Nigeria, Africa's largest economy and most populous nation, has over 853 kilometres of coastline and access to global trade routes. Despite this advantage, the contribution of the country's maritime industry to its GDP is still limited.
Analysts project that the sector could generate over $44 billion each year if properly developed. However, a persistent gap has prevented this potential from being realised.
Mismanagement is the major Issue
Nigeria's issue is not a lack of ships, but how they are managed. Although Nigeria owns a fleet of over 4,000 flagged vessels and more than 1,000 cabotage vessels, shipowners are compelled to spend between $25 million and $30 million annually on dry-docking services in neighbouring countries. This is largely due to the absence of functional facilities and limited access to funding within the country.
Even when infrastructure is available, it often remains underutilised. For example, the N50 billion modular floating dock purchased by the Nigerian Maritime Administration and Safety Agency (NIMASA) in 2018 has been left idle, representing a public investment that incurs costs without providing any economic return.
As a result of these systemic inefficiencies, Nigeria reportedly loses approximately $147.8 million every year to foreign shipyards in docking fees, repairs, and other related costs. (a revenue that could otherwise circulate within the domestic economy).
This situation highlights the urgent need for strategic investment in ship management and repair facilities within Nigeria. By revitalising domestic shipyards and ensuring effective management of maritime assets, Nigeria could retain a significant amount of revenue that is currently lost to foreign economies, create job opportunities, and substantially increase its GDP.
Can Ship Management Break the Cycle?
Yes. At a recent breakfast meeting hosted by Olisa Agbakoba Legal (OAL) in partnership with Captain Nicholas Bernard, Managing Director of NBC Maritime Ltd, ship management was presented as a viable business rescue model, particularly for distressed maritime assets. The Nigerian ship management company showcased how dormant vessels can be rehabilitated and transformed into revenue-generating assets through structured and professional ship management.
With over 33 successful projects under their belt, NBC Maritime provides a clear example of how third-party managers can introduce structure, compliance, profitability, and safety to the maritime sector.
Owning a ship in Nigeria is a capital-intensive venture. Fluctuating exchange rates, high-interest loans, maintenance failures, and poor operational capabilities have left many vessels idle or in distress. Additionally, banks that often serve as financiers are burdened with non-performing loans on vessels they cannot legally or operationally recover.
Through effective ship management, shipowners and banks can outsource the complexities of daily operations while retaining ownership and enjoying a consistent income stream. This approach can lead to significant economic transformation because professionally managed ships can re-enter trade routes, generate revenue, create jobs for skilled Nigerian workers, pay taxes and port fees, and attract further investment.
Ship Management: Definition, Function and Value
Ship management is the business of running ships professionally and profitably on behalf of ship owners. It involves handling day-to-day operations, including technical maintenance, crew hiring, regulatory compliance, insurance, voyage planning, and financial oversight.
Beyond these routine operations, ship management is a strategic economic function. When vessels are well-managed, they stay compliant, generate consistent earnings, and retain their value. Conversely, poorly managed vessels can deteriorate and become financial burdens for owners, banks, and even the nation. In Nigeria, ship management has become a crucial commercial tool that transforms idle or distressed vessels into productive assets. These vessels can then engage in trade, create jobs, pay taxes, and contribute to the country's GDP.
This approach allows shipowners to maintain ownership while outsourcing the complexities of operations. The outcome is greater sustainability and, more importantly, profitability.
Economic Contributions of Ship Management to National Growth
- Activating Idle Assets: Each abandoned ship represents a loss and a wasted investment. Effective ship management can restore these vessels to commercial use, enhancing trade volume and port activity in both global and regional markets. This revitalisation increases customs revenue, port fees, and foreign exchange inflow.
- Creating Jobs: A single managed vessel requires a crew, engineers, compliance officers, insurance representatives, and port agents. Each vessel thus becomes a significant engine for job creation.
- Building Investors' Confidence: When banks see that vessels are being managed by experts, they are more likely to finance ship purchases or extend credit. This confidence arises from improved oversight, reduced risk, and the assurance of revenue flow.
- Boosting Exports: Well-managed vessels help to reduce shipping delays and costs, making Nigerian exports, such as oil, agricultural products, and solid minerals, more competitive in the global market.
Why Banks and Investors Should Take Notice
Banks in Nigeria have historically been reluctant to finance vessel acquisitions, citing concerns over risk and a lack of capacity. However, the real issue lies not with the asset itself, but with management. Professional ship management significantly reduces the risks associated with vessel investments. When vessels are left in the hands of poorly trained or overburdened owners, even the best loans can become problematic.
By mandating professional management for financed vessels, banks can achieve several benefits: they can reduce non-performing maritime loans, extend the asset life cycles, and gain improved oversight through transparent reporting and data analytics. It's not just about financing more vessels; it's about effectively managing them to generate revenue, repay loans, and contribute to economic growth.
Conclusion: A Future Within Reach
Imagine a Nigeria where every vessel is active and generating income, every maritime loan is recoverable, and every port serves as a hub of trade, skill, and revenue. This vision is not a fantasy; it is possible through effective and efficient ship management.
Maritime liabilities can be converted into national assets through professional ship management, not as a safety net, but as a growth strategy and for commercial profitability. Professional ship management is the key to unlocking over $44 billion in projected annual value. It is a strategic tool that transforms idle vessels into national assets, distressed loans into recoverable income, and joblessness into entrepreneurial opportunities.
To shipowners, banks, regulators, and policymakers: now is the time to move decisively away from vessel abandonment, overseas spending, and unmanaged risks.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
