Understanding Contractual Issues in Africa's Maritime Industry during COVID 19

Understanding the Business Opportunities in the Nigerian Maritime Industry

Understanding the Business Opportunities in the Nigerian Maritime Sector

1. What are the primary laws applicable to the maritime sector in Nigeria?
The primary laws applicable to the maritime industry in Nigeria are: The Merchant Shipping Act 2007; the Coastal and Inland shipping (Cabotage) Act 2003; the National Inland Waterways Act, N47 Laws of the Federation of Nigeria (LFN) 2004; the Nigerian Maritime Administration and Safety Agency (NIMASA) Act 2007; and the Admiralty Jurisdiction Act of Nigeria, A4 LFN 2004.

2. What are the types of business that a vessel owner can participate in in Nigeria?
A vessel owner can participate in the business of coastal trade or inland waters trade.

3. Is it important for a ship to be registered in Nigeria before it can do business?
Yes, it is required for a ship to be registered in Nigeria before it can do business and operate commercially within Nigeria. Unless a vessel is wholly owned by Nigerian citizens, built and registered in Nigeria, such a vessel is not authorized to engage in domestic coastal carriage of cargo and passengers within the coastal territorial waters, or any point within the waters of the exclusive economic zone of Nigeria.

4. What are the types of vessels eligible for registration?
The following types are eligible for registration: passenger vessels, crew boats, bunkering vessels, fishing trawlers, barges, off-shore service vessels, tugs, anchor handling tugs and supply vessels, floating petroleum storage, dredges, tankers, carriers and any other craft or vessel used for carriage on, through or underwater of any persons, property or substance whatsoever.

5. Who can own a registered vessel in Nigeria?
Only Nigerian citizens, partnerships and companies registered in Nigeria and having their principal place of business in Nigeria.

6. Can a company not totally owned by Nigerians register a vessel for use in Nigeria’s domestic trade?
The ownership requirement under the Cabotage Act provides that a company must either be wholly and beneficially owned by Nigerians or the controlling interest of such company be held by Nigerians. A vessel is wholly and beneficially owned by Nigerians where all the shares in the vessel and the company are held by Nigerian citizens free from any trust or obligation in favour of any person not a citizen of Nigeria. A vessel is owned by a company in which Nigerians have the controlling interest where the percent of shares in the company owned by Nigerian citizens is not less than 60%.

7. What are the types of ship registration applicable in Nigeria?
In Nigeria, the following types of registration are applicable: Provisional Registration, Flag Registration, Bareboat Registration (flag/cabotage), Cabotage Registration (Wholly Nigerian Owned, Joint Venture, Foreign Category).

8. Does cabotage mean that foreign vessels are no longer allowed to trade in Nigerian waters?
Foreign vessels are allowed to trade in Nigerian waters where they make an application to the Minister for waiver to trade and the Minister is satisfied that there is no wholly Nigerian owned vessel that is suitable and available to provide the services or perform the activity described in the application. In response to the application, the Minister is empowered to grant such foreign owned vessel a waiver to operate and carry on activities in Nigerian waters.

9. What is a waiver?
A waiver is a special dispensation that permits a foreign ship or crew member to participate in the cabotage trade, where there is no Nigerian with the capacity to perform the contract.

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