Why Ghana Needs An Indigenous Shipping Line

A shipping line is basically a company that owns and operates fleets of ships for the transportation of goods from the port of origin to the port of discharge.

Maritime transport is an indispensable enterprise and a major player in facilitating global trade. It accounts for about 90% of global trade according to the World Trade Organisation (WTO) unlike the air and land modes of transportation.

Essentially, human life and the global economy is much dependent on the maritime industry. Therefore, investments in the shipping industry are of strategic importance to national economies of which Ghana is not an exception.

Ghana is well-positioned as an important sea route for international trade and trans-shipment within the sub-region due to its strategic location and therefore it offers us a comparative advantage in the maritime space. Already, our two major internationally standard ports, that is, the Tema and Takoradi ports are undergoing a major expansion to scale up the number and tonnage of ships to meet up with the ever-growing global trading demands.

In the light of the huge investment drive at our two major ports, it makes economic sense to create value for our ports by establishing an indigenous shipping line as a strategic pillar for our economic renaissance, maritime growth and offering a true meaning to our cabotage policy.

Ghana must prioritise the strategic development and implementation of a comprehensive program to resuscitate our national shipping line, that is, the Black Star Line and to generate the interest of our home-grown investors to begin to explore the possibilities of diversifying into shipping lines.

The Need for an Indigenous Shipping Line

The ramifications of the Covid – 19 has taught nations to show devotion to being self-reliant. Presently, many developing nations are suffering from the unavailability of Covid-19 vaccines and other benefits from developed nations due to the wanton dependency on the latter. The era of dependency is getting slimmer by the day and nations must endeavour to navigate their way through by being truly independent. Ghana does not own a shipping line and therefore rely solely on and at the mercy of foreign shipping lines. How then can we drive an initiative to manage and conduct our own trade?

We risk being deprived of or having limited access to the world market. Ghana is gracious enough to be a major exporter of cocoa, timber, crude oil etc and therefore we must take advantage of our products to transport our products to buyers internationally with our indigenous shipping line and to be able to smoothly import essential commodities that will be of national interest especially in the times of great necessity – this will ensure timely access to markets in any part of the world, and economic independence. The conceptualisation of ‘Ghana Beyond Aid’ must be stretched to include owning certain strategic assets which are free from foreign encumbrances.

Our revenue generation system greatly relies on burdening exporters and importers with obnoxious port charges as a means of raking in revenue to the state when the same can be relaxed while looking at getting revenues from competitive freight charges through an established indigenous shipping line. A shipping line is a major income earner for maritime nations which is a valuable source of foreign exchange and a contributor to the balance of payments.

The emergence of the African Continental Free Trade Area (ACTFA) which seeks to promote the easy and free movement of goods and services within the African continent is a game-changer for the trade and maritime industry. It is important we utilise this continental agreement to establish a national shipping line to drive and promote trade within the continent. Ghana is strategically placed to become a maritime hub for the shipment and transhipment of goods within the sub-region. This can boost trade between Ghana and other countries within the continent and employability through several chains of economic activities.

There is capacity in terms of human resources to handle the management, operations, technical and legal aspects of the shipping industry in Ghana. The maritime industry is a major source of employment and having an indigenous shipping line will absorb many of our skilful and trained personnel. The Regional Maritime University which serves as a training ground for knowledge and skills acquisition for persons with interest in the maritime industry within the sub-region is strategically located in Ghana.

The university has the capacity to train more people in diverse areas of maritime and to offer refresher courses for existing personnel in the shipping industry. It is also important to recognise the fact that through this effort, Ghana can become a ship management centre for the sub-region through a deliberate maritime policy and a special eye for the development of talent for the maritime industry like we have in Cyprus, Greece, Hong Kong, Malta, and Singapore.

The Tema Shipyard which is credited for the maintenance and repair of ships will serve as a nexus for the smooth operation of a national shipping line. Through this opportunity, the shipyard will be able to generate income to retool and position itself to be able to attract strategic partners to develop it into a world-class yard. That notwithstanding, a revamped Tema Shipyard will be a good source of income for our nation. The re-introduction of a national shipping line will help promote streams of employment and enhance the businesses of companies that provide auxiliary services within the shipping industry like the stevedores, freight-forwarding etc.

The Way Forward

There must be a deliberate agenda by the government to prioritise the setting up or reviving of the national shipping line. In doing so, we must encourage and educate our home-grown investors through maritime investment forums with adequate incentives to be able to awaken their interest to invest in shipping lines.

Ghana as a ‘corporate body’ has the credibility and a strong capital market access to raise funding to partner with strategic investors to be able to revive or set up a national shipping line. I am of the school of thought that an option for a Public-Private Partnership (PPP) will suit our circumstances in this regard with the government of Ghana having not less 51% as its shareholding. We must also take into due consideration the circumstances that led to the collapse of the Black Star Line as our nation’s only carrier while taking steps to revive it.

The Public-Private Partnership (PPP) must be anchored on three strategic mechanisms which are: First, there must be a friendly shipping tax and ship registration regime that can attract investors. Secondly, there must be a strategic maritime growth policy that will outline our short-medium-long-term plans based on a sound maritime policy initiative that will be developed through intensive collaboration between the public and private sectors. Thirdly, a pragmatic legal regime with a very stable economic and political stability can protect the capital-intensive assets and long-term capital investments of investors in the shipping industry.

A Public-Private Partnership (PPP) will reduce to a very minimum degree the level of government interference and ensure a prudent and efficient management system that will be placed in the hands of the private investor.

Ghana must either set up a development bank or widen the scope of existing development banks like the Ghana Exim Bank which is already providing financial and technical support in promoting international trade to Ghanaian owned businesses to cater for the maritime industry. This module of development bank should be able to provide a lower interest rate as compared to commercial banks and technical consultancy to our home-grown investors who may want to diversify into shipping lines.

Conclusion

There is already an existing infrastructure that can propel the establishment of a national shipping line. We must not treat shipping as a support industry but as an industry capable of manifesting on its own right leading to a sustainable, vibrant, and globally competitive shipping sector that can drive wealth creation for development and national prosperity.

The writer, Chief Obosu Mohammed (DPA, LL.B, LL.M, MCIarb), is a managing Partner at Comlife Ghana Ltd.