Dabney Shall-Holma explains why it is a game changer for the Nigerian economy.
In this interview, Dabney Shall-Holma, Chairperson, Sealink Implementation Committee, speaks on the importance of the Sealink Project, which is being promoted by the Nigerian Export-Import Bank (NEXIM Bank) to provide direct maritime links between African countries, thereby catalysing Nigeria’s GDP growth, attracting inward Foreign Direct Investment (FDI), creating jobs, and boosting intra-African trade. She spoke to Jide Akintunde, Managing Editor, Financial Nigeria.
Jide Akintunde (JA): The operational launch of the Sealink Project has missed a couple of timelines. What was the latest setback?
Dabney Shall-Holma (DSH): Fundamentally, the survey of the country’s inland waterways was a major setback. A vessel worth between $10 - $16 million would not be released into uncharted waters. So, we needed to have the hydrographic, bathymetric and hydrological surveys done, which entail getting the inland waterways mapped and charted, and admiralty charts produced. These are necessary to facilitate inland waterways operations and hinterland trade using channels that have not been put into an appreciable level of active commercial use for decades.
We engaged the Nigerian Navy and the National Inland Waterways Authority (NIWA) to jointly undertake the survey and charting of the critical segments of Lower Niger. Both NEXIM Bank and African Export-Import Bank (Afreximbank) provided grant funding and financial support for the survey and advocacy, while marshaling institutional support for the Nigerian Navy’s Hydrographic Department. This support is meant to create sustainability in channel maintenance and future river improvements.
For instance, when charting the channel or the Rhine and Danube Rivers in Europe or the Mississippi River in the USA, the new charts are always an improvement on previous charts; but in Nigeria, information regarding charts were not readily available.
We also had some consideration for navigational safety and security as well as the lack of navigational aids, anchorages and other platform infrastructure for a successful launch. As a solution, we signed an MOU with the Nigerian Navy to complement and design the security architecture of the waterways. Meanwhile, the role of the Nigerian Maritime Administration and Safety Agency (NIMASA) with the Deep Blue Project would strengthen and secure internal trade as well as ensure seamless navigability within our coastal waters.
In addition, statutory permits and approvals took much longer than expected. Sealink, through regulatory support, ought to enjoy rebates in tariffs and zero import duty just like commercial Airlines in Nigeria, as a concessional start-up national enterprise.
We had also slated the operational launch of Sealink for Q2 2020, but we are all aware of the scale of disruption brought about by the COVID-19 pandemic. In 2021, however, the implementation of the Project returned in full swing and we are fast-tracking its launch. Interestingly, not only has Sealink’s partners proven their long-term commitment, but the project itself has also shown resilience and adaptability.
We were also in the process of raising finance and funding support for critical infrastructure such as terminals, piers, ports upgrade and dockyards.
JA: Given the delays to the launch of the project, one would ask that what is the assurance that the Sealink, which was conceived by NEXIM Bank about a decade ago to provide direct maritime links within West and Central Africa, would eventually take off?
DSH: I am confident that it would soon take off because most impediments are being removed and all the pillars of support and promotion of this project are determined to successfully launch Sealink. These pillars include NEXIM Bank (promoter, host and lead pillar), Afreximbank, African Development Bank (AfDB), ECOWAS and the organized private sector (OPS).
For instance, NEXIM Bank, Afreximbank and AfDB have expressed strong support towards the up-scaling of infrastructure and increasing Sealink’s fleet-mix. Critical partnership frameworks between NEXIM, Sealink and regulatory agencies for approvals, permits and strategic collaborations have been executed through MOU’s, like the tripartite MOU with Nigerian Inland Waterways Authority (NIWA), as approved by the Federal Ministry of Transportation (FMOT), for permits and regular maintenance of the river channels.
In addition, the AfDB released funding for the feasibility study of the project. The feasibility study confirmed that Sealink is bankable. This has been affirmed by experts in international finance and development finance institutions.
We also have another MOU with the Nigerian Navy for partnership in terms of support for survey, charting, security and the use of the Naval Dockyard for vessel maintenance, and for in-country building of barges. We have estimated 55 inland barges to be built by the Navy in the near future.
An MOU as well as a commercial contract were signed on the use of the 2nd jetty at Ajaokuta Steel Complex, as approved by Government through the Ministry of Mines and Steel Development (MMSD).
When you initiate a project as expansive as the Sealink Project and while preparing for implementation, the African Continental Free Trade Area (AfCFTA) comes into force, it becomes a powerful validation of your project idea, especially as the Sealink consortium is involved in discussion with other African authorities responsible for the utilization of inland waterways. Africa has 38 coastal states. The Nile river, Congo river, Niger river, etc. represent large bodies of water equipped for inland waterways navigation on the continent.
We have failed to provide alternatives for carrying our cargoes within Africa. So, in seeking to reduce the cost, trans-shipment time and complexity of intra-regional trade, we realised that the secure frontiers for regional/African trade and growth are indeed regional and African.
JA: Why is the project very important?
DSH: It is important as structured because it would reduce the cost of shipping by about 50%, while improving frequency of shipping services with increased capacity for cargo carriage. It will also eliminate the need for trans-shipment in Europe for Africa-to-Africa shipments, increase intra-African trade volumes, improve efficiency of supply chain, boost economic growth and revenue generation in forex as well as open up avenues for the inflow of foreign direct investment (FDI) to scale-up old infrastructure and build new ones.
Sealink would also create job opportunities particularly in seafaring, shore support, cargo consolidation, packaging, trucking (short haul), freight forwarding, agency services, etc.
The project would definitely enhance inland waterways, intra-coastal and continental trade competitiveness while deepening trade. We expect enhanced economic activities through proven market demand for multi-modal operations with alternatives port facilities (in Burutu and Ajaokuta) and dockyard services for repairs and ship-building.
The economic value of inland waterways shipping is never in doubt. For instance, the USA moves 630 million tons of bulk cargo valued at $73 billion annually. The solid minerals industry in Nigeria’s hinterland could easily evacuate an annual estimated cargo throughput of 1.5 million tons (in 2021), 2 million tons (in 2022) or even the expected surge of up to 10 million tons by the third year of Sealink’s operation.
The Sealink is indeed important because it provides Nigeria an opportunity for fleet expansion. For emphasis, Africa has in total 14.2 per cent of the global ship fleet. Nigeria accounts for only 0.3 per cent of the global figure. Therefore, we need to expand the country’s fleet and develop the internal capacity to feed/support the ships. In addition, with Nigeria’s 0.3 per cent of global ship fleet, it accounts for 60 per cent of intra-African trade within West and Central Africa, which is being carried by foreign vessels. Sealink will shore up the percentage of Nigerian fleet to about 4 per cent of the global total fleet, and the country’s external trade and forex inflow will grow.
Nigeria is the largest economy in Africa. Sealink will give the country a sense of independence in conducting trade, even competitive trade, by showcasing that we are serious about harnessing our potential for trade, distribution networks and patronising local producers. Our world today is intensely connected. Every disruption in connectivity is a disadvantage to trade competitiveness.
Sealink is also important because it is a cost reduction mechanism. The specific cost modelling we recently did on moving bulk cargoes from Ajaokuta to Warri shows that Sealink could save about 70 per cent off the current cost of moving cargoes by road, over the same distances.
A significant advantage of using the inland waterways is the ability to move bulk cargoes. Some volumes that can be moved on the inland waterways cannot be moved on the road. For instance, if I were moving just one thousand tonnes of cargoes, I would need 34 trucks. Imagine if I were moving one million tonnes. 34,000 trucks would be required! Moving such a volume by road would simply be impossible. Where are the trucks and which roads are they going to ply?
Sealink also brings efficiency and saves considerable time moving cargo on the inland waterways. Transporting cargoes on water evades obstructions, but on the roads, for instance from Benue to Lagos, you can imagine all the bottlenecks and obstructions in Abuja, Lokoja, and then bumping along on the bad roads. It is the most environmentally friendly means of transportation of cargoes. Road transportation produces more CO2 emissions per tonne of cargo than maritime transport. So, with the Sealink, the cost of moving cargoes, to your health, the environment and your pocket is so much less.
Sealink will also provide the closest penetration to production centres.
JA: You have already mentioned some of the stakeholders of the Sealink Project. Would you like to further highlight their roles in this project?
DSH: Our stakeholders and partnerships are strategically structured into three major categories: Technical assistance and financial grant supporting partners, inter-Agency partnerships, and strategic technical partners.
NEXIM Bank takes the lead in funding support, advocacy, technical and transactional support as well as overall promotion of the project. It is investing in areas where cargoes can be generated like the solid minerals sector. With the Bank’s financing in the sector, we are not likely to have cargo shortfalls.
Our technical assistance and financial grant support is provided by the ECOWAS Commission (in advisory and advocacy), African Development Bank’s Directorate for Technical Cooperation for Africa (grant funding), Afreximbank (grant funding and transactional partnership support), Maritime Organization for the West and Central Africa (MOWCA), and Advisory and Technical membership in the consortium.
The Federal Ministry of Finance is also solidly behind this project through advocacy. With the help of NEXIM Bank, Sealink has received grant funding from Afreximbank for some of its smaller tasks, which we refer to as the low-hanging fruits. Meanwhile, AfDB, after its initial support in funding the feasibility study, is now looking at broader opportunities to support the Project.
Our key stakeholders are the Federal government, the regulatory agencies and the private sector -- which form the project consortium. The regulatory agencies that are members of the Sealink Implementation Committee comprise of the Nigerian Port Authority (NPA), Nigerian Shippers’ Council (NSC), NIMASA and NIWA, while the organized private sector is represented by NACCIMA/FEWAACI and Manufacturers Association of Nigeria (MAN) Export Group.
The Sealink consortium, comprising of these strategic partners, has mutually agreed on joint pooling operational principles and standards, with high ethics for operating bulk cargo and aggregating same at our selected strategic locations, with a medium to long-term strategy for purchase of vessels, upgrade of facilities and infrastructure. As a collective body, the services provided by the consortium range from vessels and logistics support, to technical operations, dockyard services, agency and trade digitalization (tracking/traceability), chartering, vetting and marine survey, channel maintenance and vessel management.
JA: With AfCFTA, the Sealink can be a catalyst for increasing Nigeria’s external trade. In view of this, what recommendations would you like to make to the authorities and the country’s exporters community?
DSH: The AfCFTA secretariat in Nigeria has been adequately briefed by Sealink, identifying areas of constraints to Nigeria’s external trade, which requires intervention and advocacy. We also need to trade more with other African countries. Some people might think that we should be selling to the US, China, Japan, Korea, Vietnam, etc. These are no doubt important markets, but some major markets for Nigerian exports and imports are much closer to home.
We would like the authorities to know that the operators of Sealink need to enjoy some concessions and there must be some protection for the country’s trade. It makes business sense to grant requested concessions even if it smacks of protectionism.
All the major economies have protectionist policies for their trade. The European Community Ship-owners Association (ECSA) enjoys a block exemption from competition laws granted by the European parliament.
China, India, and many other countries are protecting their trade. Indian vessel owners enjoy in-country concessions that no non-nationals or non-indigenous fleets enjoys, from port/cargo dues, harbour dues and reservation of special cargo to be carried on Indian vessels manned by Indians only. If the Asian export economies still give their businesses trade protection, that should be instructive for Nigeria. We should also limit enforcement of some incentives to Nigeria’s trade sensitivity areas.
Some powerful tool used by all economies whether emerging, developed or developing, at one time or the other to protect their shipping interests are critical and deliberate policy for cargo reservation, first right of refusal, cargo preferences and tax holidays. This is not because the revenue the Government would derive from taxing Nigerian shipowners is not useful, but the benefits of a thriving Nigerian trade sector is more important in the long run.
The public sector needs to also guarantee Nigerian flagged ships and their long-term businesses, through contracts of Affreightment with differential pricing regime in port charges and pilotage, a two-tier port tariff system, priority berthing, and port handling of national flagged vessels.
Sealink would register vessels in the Nigerian Ship Registry, to enhance Nigeria’s trade competitiveness nationally, regionally and continentally. It has been granted a community enterprise status by ECOWAS having been selected as one of the seven priority Community Development Project (CDP).
All West and Central Africa sub-regional vessels demised in the 1990s due to lack of adequate protection. Without similar terms as enjoyed by some foreign-owned vessels, our vessels cannot survive. Smart protectionism is a must for Nigerian and Africa’s shipping companies to succeed and effectively play a role in AfCFTA.
JA: What is your outlook of the Nigerian economy in the context that the trade sector has been shrinking in recent times?
DSH: Improvements noted in the Nigerian trading economy, especially in non-oil exports must be translated into sustained economic expansion in view of AfCFTA. The transportation sector’s contribution to the GDP is less than 2%, with the shipping sector contributing less than 0.1%. Sealink seeks to grow the Nigerian and sub–regional fleet to improve our current flag registration of less than 0.3% of the world share to a higher percentage, while on the other hand improve our Logistics Performance Index (LPI) score of 2.53 and ranking of 110, thereby improving our ease of doing business ranking.
The economic outlook would also require targeted, deliberate, sectoral development of cargo, products and processing as well as exploitation of critical solid minerals, especially in the seven priority solid minerals areas identified by the government. This would ensure that the market and regularity of shipments become guaranteed. Thereby, we would be attracting investment into the sector, creating forex inflow, jobs and wealth, improving the revenue generating capacities of regulatory authorities, and fostering an overall positive impact on our GDP.
The current Nigerian trade recession coincides with COVID-19, which is still a major issue. Therefore, the pandemic may have caused the recession in the trade sector or at least exacerbated it. However, I would like to assert that nothing improves the GDP of nations more than connectivity and access to markets. Infrastructure is also important and together, they open up the economic gateways.
In 1996 – 1998, as a General Manager of Nigeria Unity Line, MV Abuja was on charter between Colombo, Sri Lanka and Singapore. As I frequented that region, I came across a decrepit fishing port in Gwadar, Pakistan.
As part of China’s Belt and Road Initiative (BRI), formerly known as One Belt One Road, massive employment and investment opportunities (in appropriate jobs) were created following the infrastructures development and industrial expansion in and around Gwadar Port.
This was followed by a 65 per cent decline in crime rates and insecurity, 2.5 percentage points increase in annual GDP growth rate to its current 5 per cent as projected by Morgan Stanley Capital International (MSCI), which included Pakistan in the emerging markets index. Bloomberg also, ranked Pakistan Stock Exchange as the 5th best performing stock in the world. The port projects also recorded reduction in the cost of transportation and in navigational distance connecting the Arabian Gulf to Beijing (from 12,900km to 2,oookm: Gwadar – Kashgar, China.
These are precisely what infrastructure, connectivity and access do to an economy. They create endless opportunities which attracts investors into the shipping sector. It is also instructive that the Gwadar port project is credited for helping to reduce insecurity in Pakistan; as Pakistanis became more productive, restiveness and insecurity reduced. Sealink has the same prospects for Nigeria.
The Sealink Project will take off successfully because all the stakeholders critical to its success are onboard. The project is a public private Partnership (PPP) being delivered by a Special Purpose Vehicle (SPV). All the parties to the project are committed because Sealink is the game changer.
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