1. Andre w Pike The case for an African fleet and Pan-African cabotage regime

2. OVERVIEW What is cabotage? What are the drivers for cabotage How to implement cabotage Challenges to cabotage and own-ship registration Why Pan-African? Case studies and lessons learned: Nigeria Nigeria Australia Australia Where to next?

3. WHAT IS CABOTAGE? Restriction of the operation of sea, air, or other transport services within or into a particular country to that country's own transport services s Coastal routes Port to port

4. WHAT ARE THE DRIVERS FOR CABOTAGE? African Maritime Transport Charter and AIM 2050 Development of own shipping fleet Lower transport costs Saving on road transport, maintenance Prevent outflow of foreign currency (FOB / CIF problem) Create employment Stimulate economy through ancillary services

5. HOW TO IMPLEMENT A CABOTAGE REGIME Legislate for the carriage of coastal cargoes and maritime services by own ships Create other incentives for own fleet registration such as: Taxation Taxation Preferential berthing Preferential berthing Pilotage exemption Pilotage exemption Insist that State-owned cargoes be carried by own ships Insist that State-owned cargoes be carried by own ships Export cargoes sold on CIF terms and import cargoes bought on FOB terms Export cargoes sold on CIF terms and import cargoes bought on FOB terms

6. CHALLENGES TO CABOTAGE AND OWN SHIP REGISTRATION Insufficient cargoes Double handling of cargoes Uncompetitive taxation laws High start-up and running costs Ship finance Ship finance Bunkers Bunkers Management and operations Management and operations Taxes Taxes Crew Crew Mainly outward bound bulk cargoes – own ships must compete internationally Restrictive labour laws Insufficient trained seafarers

7. WHY PAN-AFRICAN CABOTAGE? Economies of scale leading to lower transport costs Force the pace of infra-structure development Create employment Prevent outflows of foreign currency More cargo to justify a cabotage regime, provided the cargoes can be traded Intra-African trade is on average 10 – 12 per cent, BUT Intra-African trade is on average 10 – 12 per cent, BUT Very significant for some countries Very significant for some countries

9. CASE STUDIES AND LESSONS LEARNED Nigeria: Coastal and Inland Shipping (Cabotage) Act 2003 Annual traffic of about 152 million metric tonnes of both oil and non- oil cargo, worth over $5 billion in freight earnings “… critical piece of legislation has failed woefully in meeting expectations… ” and “ There is no political will to implement it… ” Blaming NIMASA Taxation laws and NIMASA 3% levy Financing and infra-structure limitations

10. CASE STUDIES AND LESSONS LEARNED Australia: The Coastal Trading (Revitalising Australian Shipping) Act 2012 Carriage between ports in Australia, but excludes passengers and transhipment cargo Permanent cabotage licences for local ships and 12 month temporary licences for foreign ships

11. AUSTRALIA RESPONSE Australian Deputy Prime Minister, Warren Truss:

12. AUSTRALIA ISSUES Local wages having to be paid to foreign seafarers pushing costs high Too much red tape Loss of sea freight to road and rail Suggestion that domestic cargo "incidental" on international trips be exempt or alternatively that local wages apply to seafarers carrying local freight for a period of at least 60 days a year

13. WAY FORWARD AND CONCLUSIONS Comprehensive economic study of intra-African trade and justification for cabotage Significant ALIGNED incentives for African shipowners – legislation, taxes, pilot exemption, preferential berthing… Ensure that we have properly trained seafarers and that their wages compete internationally Ensure labour legislation for seafarers not a disincentive Reduce red tape – user-friendly legislation and easy registration subject to internationally accepted standards Reduce waiting times and ensure infrastructure adequacy Keep costs down! CO-ORDINATED Pan-African response

14. Andrew Pike www.vpnlaw.com Thank you