…as Nigeria misses out on maritime revenue
Nigerian shipowners are increasingly registering vessels under foreign flags to secure cheaper financing and internationally recognised certification, depriving the country of potential revenue.
Foreign-flagged vessels beneficially owned by Nigerians and Nigerian entities rose 28.1 percent in the six years leading to June 2026, outpacing the 17.5 percent growth in vessels on the Nigerian register, according to UN Trade and Development (UNCTAD) data.
There are now 35 foreign-flagged vessels for every 100 vessels owned by a Nigerian on the national register.
Experts say the trend erodes Nigeria’s claim on tonnage, insurance, employment and tax-related benefits needed to build a national fleet and boost the country’s maritime sector growth.
UNCTAD, using data from researchers at Clarksons, lists 82 Nigerian-owned vessels of up to 1,000 gross tonnes under foreign flags, against 235 on the Nigerian register this year.
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Safer bets
The preference for foreign registration is closely tied to the terms of financing of vessel acquisitions, according to sector experts.
Most Nigerian owners borrow to buy ships, and lenders often require them to register under flags whose legal systems and maritime administrations they trust to protect their investments.
“The general perception is that if you register a vessel on a Nigerian flag and you have issues with the funders or financiers, the ease with which they can recover the asset is more challenging in Nigeria than in most other jurisdictions,” Dakuku Peterside, former director-general of the Nigerian Maritime Administration and Safety Agency (NIMASA), told BusinessDay.
A registry’s ability to recognise and register a legal mortgage against a vessel is important to lenders who need assurance that the maritime administration will recognise their interest and allow them to recover the vessel if the borrower defaults.
Where financiers in certain markets offer credit at very low single-digit interest rates, without that confidence, they may “insist” that vessels financed with their money carry foreign flags, choosing registry as part of the terms for acquiring a ship, Peterside said.
Yet, the decision to register abroad is not driven by financing alone. The ability to trade internationally without certification disputes and additional port inspections is another important consideration for Nigerian shipowners.
“Vessels are governed by a lot of certification,” Aminu Umar, president of the Nigerian Chamber of Shipping, told BusinessDay.
“Certificates for the ship, machinery, equipment on board, the seafarers not only have to show certificates of where they went to school to show their competence, but they have to be endorsed by the flag, the register of the ship. So some of those requirements have not yet been implemented in the Nigerian certification process,” he said.
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Such disparity, coupled with the lingering perception of non-compliance with safety rules, has subjected Nigerian-flagged ships to extra scrutiny and inspections at international seaports.
For a shipowner trading internationally, the commercial consequences can include missed schedules, delayed cargo deliveries and lost operating time on an asset that may have been acquired with borrowed money.
“You might end up with a serious detention, losses and litigation between you and your client,” Umar said. Many owners prefer more reputable, compliant registries to avoid such issues.
His company, Sea Transport Services Nigeria Limited, flagged the majority of its 12 tankers in Nigeria, but reserved the vessels for international trade for foreign registries.
AbdulKadir Ahmed, managing director of NLNG Shipping and Marine Services Limited (NSML), told a Lagos summit in October that Nigeria needs to develop its capacity to “international standards.” NSML operates 13 ocean-going vessels, 11 LNG vessels and two LPG vessels, all of which are reportedly flagged abroad.
“We still need to focus on that to ensure that the certification of our seafarers is recognised internationally. Because seafaring is international. So there has to be that coordination,” Ahmed said at Nigeria’s World Maritime Day event in Lagos.
Peterside, who served as director from 2016 to 2020, said NIMASA has the capacity to issue internationally recognised certificates, but argued that the confidence attached to certificates from different administrations is not necessarily equal.
“A certificate from Harvard is not the same thing as a certificate from Benue State University; that’s exactly the scenario here,” he said.
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Missing out on revenue
The growing number of Nigerian-owned vessels registered abroad means Nigeria is missing out on some of the revenue and maritime services associated with operating a national ship registry.
Experts say that as more shipowners turn to foreign registries, fees for registering and regulating those vessels accrue to other countries, taxes on tonnage are expatriated, and opportunities to build local expertise through domestic employment also shift abroad.
“Your respectability as a shipping nation is based on the tonnage, which you have in your flag,” Omatseye said.
Liberia, which accounts for 17 percent of the entire world’s ocean-going fleet, is the highest annual financial due payer to the IMO. It is guaranteed a permanent, top-tier seat at the table, allowing it to heavily shape global maritime laws, seafarer safety policies, and decarbonisation timelines.
The country’s registry brings in over $20 million in direct annual revenue and contributes to six percent of the national budget, according to the International Transport Workers’ Federation (ITF).
Nigeria’s own closed registry has been a lingering concern for the sector. Stakeholders have described it as stringent and have repeatedly proposed an open registry to woo investors into the sector.
“Anybody who wants to flag a vessel is not too keen because sometimes they are required to put 100 percent Nigerian crew and so many requirements like that. So they naturally do not want to do that,” Temisan Omatseye, also a former director of NIMASA, told BusinessDay.
Industry experts and organisations like the Shipowners Association of Nigeria (SOAN) have continuously advocated for Nigeria to establish a second, open international ship registry alongside its closed one. A sub-registry would allow foreign shipowners to register their vessels under the Nigerian flag and, according to Omatseye, “allow easy entry and exit” to improve global reputation and tonnage.
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Undisclosed payments add to the pressure
The cost and unpredictability of bringing vessels into Nigeria add to the pressure.
Peterside said a shipowner recently requested nearly N1 billion ($726,420 at the present exchange rate) from a bank to cover Customs clearance and registrations with NIMASA and the Nigerian Content Development and Monitoring Board (NCDMB) for one oil tanker.
The former DG said it was more than the official fees he confirmed but included what the shipowner described as “under-the-table payments.” He did not disclose how much of a difference it was, but compared them to “day and night.”
Customs told BusinessDay that a 1,000-ton tanker purchased for $1 million attracts an estimated N270.35 million in total Customs charges when permanently imported. NIMASA was not immediately able to respond to BusinessDay’s request for confirmation of fees and registration costs. Its website page for fees was also unresponsive.
The fees, experts say, compel owners to opt for foreign-flagged vessels and retain cash through temporary admission. “A foreign-flagged vessel is only charged a temporary importation levy, and it’s by far cheaper than when you’re paying for full import duty, which is usually very high and prohibitive,” Peterside said.
Shipowners who can afford the fees are met with a “slow and unpredictable registration process” that takes over a week to complete, compared to foreign registries, where automation has sped up the process. Popular registries among Nigerians, including Liberia, Panama and the Marshall Islands, all boast 24-hour registration timelines.
NIMASA is presently testing a digital Nigerian Ship Registry designed to streamline registration, approvals and e-certificates for shipowners.
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Bethel Olujobi is the Trade Correspondent at BusinessDay. He brings scarce insight into Nigeria’s maritime policies and the changing currents of global commerce defining the country’s position in international trade. Before this, he reported on foreign relations, migration and sports for BusinessDay. He holds a Bachelor’s degree in Mass Communication, and is an alumni of the CNN Academy and the Financial Times News School. He is certified by Reuters and Google. He is based in Lagos, Nigeria. For pitches, email: [email protected]
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