The Contributions Of Shipping Industry To The Development Of Nigerian Economy

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THE CONTRIBUTIONS OF SHIPPING INDUSTRY TO THE DEVELOPMENT OF NIGERIAN ECONOMY

TABLE OF CONTENT

 

 

 

Title page=
Certification=
Dedication=
Acknowledgement
Abstract  ==

 

Table of content = List of Tables = = List of Figures = =

 

 

 

=======I
=======Ii
=======Iii
=======Iv
=======vii
=======viii
========Xi
========xii

 

 

 

 CHAPTER ONE         
1.0Introduction=========1
1.1Background =========1
1.2Statement of the problems ======3
1.3Objectives of the study======4
1.4Research Questions = ======5
1.5Research Hypotheses ======6
1.6Significance of the study======6
1.7Scope of the study=======7
1.8Limitations of the study=======8

 

 CHAPTER TWO LITERATURE REVIEW    
2.1Conceptual framework======9
2.2Current status and Trends in World Shipping ===16
2.2.1 Overview of the World Shipping Industry = ===16
2.2.2 Trends in ship types and features====23
2.2.3 Trends in shipping Economics=====25
2.2.4 Overview of shipping markets the current trend ==27
        7

 

2.2.6  The Global Evolution of Containerisation = ===31
2.2.7Ownership of Merchant Navy fleet=====38
2.2.8Opportunities for African Maritime countries===42
2.2.9  Importance of Maritime Trade in Nigeria’s economy =46
 CHAPTER THREE        
3.0Research Design and Methodology====51
3.1Definition of Area and population of study===51
3.2Sources of Data ========51
3.3Procedure for Date Analysis ======51
3.4Operational Definition of variables / hypotheses testing52
3.4.1 Hypothesis 1========52
3.4.2 Hypothesis 2========53
3.4.3 Hypothesis 3========54
3.5Test of significance = =======55
3.5.1 Test of model significance – ANOVA====55
3.5.2 Test of Model significance – Coefficient of determination 
 And the F-Test Approach ======57
3.5.3 Test of the significance of the explanatory variables=58
3.6Assumptions of the linear regression model==59
 CHAPTER FOUR        
2.0Data presentation, Analysis and interpretation = ==62
4.1Introduction =========62
4.2Data Presentation ========62
4.3Data Analysis and hypotheses testing ====65
4.3.1 Influence of shipment Export Trade on    
 Economic development======65
4.3.1.1 Test of Model significance – ANOVA method==67
          8

 

 

4.3.1.2 Test of model significance – R2 method  ===68
4.3.1.3 Test of the significance of the explanatory variable=69
4.3.2  The Influence of shipment export trade on Nigeria  
 External reserve   ======70
4.3.2.1 Test of model significance –ANOVA method ===71
4.3.2.2Test of model significance –R2ANOVA method ==71
4.3.2.3Test of the significance of the explanatory variable =72

 

  • The Influence of shipment Export trade on

 

 External Debt payment======73
4.3.3.1 Test of model significance – ANOVA method===74
4.3.3.2Test of model significance R2=====75
4.3.3.3Test of the significance of the explanation variable =75
4.4Discussion of Results =======76
4.4.1 Hypothesis 1========76
4.4.2 Hypothesis 2========77
4.4.3 Hypothesis 3========78

 

 CHAPTER FIVE         
5.0Summary, Conclusion And Recommendations==79
5.1Summary of findings =======79
5.2Conclusion =========80
5.3Recommendations = =======80
 Bibliography===== ===82
 Appendices =========86

 

LIST OF TABLES

  • Distribution of the world fleet and DWT capacity of containers by country

 

Group – beginning 200740

 

  • Freight costs as percentage of import value

 

For various regions of the world41
3.1  Hypothetical ANOVA table56

 

  • Nigeria’s total ocean shipment export in thousands of tones, gross domestic product,

 

 external reserve and external debt service 
 in millions of naira, 1976-200663
4.2Hypothesis 1 result / output66
4.3Hypothesis 2 result / output70
4.4Hypothesis 3 result / output73

 

 

LIST OF FIGURES

 

 

 

2.1Composition of the world fleet20
2.2Shipping statistical table21
2.3Structure of shipping market27
2.4World merchandize trade (Exports F.O.B)28
2.5The global evolution of containerization32
2.6Growth in containerized shipping33
2.7Evolution of container vessel size35
2.8Distribution of world container traffic by region38

 

11

 

 

ABSTRACT

 

 

The study investigates the importance of Ocean shipment on Nigeria’s economic development. Ocean shipment trade, in thousands of tonnes served as the independent variable in all the three hypotheses defined while, the gross domestic product, Nigerian value of external reserves and external debt payment were employed as the proxies for the level of economic development, respectively for hypotheses I through 3. A simple regression analysis was applied to the time series data. Findings of the study include the fact that a significant and positive relationship exits between ocean shipment export trade and the gross domestic product, external reserve and external debt payment. Also shipment export trade, is a significant contributor to Nigeria’s economic development under each of the dependent variables. On the basis of these findings and conclusions, the study, among other things, recommends that the overall institutional setting in the economy should be improved upon in order to reap in full the benefits of ocean shipment trade in Nigeria. Also, there is need to improve the poor transparency and hence reduce corruption that appears to be endemic in our country, and hence improve the gains from shipment export trade.

 

 

Keywords:Ocean Shipment Trade, Gross Domestic Product,External Reserve, External Debt Payment, World Shipping Industry, Containerization, African Maritime Countries, National Marine Authority, Area of Cabotage, Shipping Policy.

 

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND

 

Shipping has for a long time been recognized as one of the strong catalysts for socio-economic development. Back in 1776, Adams Smith noted that “A business working in a country town without links to the outside world can never achieve high levels of efficiency because its small market will limit the degree of specialization”. Because shipping is one of the cheapest and efficient modes of transportation over long distances, it has since the ancient times been at the forefront of opening up of the world, and thus a major driver of the process of globalization.

Shipping, especially container shipping, has been both a cause and effect of globalization. Container shipping could lay claim to being the world’s first truly global industry. In fact, container shipping could claim to be the industry which, more than any other, makes it possible for a truly global economy to work. It connects countries, markets, businesses and people, allowing them to buy and sell goods on a scale not previously possible. It is now impossible to imagine world trade, and ultimately our lives as consumers, without container shipping. Shipping has led to a phenomenal growth in world merchandise trade, which has consistently grown faster than output. In 2006, goods loaded at ports worldwide are estimated at 7.42 billion tonnes, up from 5.98 billion tonnes in 2000. The value of total world exports increased from US$6,454 billion in 2002 to US$40,393 billion in 2005, representing an increase of 64 per cent. (See Fig 4). According to Kummi (2007), shipping has emerged as one of the most powerful socio-economic and political forces shaping the world today. The phenomenon of shipping is moving the world towards increasing and irreversible integration of economic, social, cultural and political systems. Globalization through shipping trade has “decoupled time and space” resulting in the “death of distance”. Thanks to globalization, the once big world has been transformed into “one little village”.

Shipping has been one of the main causes and effects of globalization. The impact of globalization on shipping, especially container shipping, has been most phenomenal. Indeed, shipping connects countries, markets, businesses and people, allowing them to produce, buy and sell goods on a scale not previously possible. It therefore becomes necessary, if not imperative for countries to try to evaluate impact of shipping trade on their economies. Consequently, this study is an appraisal of the impact of shipping trade on economic growth in Nigeria.

 

1.2  STATEMENT OF RESEARCH PROBLEMS

 

The maritime industry is international in nature and is acknowledged to be a very dynamic component in the socio-economic configuration of any given maritime nation. Nigeria is no exception. Even land-locked countries such as Mali and Burkina – Faso in West Africa also hinge, their economic fortunes on the maritime sector relying as it were on the port of Abidjan for import and export transactions. One major problem that has continued to plague the industry in Nigeria is the issue of adequate policy formulation and implementation, hence the contribution of shipping trade to economic growth has therefore being a subject of debate.

In traditional maritime nations such as United Kingdom, the USA, the Scandinavians, other European Countries among others, the factors of time, proper planning, co-ordination and implementation of clear-cut policies through government intervention largely account for the enviable levels of efficiency, sophistication and monumental success in their maritime activities especially in respect of its contribution to economic growth. The reverse appears to be the case in Nigeria as the fortunes of the industry have continued to suffer progressive catastrophe over the years. A very near example is the fact that the Nigerian National Shipping Line (NNSL) which took delivery of 19 (nineteen) brand new tonnages from European shipyards in 1979 and 1980, has not only lost all her vessels but has been liquidated altogether. This is complicated by the inability of governments of different types to float an indigenous national carrier up till date.

Therefore, the basic questions that will agitate the mind of the researcher include the following:

  • What has been the trend and pattern of shipping or maritime trade in Nigeria?
  • What are the causes of the trends in the shipping trade?
  • What has been the impact of shipping trade on economic growth in Nigeria using economic indicators of Gross Domestic Product (GDP), External Reserves and Debt Services payment as yardsticks?

 

This study therefore, investigates the impact of ocean shipping export trade on economic development in Nigeria.

 

1.3  OBJECTIVE OF THE STUDY

 

The central objective of this study is to empirically determine the impact of ocean shipping export trade on Nigeria’s economic development. Specifically, the study intends to accomplish the

 

following:

  • To determine the relationship between ocean shipping export trade and Nigeria’s gross domestic product.
  • To ascertain the influence of ocean shipping export on Nigeria’s external reserve.
  • To determine whether ocean shipping export significantly influences the level of external debts payment.
  • To isolate policy constraints towards the effective use of oceanshipping export to boost economy and proffer policy recommendations

 

1.4  RESEARCH QUESTIONS.

 

Having stated the above objectives, we therefore, consider the

 

following research question relevant for the study?

 

  • What is the nature of relationship between ocean shipping export and Nigeria’s economic development?

 

  • To what extent has ocean shipping export influenced the level of Nigeria’s gross domestic product?

 

  • What is the influence of ocean shipping export on Nigeria’s foreign exchange reserve?

 

  • To what extent has ocean shipping export influenced Nigeria’s debt service payment?

 

  • What are the policy constraints toward the effective use of ocean shipping export receive in Nigeria?

 

1.5  RESEARCH HYPOTHESES

 

In order to carry out an adequate research work, and to analyze the relationship of the needed variables, we shall make the following hypotheses:

 

H0: 1 There is no significant relationship between ocean shipping export  and the Gross Domestic Product.

 

H0: 2 There is no significant relationship between ocean shipping export  and External Reserve.

 

H0: 3 There is no significant relationship between ocean shipping export  and External Debts Payment.

 

 

  • SIGNIFICANCE/JUSTIFICATION OF THE STUDY

 

There is no gain saying the fact that the issue of economic growth and development is one of the most sensitive issues in Nigeria of today. One reason for the sensitivity of this issue is the scenario of abject poverty in the Land of surplus as is the case in Nigeria. The reason for this boils down to the fact that every reasonable Nigerian is bothered about the economic imperialism brought about by the level of underdevelopment. The generation yet unborn is even saddled and sold to economic slavery because of the present level of poverty and penury.

A research work on such a sensitive matter as the relationship between economic development, external reserve, debt payment and ocean shipping export  in Nigeria, is therefore at this time a necessity.

The need to provide a lasting solution to the problem of underdevelopment, abject poverty, tribal clashes, Niger Delta Youth restiveness, religious bigotry among others, provide workable economic growth scenario, management of our abundant natural resources among others as would be advocated in this research work is therefore a task that must be done and hence a justification for this research work. Hence, this study is significant.

 

1.7  SCOPE OF STUDY

 

This research work aims at covering an overview of the nature of the relationship between the ocean shipping export  and economic development in Nigeria, giving special attention to the some indicators of economic growth in Nigeria – gross domestic product, external reserve and external debt payment. References would be made to other countries which are relevant to this research work. The study also covers a period of 39years, 1976-2015.

1.8  LIMITATIONS OF STUDY

The research work has been intended to have an overview analysis of the Nigerian ocean shipping export  in relation to it economic development and growth.

It would assess the concept of ocean shipping export  in relation to the current level of economic growth given special attention to relationships between ocean shipping export  and some indicators of economic growth.

However, due to time constraints and lack of good data base and information sources in Nigeria and worst still because of lack of good data in the required government ministries and parastatals, the research work could not cover all the economic growth information of the country.

 

THE CONTRIBUTIONS OF SHIPPING INDUSTRY TO THE DEVELOPMENT OF NIGERIAN ECONOMY

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