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CARBOTAGE LAW AND IT’S EFFECT ON HUMAN RESOURCE UTILIZATION IN THE MARITIUME INDUSTRY

CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND TO THE STUDY

The place of effective Carbotage Law in the seemingly porous and loose marine transport system in Nigeria cannot be pushed to the dark.  Globally, shipping plays an important part in the economic life of nations. This is because it provides an inexpensive way of carrying people and goods from one place to the other, compared with other modes of transport. It may be between one country and another or even within a particular country, moving from one coast to the other. The demand for shipping is an indirect one as it is not demanded as an end in itself, but only as a means to an end. In other words, it is a derived demand, since it does not create its own demand, but its demand is derived from trade in goods (Walter, 2010). Generally, shipping activities have been going on for a very long time. The first known sea trade network was developed about 5,000 years ago between Mesopotamia, Bahrain and the Indus River in Western India (Stopford, 2009). In modern times, shipping has assumed an important position in the carriage of goods and passengers across the globe. It constitutes an important component in world trade, carrying about 90% by volume of cargoes generated globally.

The modern international maritime transport system falls into three zones: interregional transport, which covers deep-sea shipping; short-sea shipping, which transports cargoes of short distances and often distributes cargoes brought in by deep-sea services; and inland transport (Stopford, 2009). Deep-sea shipping is the only economic transport between the continental landmasses for high-volume inter-regional cargoes. On the other hand, short-sea shipping provides transport within regions. It involves distribution of cargo delivered to regional centres by deep-sea vessels. However, short-sea shipping is subject to many political restrictions, one of which is cabotage, the practice of enacting laws. which reserve coastal trade to ships of the national fleet of a particular country (Stopford, 2009). Ocean shipping is one of those three vital economic areas whose indigenous control or lack of it may make or mar the fortunes of a country’s socio-political independence. Of the other two - banking and insurance - significant progress at such control has been made in Nigeria. In the case of ocean shipping, Nigeria is still to have effective control in this area covering the supply and pricing of the services to the country.

Generally, over the years, various countries have sought to protect their citizens by restricting participation in key sectors of the economy to the citizens, usually through restrictive/protectionist policies and although shipping is international, the maritime industries of some nations have not been immune from such policies. An instance of this is the restriction of participation in the coastal carriage of cargo of a maritime nation to the exclusive preserve of its citizens, otherwise known as cabotage (Agidee, 2003).  Maritime transport is very central to the Nigerian economy. This centrality is underscored by the very nature and structure of Nigeria’s international trade. Nigeria’s economy can be said to depend largely on the efficiency of international trade and commerce. Consequently, the development of maritime transport capacity becomes important for the utilization of human resources found in the length and breadth of the country (NIMASA, 2009).

Realizing this importance, successive governments in Nigeria since independence have made considerable efforts through various policy strategies and administrative measures to encourage indigenous shipping capacity development, even in the face of threats from developed countries that have always monopolized the trade. The climax of all these efforts was the promulgation of the National Shipping Policy Decree 10 of 1987 by the Federal Military Government. Thus, the National Maritime Authority was established to coordinate the implementation of the shipping policy. This move was necessitated by the desire to fully promote and develop the nation’s maritime resources, protect and encourage the utilization of local technologies and personnel as well as generate accruable revenue for national development. Furthermore, in order to ensure the development of domestic shipping in Nigeria, through the empowerment of Nigerians to be able to handle all aspects of coastal and inland waterways transport, the Coastal and Inland Shipping (Cabotage) Act was enacted in May 2003.

1.2    STATEMENT OF THE PROBLEM

Now twelve years after the promulgation of the Cabotage Act, indigenous shipping development seems not to have improved, rather, it seems to be worsening. Fleet expansion has not been achieved; instead there has been a considerable depletion of the national fleet. More also is the envisaged idea that the Cabotage Act would promote the use of local personnel and therefore be a stategy to create job opportunities for the teaming unemployed Nigerians, this however is yet to be seen as the rate of unemployment has skyrocket in the time view. It is in the light of this that the researcher wishes to examine the Carbotage Law and its effect on Human Resource Utilization in the Maritime Industry with a special reference to Tin-Can Island Port and to identify what has been responsible for the unimpressive performance of the local shipping lines in Nigeria’s shipping trade, especially coastal shipping.

1.3    OBJECTIVES OF THE STUDY

The main objective of this study is to examine Carbotage Law and its effect on Human Resource Utilization in the Maritime Industry. Other specific objectives include:

1.To examine Carbotage Law and its effect on Human Resource Utilization in the Maritime Industry.

2.To find out the effect of government protectionist policy on the growth of the maritime industry.

3.To determine the impact of government restriction on the efficiency of coaster shipping in Nigeria.      

4.To investigate the effect of Carbotage Law on job creation in Tin-Can Island Port.

5. To provide plausible recommendations for effective implementation and improvement of the Carbotage Law.

1.4    RESEARCH QUESTIONS

This research work shall be guided by the following research questions:

1.Does Carbotage Law have effect on Human Resource Utilization in the Maritime Industry?

2.Is there any significant relationship between protectionist policy and growth of the maritime industry?

3.What are the effects of government restriction on efficiency of coaster shipping in Nigeria?

4.Does  Carbotage Law have effect on job creation in Tin-Can Island Port.

1.5    RESEARCH HYPOTHESES

The under mentioned hypotheses will be tested in the course of the research study;

Hypotheses 1:

Ho: There is no significant relationship between Carbotage Law and human   resource utilization in the maritime industry.

Hi: There is a significant relationship between Carbotage Law and human resource utilization in the maritime industry.

Hypotheses 2:

Ho: Government protectionist policy does not have any effect on growth of the maritime industry.

Hi: Government protectionist policy has an effect on growth of the maritime  industry.

1.6    SIGNIFICANCE OF THE STUDY

Cabotage law is principally a protective law that safeguards local shipping interests in the carriage of locally generated cargo. The law restricts the participation of foreign shipping companies in the carriage of such locally generated cargo. Now, it is anticipated that the analytical, conceptual and empirical studies will be a furtherance of understanding of salient issues relating to Cabotage law in the Nigerian maritime competitive business environment. The study will also serve as a useful tool for students of the University of Lagos, who would want to carry out further research in this domain.It would also be useful to human resource managers. The study would be significant to policy makers and implementers in the maritime subsector of the Nigerian economy, as they will make use of the findings and recommendations of this study.

1.7    SCOPE AND LIMITATIONS OF THE STUDY

The scope of coverage of the study is the shipping industry in Nigeria with a special focus on the Carbotage Law and its effect on Human Resource Utilization in the Maritime Industry and having Tin-Can Island Port in Lagos as its study area. The time scope for the study is rather short, as it has not been possible to carry out a fully detailed study within the stipulated period. During the course of this research study, a lot of constraints and limitations might be encountered. Collection of primary data for this study may pose a major constraint, as the researcher has to be on the field personally in all the administration and collection of data processes. Financial constraints may also pose a major limitation during the investigation. The researcher would want to carry on the same type of investigation in a similar firm within the same industry but for financial constraints. Time is another limitation that might be encountered during the course of the study. Sometimes, secondary data collected may not be reliable, hence will be rejected.

1.8    ORGANIZATION OF THE STUDY

The study shall be segmented into five chapters. The chapter one contains the general introduction, research problem; objectives of the study, scope of study, significance, e.t.c. Chapter two concentrates on review of relevant literature on Carbotage Law and its effect on Human Resource Utilization in the Maritime Industry. Chapter three shall explain the research method adopted for the study while chapter four will focus on the analysis of hypotheses and chapter five contains the summary of the study; conclusion drawn and recommendations.

1.9    DEFINITION OF TERMS

The following are the operational definition of terminologies used in the study;

Cabotage law: in the context of this study it reffers to protective law that safeguards local shipping interests in the carriage of locally generated cargo. The law restricts the participation of foreign shipping companies in the carriage of such locally generated cargo.

NIMASA: Nigerian Maritime Administration and Safety Agency.

NPA: Nigerian Ports Authority

NNPC: Nigerian National Petroleum Corporation

Protectionism: are legislation put in place by the government to encourage indigenous participation of Nigerians in the maritime business.

Human resource utilization: it defines the degree of involvement of Nigerians in the country’s maritime frontier.

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