By Ese Ufuoma
Nigeria is losing close to $100 billion every year due to weak enforcement of the Coastal and Inland Shipping (Cabotage) Act, according to new findings by the Sea Empowerment and Research Centre (SEREC).
The report highlights how policy lapses, abuse of waivers, and weak institutional coordination have allowed foreign vessels to dominate Nigeria’s coastal and offshore logistics, particularly in the oil and gas sector, undermining a law designed to build indigenous maritime capacity.
Enacted in 2003, the Cabotage Act was intended to ensure that vessels operating in Nigeria’s domestic coastal trade are owned, built, and crewed by Nigerians. It was meant to promote local content, create jobs, and retain capital within the economy.
More than two decades later, SEREC says the law has failed to achieve those objectives. The group estimates that Nigeria loses between $9 billion and $50 billion annually in direct freight revenues, with total indirect losses, through capital flight, taxes, and repatriation of profits, bringing the figure to about $100 billion a year.
“The losses are not speculative but systemic,” SEREC said. “They reflect a long-standing failure to implement one of the most strategic economic sovereignty laws in Nigeria.”
SEREC attributes much of the problem to the abuse of waiver provisions, which allow foreign operators to work on Nigerian routes when local capacity is unavailable. Over the years, the waiver process has reportedly become a loophole, with foreign firms enjoying near-unrestricted access to contracts meant for Nigerian shipowners.
The report also faulted poor coordination among maritime regulators: the Nigerian Maritime Administration and Safety Agency (NIMASA), the Nigerian Ports Authority (NPA), and the Nigerian National Petroleum Company Limited (NNPCL), which it says has weakened enforcement and created overlap in responsibilities.
“Without clear enforcement structures, the Cabotage Act is reduced to mere rhetoric,” SEREC stated.
Financing Gaps and the CVFF Dilemma
The Cabotage Vessel Financing Fund (CVFF), set up to provide credit support for Nigerian shipowners, remains largely underutilised.
Despite industry contributions, disbursements have been delayed for years, denying indigenous operators the financial backing needed to compete with foreign fleets.
SEREC emphasised that transparent management of the CVFF is critical to the success of cabotage reform. “Without access to capital, Nigerian shipowners cannot build the capacity needed for effective participation,” the group warned.
A Regional and Economic Imperative
Nigeria controls nearly 70 per cent of West Africa’s maritime trade, yet still depends on foreign vessels for domestic operations. This imbalance, SEREC argued, undermines the nation’s economic autonomy and contradicts local content policies already driving progress in oil and gas.
Other nations with similar policies, such as Indonesia and Brazil, have successfully used cabotage laws to develop national fleets and create thousands of jobs. Experts say Nigeria must learn from these models if it hopes to realise the full economic potential of its coastal trade.
Reform and the Way Forward
To reverse the trend, SEREC recommends a comprehensive review of the Cabotage Act to strengthen penalties for violations and close waiver loopholes. It also urged regulators to adopt digital vessel monitoring systems, publish compliance reports, and collaborate more closely with the Nigerian Content Development and Monitoring Board (NCDMB) to align maritime policy with energy sector goals.
“Cabotage is not just about ships; it’s about national control over logistics, energy, and economic value,” the centre noted.
Implications for the Energy Sector
The enforcement gap has major implications for the petroleum industry, which relies heavily on maritime logistics for offshore exploration, crude lifting, and supply chain operations. Experts warn that continued foreign dominance means ongoing loss of foreign exchange and missed opportunities for technology transfer.
“Every barrel of oil that leaves Nigeria is tied to a maritime service,” one industry observer told Valuechain. “If those services are foreign-controlled, we keep exporting jobs and importing costs.”
The SEREC report renews attention on a law once hailed as a cornerstone of Nigeria’s maritime independence. Two decades later, its weak implementation underscores a broader struggle between policy ambition and institutional will.
Whether through stronger regulation, better financing, or transparent governance, analysts agree that reforming the cabotage regime is vital to Nigeria’s industrial future.
“Cabotage was meant to protect national interest,” SEREC concluded. “Now, Nigeria must protect cabotage itself.”