The big divide: Why Africa's shipping lags behind

 

Lack of strong policies as well as poor investment from governments is grounding the shipping industry in Africa, analysts now say.

The shipping experts drawn from 25 African countries who met in Mombasa said that only strong investment and a protectionist agenda through cabotage laws will save the industry from foreign dominance. 

According to data released by representatives from the Continental Free Trade Area (AfCFTA), in 2021, African ports loaded 762.4 million tons of goods onto mostly foreign-owned ships and discharged 553.2 million for Sh115.5 trillion ($762.4 million).

A number of participants at the forum explained that cabotage, a protectionist policy framework to guarantee business between ports within the same territory to local ships, was crucial for continental self-sufficiency.

In the three-day forum, maritime industry leaders were upbeat that they had found a formula to build capacity and distribute their cargo and eventually play a role in the international maritime transport arena.

Kenya Maritime Authority (KMA) Director General John Omingo said that the continent should build a coastal fleet and later venture into international maritime transport through partnerships.

“We can strengthen the coastal fleets and then come together and venture into the international maritime transport once we implement the regional maritime cabotage,” he explained. Kenya Ports Authority (KPA) Chairman Benjamin Tayari said African countries should form strong partnerships to reap FROM shipping business.

Principal Secretary for Shipping and Maritime Affairs Geoffrey Kaituko called on the continent to use its shipping lines to boost the economy while taking advantage of AfCFTA.

African countries stand to gain from the implementation of the cabotage policy through economic growth, regional integration, reduction of over-reliance on international shipping, enhanced intra-African trade, improvement of safety and security, and environmental protection through control and mitigation of greenhouse gases.

The forum recommended the creation of incentives to support local vessel ownership and shipbuilding.

This should come in the form of subsidies, tax incentives, enabling investment environment, access to land, safety, and security in the high seas and inland waterways and along corridors.

The industry players called for adequate infrastructure, digitisation, research and development with an adequate budgetary allocation, among other incentives.

In Kenya, the proposed maritime cabotage regime is to be anchored on the Merchant Shipping Act Section 14, while in Nigeria it will be nachored on the Local Content Act, which entails supporting local cargo handling by local vessels.

In Tanzania, the cabotage regime will be based on the Tanzania Merchant Shipping Act Section 10.

The forum noted that in the US, the Jones Act (1920) restricted water transportation of cargo between US ports to ships that are US-owned, US-crewed, US-registered and US-built.

The industry leaders recommended for the setup of an African ship registries forum and shipbuilders forum. It will list all registries on the continent, list all shipbuilders in Africa and support innovations in ship registration.

It was agreed that the continent supports the growth of the ship-building industry, complemented by auxiliary industries within the special economic zones (SEZs).

The industry leaders recommended public sector funding or guarantees to enable private sector access to funds while the private sector invests through concessional international funding.

Other areas of investment are Public Private Partnerships (PPPs) and the use of pension funds to grow the maritime industry. The forum recommended the formation of a regional maritime bank or national maritime bank) to build a robust maritime industry in the continent. This would ensure the involvement of specialist bankers with a solid understanding of the industry needs and investment requirements.

They recommended the establishment of a Cabotage Vessel Financing Fund, like in the case of Nigeria and a Ship Building Financial Assistance Policy like the India model.

The maritime stakeholders called for adequate funding to be made available for ship ownership and shipbuilding in the continent to make maritime cabotage a success.

The forum also recommended capacity building for the industry and development of regional blue economy training institutions, advocacy and awareness, apprenticeship programmes, networking and partnership, and knowledge transfer and management.

The industry players said there was need to develop an integrated regional cabotage policy and regulatory framework with solid institutions.

They called for a progressive regulatory approach that can predict the future, and plan for it.

Mr Kaituko said African countries must go for Africa-wide coverage or phases approach in the implementation of the cabotage regime, looking at the US, Nigeria, and India modeling.

“We must engage government ministries of Transport and Infrastructure in this conversation and assign specific responsibilities for each sector agency - the role of government.