The Blue Economy: Thoughts To Action Olufemi Awoyemi October 17, - - PowerPoint PPT Presentation

The Blue Economy:

Thoughts To Action

Olufemi Awoyemi October 17, 2019

“There is increasing interest globally in the Blue Economy and BlueTech as

hu huma mans ns red edisco iscover er th the e im impor

• rtance

tance

• f
• f th

the e oc

• cea

ean…Problems like ocean

warming, plastic gyres and ocean rise have us looking at the ocean again since it is our past and our future…even as we address human needs for food, water, energy, medicine and coastal real estate.”

• Michael B. Jones, The Maritime Alliance

Four things I wish to achieve

Provide an Overview/Understanding of the Blue Economy ….and the ecosystem; Present a PESTEL analysis describing the macro-environmental factors to be addressed in moving from Thought To Action; Offer more specifics around the Blueish Colour of Littoral State Economies; and Offer my thoughts on what is possible and posers for the panel session to follow.

The Blue Economy:

What it means and the Ecosystem…

Simplifying The Climate Talk/ Ecosystem - Nature….

Negative: Smog etc Positive: Wind Turbines,

etc

Negative:

Rising Tides, Typhons, Tsunamis etc

Positive:

Rain for Harvest, Thermal Power etc

Negative:

Erosion, deforestation, etc

Positive: Agriculture, etc Negative: Wildfires, lava

etc

Positive:

Solar Energy, etc

What is a ‘Marine’ or ‘Blue’ Economy? …. The blue or marine economy is the ecosystem of economic activities centred on trade and actions around large

bodies of water ranging from rivers to oceans, which are

managed in a way as to ensure environmental sustainability. The economy extends beyond ports and terminals to fishing, waste management, hospitality (beachside hotels

and bars),

Power (offshore

wind and tidal energy)

and Transportation (ships, barges, rigs and other floating vessels).

According to the World Bank, the Blue Economy is, “sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of ocean ecosystem.” While the EU, on the other hand, defines it as, “All Economic activities related to Oceans, Seas and Coasts”.

The BLUE Economy! ….

Over the last decade, the blue economy has taken on greater importance in the context of an increasingly resource constrained world and a climate-threatened global ecosystem.

1 2 3 4 5 6

Sustainable Blue Economy – What It Means….

As the single largest natural asset on the planet which represents some 99% of the earth’s living volume, the Ocean delivers numerous benefits to humanity:

The ocean is responsible for the oxygen in every other breath we take. It supplies 15% of humanity’s protein needs. It helps to slow climate change by absorbing 30 percent of carbon dioxide emissions and 90 percent of the excess heat trapped by greenhouse gases. It serves as the highway for some 90 percent of internationally traded goods, via the shipping sector. If the ocean were a country, at several trillion dollars per year of economic activity, the ocean would rank 7th on the list of largest nations by GDP.

It is the source of millions of jobs, in fisheries, aquaculture, shipping, tourism, energy production & other sectors. It is also the source of some 30% of the world’s oil and gas resources but this equation must change if we are to succeed in the necessary transition to a low carbon development pathway. Millions of the world’s poorest people depend heavily on the

• cean and coastal resources for their sustenance and

livelihoods. Small-scale fishing provides about half of the world’s harvested seafood – but provides 44 times as many jobs per ton of fish as industrial fisheries do!

Sustainable Blue Economy – What It Means…. /2

The Marine Ecosystem & SDG’s ….

“In simplest terms, there are two elements for the Blue Economy. The first is the necessity of protecting – and restoring where needed – the existing

• cean

resource base that already supplies food and livelihoods to billions of people. Depleted fish stocks that are permitted to recover can ultimately deliver higher, sustainable fish yields and associated jobs. If protected and restored, coastal ecosystems such as coral reefs and mangroves can deliver increased coastal protection benefits from storm surges and sea level rise. Coastal areas that reduce nutrient pollution and eliminate hypoxic areas can, in turn, enjoy higher fish yields and increased tourism revenue.”

The Marine Ecosystem & SDGs…. /2 “The other side of the Blue Economy is where

• pportunities may exist for enhanced or new

sustainable economic activity derived from the

• cean. Progress and prospects for ocean-related

energy, such as offshore wind and tidal energy, appear promising. Opportunities also exist to ‘monetize’ the value of highly effective coastal carbon stocks such as mangroves and seagrasses into carbon finance markets, or ‘blue carbon.’ Globally, aquaculture has been growing at a compounded rate of almost 9% since 1980, and now supplies nearly half of the world’s consumed fish protein.”

The Marine Ecosystem & SDGs…. /3 “However, much of it remains unsustainable in terms of pollution and impacts on species diversity, making this a critical Blue Economy

• pportunity

to introduce more sustainable practices, such as integrated multi-trophic aquaculture. With support from GEF and UNDP, the IMO and the global shipping sector are taking pro- active steps to minimize the sector’s contribution to climate change through improved energy efficiency, which can, in turn, enhance the sector’s profitability, a true Blue Economy approach.”

Comparative African Blue Economy ….

The territorial waters and exclusive economic zones (EEZs) within African Coastal States (about 39 out of Africa’s 54 countries are either coastal states or islands) are extensive, measuring some 13 million km², and the continental shelves extend over a total area of 6.5m km². With an area of approximately 30m km², Africa is the 2nd largest continent on the planet, equal to 2/3 the size of Asia, and perhaps 3x the size of Europe. The continent is surrounded by oceanic expanses (Atlantic Ocean and Indian Ocean), and by two semi-enclosed seas: the Mediterranean Sea and the Red Sea). Africa is also home to the 2nd largest and longest rivers and aquatic areas in the world (the Nile and the Congo). There are 6 international river basins covering approximately 64%

• f

the continent’s land area. The African Great Lakes constitute 27% of surface freshwater, the largest proportion in the world.

Comparative African Blue Economy …. The Blue Economy has the potential to create both economic growth & development. The added African wealth that can be generated from the

• cean is conservatively valued at US$ 4 trillion, which is

equivalent to the GDP of countries in East Asia and the Pacific in 2017 with estimated goods and services of $2.5

trillion annually.

If, collectively, the African oceans were a country, they would constitute the eighth largest economy in the world just after India and perhaps just ahead of Italy.

Words we need to clear up:

* Giant * Potential * Narratives * Reputation * Best Practice *Policy

Table 1: Performance Indicators of Ports In Eastern and Southern Africa

The PESTEL Analysis:

Moving from Thought to Action…

The problem facing a sustainable Blue Economy in Nigeria centres on 6 key strategic difficulties that relate to the foll:

POLITICAL:

The lack of control by coastal states of their natural water resources and coast lines has resulted in an inefficient management

• f

country’s waterways mainly located in the Southern region of the country. Nigeria’s South hosts the country’s Oil and Gas resources, international waterways and littoral ports. The natural geography and geology of the country which places these resources in one part of the nation creates a major point of political conflict with the North. An indication of this conflict is the ongoing litigations

between the Lagos State Inland Waterways and the Federal Inland Waterways Services over control of waterway revenues in Lagos State.

The problem over who controls inland waterways revenue has been a long- drawn battle since the early 2000’s and shows the innate conflict between federal and state governments over resource control. The lack of broad political consensus on the nature of Nigeria’s fiscal federalism has deep economic implications, including making the blue economy a fragile concept.

ACTIONs:

Autonomy - The fiscal arrangement in Nigeria needs to be revisited to have greater autonomy to enable littoral states generate the private capital investments needed to improve the quality of maritime ecosystems and expand blue local economies in sustainable manners. Centralization of policy and investment - the federal level cannot bring about a fast-paced improvement in the maritime sector; the Littoral states marine fronts should be treated as the equivalent of crude oil and maritime entitled to derivation proceeds from revenues at the ports. The applicable principles to the green economy: where agricultural

• utput would also be given similar treatment. The approach proposed towards

developing the blue economy would mean that their may be need for a constitutional review and this would require political buy in from all parts of the country.

ECONOMIC:

A blue economy would require competitive and efficient use of coastline

• resources. Nigerian ports and maritime facilities are currently

costlier than neighbouring countries such as Port Novo in Benin Republic or Tema Port in Ghana. The relative high cost of Nigerian ports has reduced port activities; this, in turn, has reduced potential employment and decreased tax revenues that could be achieved in a less expensive and more efficient administrative

• environment. The high explicit and implicit cost of using Nigerian

ports has stifled growth of maritime activities and held down the expansion

• f Nigerian coastal economies.

The shrinking of port patronage is evident from the reduction in ships that have berthed in Nigeria between 2012 and 2017. Service boat numbers have fallen from 21,726 vessels in 2012 to 12,243 in 2017, a reduction of 271%. Ocean going ships fell from 6,369 in 2013 to 4,175 in 2017, a drop of 52.6% (see chart 1 and 2 below).

ECONOMIC: Chart 1

ECONOMIC: Chart 2

ECONOMIC: Chart 2 b

Total transport Revenue from maritime activities in the last 3 years has been roughly equivalent to the average size of the Nigerian annual budget. Import and Export values of maritime shipping transactions have been around N8trn in 2018 and 2019, which were increases from around N6trn in Q4 2017 and 7trn in Q1 2018. In Q1 and Q2 2019 the value of shipping transportation for both import and export was N8.5trn, while export alone was N4.5trn (see chart 3 and table 2 below).

ECONOMIC: Chart 3

ECONOMIC: Chart 3

Table 2: Total Quarterly Marine Transportation Value 2017-2019 (N’bn)

SOCIAL:

High incidence of piracy, smuggling, human trafficking and drug peddling makes Nigeria’s maritime business a precarious entrepreneurial activity. For fear of their lives, several port security officials simply allow illegal activities fester as they take a pre-arranged cut of the proceeds. Many officers that have been known to resist port smuggling or trafficking bandits have ended at the bottom of the Atlantic Ocean. They high presence or influence of wharf gangs has created a marine inverse ecosystem that is socially precarious involving illegal guns, drugs, prostitution & gambling – with consequences of anti-social sub-culture manifestly dire in places like Ajegunle, Apapa and Ijora in Lagos State, Abalama, Tombia, Degema and Buguma in Rivers State, Creek Town and Calabar in Cross River State. Similar challenges exist in riverine communities of Ondo, Ogun, Bayelsa, and Ebonyi States. Poor social conditions

• f

maritime communities reduce communal productivity & worsens problems

• f

education, social aspiration and entrepreneurship reward.

ACTIONs:

Improve the physical condition of communities around the Ports Compel port operators to contribute to a community trust fund by way of a community charge on port activities. Part of the fund would go into technical training schools targeted at port-related activities Maintain port/terminal community relations offices Locate maritime training schools in close proximity to port locations Commence port sustainability programmes which would include supporting clean port communities and “clear waters” programmes. Port ecology should be just as important as port profitability.

TECHNOLOGY:

Tech adoption is a critical aspect of the evolving blue economy, from stevedoring to cargo handling and inspection, the use of machines has become a compelling necessity to remove the obvious corruption that occurs with multi-point human interface in shipping operations. The digitization of SOPs and the use of electronic monitoring and inspection technology has gone a long way in improving port turnaround time and scaled down the levels of corruption that result from high levels of human discretion. Nigerian ports are still majorly inefficient and corruption prone as a result of low level of technology application in ship processing. A recent survey by the Maritime Anti-Corruption Network (MACN) in collaboration with the CBi discovered that although most port users knew the SOPs that applied to port activities; they simply circumvented them to provide

• pportunities for negotiated expedition of port processing. The result has

been a tendency to prefer human engagement that allows for operational

• paqueness as a tradeoff for transparency that could be relatively

cheaper in terms of time spent on activities, and better in terms of service quality in respect of diligence.

ACTIONs:

Adopt increased technology to reduce human intervention SOPs can be circulated to mail addresses of captains and crew of berthing ships. Surveillance of Personnel and cargo by way of multiple point CCTV Cameras Use of cargo scanners as first line inspection method while human intervention should take place only when digital red flags are raised

• r sniffer dogs initiate further investigation

Digital register of all port officials updated daily

ENVIRONMENT:

The port environment in Nigeria is poor and nurtures a culture of weak morals and perverse hygiene. Port infrastructures are old and badly maintained while marine shorelines are highly polluted from industrial effluence and waste products habitually thrown into the dock waters by port users and refuse disposal vendors. The pollution of the ports marine water creates challenges for environmental sustainability.

ACTIONs:

Water quality at the ports/terminals must be routinely tested to measure pollution levels Environmental agency should regularly monitor compliance with health codes at the wharfs Port ecosystem review needs to be conducted and a metrics developed for assessing the quality of port environments. The environmental status reports would be used to shape action

• n remediation in every port and terminal.

LEGAL: The laws and procedures guiding maritime services in Nigeria are comprehensive and fairly robust, the problem is not with written regulation but enforcement. The punitive sanctions and positive incentives that would encourage better port behavior have been found to be ineffective, mainly because port officials find the economic rewards of violating SOPs more compelling than the likelihood of sanctions for infractions. The results of slim risks of punishment for bad conduct leads to higher port charges (with a large unofficial component), slower throughput time, and deadweight loss resulting from both service time delay and service quality reduction (see economic supply and demand illustration 1 below showing the deadweight consequences of slower service delivery and higher port cost charges).

Illustration 2: The Economic Burden of Port Inefficiency and Corruption

ACTIONs:

SOPs must be rigorously enforced SOP enforcement should be digitized and codified in such a manner that enforcement will involve minimal human intervention. The intervention would involve CCTV Capture technology, scanners, check-in, check-out movement monitors and digital activity log books similar to those that operate in factories. At a broader national level constitutional provisions regarding maritime activity need to be revised to allow greater state involvement in maritime management and investment. Private sector engagement in port management needs to be expanded and public private partnerships (PPPs) need to be adopted as standard default models for port administration. The laws should be configured in a manner that maritime assets can be securitized to improve fiscal liquidity on the part

• f the government while efficiency would be attained through private

management of port/terminal infrastructure, this sort of framework would support social, economic and environmental sustainability (see illustration 3 below).

Illustration 3:

“Pain is Inevitable but Suffering is Optional?”

..for the birds of hope are everywhere, listen to them sing..

Blueish Colour of Littoral State tes:

Economic Frameworks & Results…

Littoral States & GDP: Littoral states (that provide buffer to 8,000kilometers

• f navigable inland and coastal channels) do not

appear to benefit directly from their supposedly ‘privileged’ maritime status apart from derivation revenues received from

• il exports by oil producing states along Nigeria’s Gulf of

Guinea. The revenues that they receive come mainly from onshore oil wells as offshore wells are considered to belong exclusively to the FGN. Nevertheless, as a proportion of national GDP, littoral states have seen a major increase since the decline from 21.87% in 2013 to 18.75% in 2014. The contributions of these states (minus Lagos State) further declined in 2015 to 17.92% before rising to 18.75% in 2016 and 56.08% in 2017 (see chart 4 below).

Chart 4: Littoral States Collective GDP/ National GDP (%)

The contribution to GDP between Oil and Non-oil activities is clear in a breakdown of each state’s contribution to GDP by percentage economic activity (see chart 5 below).

Chart 5: Share of Nigerian Littoral States In GDP (%), Excluding Lagos State

Littoral States and the Sovereign Construct.. Littoral states have been prominent in their industrial contribution to GDP from 56.92% in 2013 to 61.34% in 2014, but this dropped to 43.02% in 2015 at the beginning of the country’s first recession in 20 years, by 2016 the industrial

• utput contribution of littoral states dropped to 39.41% and

rose steeply to 76.5% in 2017 at the height of the recovery. The service sector has also improved as a proportion of GDP since the 2015 recession rising from 7.02% in 2015 to 9.94% in 2016 and 47.63% in 2017. In the last 5 years littoral states have seen the proportion of maritime activities such as fishing, water transportation and waste management rise as a proportion of their state GDP (see table 3 below).

Chart 6: Map of Nigeria

Chart 6: Map of Nigeria

Table 3: Maritime Sector as % of Littoral State GDP

Nigeria’s maritime architecture is weak, leading to the sector performing far below its revenue-generating potential aside oil export and import. A few numbers underscore the problem:

• A 2017/2018 study by the NPA showed that Nigeria loses $7bn annually in

revenue due to poor ports infrastructure.

• To counterbalance this, Nigeria generated $840m in revenue in 2017. It also

created 10,000 direct new jobs. The ports also recorded increasing volume of 1.3m shipment of non-oil products. These developments led to a 2.1% increase in GDP.

• Recent studies by other intnl maritime agencies seem to suggest that a 10%

increase in port activities could lead to a 6% - 20% increase in national GDP.

In other words, the “Blue Economy” has an enormous potential of dragging the Nigerian economy out of its slow-moving GDP growth rate (GDP growth for Q2 2019 was 1.94% down from 2.38% in Q4 2018). But a lot will depend on understanding the Blue ecosystem; the synergies, the strategic imperatives and the overarching vision to unleashing maritime sector growth. Unfortunately, most of Nigeria’s maritime activities, especially ports and terminals, have been lumped under an amorphous ministry called transportation making it difficult to isolate the contribution and cost requirements of the sector; this has resulted in poor planning, suboptimal decision making and underperforming sectoral growth.

Politics vs Policy….Beyond the ‘noise’

If Nigeria’s maritime economy is to take off, the maritime sector needs to be under a separate ministry from transportation (or a dedicated unit in that ministry) and should be shaped by a clearly crafted fiscal plan to grow the sector by at least 10% in annual revenues and maritime activities over a period of 10 years. The plan will involve several public private partnerships (PPPs) and financial arrangements that improve the liquidity

• f the sector by selling off non-strategic maritime

assets of the government to private enterprises or by ‘securitizing’ these assets for the benefit of the populace while still improving sector liquidity. Politics vs Policy….Beyond the ‘noise’ …/2

We are not going to achieve a quantum leap by embracing a tunnel vision ….

..we will make mistakes, have false steps but we must recognise

that this current state is NOT another crisis… it is a disruptor in sovereign models… We must dare to RE-IMAGINE!!!

Nigeria must dare to be bold and challenge the market to bet

• n her…

Closing Thoughts:

What is Possible & Posers …

Nigeria’s Blue Economy could help the country diversify and generate far larger revenues than currently exists, but this will require a clear delineation

• f maritime economic activities across littoral states. It would also need the

following: Creation of littoral maritime activity budget lines at both Federal and State levels; Creation of a purpose-led office for Maritime Affairs in/under the Ministry of Transportation, or specifically, make it a direct KPI for the Minister of State; All activities under the Blue Economy must be recorded and brought in a single central data base; and Marine activities such a transportation, fishing, hydro-energy generation, littoral state beachside revenue generation and activities related to waste management and waterway management must be brought into a broad national plan that details the needed set of activities to achieve clear goals.

Takeaways…

…Edison's electric

light did not come about from the continuous improvement of the candle...

What should be Nigeria’s Blue Economy Strategy, within the SDGs we have signed unto? What do we do with the current architecture in place i.e. silos in governance and streamlining/integrating our budgets to provide focus on the economic benefits?; How do we deliver on above to access funding available for the blue economy (green funds included); and How do we deploy PR to help us create awareness of state of play, opportunities and access points; to market the strategy designed and sell the market to stakeholders?

Posers…

“It is li lightning htning that strikes, not thunder. Thunder is a direct result of

• lightning. It IS possible that you

might see lightning and not

hear the thunder because it

was too far away”

• Nuggets, Separating Myth from Science

Q & A – Panel Session

Nigerian Federal Government Budget 2020, October 2019 Breakdown of the 2020 Executive Budget Proposal Nigeria Federal Government Budget 2019, December 2018 Africa’s Blue Economy-Opportunities and Challenges to Bolster Sustainable Development and Socioeconomic Transformation, Issues Paper, United Nations Economic Commission for Africa, November 2018 Opportunity and Growth Diagnostic of Maritime Transportation in The Eastern and Southern Africa, Professor Godius Kahyarara and Deborah Simon, September 2018 Blue Economy: Initiatives in East Asian Seas, Maria Corazon Ebarvia, Project Manager, PEMSEA, August 2018 Nigeria Economic Recovery & Growth Plan 2017-2020 (ERGP), February 2017 Africa’s Blue Economy: A Policy Handbook, UNECA, March 2016 Green Economics, An Introduction to Theory, Policy, and Practice, Molly Scott Cato, June 2008 www.proshareng.com

References / Acknowledgments

Thank You