Federal Government Institutions operating in Nigeria today where colossal amounts go missing undetected and unchecked.

In order to ameliorate this problem the following steps appear imperative.

• It is a pertinent need for Nigeria to conduct its much anticipated Sovereign National Conference, where elected representatives of the people come together to deliberate on the and conditions of our union as a Nation. The conference must be sovereign in nature meaning that it must be established through an act of the Legislature, which shall into law a resolution that

states that the results of the conference will become binding on Nigeria and imputed into its constitution. Any other conference however noble in objectives cannot be considered sovereign especially if made by an act of the executive.

• There may also appear to be a pertinent need to review all laws legislations and institutions in force in Nigeria (especially the Nigerian civil service) to establish whether they project the fundamental values of Nigerian society. Nigerian laws should also be analysed to determine whether they aim to protect the general interests of majority of Nigerian citizens or whether they have been put in place to satisfy the interests of the elite.

• There is also an immediate need to restructure and reform the institutions of government to make them more centred around the people and more responsive to their needs. Check and balances must be put in place to ensure that a person in power is incapable of dealing with the resources of government for personal gain. Furthermore, Nigerian institutions should be so strong that even if a man without prudence assumes power he won’t be able to cause irreparable damage because the institution’s internal laws and structure already protect the nation and the people against corruption, diversion and sabotage.

A CULTURE OF TRIBALISM AND LACK OF TRUST AMONG TRIBES IN NIGERIA

Another negative result of the introduction of the Europeans in West Africa: in particular the British and Portuguese presence in Nigeria is the inherent culture of corruption, tribalism, religious intolerance, ethnic bias and lack of trust it caused among Nigerian ethnic societies.

Since Nigeria was created out of an imperial declaration² ⁸ rather than a wilful merger or amalgamation there was no opportunity for deliberations aimed at

producing some form of regional and condition which each region of Nigeria considers fundamentally essential to national unity. Although the British might have had good intentions, the arbitral creation of protectorates and boundaries has not had the desirous effect because they paid no regard to the history of the local people, ethnic affinities and geographical similarities in their attempt to create boundaries and to merge societies. As will be shown below, the 1855 Berlin Conference and 1914 amalgamation failed to consider the centuries of history between the tribes in Nigeria especially against the background of over three hundred years of slave trade.

It is important to understand that the institution of slave trade brought about a severe lack of trust and tribalism among the people of Nigeria to opposing and neighbouring tribes. Furthermore, since there was an available and lucrative market for slaves fuelled by the presence of Portuguese and British Slave traders, ready to buy as many slaves as can be captured, two adverse political processes were created in Nigeria. First, many tribes and communities became reorganised around the sole objective of enslaving their neighbouring communities and selling them over to European slave-traders. In fact between the 1820’s and 1830’s, Kidnapping was so rampant in Nigeria that parents refused to allow their children play outside for fear that they will be kidnapped and sold into slavery. Furthermore, it has been asserted that the growth and expansion of the Oyo Kingdom during the 17th Century was a direct result of the increase of slave exports within the coast. It commenced with a military revolution in 1690, where the Alafin imported powerful horses from the northern part of Nigeria to improve the strength of his cavalry as he prepared to go to war for the sole purpose of making money through slave trade. Through the victories of Alafin’s developed armies Oyo began to expand to the south of Nigeria. When they captured a territory all its inhabitants were taken in chains as slaves to be sold to British and Portuguese slave traders. As a result of this practice, the Alaafin of Oyo town became the sovereignty behind the coining of southern Nigeria as the Slave Coast because of his monopoly on slave trade between 1690 to 1740.²

Another consequence of slave-trade to the existing cultural processes in Nigeria was that the practice was so lucrative that it was able to penetrate the objectives

of indigenous tribal, cultural, and spiritual authority. In some cases even the highest forms of authority were corrupted by lucrative slave deals. For example, a famous oracle at Arochukwu in Eastern-Nigeria, which was perceived to be an important deity among Ijaws, Ibibios and Igbos was one of such highly regarded spiritual institutions corrupted by slavery. People often visited the oracle from far and wide to settle disputes. The shrine was located at the base of a tall cave with a narrow and dark pathway lined with human skulls. Indeed the Oracle was revered and regarded as very potent and was said to have the power to “swallow up” guilty people who approach the shrine with an intention to lie to it or deceive it. However, unknown to most people, the Arochukwu oracle was in secret business collaboration with Aro Slave traders and merchants and every one allegedly “swallowed up” by the oracle during that period was forcefully led down Cross River in chains unto European slave-ships, never to be seen again by their friends and family.³

In other to suggest any potential solution to solve the Nigerian problem of tribalism and intolerance especially with regard to how it affects our present political institutions one must first appreciate Nigerian immediate history. Before the express creation of the country in 1914, Nigeria was a place where Nigerians were selling other Nigerians off as slaves to European purchasers. The majority of slaves taken out of Nigeria where sold by Nigerian rulers, traders, and military aristocracy who grew fat and wealthy from selling their brethren and became well positioned to become the new set of elite in the society. For example, a woman from Egba Land, popularly referred to as Madam Tinubu grew from rag to riches by trading in slaves, salt, and tobacco in Badagry and later became one of the pioneer Nigerian nationalists. Even till this day, “Tinubu Square” located in Lagos, the commercial centre of Nigeria’s economic capital is named after madam Tinubu, a notorious 19th century slave trader³ ¹. In his very detailed and insightful commentary on how Nigerian rulers carried out raids on their neighbour to capture slaves, an ex-slave Olaudah Equiano described the transaction that led to his capture in his published memoirs. He remarked,

• “When a trader wants slaves, he applies to a chief for them, and tempts him with his wares. It is not extraordinary, if on this occasion he yields to the temptation with as little firmness, and accepts the price of his fellow creature’s

liberty with as little reluctance, as the enlightened merchant. Accordingly, he falls upon his neighbors, and a desperate battle ensues...if he prevails, and takes prisoners, he gratifies his avarice by selling them.”³ ²

It is also worthy to note that when slave trade was abolished in 1807, by an Act of the British Parliament located in London, the British Government did not only receive resistance from the white slave traders. The bulk of the resistance came from the Nigerian elite and rulers who grew wealthy from the slave trade practice. In fact, between 1807 and 1893 when slave exports across the globe was officially terminated; the Nigerian elite still actively participated in the business of capturing their neighbours and selling them into slavery. In order to enforce the 1807 Act, the British set up a Naval Blockade on the high seas to stop ships leaving Nigeria and West Africa with slaves. However, this did not reap useful results in eradicating the practice as the British efforts only made slave trade more profitable. According to the records of a former British Naval Officer Lieutenant Patrick Forbes, between 1823 and 1849, out of an estimate of one million eight hundred and sixty eight thousand slaves which were captured and left the shores of West Africa attempting to get past the blockade, only one hundred and three thousand slaves were liberated by the British. Thus, within that period, ships carrying one million seven hundred and sixty five thousand slaves escaped the British.³ ³

The point of this submission is that the European invasion of West Africa especially their readiness and availability to offer funds to fuel a slave monopoly in Nigeria led to a history of tension and insecurity among indigenous tribes. Neighbouring tribes harboured distrust through frequent wars, conflicts, and kidnapping for a period of over three hundred years and overnight, without their consent those tribes suddenly became forcefully amalgamated and expected to operate as one united nation. It is fundamental to point out that the situation described above best explains the nature of the Nigerian society which was further influenced by two critical and fundamental events. They include;

1. The Berlin Conference of 1885: in order to ensure contending colonial powers

don’t have conflict in their forceful exploitation of Africa, the Berlin Conference of 1885 was called where the European super-powers shared the territories of Africa amongst themselves. 2. 1914 Amalgamation: Nigeria was created by an arbitral merger or amalgamation of the Southern-Protectorate and Northern Protectorate of Nigeria. This amalgamation was done solely for istrative conveniences without due consideration of the histories, boundaries, and ethnicities of the colony.

The two political events above created a Nigeria with internal regions where, in many cases, a town which may have been solely responsible for enslaving neighbouring communities suddenly became united with its captives and was expected to compete in a healthy political environment. Nigerian nationality was imposed overnight on the tribes that make up the country without giving them an opportunity to resolve their many years of conflict. It is unsurprising that in Nigeria today there still exist a lot of unhealthy ethnic competition and deeply rooted tribal indifferences among ethnic groups and even in different parts of the same tribe. Furthermore, in Nigeria majority of the population do not consider the qualification of the person running for office as the most important factor to determine their ballot but are more concerned with more basic issues like ethnicity and religion. All these are as a result of the genre of democracy being practiced in Nigeria where a community which defines itself as free is arbitrarily created without offering the opportunity to its citizens to deliberate on the of its union.

The above narrative also attempts to justify the real need for a sovereign national conference which is the simple step to be taken to ensure a united Nigeria but has been ignored to the detriment of development.

It is also intrinsic to note that this process of reconciliation of various tribes of Nigeria, where they sit down to agree on the of the Nigerian unity through a sovereign conference has been omitted since Nigeria obtained its independence in 1960 till date. A reliable commentary which gives insight to the state of mind of Nigerian politicians at the time of independence and also presents a credible

of what transpired pre independence with regard the structure of Nigeria was given by Obafemi Awolowo in his Autobiography, which was authored by the learned and erudite politician himself titled Awo, The Autobiography of Chief Obafemi Awolowo. In chapter twelve he remarked:

• ….drove me to the conclusion that there was a dangerous complacency in the attitude of Nigerian leaders towards the country’s constitutional problem. They had all accepted the form of government laid down by the British for Nigeria; and all the nationalists from Herbert Macaulay downwards had been doing was to fit themselves into the framework, and to accelerate the county’s progress towards the attainment of Dominion status within the British Common-Wealth of Nations. I thought they were wrong for not applying their minds to the form of constitution best suited to the country.³ ⁴

Figure 8.1. Map of Nigeria indicating regions before independence.

[Source: Map generated by the Department of Geography, University of Lagos.]

Figure 8.2. Map of Nigeria indicating regions before independence.

[Source: Map generated by the Department of Geography, University of Lagos.]

CLARION CALL FOR THE STRATEGIC RESTRUCTURING OF NIGERIAN INSTITUTIONS

It is clearly visible that Nigeria is in dire need of restructuring. The real issue for deliberation is the type of restructuring needed. Any call to properly restructure Nigeria in a manner that will guarantee prosperity peace and tranquillity amongst all Nigerian ethnicities must begin with a sovereign national conference whereby representatives of all ethnicities will deliberate upon and agree on the by which Nigeria as a whole shall operate. The agreed upon in this conference should subsequently become the bedrock where a new constitution which properly reflects the will of the people, will be based. Furthermore, there must be an act to strengthen all existing institutions to make them more focused on istering to the basic and more realistic needs of the people. It is also proposed that the nation carries out a review of all existing laws to ascertain and enforce legislation which the development of the nation and to repeal all other conflicting laws. It is also proposed that Special Purpose PPP/JV companies are established around the country to promote and ister investment in economic deficient areas with the sole objective of channelling the populace into economic activity.

It should therefore be apparent that any attempt to restructure Nigeria which fails to consider the diversity of tribe, ethnicity, culture, language, and religion and accept the same as a critical factor in proposing a new Nigerian structure is unlikely to succeed. While it is an established fact that Nigeria is a very diverse society it is submitted that our diversity presents the formula for a successful economy if it is understood, appreciated, and respected by every Nigerian person. In this regard, any call to restructure Nigeria must ensure that tribal, ethnic, religious, historically, and cultural peculiarities of the people are protected in order to provide institutions more acceptable by the populace. Such institutions ister a sense of nationality and belonging among citizens and

as a result, they bring the government closer to the people. A Nigeria constitution that is framed to accommodate every tribe in the country will also help to foster economic and political growth. As shown above, the political structure adopted presently in Nigeria unintelligently ignores the diversity and differences of the people it attempts to unify. The constitution misrepresents itself and continues to apply a government structure imposed by colonial authority which made arbitrarily territorial boundaries thereby ignoring the very key diversity factor. In 2015, the IMF ranked Nigeria as the seventh most populous country in the World made up of one hundred and eighty four million people. Nigeria is made up of two hundred and fifty ethnic groups speaking five hundred indigenous languages.³ ⁵ The understanding of Nigeria as a heterogeneous society containing diverse ethnic systems not only remains the key to understanding the reason behind the structure to be proposed below but remains the fundamental flaw behind colonial, military, and democratic structures adopted to ister the country thus far. The British colonialists and their European counterparts who were from homogeneous societies with one language and religion could not have considered the heterogeneous quality of the colonies when setting up colonial law.

Nigeria is very similar to India in this respect. First, India was colonised by the British but was granted independence just thirteen years before Nigeria in 1947. Furthermore, India is also a heterogeneous nation with a population of over 1.3 billion people made up of over two thousand ethnic groups. The main difference between the istration of both countries which may appear apparent by a comparison of the economic fortunes of both countries was that in the case of India, the Indian Parliament’s promulgated the States Reorganisation Act of 1956 shortly after independence.

The States Reorganization Act ensured that all arbitral division of territories in India made by the British, done for istrative convenience, no longer applied. The Indian State Reorganisation Act of 1956 also reformed the division of state and territorial boundaries in India and reorganised a division along linguistic and ethnic lines.³ The Act came into effect in 1956 at the same time as the 7th amendment of the Indian Constitution and was adopted into the constitutional framework of India under Articles 3 and 4.

Chief Obafemi Awolowo who was mentored by illustrious leaders of the Indian National Congress like Mahatma Gandhi, Pandit Nehru and Subha Bose was the first Nigeria leader to suggest that Nigeria follows the example of India in adopting a similar division of state and territorial boundaries along ethnic lines because both countries are made up of various ethnic and tribal interests. He remarked as follows in a commentary of an overall government structure suitable for Nigeria:³ ⁷

• I argued that Nigeria should have as any many provinces zones, regions or states as there were linguistic or ethnic groups in the country and each region should have a legislature and government of its own. There would be a central parliament and government on which the various linguistic groups in the country will be represented. In addition to my previous argument I pointed out that the sheer territorial size of Nigeria necessitated the adoption of a federal form of constitution and hence the division of the country into regions, even if the inhabitants of Nigeria were linguistically or ethnically homogeneous. The British who had not given much thought to the heterogeneous character of Nigerian peoples in formulating their istrative arrangements had been compelled to divide the Protectorate of Southern Nigeria into two- for istrative purposes- because it was becoming more and more enlightened and articulate. In the main, language lay at the root of racial differences: be they differences in culture and custom, in philosophy of life and political institutions, in national character and social concepts and practices.³ ⁸

The highly celebrated and respected, cerebral politician also pointed out that this kind of division would immediately create healthy competition within the different tribes which have different ideologies, are at uneven stages of adopting western education and have different standards of general civilisation. If Nigeria decides to adopt a structure that strengthens tribal institution and empowers them for regional development it will have set to effect a process where society is organised around the fundamental and most significant differentiating factor that’s distinguishes one Nigerian from the next. Chief Awolowo rightly identified inherent disadvantage existed in creating heterogeneous states, made

up of different ethnic groups and leaving them to compete for political power.

1. When the country is faced with a very important collective political decision, Chief Awolowo suggested that it was erroneous to believe that majority of the Nigerian diverse population would consider ideological principles and standards over linguistic affinity and ethnic self-assertion. He emphasized this as an ominous pointer for the future shown through blind and loyalty based on ethnic affinity prevalent during the Ikoli-Akisanya 1941 National Youth Movement conflict. This kind of affinity was also magnified in the 2015 Nigerian presidential election which was also decided along ethnic and religious lines. 2. The above prescribed structure also appears, in one fell swoop, to cut down the cost of government in a time where the countries recurrent expenditure is through the roof and cannot be maintained because of the global fall in crude prices. Following from the structure prescribed above, Nigeria will retain its federal character but for the purpose of istration will comprise of about nine geo-ethnic states namely:

• Northern (Katsina, Kano, Zaria, etc.)

• North Western (Sokoto, Niger, etc).

• North Eastern (Jigawa, Gombe, Bauchi, etc.)

• Central (Kogi, Benue, Plateau, etc.)

• South Eastern (Enugu, Anambra, Rivers etc.)

• South Western (Ondo, Ogun, Ilorin, Oyo, etc.).

• South South (Bayelsa, Rivers, Warri, etc.)

• Lagos and Abuja as FCT should be run separately and independently.

• Boko Haram volatile territories of Adamawa and Borno should also be run under a special regime.

For the purpose of handling effective istration it may also have to redraw its state boundaries to reflect a division into as many regions as there are ethnic groups. According to Awolowo, the reason behind the criteria for this division is to ensure that each region only contains groups of people who are known to be capable of working harmoniously together. He remarked further that there was indeed a misconception that an alleged spiritual union among Nigerians will keep them unified and the union will make Nigerians accept common standards.

In addition, Awolowo suggested that the division into a few geo-ethnic regions will not be permanent as over time it is expected that smaller ethnic groups who initially don’t have the requisite finance to run an independent state will be created out of the existing nine and recognised as geo-states made up of either one ethnicity or a group of ethnicities. This will result in a Nigeria with regional boundary lines similar to its present division under geo-political zones but with the following alterations.

• Lagos and Abuja as FCT should be run separately and independently.

• Boko Haram former territories of Adamawa and Borno should also be run under a special regime.

• Kwara will no longer be considered as a part of the North Central but as part of the south-west.

• A new central region will be created from Kogi, Nasarawa, Plateau and Benue.

Figure 8.3. Map of Nigeria indicating its geopolitical zones.

[Source: Map generated by the Department of Geography, University of Lagos.]

Figure 8.3.B Map of Nigeria indicating its geopolitical zones.

[Source: Map generated by the Department of Geography, University of Lagos.]

In the proposed structure Nigeria will be made up of a central executive government and just one central legislative house where the representatives of the various ethnic groups will be elected into office in periodic elections. For the purpose of istration, it will also be made up of the 9 geo-ethnic state governments prescribed above.. As compared with the structure being adopted at present in Nigeria, this will immediately reduce the cost of government as the salaries of high government earners which have become a burden to the Nigerian budget would be immediately dispensed with. The prescribed structure will require the dissolution of one central legislative house and twenty seven regional executive and legislative bodies together with the heavy salaries and pensions of cabinet and principal officers across the country. As compared with status quo the savings made in the cost of istering Nigeria will be huge.

Figure 8.4. Map of Nigeria indicating Thirty Six States and Capitals.

[Source: Map generated by the Department of Geography, University of Lagos.]

It is also proposed that under this new istrative structure, it is imperative that Nigeria practices true federalism. An attempt should be made to reduce the power of government at the centre making it less attractive and to increase regional and ethnic autonomy. For example, the exclusive legislative list should be amended to allow regional powers make and enforce laws involving subjects like federal roads, police, mines and minerals, fishing, maritime activity, import and export, nuclear energy, etc. In other words, just a few aspects of istration should be handled by the central government like insecurity, defence, currency, immigration, customs, etc. At present, the accumulated constitutional power on the central government causes istrative delay and bottlenecks which make government feel slow to react to problems and far away from the people. Overtime, those bottlenecks become a c the wheel of progress and development. For example, in Nigeria certain roads are identified and marked as Federal roads even though there are located within a regional state. If a Federal road becomes damaged and is causing serious delay in the free flow of traffic to adjourning state roads, the State government cannot make repairs without the consent of the Federal government. However, since federal roads are located all around the country the Federal government may not have requisite man-power or machinery at the time of damage present in the state but may have to move it across states or regions causing the terrible traffic situations to linger for days, weeks or even months. Most times the Federal government may also refuse consent so a Federal Minister’s portfolio of completed projects appears rich on paper in order to score cheap political points to the despair and suffering of the general public.

As a result, it is proposed that a fundamental subject which must be included in any proposed constitutional conference must be how to decentralise the power of the Federal Government by reviewing its levels of competency on matters to deliberate upon and ister. The extensive power of the Federal government also creates problems in the area of mining and minerals. Since mining is also contained in the exclusive legislative list any person or company interested in

mining must obtain a mining licence from the Federal Government. However, because Nigeria has many resources spread along the regions, the state governments are more strategically located to embark on the strategic development of agriculture and natural mineral resources. Federal government does not have the personnel or the local presence to properly monitor and ister mining which may be a pointer to why very few resources are mined in commercial quantity. It hereby suggested that apart from retaining a few resources like oil and steel, it is more reasonable and practical for regional governments to be in charge of mining activities within their regions while paying a reasonable percentage of profits as tribute or tax to the Federal government.

After a constitutional reform has been made to increase the level of competency of geo-ethnic states and to make them competent in sectors like mining, it is proposed that the new states should be immediately charged to look inwards to develop indigenous agricultural systems and mineral resources. As mentioned earlier, Nigeria is so blessed with natural and agricultural resources that every region in Nigeria will become economically viable if they developed mineral resources alone.

Once this has been put in place the structure now exists to channel the region into economic activity through mining and agriculture which will produce a mass injection of jobs for restive youth across the Federation. This is explained in what follows:

• Geo-ethnic states empowered with the competency to ister mining and agriculture can immediately create special purpose JV companies like the ones proposed earlier in this work using the Chinese Automobile Model and ElderDempster /British collaboration models.

• This special class of company will be made up of the most qualified Nigerians and will be tasked with ensuring the mining and exports of specific mineral

resources. The JV companies will also be tasked in ensuring that Nigeria builds self-sufficient agricultural systems with the goal of producing large volumes of food for local consumption and universal exports.

• Since the company can be identified both locally and internationally as having the backing of the regional government which is visible through some kind of monopoly or controlled competition it becomes more attractive to investors and identified as an exclusive Special Purpose Vehicle where investment in certain economic activity can be channeled.

• The company may now enter into a t venture with foreign mining companies having requisite finance, equipment, technology, and know-how in mining an identified resource and together they exclusively mine and export the resource for profit. Once this is established the SPV can train indigenous youths around the region and use them as labour for mining the particular resource and other services related industry associated with that resource. For example, the youth can learn how to do simple soil tests to determine which landed areas contains extracts of the resource to be mined and the youths may earn a living as independent agents of the SPV paid on commission bases. Resources like tin, columbite, and iron ore are available in the mid regions of Nigeria. Although not visible to the human eye, those resources are mixed and infused into the soil in certain locations. In those places, people are literarily walking on money and they don’t know it. The youth of the area who are more familiar with the nukes and cranny of the region are well equipped to identify suitable locations with rich deposits for the benefit of the proposed JV Company.

• Over time there will also be a pressing need for the company to employ manpower and labour for the mining process and this will lead to even more employment within areas with rich deposits of minerals. In the case of tin, tantalite, and columbite mentioned above, when a location is discovered, a distillation F Float Machine which can distill the minerals in commercial quantity will be required to receive the sand extracted from a site in large quantities and from the other side of the machine the tin, columbite, tantalite,

and iron ore comes out successfully separated to complete the production process.

• The SPJV Company will also be in charge of exporting the mineral in commercial quantities to meet the international demand for the resource.

• A percent of the profits of the company can be accruable to the Federal Government through various tax and tariff regimes. The remaining will be shared between the regional governments the international investors with a large chunk going to Nigerian experts who make up the management of this company. The Federal Government can use its contribution to assist economically unviable and volatile regions.

• The establishment of this type of Special Purpose t Venture (PPP) Companies and applying those systems of istration to over 400 mineral resources available in Nigeria and other agro allied products will cause a revolution in the Nigerian economy and prosperity which can only be imagined.

• This form of istration will encourage healthy inter-ethnic competition in economically deficient areas. For example, if a region discovers that in the last financial year its neighboring geo-ethnic state made a lot of money from planting and exporting coconut in commercial quantities it too can enter into the planting of coconut. In subsequent years both states will engage in healthy competition to determine which state planted and exported more tons of coconut per year.

• Creating political and economic structures like those described above will boost the spirit of nationalism within tribes and eliminate situations where one ethnic region feels sidelined from power. If this is adopted, a situation were a part or region of the country wants to secede to form a new country like in the case of Biafra will be totally eliminated.

According to Awolowo, the most suitable structure to be adopted to ister heterogeneous societies such as Nigeria is to allow each ethnic group develops its own peculiar culture and institutions the way it wishes. He pointed out that this practice will ensure unhealthy intertribal acrimony and jockeying for leadership will cease. He further remarked that introducing one central government without regional autonomy will only result in the frustration to the more pushful and dynamic ethnic groups which will feel unnecessarily slowed down by others. Regional autonomy where the regions are on the same page, have a common vision, and possess evidence that they are capable of working with each other is the only way Nigeria can attain economic self-sufficiency and prosperity.

Comparing Awolowo’s suggested political structure to what is obtainable at present, in order to align status quo with the prescribed structure; the dissolution of one central legislative house and twenty seven regional executive and legislative bodies will be required. It is however suggested that for a start the country can retain the office of the Executive Governor while they restructure the states public sector to accommodate more Special Purpose t Venture Companies working hand in hand with state agencies tasked with a goal of performing public services to improve the quality of life of majority of Nigerians. One central legislative house and all state legislative houses can be immediately replaced with the proposed nine new regional legislatures. As mentioned earlier, this act will cause a drastic reduction to the cost of governance across the country. Furthermore, a more powerful regional legislature is more equipped to keep the acts of the Executive Governor in check and handle the responsibility of channeling the collective towards a common economic objective. For example, the idea of greater regional autonomy to issues like state police is less likely to be abused where each region is made up of five or six states making it more difficult for an unscrupulous executive governor to manipulate the state police for personal gain. Furthermore, a stronger regional legislature is better equipped to keep an Executive Governor in check through the threat of impeachment because the central regional legislature will be seen to be more superior to the executive arm of the sub-states thereby making the system less susceptible to executive manipulation.

The rationale behind the strengthening of other organs and parastatals to check the executive arm finds authenticity in the fact that the executive arm of government, indeed in Nigeria and most African countries have been responsible for the most obvious, excessive, and audacious acts of corruption. This is because the executive is the custodian of the common wealth of the people while the legislature and judiciary can only perform corrupt action in matters and issues that are before them.

In conclusion, it is submitted that Nigeria needs a constitution which expresses a new collective desire to organise society along ethnic and linguistic boundaries because that remains the most notable factor which differentiates one Nigerian from the next. This division is to ensure that people who have had a history of working peacefully and amicably together live together. While it is ideal for all Nigerians to operate in love, Nigerians only have to appreciate and respect each other to have collective success. It is therefore suggested that once this kind of division is made it is not necessary to insist that every Nigerian is uprooted from where he is domicile and returned to his village, once the individual decides to appreciate the culture and institutions where they make their livelihood. The rationale behind this kind of constitutional restructuring is to ensure that each region or group of states is united in vision and operates as one efficient machinery so that a long term economic plan like the one presented in this work can be sold to Nigerians.

Once this is done there also exist a need to restructure Federal and State agencies to ensure that the primary purpose of the government is to provide services for the benefit of majority of its citizens. Simultaneously, government must also constitute and equip Special Purpose PPP/t Venture Companies to channel the populace into economic activity especially in economic deficient areas such as agriculture and mining.

Nigerians must for the first time decide the by which each person and region will unite and be bound; which remains a pertinent action because of the

circumstances in which Nigeria was created. It is submitted that anyone who suggests otherwise with respect to the restructuring issue has failed to appreciate the fact that Nigeria became independent just sixty seven years after over three centuries of slave trade where the primary business in Nigeria was selling each other into slavery. This has led to a system of disunity and distrust among Nigerians. The only act of human enslavement recorded in history where the people were subdued for centuries similar to what transpired in Nigeria is recorded in the Bible in Exodus. Chapter 12 Verses 40 and 41 records that the Israelites were in Egypt for a total 430 Years including a time where both allies lived together harmoniously until the Egyptians illegally broke a peace treaty and decided to enslave them.³ Indeed the Bible records that this slavery experience affected the Israelites in achieving their full potential because they found it difficult to trust God and lacked courage to surmount their every challenges without playing the blame game.³¹ This s for the lack of trust in countries that benefited the most from slave trade including Nigeria and the United States of America.

In the United States the majority of the descendants of African slaves still live in a society of inequality where the average African American is discriminated against and the whites consider themselves as the more privileged race. This distrust is evident in the violent attitude the police have towards black African Americans because of so much negativity within the black community. If Nigeria is to quickly integrate herself towards a new and prosperous economy she must immediately recognize the peculiarities of her history and take well thought out and planned steps to create institutional efficiency.

The notion that Nigeria should reorganize society along ethnic and linguistic borders to ensure regions can amicably live and work together may seem like a very basic step to take but it is indeed important and cannot be disregarded. In fact, this very notion finds in the Holy Bible’s of the origin of languages recorded in Genesis chapter 11 verses 1 to 9. According to the age, there was a time very long ago when the whole of the earth had one language and the children of men decided to build a tower to reach the heavens. The age reveals that God came down from heaven to look at what they had built and when he saw it he said that because the people were united, of one

language and they have started to build their tower, there was nothing that they propose to do that can be withheld from them. This means that if Nigerians have unity of purpose, mutual respect, understanding and a firm undertaking to work with each other and we decide for ourselves to work together in harmony on any or all purposes we can successfully re-build the Nigerian economy to reach the heavens thereby integrating Nigeria into the world economic order.

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CarslogieSSCov.NorwegianGovernment[1952]AC292.

TheCavendish[1993]2Lloyd’sRep.292.

CfStovinv.Wise[1996]AC923.

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TheDundee(1823)1Hagg109,120.

TheEstrella[1977]1Lloyd’sRep525.

TheEssoBernicia[1989]AC643.

TheFritzThyssen[1967]2Lloyd’sRep.199.

The Gas Float Whitton (No 2) [1897] AC 337 (HL).

TheGazelle(1844)2WRob279,Oregonv.TheTugGo-Getter,1973AMC243.

The Gregerso [1971] 1 Lloyd’s Rep. 220.

Hook v. Cunard Steamship Company limited [1953] 1 ALL ER 1021.

Janet Dawkins v. Carnival Plc (t/a P & O Cruises) [2011] EWCA Civ. 1237.

The Khedive (1880) 5 App. Cas. 876, 909.

Lee v. Airtours Holidays Ltd. [2004] 1 Lloyd’s Rep. 683 (Central London CountyCourt).

Measure Affecting Imports of Automobile Parts Dispute DS339 (EU), DS340 (US), DS342 (Canada).

TheMediana[1900]AC113.

TheMerchantVenturer[1997]1LloydsRep.388.

The Minniehaha [1861] Lush PC 335.

TheMoorcock(1889)14PD64.

TheMostyn[1928]AC57.

The Nagasaki Spirit [1997] 1 Lloyd’s Rep. 323.

TheNeptune[1938]P21.

OceanicCrestShippingCo.v.PilbaraHarbourServicesPty.Ltd.(1986)160C.L.R.626.

TheOropesa [1942]P.140.

ThePacificConcord[1960]2Lloyd’sRep270,TheSivand[1998]2Lloyd’sRep97.

The Phantom [1886] LT 1 A & E 58.

R v. Goodwin [2005]EWCACrim.3184;[2006]1Lloyd’sRep.432.

The Samco Europe (Owners) v.The MSC Prestige (Owners) [2011] EWHC 1580 (lty), [2011] 2 C.L.C. 655.

The Sandefjord [1953] 2 Lloyd’s Rep.557.

The San Demetrio (1941) 69 Lloyd’s Rep 5.

TheTexacoTexas,773F.2d1396(1986).

The Transcolorado458F.2d164(1995),1995AMC292.

The Tojo Maru [1971] 1 Lloyd’s Rep. 345.

TryggingarfelagidForoyar P/F v. T EmpresasMaritimas SA (The M/V Athena) [2011] EWHC 589

TheVicky1[2008]2Lloyd’sRep.45.

TheVirgo(1876)3Asp.MLC285.

TheWestWales[1932]P165.

WVHRogers[1980]CLJ124.

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International Convention on the Removal of Wrecks 2007, Nairobi, Kenya.

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SOLAS Convention.

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ENDNOTES

1 Pablo Mendes DeLeon, Cabotage in the Air Transport RegulationMarntinusNijhoff of Publishers 1992.

2 Lorenzo, E. M., “The Domestic Shipping Industry of the Philippines: A Situation Report”, Director, Domestic Shipping Office, Maritime Industry Authority see http://marinaph.freehostia.com/report/domestic/domestic98.pdf

3 H. Black, Black’s Law Dictionary, Sixth Edition,2002.

4 Source: Maps generated by the Department of Geography, University of Lagos.

5 Ibid.

6 Oppenheim, L., and R. Roxburgh, International Law: A Treatise, Clark, NJ: Law Book Exchange Ltd 1920.

7 Ibid., 745.

8 Emeka, Akagbogu, Maritime Cabotage in Nigeria, Olisa Agbakoba and

Associates Publishers Lagos, 2004.

9 http://www.icao.int/publications/Documents/7300_orig.pdfaccessed 03/05/2010.

10 Igbokwe, Mike, Nigerian Maritime Cabotage Policy and Law (the Case and Advocacy), One United Company, 2006

11 Popularly known as the Jones Act; see Public Law 66261 Title 4 of the US code.

12 46 App. USC 861 (2002).

13 See Section 1 of the US Merchant Marine Act.

14 See Section 6 of the US Merchant Marine Act of 1920 (46 App. USC 865, 2002).

15 Igbokwe, Mike, Nigerian Maritime Cabotage Policy and Law (the Case and Advocacy), One United Company, 2006.

16 Mike Igbokwe, Nigerian Maritime Cabotage Policy and Law (the Case and Advocacy), 3

17 See Section 1009 of the Tariff and Custom Code of the Philippines.

18 Mike Igbokwe, Nigerian Maritime Cabotage Policy and Law (the Case and Advocacy), 3.

19 Ibid.

20 http://www.mua.org.au/statement_regarding_the_mv_pioneer_blog, accessed 05/05/2010.

21 See Punch newspaper publication 27th May 2014 written by NAN titled “Nigerian has over 400 minerals, Minister.”

22 http://www.encyclopedia.com/topic/Nigeria.aspx, accessed 05/05/2010.

23 Igbokwe, Mike, Nigerian Maritime Cabotage Policy and Law (the Case and Advocacy), One United Company, 2006

24 Maritime Cabotage Task Force, “Full Speed Ahead”, a report on the American Domestic Fleet, Washington DC: Preston, Gates, Ellis, and Rourelas Meds., 1997.

25 Mike Igbokwe, Nigerian Maritime Cabotage Policy and Law (the Case and Advocacy), 5.

26 Maritime Cabotage Task Force, “Full Speed Ahead”, a report on the American Domestic Fleet, Washington DC: Preston, Gates, Ellis, and Rourelas Meds., 1997.

27 Mike Igbokwe, Nigerian Maritime Cabotage Policy and Law (the Case and Advocacy), 6.

28 AyodejiOlukoju, Maritime Policy and Economic Development: A Comparison of Nigerian and Japanese Experiences since World War, 166.

29 Takeuchi, Yoshio, “Development of Ports in Japan and the Role of Central Area in Japan and the Role of Central Governments – History and Future of Port Development”, in proceedings of the Arab-Japan Port of Harbour t Conference, Tokyo, 1977, 31–36.

30 Takeuchi, Yoshio, “The Economic Impact of Ports in Japan”, ESCAP Port Development, 6 (1983), 31–35.

31 Akatsuka, Y., “Development of Katshima Seaboard Industrial Area in Proceedings of the Arab-Japan Port and Harbour t Conference, Tokyo”, International Association for Ports and Harbours (IAOH), 1977.

32 The workshop was titled “Challenges of Maritime Practices in the New

Millennium” and was organized by the Federal Ministry of Transport in Collaboration with its parastatals and the Foundation Chambers. It ran from 26– 28 February 2001 at el Meriden Eko Hotel, Victoria Island, Lagos.

33 The Guardian “Nigeria’s Local Content Policy Is a National Imperative”, 18 August 2008.

34 “Daily Trust, “IBOM DOCK, answer to Nigeria’s Cabotage Needs”, 9 October 2008.

35 AyodejiOlukoju, “Helping Our Own Shipping Official age to Nigeria 1914–45”, 30.

36 See “ITF Maritime Department Policies: From Osio to Delhi”, chapter 5, cited in Mike Igbokwe, Nigeria Maritime Cabotage Policy and Law (the Case and Advocacy), 8.

37 http://www.mikeigbokwe.com/new1/Cabotage%20Act.Intended%20Effect.pdf

38 Mike Igbokwe, Nigerian Maritime Cabotage Policy and Law (the Case and Advocacy), 12.

39 Ibid.

40 Mike Igbokwe, Nigerian Maritime Cabotage Policy and Law (the Case and Advocacy), 13.

41 Hopkins, A. G., “An Economic History in West Africa” London: Longman Publishers, 1973.

42 Olukoju, Ayodeji, “Helping Our Own Shipping: Official age to Nigeria 1914–45”, Journal of Transport History.Vol. 20, No. 1 March 1999

43 Olukoju, Ayodeji, “Helping Our Own Shipping: Official age to Nigeria 1914–45”, Journal of Transport History.Vol. 20, No. 1 March 1999, 32–33.

44 See NAI CSO 26/1 09129 vol. I, encl. in crown agents to Chief Secretary to the Government,27 March 1917:“Lugard to Long”, January 1918.

45 “Lugard to Long”,January 1918.See also Davies Trade Markers, 196,477–78.

46 Ibid.

47 Olukoju, Ayodeji, “Helping Our Own Shipping: Official age to Nigeria 1914–45”, Journal of Transport History.Vol. 20, No. 1 March 1999

48 “Shipping in inter wars” studied in Davies Trade markers and Leubuscher, Shipping Trade. See also AyodejiOlukoju,“Maritime Trade in Lagos in the

Aftermath of the First World War” African Economic History Journal page 119135.

49 See“Scott (acting Chief Secretary to the Government) to Colonial Workers Association”, 4 October1922.

50 NI CSO 26/1 02029, vol.I, “Scott (acting Chief Secretary to the Government) to Secretary, Southern Provinces, and Heads of Departments”, 3 April 1923.

51 Ibid.

52 Olukoju, Ayodeji, “Helping Our Own Shipping: Official age to Nigeria 1914–45”, Journal of Transport History .Vol. 20, No. 1 March 1999

53 Infra (see footnote 51).

54 Association of European Civil Servants of Nigeria, untitled pamphlet, 30 April 1923, p. 2.See alsoAyodejiOlukoju“Elder Dempster’s Monopoly in World War I” 2–3.

55 Association of European Civil Servants, pamphlet, 3–4.

56 NAI CSO 26/1 09129, vol. I, “Elder Dempster &Co. to Chief Secretary to the Government”, 5 May 1923. See also the reactions of shipping lines to port

tariffs, which have been examined in Olukoju, “‘Expensive Port”.

57 NAI CSO 26/1 09129, vol. II, “‘Ocean age Rates”,H. J. Read to Elder.Seealso“Elder Dempster &Co. to Undersecretary of State”,10 June 1923.

58 “Acting Treasurer to Chief Secretary to the Government”, 6 September 1923. Quoted from AyodejiOlukoju,“Helping Our Own Shipping:” Official ages to Nigeria,1914–45”,37.

59 See Secretary of Southern Provinces, Lagos, to Resident, Owerri Province,” 16 August 1923.Quoted from AyodejiOlukoju, “Helping Our Own Shipping:” Official ages to Nigeria,1914–45”.

60 NAI CSO 26/1 09129, vol. III, “‘Ocean 44 age.Rates”, J. Jones (for Elder Dempster) to Undersecretary of State, 12 February 1924.

61 See Minute, 31 July 1928; Secretary of State L S. Amery, to Thomson, Nigeria Confidential,13 August 1928.

62 NALCSO 26/1 09129 vol. III, Treasurer to Chief Secretary to the Government, 5 September 1928; · Lieutenant Governor, Northern Provinces, to Chief Secretary to the Government, 11 September 1928.

63 F.M. Baddeley (Officer istering Government, Nigeria) to Amery, 12 November 1929. From Ayodeji Olukoju,“Helping Our Own Shipping:” Official ages to Nigeria, 1914–45”, 39.

64 NAI CSO 26/1 06767 vol.IV, “‘Ocean age Arrangements for Nigerian Officials”, Treasurer to Chief Secretary to the Government, 8 May 1930.

65 Crown Agents to Chief Secretary to the Government, 19 September 1930; Secretary of State to Officer istering Government, Nigeria, 8 September 1932.

66 The agreement is enclosed in Cunliffe-Lister to Cameron, 11 July 1933,quoted from AyodejiOlukoju,“Helping Our Own Shipping:” Official ages to Nigeria,1914–45”, 39.

67 Acting Treasurer to Chief Secretary to the Government, 11 August 1933;NAI CSO 26/1 06767 vol.V, “Ocean age Arrangements”, Acting Treasurer to Chief Secretary to the Government, 10 March 1936.

68 NAI CSO 26/1 06767 vol. V, Minute, Cox to Chief Secretary to the Government, 16 July 1936. fromAyodejiOlukoju,“Helping Our Own Shipping:” Official ages to Nigeria, 1914–45”, 40.

69 V. E. Ringmore (Crown Agents) toUndersecretary of State, 30 September1936.

70 Elder Dempster &Co. to Acting Financial Secretary, 22–25September 1939.

71 Bourdillonto MacDonald, 6 October 1939 from “Helping our own shipping” Official ages to Nigeria 1914-45 by AyodejiOlukoju published in the Journal of Transport History 20/1’page 41

72 Secretary of State MacDonald to Bourdillon, 29 November 1939 ibid

73 Smallbridge (CrownAgents) to Under-Secretary of State, 11 May 1942

74 H. W. Eagleton (Crown Agents) toUnder-Secretary of State, 10 May 1943.

75 A study of French protectionism in West Africa, C. W. Newbury’s“‘TheProtectionist Revival in French Colonial Trade: The Case of Senegal”, 337–48.

76 Olukoju, “Maritime Policy and Economic Development: A Comparison of Nigerian and Japanese Experiences since the Second World War”, 160.

77 Paul Hanappe and Michel Savy, “Industrial Ports and Economic Transformations, Tokyo: I.A.P.H.”, 1980.

78 Olukoju, Ayodeji, “Maritime Policy and Economic Development: A Comparison of Nigerian and Japanese Experiences Since World War”, Afrika Zamani,11–12 (2003–2004).

79 Tessier, J. M., “Port City Relations: A Canadian Perspective”, in proceedings of the Seventeenth IAPH World Ports Conference (1991), 165–186

80 Ibid.

81 Olukoju, Ayodeji, “Maritime Policy and Economic Development: A Comparison of Nigerian and Japanese Experiences Since World War”, Afrika Zamani,11–12 (2003–2004).

82 Goss, R. O., “Economic Policies and Seaports 1”, The Economic Functions of Seaports, Maritime Policies and Management, 17/3 (1990).

83 Ibid., n. 71.See also OlukojuAyodeji, “Spatial Analysis and Inter-Port Competition: Lagos, the Niger, and the Capture of the Kana-Tripoli Trade, 1890–1914”, 30–47.

84 Ibid., 71.

85 See pages 2 and 3, of this work.

86 Those cabotage polices, however, are subject to EU treaties that reflect uniformity in trade practices, entered into by England and .

87 Olukoju, Ayodeji, “Maritime Policy and Economic Development: A

Comparison of Nigerian and Japanese Experiences Since World War”, Afrika Zamani,11–12 (2003–2004).

88 Olukoju, Ayodeji, “Maritime Policy and Economic Development: A Comparison of Nigerian and Japanese Experiences Since World War 11”, Afrika Zamani,11–12 (2003–2004).

89 Olukoju, Ayodeji, “Government and Port istration in Japan in the Aftermath of the Port and Harbour Law 1950”, Northern Mariner 7/4 (October 1977).

90 Ibid.

91 Olukoju, Ayodeji, “Government and Port istration in Japan in the Aftermath of the Port and Harbour Law 1950”, Northern Mariner 7/4 (October 1977).

92 See Articles 14–27 of the Port and Harbour Law of 1950 (Japan).

93 Olukoju, Ayodeji, “Government and Port istration in Japan in the Aftermath of the Port and Harbour Law 1950”, Northern Mariner 7/4 (October 1977).

94 See Article 33 of the Ports and Harbour Law of 1950.

95 Olukoju, Ayodeji, “Government and Port istration in Japan in the Aftermath of the Port and Harbour Law 1950”, Northern Mariner 7/4 (October 1977).

96 Article 44 of the Ports and Harbour Law of 1950.

97 See Articles 42–43 of the Ports and Harbour Law of 1950. See also Olukoju, Ayodeji, “Government and Port istration in Japan in the Aftermath of the Port and Harbour Law 1950”, Northern Mariner 7/4 (October 1977)., page 71.

98 Kazuo Kudo “Implementation of Port Development Policy in Japan: Problems and Counter Measures” ESCAP (Bangkok 1984)

99 Olukoju: “Government and Port istration in Japan in the Aftermath of the Port and Harbour Law 1950” the Northern Mariner VII, No 4 (October 1977) page 72

100 Kazuo Kudo “Implementation of Port Development Policy in Japan: Problems and Counter Measures” ESCAP (Bangkok 1984)

101 Olukoju, Ayodeji, “Government and Port istration in Japan in the Aftermath of the Port and Harbour Law 1950”, Northern Mariner 7/4 (October 1977).

102 Olukoju, Ayodeji, “Government and Port istration in Japan in the Aftermath of the Port and Harbour Law 1950”, Northern Mariner 7/4 (October

1977), 72–73.

103 Ibid., 74.

104 Ibid.

105 Ibid.

106 Y. Ataksuka “Development of Kashima Seaboard Industrial Area” ESCAP proceedings 1984 page 38

107 Olukoju, Ayodeji, “Government and Port istration in Japan in the Aftermath of the Port and Harbour Law 1950”, Nothern Mariner 7/4 (October 1977), 72.

108 Takeuchi, Yoshio, “The Economic Impact of Ports in Japan”, ESCAP Port Development, 6 (1983), 38.

109 ibid

110 https://www.google.co.uk/#q=length+of+nigerian+coastline, 02/01/2015.

111 See Nigerian Export Promotion Council list of ed and performing

exporters and commodities 2013.

112 See Channels Television Sunrise Programtitled “Analysing port sector reforms in Nigeria” (interview of David Iweta, president of the Nigerian Chamber of Commerce, Sapele Division) on the 15th of December 2016.

113 ibid

114 https://en.wikipedia.org/wiki/Triangulartrade

115 For a more comprehensive study of this theory please see https://www.britannica.com/science/continental-drift-geology assessed 06/07/2017

116 http://www.encyclopedia.com/earth-and-environment/geology-andoceanography/geology-and-oceanography/continental-drift accessed 6th July 2017.

117 Daron Acemoglu and James A. Robinson “WHY NATIONS FAIL: THE ORIGIN OF POWER, PROSPERITY AND POVERTY” Profile Books Limited Publishers.

118 http://www.howard.edu/library/refrence/cybercamps/camps2002/Yorubafaith.htm assessed 6th of June 2017.

119 The Malaysian government in the 1970s came to learn the technology for making palm oil in Nigeria, and today it is the world’s number one exporter of this product. Nigeria does not export palm oil yet.

120 “The Nigerian Local Content Policy in the Oil and Gas Industry and Its International Obligations: A Commentary”, seminar paper presented by Obatabgonna Joy Abiemwense and Akagha Tina Onyinyechi, delivered at Babalakin and Co, Lagos.

121 http://www.nnpcgroup.com/faq.htm13/11/2007.

122 http://www.nnpcgroup.com/faq.htm13/11/2007, quoted from Akagha, Tina Onyinyechi and Obatabgonna Joy Abiemwense, “The Nigerian Local Content Policy in the Oil and Gas Industry and Its International Obligations (A Commentary)”, seminar paper delivered at Babalakin and Co., Lagos 2006.

123 https://giwaraufolatunde.files.wordpress.com/2011/03/ptdf_revision1.pdf accessed 20/10/2015

124 Akagha, Tina Onyinyechi and Obatabgonna Joy Abiemwense, “The Nigerian Local Content Policy in the Oil and Gas Industry and Its International Obligations (A Commentary)”, seminar paper delivered at Babalakin and Co., Lagos 2006.

125 Xie, Bin, and Oliver Nick, “The Developing Chinese Automotive Industry”, working paper, Judge Institute of Management and Studies, University of

Cambridge, 1996

126 Holweg, Matthias, JianxiLuo, and Oliver Nick, “The Past, Present and Future of China’s Automotive Industry: A Value Chain Perspective.” Judge Business School, University of Cambridge UK, Engineering Systems Division, Massachusetts Institute of Technology 2009.

127 Hong, Eui, and Holweg, Matthias ’ Evaluating the Effectiveness and Efficiency of Global Sourcing Strategies’ Working Paper, Judge Business School, University of Cambridge, UK. 2005.

128 All recent Apple devices, including the iPhone, iPod and iPad series, have inscribed the words “Designed by Apple in California. Assembled in China” on the back.

129 A paper prepared for the Energy Foundation, China Sustainable Energy Program.

130 Gallagher, Kelly Sims, “Direct Investment as a Vehicle for Deploying Cleaner Technologies: Technology Transfer and the Big Three Automakers in China”, doctoral dissertation, Fletcher School of Law and Diplomacy, June 2003.

131 Ministry of Science and Technology (MOST), State Development Planning Commission (SDPC), State Economic and Trade Commission 2002, “Evaluation of Policies Designed to Promote the Commercialization of Wind Power Technology in China”. See www.efchaina.org/documents/windpowertechcomplete.pdf.

132 Lewis, Joanna I., “A Review of the Potential International Trade Implications of Key Wind Power Industries and Policies in China”, prepared for the Energy Foundation China Sustainable Energy Program, 2. See http://www.resourcesolutions.org/pub_pdfs/China.wind.policy.and.intl.trade.law.Oct.07.pdf

133 Lew, Debra J., “Alternatives to Coal and Candles: Wind Power in China”, Energy Policy 28 (2000), 271–286.

134 Kranhold, Kathryn, “China’s Price for Market Entry: Give Us Your Technology Too”, Wall Street Journal, 26 February 2004.

135 Joanna I. Lewis, “A Review of the Potential International Trade Implications of Key Wind Power Industries and Policies in China”, 6.

136 Joanna I. Lewis, “A Review of the Potential International Trade Implications of Key Wind Power Industries and Policies in China”. 7.

137 Liu, Wenqiang, Lin Gab, and Xiliang Zhang, “Cost Competitive Incentives for Wind Energy Development in China: Institutional Dynamics and Policy Changes”, Energy Policy, 30 (2002), 753–765.

138 “China – Measure Affecting Imports of Automobile Parts” Dispute DS339(EU), DS340 (US), DS342 (Canada).

139 Joanna I. Lewis, “A Review of the Potential International Trade Implications of Key Wind Power Industries and Policies in China”, 3.

140 Ibid.

141 Joanna Lewis and Ryan Wiser, “ing Localization of Wind Technology Manufacturing through Large Utility Tenders in Quebec: Lessons for China”.

142 Dispute Settlement: Dispute DS 146, “India – Measures Affecting the Automotive Sector”, http:/www.wto.org/English/tratop_w/dispu_e/cases_e/ds 146_e.htm.

143 Joanna I. Lewis, “A Review of the Potential International Trade Implications of Key Wind Power Industries and Policies in China”, 4.

144 Ibid.

145 These are projects funded by the government. For example, when a student comes back from training in a foreign school or has gone to acquire some skills abroad, the government organizes demonstration projects to replicate in China what students learnt elsewhere.

146 National Renewable Energy Laboratory (NREL), “Renewable Energy Policy in China: Financial Incentives”, http:/www.nrel.gov/docs/fy04osti/36045.pdf.

147 Holweg, Matthias, JianxiLuo, and Oliver Nick, “The Past, Present and Future of China’s Automotive Industry: A Value Chain Perspective.” Judge Business School, University of Cambridge UK, Engineering Systems Division, Massachusetts Institute of Technology 2009.

148 Holweg, Matthias, JianxiLuo, and Oliver Nick, “The Past, Present and Future of China’s Automotive Industry: A Value Chain Perspective.” Judge Business School, University of Cambridge UK, Engineering Systems Division, Massachusetts Institute of Technology 2009.The authors identified historically, the development phases of the Chinese automotive sector and properly identified polices and experiences that led to its success. It is our own submission here that the success story of the Chinese experience is related behind a spirit of local content in a quest by government to develop local capacity in various industries using the automotive industry as a point of reference.

149 Ibid.

150 Ibid.

151 Holweg, Matthias, JianxiLuo, and Oliver Nick, “The Past, Present and Future of China’s Automotive Industry: A Value Chain Perspective.” Judge Business School, University of Cambridge UK, Engineering Systems Division, Massachusetts Institute of Technology 2009.

152 Xie, Bin, and Oliver Nick, “The Developing Chinese Automotive Industry”, working paper, Judge Institute of Management and Studies, University of Cambridge, 1996

153 Holweg, Matthias, JianxiLuo, and Oliver Nick, “The Past, Present and Future of Chinas Automotive Industry: A Value Chain Perspective.”, 5.

154 Ibid.

155 Holweg, Matthias, JianxiLuo, and Oliver Nick, “The Past, Present and Future of Chinas Automotive Industry: A Value Chain Perspective.”, 11.

156 Holweg, Matthias, JianxiLuo, and Oliver Nick, “The Past, Present and Future of China’s Automotive Industry: A Value Chain Perspective.”, 12.

157 Ibid.

158 Holweg, Matthias, JianxiLuo, and Oliver Nick, “The Past, Present and Future of Chinas Automotive Industry: A Value Chain Perspective.”, 15.

159 Ibid.

160 Ibid.

161 Xie Bing and Nick Oliver, “The Developing Chinese Automotive Industry”.

162 Holweg, Matthias, JianxiLuo, and Oliver Nick, “The Past, Present and Future of Chinas Automotive Industry: A Value Chain Perspective.””, 23.

163 Ibid.

164 Holweg, Matthias, JianxiLuo, and Oliver Nick, “The Past, Present and Future of China’s Automotive Industry: A Value Chain Perspective.”, 23.

165 Ibid.

166 Holweg, Matthias, JianxiLuo, and Oliver Nick, “The Past, Present and Future of Chinas Automotive Industry: A Value Chain Perspective.”, 25.

167 Ibid.

168 ibid.

169 Ibid.

170 Holweg, Matthias, JianxiLuo, and Oliver Nick, “The Past, Present and Future of China’s Automotive Industry: A Value Chain Perspective.”, 25.

171 Ibid.

172 Howleg, Matthias and Frits K. Pil, “The Second Century: Reconnecting Customer and Value Chain: Moving beyond Mass and Lean Production in the Automotive Industry”, Cambridge: MIT Press 2005.

173 For example, Ford announced plant closures in the United States in early 2005, when the overall capacity had fallen below 75 per cent. See Holweg, Matthias, JianxiLuo, and Oliver Nick, “The Past, Present and Future of Chinas Automotive Industry: A Value Chain Perspective.”, 29.

174 Holweg, Matthias, JianxiLuo, and Oliver Nick, “The Past, Present and Future of China’s Automotive Industry: A Value Chain Perspective.”, 29.

175 Ibid.

176 Ibid., 33–35.

177 Holweg, Matthias, JianxiLuo, and Oliver Nick, “The Past, Present and Future of Chinas Automotive Industry: A Value Chain Perspective.”, 45.

178 Ibid.

179 Holweg, Matthias, JianxiLuo, and Oliver Nick, “The Past, Present and Future of Chinas Automotive Industry: A Value Chain Perspective.”, 45–46.

180 Published on twitter on the 13th of July 2017 by Amara Nwankpa, (@Nwankpa_A) Director of Public Policy Initiative, Shehu Musa Yaradua Foundation.

181 “Flora Shaw Gives Name to Nigeria”, www.nabss.org.uk//i/mark.../History%20of%20Nigeria.pdf.

182 Ibid.

183 See http://www.sahistory.org.za/topic/songhai-african-empire-15-16thcentury, 12/05/2015.

184 Article title “Emerging giants” contained in The Report Nigeria 2016 published by OXFORD BUISNESS GROUP.

185 https://en.wikipedia.org/wiki/Isaac_Newton

186 See Article title “Keeping Pace” contained in The Report Nigeria 2016 published by OXFORD BUISNESS GROUP.

187 ibid

188 Article title “Work to be Done” contained in The Report Nigeria 2016 published by OXFORD BUISNESS GROUP.

189 This must be done with careful reference to child rights and child Labour legislations.

190 WunmiIledare and Rotimi Suberu,“Framework Paper on Oil and Gas Resources in the Federal Republic of Nigeria”.prepared for the Conference on Oil and Gas in Federal Systems World Bank Headquarters, Washington, DC 3–4 March2010

191 In 1990, the government offered a number of new concessions in water depths of up to 3,000 meters. BP/Statoil, Shell, Mobil, Elf, Agip, and Exxon were among the major oil companies that won concessions. Estimates of recoverable oil reserves in Nigerian deep-water areas range from 8 to nearly 20 billion barrels. Exploration and appraisal began in 1995, and several discoveries have been made in Nigeria’s deepwater, although high production costs associated with deep water have meant that production has been delayed. See http://www.mbendi.com/indy/oilg/ogus/af/ng/p0005.htm.

192 Mike Igbokwe, Nigerian Maritime Cabotage Policy and Law (the Case and Advocacy), 357.

193 Ibid.

194 See Section 51 of the Coastal and Inland Shipping (Cabotage) Act No. 5 of 2003, LFN.

195 http://www.commercialdiplomacy.org/ma_projects/magee2.htm#top. accessed 28/10/2015

196 http://www4.law.cornell.edu/uscode/unframed/46X/ch24.html. Accessed 20/10/2015

197 http://www.hawaii.gov/dbedt/he7-99/psa.html Accessed 20/10/2015

198 Chapter 421wasan act to abolish certain fees for official services to American vessels, and to amend the laws relating to shipping commissioners, seamen, and owners of vessels, among other purposes.

199 An act to amend the laws relating to navigation.

200 Seehttp://www.commercialdiplomacy.org/ma_projects/magee2.htm#top. Accessed 28/10/2015

201 Jones Act Report, www.mct.com/news/letter, 9/10/2008.

202 This suggestion is elaborated upon in chapter 7.

203 Countries that utilize this opportunity include United Kingdom, Liberia,

Panama, Norway, Netherlands, and the Bahamas.

204

205 http://www.iccl.org/policies/lifejackets.htm. Accessed 28/10/1015

206 Section 35 of the Cabotage Act.

207 See Ross T. Smyth v Bailey {1940} 3 All ER 60

208 See the testimony by the Deputy Maritime on 15 September 1988 at https://www.marad.dot.gov./headlines.

209 htts://www.dhs.gor/xnews/releases/press.shtm. Assessed July 2008

210 Ibid.

211 See sections 10 and 11 of the Coastal and Inland Shipping (Cabotage) Act No. 5 of 2003, LFN.

212 Details discussed in Chapter 6.

213 See section 22 of the Coastal and Inland Shipping (Cabotage) Act No. 5 of 2003, LFN.

214 See section 35 of the Coastal and Inland Shipping (Cabotage) Act No. 5 of 2003, LFN.

215 Mike Igbokwe, Nigerian Maritime Cabotage Policy and Law (The Case and Advocacy), 10.

216 See sections 44 and 45(f) of the act.

217 Amanda Ripley, “How the Coast Guard Gets it Right”. Time Magazine October 24 2005

218 http://en.wikipedia.org/wiki/Unitedstatescoastguard. Assessed 28/10/2015

219 Ibid.

220 Pub. L. 107-296, 116 Stat. 2249 (2002).

221 http://en.wikipedia.org/wiki/Unitedstatescoastguard. Assessed 28/10/2015

222 Jim Garamone, “Sea Services Unveil New Maritime Strategy”,

http://www.navy.mil/search/display.asp?storyid=32655. Assessed 28/10/2015

223 Title 18 of USC S1385 exempts the US Coast Guard from the provisions of the Posse Comitatus Act.

224 Reported in Maritime Quarterly, May–June 2001 edition, 5.

225 Ihenacho, E., “Prospects of Cabotage in Nigeria”, seminar paper presented at the Maritime Stakeholder’s Conference, 2004.

226 M. Igbokwe, “International Maritime Conventions: Regional Cabotage for West Africa: A Possibility?”.

227 Udeh, O., “Movement for a Cabotage Regime in Nigeria”, Maritime Quarterly (May–June 2001).

228 Okoroji, L., and W. I. Ukpere, “A Strategic Reposition of the Maritime Industry for Economic Recovery and Sustainability: The Cabotage Act”, African Journal of Business Management 5/14 (2011), 5658–5663.

229 Usoro, M. E., “Cabotage Policy and International Maritime Politics: The Nigerian Coastal and Inland Shipping (Cabotage) Act 2003”, a paper presented at the Annual Maritime Seminar of the Nigerian Maritime Law Association, 13– 14 May 2003.

230 Biu, A. A., “Development of Opportunities in the Gulf of Guinea through Duty Free Zones, Cabotage and Common Maritime Regimes”, presented at Abuja Petroleum Roundtable on Oil and the Future of Nigeria: Challenges, Opportunities, Road Map to Development (8–9 March 2007).

231 Donald J. Trump and Robert T. Kiyosaki “Why we want you to be rich” published by Richpress 2006

232 ibid

233 Ibid.

234 See “President Obama’s Agenda for Creating Economic Opportunity for Millennials”, http://www.whitehouse.gov/the-press-office/2014/10/09/fact-sheetpresident-obama-s-agenda-creating-economic-opportunity-millen. Also see “The President’s Trade Policy Agenda, 2013”, https://www.ustr.gov/sites/default/files/Chapter 16/10/2015.

235 Asoluka, C. C.,“Cargo : Tool for Building Indigenous Competitive Maritime Industry in Nigerian Maritime Resources Development: Issues and Challenges”, Surulere-Lagos: ELMachi Publishers Limited 2003

236 Source 26, no. 1 (January), 25.

237 See “An Evaluation of the Effectiveness of the Cabotage Act 2003 on Nigerian Maritime istration”, 12–28.

238 Sekibo, A. P. S., “Prospects and Challenges of Cabotage in Nigeria”, Lagos: Wista Nigeria, 2004.

239 Usoro, M.E. (2010) “Third Party Claims: An Appraisal of the NIMASA Act 2007” a paper presented at the second strategic iralty seminar for judges, November 15-19 at Calabar, Nigeria.

240 Ibid.

241 Agoha, William U., “The Impact of the Cabotage Act on Local Capacity Development: A study of Selected Indigenous Shipping Companies”, advanced PGD diploma dissertation, Federal University of Technology, Owerri, November 2008

242 Oscarline Onwuemenyi, ‘How Adoke withdrew 50% of EFCC Cases’, the Vanguard Newspaper Article dated,26th of July 2011

243 Ade Adesomoju, “EFCC to probe Adoke’s $6M no trial deal with suspect” Punch News Paper Publication dated 27th April 2016.

244 Daron Acemoglu and James A. Robinson “WHY NATIONS FAIL: THE ORIGIN OF POWER, PROSPERITY AND POVERTY” Profile Books Limited Publishers (Preface 3).

245 See “Cancellation of import duty waivers” Source www.shipsandports.com.ng. accessed 11/09/2017

246 See “Cancellation of import duty waivers” Source www.shipsandports.com.ng. accessed 11/09/2017

247 ibid

248 See Emmanuel Mayah “How N215 billion import waivers was disbursed in 4 years mostly during night visits to the President” Times Newspaper

249 ibid

250 See Section 76 (3)1, (4)1 and 6(1) of the Insurance Decree 1997

251 See Biddel Brothers vs. E. Clemens Horst co.

252 MambreSacarine vs. Corn Produce

253 See The Maritime Newsletter Volume 2, Olisa Agbakoba and Associates Publishers.

254 Elegido, J. M., “Jurisprudence”, Spectrum Publishers, 1994.

255 Dicey, A. V., “Introduction to the Study of the Law of the Constitution”, London, 1885.

256 See “The Rule of Law in a Free Society and the International Commission of Jurists”, 1960.

257 Igbokwe, M., “An Appraisal of the Cabotage Act: Three Years After”, presented at the Maritime Seminar for Judges, organized by the Nigerian Shippers’ Council, July 2006

258 See 26 USG section 30104.

259 Agoha, William U., “The Impact of the Cabotage Act on Local Capacity Development: A study of Selected Indigenous Shipping Companies”, advanced PGD diploma dissertation, Federal University of Technology, Owerri, November 2008

260 See Punch Newspaper, 26 June 2012, 14.

261 Agoha, William U., “The Impact of the Cabotage Act on Local Capacity Development: A study of Selected Indigenous Shipping Companies”, advanced PGD diploma dissertation, Federal University of Technology, Owerri, November 2008

262 See articles 3–4 of EUDirective 2005/35/EC, 17 September2005.

263 The Khedive (1880) 5 App. Cas. 876,909 (Per Lord Hatherley).

264 See also section 313 of the Merchant Shipping Act of 1995.

265 [2005]EWCACrim.3184;[2006]1Lloyd’sRep.432.

266 458F.2d164(1995),1995AMC292.

267 See TheVirgo(1876)3Asp.MLC285.

268 [1942]P.140.

269 TheEssoBernicia[1989]AC643.

270 See 253(2) Merchant Shipping Act 1995.

271 See section 7(4) of the Pilotage Act of 1987.

272 The News publication “2 vessels collide on the High Seas; NIMASA rescues

3 crew ” Thursday February 4th 2016: See Also News expresses publication “NIMASA gives insight to Ship Collision, rescue operation” Twenty eighth of October 2015.

273 (See The Minniehaha [1861] Lush PC 335: The Sandefjord [1953] 2 Lloyd’s Rep.557:The San Demetrio (1941) 69 Lloyd’s Rep 5:Section 4 of the Fire Services Act 1947:The Gregerso [1971] 1 Lloyd’s Rep. 220:The Belle [1809] All ER 165.)

274 See The Tojo Maru [1972] AC 242 (HL). Also see article 8(1) of the Salvage Convention of 1989.

275 http://www.imo.org/About/Pages/Default.aspx, accessed 06/03/2015.

276 http://www.imo.org/About/hip/Pages/tates.aspx, accessed 06/03/2015.

277 Janet Dawkins v. Carnival Plc (t/a P & O Cruises) [2011] EWCA Civ 1237.Lee v. Airtours Holidays Ltd. [2004] 1 Lloyd’s Rep. 683 (Central London County Court).

278 Thomas, D. R., Liability Regimes in Contemporary Maritime Law, London Informa, 2007.

279 See articles 3–4 of EUDirective 2005/35/EC, 17 September2005.

280 http://en.wikipedia.org/wiki/International_Labour_Organization, 03/20/2015.

281 See the preamble to the MLC 2006.

282 See article 28 of the International Labour Organisation constitution.

283 See http://www.ilo.org/search/myanmar, 01/05/2014.

284 www. oxforddictionaries.com accessed January 11, 2017

285 www.wikipedia.org/mordernwarfareaccessed January 11, 2017

286 ibid

287 www.wikipedia.org/industrialrevolutionaccessed January 11, 2017

288 Daron Acemoglu and James A. Robinson “WHY NATIONS FAIL: THE ORIGIN OF POWER, PROSPERITY AND POVERTY” Profile Books Limited Publishers.

289 De las Casas, Bartolome “A Short of the Destruction in the Indies”, Penguin Publishers

290 Daron Acemoglu and James A. Robinson “WHY NATIONS FAIL: THE ORIGIN OF POWER, PROSPERITY AND POVERTY” Profile Books Limited Publishers.

291 ibid

292 Daron Acemoglu and James A. Robinson “WHY NATIONS FAIL: THE ORIGIN OF POWER, PROSPERITY AND POVERTY” Profile Books Limited Publishers.

293 www.wikipedia.org/kensaro-wiwaaccessed January 11, 2017

294 See Article title “Keeping Pace” contained in The Report Nigeria 2016 published by OXFORD BUISNESS GROUP.

295 Daron Acemoglu and James A. Robinson “WHY NATIONS FAIL: THE ORIGIN OF POWER, PROSPERITY AND POVERTY” Profile Books Limited Publishers (See Chapter 13, Why Nations Fail Today).

296 Daron Acemoglu and James A. Robinson “WHY NATIONS FAIL: THE ORIGIN OF POWER, PROSPERITY AND POVERTY” Profile Books Limited Publishers (See Chapter 13, Why Nations Fail Today).

297 See Davidson Iriekpen “Court Adjourns FG’s Suit Against Omokore, Aluko over $1.7bn Dept to Sept 29” This Day Newspaper publication dated 18/07/2017

298 Nigeria was initially created and run as a company in 1879. The Royal Niger Company and still exist today as Uniliver

299 Daron Acemoglu and James A. Robinson “WHY NATIONS FAIL: THE ORIGIN OF POWER, PROSPERITY AND POVERTY” Profile Books Limited Publishers

300 Ibid

301 http://logbaby.com/encyclopedia/slave-trade-in-nigeria_9329. Accessed 31/08/17

302 Ibid

303 http://logbaby.com/encyclopedia/slave-trade-in-nigeria_9329. Accessed 31/08/17

304 Chapter 12 Evolution of a Federalist Auto -biography of Chief Obafemi Awolowo authored by self.

305 See Article title “Emerging Giant” contained in The Report Nigeria 2016 published by OXFORD BUISNESS GROUP.

306 www.en.wikipedia.org/Statesreorganisationact1956 accessed 28/07/17

307 Obafemi Awolowo, Awo, The Autobiography of Chief Obafemi Awolowo Chapter 12 Evolution of a Federalist.

308 Ibid

309 See Exodus Chapter 1 verse 8 to 10

310 See Deuteronomy 1 verse 19 to 45