Surmounting Logistics Barriers to Regional Shipping

James Emejo writes on the need to hasten the commencement of the iconic Sealink project, which would among other things activate a competitive shipping regime in Africa and curb imported inflation in Nigeria

In August 2011, the Nigerian Export-Import (NEXIM) Bank and the Economic Community of West African States (ECOWAS) Commission on Private Sector agreed to a $61.5 million deal to have a maritime shipping company that will connect the West African coastal ports to facilitate trade.

The project, seen as a watershed in regional shipping, would particularly connect parts of central Africa to the West African region, and end the undue exploitation of Africans by international shipping companies.

The initiative was estimated to cost $60 million in equipment and working capital and $1.5 million for the operation of a Special Purpose Vehicle (SPV) for the promotion of the concept among member countries – and the funding would include 60 per cent equity participation by private investors while the remaining 40 per cent capital would be borne by institutional investors in the form of a loan.

 Shortening Shipping Logistics 

According to NEXIM Bank, the initiative further seeks to build a legacy in the maritime industry and boost the country’s drive to diversify the economy and create jobs as well as modernise shipping and make it more competitive and affordable in the region and the continent in general.

Upon assumption of office on May 2, 2017, the bank’s Managing Director/Chief Executive. Mr. Abba Bello had developed a new Strategic Plan (2018 – 2022) to improve its operational performance and achieve NEXIM’s mandate and contribution towards meeting the objectives of the federal government under its growth plans.

And as part of the bank’s trade facilitation role towards enhancing Nigeria’s readiness under the African Continental Free Trade Agreement (AfCFTA), the development finance institution has continuously spearheaded the sealink initiative.

Bello said the shipping initiative would foster regional trade connectivity and facilitate inland waterways operations to support hinterland trade and bulk commodities exports, especially of solid minerals.

Only recently, the project got a boost with the unveiling of navigational charts for the lower River Niger through the joint efforts by hydrographers of the Nigerian Navy and the National Inland Waterways Authority (NIWA) with financial support from both NEXIM and Afreximbank.

The survey comprised 12 paper and electronic charts to ensure navigational safety of the lower River Niger channel to boost both hinterland and coastal trade.

Bello pointed out that as a trade policy institution, the bank embarked on the deliberate policy initiative to bridge maritime infrastructure gaps towards lowering logistics costs to foster trade with the promotion of the regional sealink project.

He noted that as a Special Purpose Vehicle (SPV) under a public-private-partnership framework, Sealink will essentially enable the bank to significantly broaden the national export basket.

According to him, the cessation of the use of the Burutu port in the mid-1970s substantially led to a considerable level of disuse of the river channel for mercantile trade, leading to the siltation of the channel over the years that resulted in navigational challenges.

This, therefore, informed the decision of NEXIM to partner with Afreximbank, the Nigerian Navy, and NIWA to undertake the survey/charting exercise.

The bank’s efforts at liberating the continent from the complex shipping operations by global fleets promptly received the commendation of the Minister of Finance, Budget, and National Planning, Mrs. Zainab Ahmed, who praised NEXIM for its determined drive to implement government policy initiatives and for the inter-agency collaboration on the Sealink initiative.

Bello had said that the expected multi-million dollar Sealink project, would boost intra-African trade, foster regional trade connectivity and facilitate inland waterways operations to support hinterland trade and bulk commodities exports, especially of solid minerals.

 Addressing Logistic Barriers

If anything, the Sealink project remained a major step in deepening trade within the ECOWAS sub-region as well as chart an efficient sea transportation system that would enable the ECOWAS sub-region to move goods from one member state to another as well as stop any capital flight within the region as well as provide jobs to the unemployed class in the region.

According to the NEXIM Bank MD, the rationale for the project was to deepen trade within the ECOWAS sub-region as one of the major trade barriers identified was how the country could move goods by sea in view of the problem associated with land transportation particularly multiple checkpoints, and harassment by security agencies – and it was impossible to increase trade flows between member states by trucking.

The bank said: “One of the major reasons why we have to embark on this is that, if you have to move your goods from Lagos to Kema port or any city in Ghana, it would take you about three days; but if you have to move your goods from Apapa Ports to Tema Port, it’ll take you a minimum of 60 days and the simple fact is that we don’t have Cargo vessels here-they either move to South Africa or they move to Europe and do a trans-shipment.

“Under that kind of scenario, there is no way you can deepen trade; there’s no way you can integrate what even the ECOWAS commission is trying to do.”

  Missed Implementation Timelines 

Nonetheless, the launch of the Sealink project has continued to drag on, despite its potential to increase intra-African trade which remains below 11 per cent at a time other countries are trading 40 per cent to 50 per cent with one another.

The project had been scheduled for launch by end of 2021. 

The implementation date was later announced for the first and second quarters of 2022.

  Antidote for Imported Inflation

At a period when inflation remained a threat to the economy, no doubt, the operationalisation of the Sealink concept will curb rising prices of imported commodities from which inflationary pressures were further derived. 

In a recent chat with THISDAY,  Chairperson of the Sealink Implementation Committee, Mrs. Dabney Shall-Holma, noted that “A cargo will leave Nigeria and is going to Liberia or Sierra Leone or Côte d’Ivoire or Senegal – and it would go all the way to Europe and be trans-shipped for weeks and sometimes months before the same cargo is brought back to Africa.”

Accordingly, the Sealink project was conceived to also reduce the cost of shipment among African countries, pointing out that expenses were often three times more when allowing goods meant for destinations within the continent to be shipped to Europe and bring back home again.

Bello, however, added that the initiative was conceived, promoted as well as funded by NEXIM to respond to complaints and worries of shipping companies, exporters, and importers whose trade was suffering on account of trans-shipment to Europe.