A Comprehensive Analysis of the Challenges and Prospects in the Nigerian Maritime/Shipping Industry Viz-A-Viz its Implications for Foreign Investment


In 2015, the Nigerian maritime trade economy was estimated to account for more than 50% of the vehicular means of international trade in Nigeria, leading to a major transition of the country’s international trade market, from national to international recognition. However, the sector is plagued with issues like low capital formation and low investment incentives, mostly because the industry is not readily accorded the requisite concessions given to other “big” industries. As a result, it has been particularly difficult to find investors willing to place stakes in the industry, owing to the many risks associated with it.

Undeniably, the Maritime Industry is one of the most lucrative industries in the world. It plays a major role in the economic development of any country by largely setting the pace of growth experienced in other industries. Hence, it is a matter of great importance that these challenges be addressed using more efficient mechanisms.

Using other developed countries as a compass, this disquisition aims to explore the challenges and prospects of the Nigerian Maritime Industry as well as the relevant regulatory frameworks and their implications for foreign investments.


The term “Maritime” may be defined as anything involving the sea, including the navigation of commercial transactions on the sea or via any means requiring shipping transportation.

Given the foregoing, the Nigerian Maritime Industry can be described as an all-encompassing industry, which embraces all maritime-related business activities that take place within the country’s maritime environment. It ranges from offshore economic activities such as fishing, salvage, towage, and underwater resources to on-shore economic activities such as port activities, maritime transport (shipping), ship construction, repairs, and maintenance activities as well as the enterprises involved in carrying out these activities.[1]


In 2018, the Nigerian Maritime Administration and Safety Agency (NIMASA) being the primary regulatory body for maritime activities in Nigeria, analyzed the Country’s maritime endowment as comprising a coastline of over 850kms, an exclusive economic zone of over 200 nautical miles, a vast inland waterways resource estimated at nearly 4,000kms, capable of supporting a vibrant intra-regional trade. Nigeria’s total annual freight cost which is estimated at between $5 billion and $6 billion annually, places shipping at the heart of the Country’s economic growth.

With the above analysis in mind, one would expect that the industry would be at the forefront of attracting potential investors, while increasing the Country’s revenue by significant numbers. However, this seems not to be the current position as the industry is still faced with a myriad of challenges, a few of which are:

  1. Marine Infrastructure and maintenance deficit

In 2019, the Marine infrastructure deficit was identified as one of the major challenges faced by the Nigerian Maritime Industry, owing to the fact that its success is largely dependent on its infrastructural development which includes ports, terminals and cargo handling equipment,[2] most of which were built several years ago, and cannot presently handle all of the tonnes or capacity currently received on a daily basis.

One of the major causes of infrastructural deficit is the unavailability of operational equipment, coupled with the failure of the industry’s management personnel to widen the country’s shipping business, which has ultimately culminated in the country’s revenue loss in the industry in the last few years.[3] Even in cases where these equipment are available, the required expertise to achieve a proper maintenance structure seems quite hard to find, as most persons involved in the chain of vessel acquisition and maintenance do not always possess the requisite expertise. In a maritime survey conducted in 2019[4], it was discovered that most companies in the industry have no room for maintenance expenditure, as it is often considered a waste of resources.

Although there have been various reactions to this issue, most of which highlight this challenge, it is clear that this is a crucial aspect that must be addressed to secure the consistent growth that is required in the industry.

  1. Loss of revenue owing to inefficiencies and sharp practices

In recent times, research[5] has revealed that Nigeria is currently losing over 15 billion naira in revenue, with its percentage in ownership of vessels lower than the 8% contemplated in extant legislations, owing to the unpredictability in maritime operations, sharp practices, unanticipated delays in ports shipment etcetera. More so, the collaboration amongst stakeholders, inclusive of regulators and operators alike, to curb or mitigate the existing efficiencies through the promotion of global best practices, and the use of innovative technologies seem to be slow-paced.

  1. Lack of funding

The Maritime Industry is largely capital intensive and thus, requires a significant amount of funding as a lot of businesses thrive on the success of the industry, which is due to the high demand of shipping and trade level in the country. As such, a lack of funding would impede economic growth to a large extent, creating a lot of risks for foreign investments.

As earlier highlighted, the Nigerian Maritime Industry is capital intensive. Hence, it requires a significant amount of capital to keep it afloat. Undoubtedly, investment has been acknowledged as one of the most reliable methods for the expansion and sustenance of any industry, irrespective of size. However, the level of investment is also dependent on an ascertainable valuation of risks as well as revenue generated. So, in a case where the risks weigh higher than the revenue, this poses a challenge as it reduces investment options.

Some regulatory frameworks have been put in place to mitigate a few of the highlighted challenges such as:

  1. Nigerian Maritime Administration and Safety Agency (NIMASA) Act 2007: The NIMASA Act created NIMASA and charges it with promoting the development of shipping and regulating issues affecting Merchant ships and Seafarers in Nigeria. Other statutory tasks of NIMASA include but are not limited to, regulating shipping safety in terms of ship construction and navigation, and administering ship registration and licensing.
  2. The Coastal and Inland Shipping (Cabotage) Act 2003: The Cabotage Act was enacted in response to a growing demand from Nigerian maritime enterprises for legal intervention, to encourage Nigerians in the participation of the country’s internal coastal trade. The Act in a bid to encourage participation restricts the participation of foreign vessels in domestic coastal trade (including the carriage of goods and passengers in Nigerian seas), encourages the growth of indigenous tonnage, and creates a Cabotage vessel financing fund. The Act specifically prohibits a vessel that is not wholly owned and manned by a Nigerian citizen, built and registered in Nigeria, from engaging in domestic coastal carriage of cargo and passengers within the coastal territorial inland waters, or any point within Nigeria’s exclusive economic zone.
  3. Nigerian Ports Authority (NPA) Act: The NPA Act empowers the NPA to maintain, improve and regulate the use of the ports; ensure the efficient management of port operations; provide and operate ports facilities; form and establish or incorporate subsidiaries or affiliate companies with other persons or organisations, for the purpose of carrying out any of its functions.
  4. Merchant Shipping Act, 2007: This Act provides for Merchant shipping in Nigeria and allows only registered Nigerian ships to operate commercially to the exclusion of others, except for statutory exempted cases[6].
  5. The Finance Act 2021: This Act primarily regulates the taxation of companies, inclusive of companies involved in the maritime business. It is important because taxation policies play a huge role in attracting foreign direct investments.

How then do these regulations facilitate potential investments in the industry?

Regulations go a long way in attracting investment as they set the tone for which the business operates, as a business operating under more favourable policies would attract more foreign direct investments in different areas of the industry, ranging from tourism to vessel construction, etcetera. However, these regulations do not go the extra mile of providing an increment in revenue, more particularly, they give little or no room for foreign investments, and they are rather restrictive.

In an analysis of China’s maritime industry development post its adoption of the World Trade Organization Legal system, China created a more commercial presence for the Country, as foreign investors became permitted to engage in the businesses of maritime transportation, coastal transportation, and inland waterway transportation. They implemented this by establishing a Contractual Joint Venture or Equity Joint Venture, with foreign investors allowed to hold a maximum of 49% of the resultant shares, canvass for cargo, sign the parent company’s bill of lading, settle freights, and conclude contracts for transportation service and other businesses allowed by China’s laws and regulations which in turn boosted economic growth[7].

After twenty years of constant effort, China’s program of economic reform is widely acknowledged to have achieved remarkable results, owing to China’s reform of its legal system, which has equally impacted China’s economy and society in the future, with respect to the reform of the laws regulating maritime commerce and shipping. Some satisfactory results have already been achieved, and they undoubtedly instill greater confidence in foreign investors. These regulations have allowed China to compete with domestic investors on an equal basis[8].


Interestingly, the Nigerian Maritime industry has developed through time, but there is still a compelling reason to continue developing the industry to attract potential investments to enhance the country’s economic performance. As a major exporter and importer of goods to and from other nations, it is critical for the government to support and pay more attention to the industry’s issues, as it will not be able to function at its full potential unless the government becomes more cognizant of how it influences the economy.

More particularly, asides addressing the above-listed challenges, existing legislations should be amended to create more room for foreign participation in the industry, as it is one sure method to increase the revenue generated in the industry by significant numbers.

  1. P.M Brickstone, ‘Nigeria Maritime Industry’ Proshare Intelligent Investing (17, January 2019) < https://www.proshareng.com/news/TRANSPORTATION/Nigeria-Maritime-Industry/43571> accessed 21 April 2022.
  2. Ibid 2
  3. Bayo Akomolafe, ‘Infrastructure Deficit Rattles Maritime Sector Stakeholders’ https://www.newtelegraphng.com/infrastructure-deficit-rattles-maritime-sector-stakeholders/ > accessed 22 April 2022.
  4. ‘Nigeria: challenges in Nigeria’s Shipping Sector’ International Shipping News (26/04/2021) https://www.hellenicshippingnews.com/nigeria-challenges-in-nigerias-shipping-sector/ > accessed 22 April 2022.
  5. P.M Brickstone, ‘Nigeria Maritime Industry’ Proshare Intelligent Investing (17, January 2019) < https://www.proshareng.com/news/transportation/Nigeria-Maritime-Industry/43571> accessed 21 April 2022..
  6. P.M Brickstone, ‘Nigeria Maritime Industry’ Proshare Intelligent Investing (17, January 2019) < https://www.proshareng.com/news/transportation/Nigeria-Maritime-Industry/43571> accessed 21 April 2022..
  7. WTO Secretariat, Maritime Transport Services, (S/C/W/62 and S/CSS/W/106) ‘A collection of the legal instruments for China’s WTO accession is published by the Ministry of Communications’ http://www.mofcom.gov.cn/article/200207/20020700032358_1.xml.> accessed 23 April 2022.
  8. Ibid 7.

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