How blue economy governance architecture will drive economic transformation in Nigeria, By Olufemi Awoyemi

The Nigerian government, in its desire to diversify the economy and reduce its vulnerability to external shocks, is rightfully promoting other viable sectors such as technology, education, agriculture, solid minerals, and the blue economy. These sectors selected appears deliberate and backed by evidence, but the necessary policies, programmes, and projects to drive the thoughts to actions are still at large, especially in the blue economy sector.

The primary segments of the Blue Economy ecosystem include Maritime Transportation (ships, barges, rigs and other floating vessels); Fisheries; Alternative Power (offshore wind and tidal energy / Renewable Energy); Hospitality/Tourism (beachside hotels and bars); Climate Change (carbon sink); and Waste Management.

This contribution seeks to look at the issues, challenges and actions necessary to articulate, scale and deliver a value-creating ecosystem.

Growth and Contribution Proxy 

The blue economy currently lacks aggregated data. However, a quick proxy with water transportation and trade (as maritime transport accounts for 98.9% of total exports and 93.4% of total imports) shows a moderate growth of 5.36% for water transport and 2.41% for trade and a higher prospect in terms of contribution to GDP, as trade constitute the second largest contributor to GDP. However, water transport contributes only 0.01% (see charts 1 & 2 below).

Chart 1

Chart 2:

A graph and chart of a company

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Key Issues Around the Blue Economy

In governance, notable changes have occurred; however, the operational landscape has shown no discernible changes from the thoughts put together in a  2019 report titled “Nigeria’s Blue Economy: Thought to Action”, around the issues and propositions in the maritime sector. In a PESTEL analysis, Proshare analysts noted key issues with Nigeria’s blue economy, viz:

Political Challenges: The absence of coastal states’ control over their natural water resources and coastlines significantly impedes the efficient management of the nation’s waterways. 

An indication of this conflict is the ongoing litigations between the Lagos State Inland Waterways and the Federal Inland Waterways Services over control of waterway revenues in Lagos State. The problem over who controls inland waterways revenue has been a long-drawn battle since the early 2000’s and shows the innate conflict between federal and state governments over resource control. The lack of broad political consensus on the nature of Nigeria’s fiscal federalism has deep economic implications, including making the blue economy a fragile concept.

Economic Hurdles: A blue economy would require competitive and efficient use of coastline resources. Nigerian ports and maritime facilities are currently costlier than neighbouring countries such as Port Novo in Benin Republic or Tema Port in Ghana. The relative high cost of Nigerian ports has reduced port activities; this, in turn, has reduced potential employment and decreased tax revenues that could be achieved in a less expensive and more efficient administrative environment. The high explicit and implicit cost of using Nigerian ports has stifled growth of maritime activities and held down the expansion of Nigerian coastal economies. The shrinking of port patronage is evident from the reduction in ships that have berthed in Nigeria over the years.

Social Implications: High incidence of piracy, smuggling, human trafficking and drug peddling makes Nigeria’s maritime business a precarious entrepreneurial activity. The high presence or influence of wharf gangs has equally created a marine ‘inverse’ ecosystem that is socially precarious involving illegal guns, drugs, prostitution, and gambling. The rough social life at the marines has infiltered surrounding villages or communities with young girls precociously introduced to rough social conditions and young boys recruited into a lifestyle outside the law. 

The consequences of the anti-social sub-culture have been dire in places like Ajegunle, Apapa and Ijora in Lagos State, Abalama, Tombia, Degema and Buguma in Rivers State, Creek Town and Calabar in Cross River State. Similar challenges exist in riverine communities of Ondo, Ogun, Bayelsa, and Ebonyi States.

The poor social conditions of maritime communities reduce communal productivity and worsens the problems of education, social aspiration and entrepreneurship reward. Some actions proposed to address this include:

  • Improve the physical condition of communities around the Ports
  • Compel port operators to contribute to a community trust fund by way of a community charge on port activities. Part of the fund would go into technical training schools targeted at port-related activities
  • Maintain port/terminal community relations offices
  • Locate maritime training schools in close proximity to port locations
  • Commence port sustainability programmes which would include supporting clean port communities and “clear waters” programmes. Port ecology should be just as important as port profitability.

There are other issues related to 

1. Technological Inefficiencies: Nigerian ports continue to grapple with inefficiency and corruption, primarily attributed to a dearth of technological applications in ship processing. Technology adoption is a critical aspect of the evolving blue economy, from stevedoring to cargo handling and inspection, the use of machines has become a compelling necessity to remove the obvious corruption that occurs with multi-point human interface in shipping operations. The digitization of standard operating procedures (SOPs) and use of electronic monitoring and inspection technology has gone a long way in improving port turnaround time and scaled down the levels of corruption that result from high levels of human discretion. Nigerian ports are still majorly inefficient and corruption prone as a result of low level of technology application in ship processing. 

A 2019 survey by the Maritime Anti-Corruption Network (MACN) in collaboration with the Convention on Business Integrity (CBi) discovered that although most port users knew the SOPs that applied to port activities; they simply circumvented them to provide opportunities for negotiated expedition of port processing. The result has been a tendency to prefer human engagement that allows for operational opaqueness as a trade-off for transparency that could be relatively cheaper in terms of time spent on activities, and better in terms of service quality in respect of diligence. Some actions proposed include:

  • Adoption of increased technology to reduce human intervention;
  • SOPs can be circulated to mail addresses of captains and crew of berthing ships;
  • Surveillance of personnel and cargo by way of multiple point CCTV cameras;
  • Use of cargo scanners as first line inspection method while human intervention should take place only when digital red flags are raised or sniffer dogs initiate further investigation; and
  • Digital register of all port officials updated daily.

2. Environmental Concerns: The port environment in Nigeria is characterised by substandard conditions, fostering a culture of weak moral values and perverse hygiene. Ageing and poorly maintained port infrastructures, coupled with high pollution levels along marine shorelines from industrial effluence and improper waste disposal practices, are further compounding the environmental challenges of Nigeria’s maritime system. Specifically, marine shorelines are highly polluted from industrial effluence and waste products habitually thrown into the dock waters by port users and refuse disposal vendors. The pollution of the ports marine water creates challenges for environmental sustainability.   Some actions proposed include:

  • Water quality at the ports/terminals must be routinely tested to measure pollution levels
  • Environmental agency should regularly monitor compliance with health codes at the wharfs
  • Port ecosystem review needs to be conducted and a metrics developed for assessing the quality of port environments. The environmental status reports would be used to shape action on remediation in every port and terminal.

3. Legal Complexities: The effectiveness of punitive sanctions and positive incentives designed to encourage improved port behaviour has been compromised, as port officials are driven by economic incentives that outweigh the perceived likelihood of sanctions for procedural infractions.

The laws and procedures guiding maritime services in Nigeria are comprehensive and fairly robust, the problem is not with written regulation but enforcement. The punitive sanctions and positive incentives that would encourage better port behavior have been found to be ineffective, mainly because port officials find the economic rewards of violating SOPs more compelling than the likelihood of sanctions for infractions. The results of slim risks of punishment for bad conduct leads to higher port charges (with a large unofficial component),slower throughput time, and deadweight loss resulting from both service time delay and service quality reduction. Some actions proposed include:

  • SOPs must be rigorously enforced and used as a basis of performance assessment;
  • SOP enforcement should be digitized and codified in such a manner that enforcement will involve minimal human intervention. The intervention would involve CCTV Capture technology, scanners, check-in, check-out movement monitors and digital activity logbooks similar to those that operate in factories;
  • At a broader national level constitutional provisions regarding maritime activity need to be revised to allow greater state involvement in maritime management and investment; and
  • Private sector engagement in port management needs to be expanded and public private partnerships (PPPs) need to be adopted as standard default models for port administration. The laws should be configured in a manner that maritime assets can be securitized to improve fiscal liquidity on the part of the government while efficiency would be attained through private management of port/terminal infrastructure, this sort of framework would support social, economic and environmental sustainability.

Necessary Policy Actions

In addition to the actions/recommendations noted above, the following governance structural issues should form the basis of a national maritime economic delivery architecture.

  • The fiscal arrangement in Nigeria needs to be revisited in such a way as to allow states to have greater autonomy over their local marine resources. This would enable littoral states generate the private capital investments needed to improve the quality of maritime ecosystems and expand blue local economies in sustainable manners. 
  • Greater fiscal autonomy for littoral states may appear radical, but if the country is to achieve greater growth in the blue economy, centralization of policy and investment at the federal level cannot bring about a fast-paced improvement in the maritime sector. 
  • The sector must witness greater privatization of infrastructure and deeper localization of economic activities. Littoral states marine fronts should be treated as the equivalent of crude oil and maritime states should be entitled to derivation proceeds from revenues at the ports. This would bolster littoral state revenue and serve as an incentive for such states to improve infrastructure leading to the ports/terminals since there would have been higher vested economic interest byway of increased recurrent revenues. 
  • The principles applied to the blue economy would also be equitably applied to the green economy, where agricultural output would also be given similar treatment. The approach proposed towards developing the blue economy would mean that their may be need for a constitutional review and this would require political buy-in from all parts of the country.  
  • While the current administration has created a ministry for that purpose, it is imperative to formulate and implement a National Maritime Strategy that brings together all facets of the blue economy and set the course for sustainable use of the country’s ocean resources, environmental conservation, and economic diversification that will be captured in the National Development Plan (NDP) or at least the 2024 -2026 Medium-Term Expenditure Framework and Fiscal Strategy Paper (MTEF and FSP).

Concluding Thought

I will conclude that the potential of Nigeria’s blue economy will not succeed based on hope and grand thoughts but rather around a coherent and well-thought-out plan that is compelling as a viable investment opportunity for private capital and improved fiscal liquidity. 

Thank you.

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