Sealink and Nigeria’s economic integration
Sealink will establish sustainable shipping connectivity to stem the tide of rising cost of shipments to and from Nigeria.
This being the goodwill message delivered by Dabney Shall-Holma, Chairperson, Sealink Implementation Committee, at the occasion of the flag-off of the survey and charting of Lower Rivers Niger and Benue by the Nigerian Navy, to facilitate the operational take-off of Sealink, which aims to provide direct maritime links in West and Central Africa and beyond, on 24 November 2021, at Ajaokuta Port, adjacent to Ajaokuta Steel Complex.
I am delighted and honoured to be part of this auspicious event and milestone in the history of maritime and logistics development in Nigeria. This event is bound to reverberate throughout the West African subregion, the continent and beyond, coming after nearly 12 years, from envisioning to conceptualisation and actualisation, with all the back-breaking and sacrificial hard work, technical and regional political debates as well as stakeholder engagements that produced two efficacious feasibility studies. This launch advances on our efforts and guarantees full operations of Sealink.
Hydrograhic, bathymetric and hydrological surveys, which entail getting the inland waterways surveyed, mapped and admiralty charts produced, will facilitate inland waterways operations and hinterland trade, especially in Nigeria’s channels that have not been put into an appreciable level of active commercial use for decades, and provide comfort to shipowners, brokers and potential investors in inland waterways.
Sealink could not have achieved this feat without Nigerian Export-Import Bank (NEXIM) as the conceptual platform and prime promoter. Other facilitators include Afreximbank, ECOWAS, Federation of West African Chambers of Commerce and Industry (FEWACCI), African Development Bank (AfDB), National Inland Waterways Authority (NIWA), Federal Ministry of Mines and Steel Development (MMSD), Ajaokuta Steel Complex, Nigerian Shippers Council, Nigerian Maritime Administration and Safety Agency (NIMASA), Nigerian Ports Authority (NPA), and all other collaborative and strategic partnerships providing financial and statutory support to the project.
The Sealink has thrived on collaborations and partnerships. An MOU as well as a commercial contract have been signed on the use of the second jetty at Ajaokuta Steel Complex by Sealink, as approved by the Federal Government through the MMSD. 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 50 inland barges to be built in the country by the Navy in the foreseeable future. We are proud of their professionalism in addressing these tasks.
Our analysis has shown that these strategic, participatory frameworks have great potentials for fleet expansion to cater for agro-products, manufactured goods and solid minerals export, thereby broadening Nigeria's export basket while also enhancing the country’s readiness for active participation in African Continental Free Trade Area (AfCFTA). Sealink will establish sustainable shipping connectivity to stem the tide of rising cost of shipments to and from Nigeria. It will also improve the contribution of mining and shipping to GDP, from the current low level of less than 0.5% and 0.2%, respectively.
Sealink as structured will reduce the cost of shipping by about 50%, while improving the frequency of shipping services and also increasing capacity for cargo carriage. It will also eliminate the need for transhipment in Europe for Africa-to-Africa shipments, increase intra-African trade volumes, improve efficiency of supply chain, boast economic growth and revenue generation in foreign exchange, as well as open up avenues for the inflow of Foreign Direct Investment (FDI) to scale-up old infrastructure and build new ones.
Also, Sealink will create job opportunities particularly in seafaring, shore support, cargo consolidation, packaging, trucking (short haul), freight forwarding, agency services, etc.
The project will enhance inland waterways commercial operations, intra-coastal and continental trade competitiveness while deepening trade. We expect enhanced activities through proven market demand for multi-modal operations with alternative 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 about 630 million tons of bulk cargo valued at $73 billion annually on its inland waterways. The solid minerals industry in Nigeria's hinterland could easily evacuate an annual estimated cargo throughput of 1.5 million tons (2021), 2 million tons (2022) or even the expected surge of up to 10 million tons by the 3rd year of Sealink's operation.
Two thirds of the world ship-building deliveries in 2020 was of dry cargo bulk carriers and tankers. This signals an aggressive shipping of bulk commodities orchestrated by the demand for economic restructuring, stockpiling and re-industrialisation activities globally. To be competitive, river ports need to be connected to their hinterland and become smart logistic hubs connecting maritime and other modes of transport and facilitating supply and value chain connections domestically, regionally and internationally.
The World Bank puts the cost of moving goods in Nigeria (per unit distance) at 5.3 times that of the United States. Port infrastructure, trade facilitation and shipping connectivity are three structural determinants to wealth creation and growth in GDP, according to UNCTAD 2021 Review.
However, it is a known fact that developing countries, especially in Africa, pay between 40% - 70% more for international transport of their imports than developed economies. The main reasons are lack of shipping connectivity, poor transit systems, trade imbalances, ineffective trade facilitation reforms as well as lower trade volumes.
Most West African countries are trapped in a vicious circle where exports remain weak due to high transportation cost (and other constraints) which induces low traffic and, as a result, high tariffs.
This flag-off will fast-track the commencement of coastal operations and cargo lightering services in the country and also facilitate current port decongestion exercise following the imminent deployment of 5,000 tonners of new-built, vetted and classed vessels with self-handling gear, to be matched with befitting port bases in Ajaokuta, Burutu and Onitsha for the time being, while port operations and handling gears are upscaled and deployed simultaneously.
It has been reported that Nigeria seeks to develop $1.2 billion export capacity for each of the 36 states of the federation to make the benefits of AfCFTA a meaningful reality. How do we deepen economic integration nationally, subregionally and continentally without Sealink?
Sealink and its strategic partners have asked and answered these questions, hence today's event.
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