CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

In the port and maritime business, logistics integration and network orientation have redefined the functional role of ports in value chains, resulting in novel freight distribution patterns and approaches to port hierarchy. Existing models of port and port system spatial and functional evolution only partially fit the new freight distribution paradigm. The goal of this work is to add to the current literature by establishing a port regionalization phase in the development of ports and port systems. The regionalization phase, as well as the associated hinterland notions, necessitate new approaches to port governance and a functional focus that extends beyond the traditional port perimeter.

The government’s goal in enacting the cabotage regime is to promote maritime sector development through an interventionist program targeted at increasing local capacity expansion in the face of strangling external competition and dominance.

Cabotage is a 60-year-old global practice that justifies intervention of this nature to induce some predetermined result (as opposed to the classical economic approach of free market forces) as an acceptable tool for achieving some predetermined economic goals, particularly where competition is unfair and dominance is prevalent. This practice has been observed around the world in both marine and aviation, and it has been attributed to a variety of circumstances, including reserving all or part of the national market opportunity to national companies.

The Coastal and Inland Shipping (cabotage) Act, 2003, covers the carriage of goods and passengers by vessels and any other mode of transportation, mineral and other natural resources, and any marine transportation or commercial activity within Nigeria’s territorial waters, as defined by the Exclusive Economic Zone Act CAP 116 of the Federation Republic of Nigeria, 1990. The Act aims to limit the employment of foreign vessels in domestic coastal trade and, as a result, promote the growth of indigenous tonnage.

It has been two and a half years since the cabotage policy was enacted, or one and a half years since it was implemented. Nigerians are yet to notice much of a difference. Foreigners continue to dominate the cabotage trade. The question remains, from the standpoint of the target group, Nigerian Shipping Companies: to what extent has cabotage delivered its expected opportunities? Only ten private member’s bills passed the Legislative Rubicon to become laws out of 320 or more introduced in the House of Representatives between 1999 and 2003: Why hasn’t the same forces been able to ensure that the cabotage policy is simply implemented in a robust and decided manner? What are the factors that are causing the program’s slow start? What exactly are the issues? Are they linked to the nature of shipping development politics, the method or policy, or a mix of these factors? What are the consequences of the cabotage laws, and what are the benefits?

STATEMENT OF PROBLEM

In the port and maritime business, logistics integration and network orientation have reshaped the functional role of ports in value chains, resulting in novel freight distribution patterns and port hierarchy systems. The new freight distribution paradigm only partially fits existing theories on the spatial and functional growth of ports and port systems. By presenting a port regionalization phase in port and port system development, this research hopes to add to the existing literature. The regionalization phase and associated hinterland notions necessitate new methods to port governance and a functional focus that extends beyond the traditional port boundaries, as demonstrated.

Cabotage policies are used in such regions or sub-regions, rather than a single country, as a result of inter-governmental agreements, to favor local or regional employment and manage regional and/or sub-regional coastal trade (Maritime Resources Development Issues and Challenges; 2003, P.70).

The goal of this dissertation is to produce a comprehensive study that critically evaluates the difficulties surrounding cabotage services and their impact on Nigerian entrepreneurial growth potential. Is there any benefit to the Nigerian economy from Maritime Cabotage in Nigeria? What are these advantages, and how do they aid in the growth of Nigerian businesses? These and other discoveries will be revealed, together with recommendations, in order to improve the creation of solid scientific and economic policies.

OBJECTIVES OF THE STUDY

The overall goal of this study is to look into maritime entrepreneurship and economic development in Nigeria. The research is guided by the following precise objectives:

To determine the extent of Nigerian marine cabotage as defined by the Nigerian Maritime Authority (NMA).

To identify the numerous prospects that cabotage in the maritime industry provides for Nigerian entrepreneurs.

To identify the current issues that are impeding the maritime industry’s economic sustainability in Nigeria.

To determine the obstacles that a Nigerian entrepreneur faces in the cabotage sector.

To provide answers to Nigerian entrepreneurs who are experiencing difficulties in the maritime industry.

RESEARCH QUESTIONS

To guide the study, the following research questions were generated from the objectives:

What is the Nigerian Marine Authority’s (NMA) definition of maritime cabotage in Nigeria?

 

What are the numerous advantages that cabotage in the maritime business provides for Nigerian entrepreneurs?

 

What are the current issues that are threatening the maritime industry’s economic viability in Nigeria?

 

What are the challenges faced by Nigerian entrepreneurs in the maritime cabotage business?

 

What solutions may be presented to Nigerian entrepreneurs with regard to their maritime business problems?

SIGNIFICANCE OF THE STUDY

Further research into Nigerian maritime cabotage and its impact on the nation’s economy, as well as as an interventionist in the promotion of Nigerian entrepreneurial activities, will most likely be initiated as a result of the findings of this dissertation. Indeed, it is believed that the approval of the cabotage Act by the National Assembly will open up a new world of commercial potential in the maritime cabotage sector. New chances are constantly sought, discovered, grasped, and acted upon as the backbone of the entrepreneurial setup, to the benefit of both the consumer and the entrepreneur. To this purpose, maritime professionals, regulators, and entrepreneurs must pool their resources to provide insights into how to take advantage of the marine industry’s prospects.

SCOPE OF THE STUDY

The focus of this research will be limited to the economic impact of Nigerian marine cabotage as well as entrepreneurial potential for economic development in Nigeria. Maritime cabotage, often known as domestic watercraft transportation, may be the focus of this dissertation. The researcher would also want to emphasize that there are limitations in the area of data gathering; some important material is classified as confidential, and permission must be obtained before it is shared. Even for oral interviews, consent must be obtained before the interviews are conducted. Another notable constraint is the passage of time.

It should be mentioned, however, that frantic efforts were made to ensure that meaningful information was eventually obtained in order to improve an objective.

DEFINITION OF TERMS

Maritime: relating to the sea, particularly in regards to seaborne trade or naval concerns.

Entrepreneurship is the process of creating, launching, and operating a new firm, usually a small one. Entrepreneurs are the folks who start and run these businesses.

 

Marine Entrepreneurship refers to the promotion of innovative business concepts relating to the maritime economy and the values of sustainable entrepreneurship, with the goal of improving entrepreneurial spirit and increasing company activity.

 

Economic development is the transformation of a country’s people’s standard of living from a low-income (poor) to a high-income (rich) economy. More economic development occurs when the local quality of life is improved. When social scientists examine economic development, they consider the following factors.

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