Following the expansion in the volume of international trade experienced across Nigeria’s ports over the years, the Nigerian maritime sector has created prospects for a significant return on investment. With the expanding economic operations between Nigeria and other countries across the world, the necessity to invest in the Nigerian maritime industry cannot be overstated. If you want to start a shipping company business in Nigeria, this article will walk you through the steps of starting a shipping business, the requirements needed, the post-incorporation registration required, and the benefits of a shipping business in Nigeria
Regulatory Framework a Shipping Company Business in Nigeria
Before you begin, you should familiarize yourself with the regulatory structure that governs a shipping company in Nigeria. The following legislation constitutes the main body of substantive shipping laws:
- The Merchant Shipping Act 2007 (The MSA)
- The Nigerian Maritime Administration and Safety Agency Act 2007 (The NIMASA Act)
- The Admiralty Jurisdiction Act 2004
- The Nigerian Port Authority Act 2004
- The Coastal and Inland Shipping (Cabotage) Act No. 5, 2003 (The Cabotage Act)
- The Finance Act 2021
A shipping company in Nigeria must follow additional standards, including ship safety, navigation, pollution, and personnel concerns. The Nigerian Maritime Administration and Safety Agency (NIMASA) regulates the Nigerian maritime industry. According to the Companies and Allied Matters Act (CAMA) 2020, the first step is to register the company with the Corporate Affairs Commission as a limited company by shares.
In Nigeria, the minimum mandatory share capital for a shipping company or private limited company is 100,000.00 (hundred thousand naira), whereas the minimum mandatory share capital for a public limited liability company is 2,000,000.00 (two million naira). However, the minimum share capital of a shipping company in Nigeria is 25,000,000.00 (twenty-five million naira).
Requirements for Forming a Shipping Company in Nigeria
The following are the conditions for incorporating a shipping company in Nigeria:
- Two possible names for the company are: For “name search, screening, and approval,” the CAC will receive your business names. Following approval, the promoters may proceed to register the company using the approved name.
- The proposed registered address, email address, and phone number for the company
- Details of the shareholders, director(s), and company secretary, including their names, contact/home addresses, email addresses, phone numbers, dates of birth, occupations, National Identification Number (NIN), and electronic signatures Please keep in mind that for foreigners, an international passport will suffice as identification.
- The proposed company must be registered as a shipping company.
Post-incorporation Registrations Required for Starting a Shipping Company or Business in Nigeria
After incorporation, a shipping company must complete four (4) post-incorporation registrations and approvals in order to function smoothly in Nigeria.
#1. Registration With the Federal Inland Revenue Service (FIRS)
Every legitimate business in Nigeria, including a shipping company, is required by law to register with the Federal Inland Revenue Service (FIRS) for tax purposes and returns. Please keep in mind that the Corporate Affairs Commission assigns a Tax Identification Number (TIN) to each company upon incorporation. To conduct lawful business in Nigeria, you must have a TIN.
Registration with the FIRS requires the following:
- Application letter on company letterhead paper
- Certificate of incorporation and other incorporation documents
- Details of the company directors
- Utility bill for the company’s registered address.
#2. Registration With the Nigerian Maritime Administration and Safety Agency (NIMASA)
The Nigerian Maritime Administration and Safety Agency (NIMASA), originally the National Maritime Authority (NMA), is in charge of regulations governing Nigerian shipping, maritime labor, and coastal waters. To operate a shipping company in Nigeria, a company must apply to NIMASA for a license. The necessary paperwork required by the NIMASA Act is present to support the license. NIMASA will conduct a physical inspection of your company.
Documents required to register a shipping company with NIMASA:
- NIMASA form B1 completed
- Receipt of registration fee payment
- Memorandum and Articles of Association demonstrating that the company has been registered with a share capital of 25,000,000 naira (Note: the major object clause must be shipping-related)
- Certificate of increase in share capital if your company increased its share capital after incorporation, reflecting allotment of shares
- Documents reflecting allotment of shares or post-incorporation revisions in the company’s records
- Documents displaying director particulars or any post-incorporation filings;
- Evidence that the company filed annual returns (this could be in form CAC 10 or a letter acknowledging filing of Annual Returns from Corporate Affairs Commission)
- Current tax clearance certificate
- Original bank reference letter and an audited account or financial statement of account (the applicant company will need a financial statement if it is less than 18 months old and an audited account if it is over 18 months old).
The following is the process for submitting an application to NIMASA:
- The shipping company or its authorized agent will submit the application to the Port Authority’s General Manager
- The applicant will receive a debit note and make a payment of N300,000.00 (three hundred thousand naira).
- The Nigerian Port Authority will give a receipt to the applicant upon payment confirmation.
- The applicant receives the original copy of the registration certificate from the Nigerian Port Authority.
Duration of license registration
If all relevant documents are submitted and declared suitable, the registration license will be issued within 2 to 4 weeks of registration.
Furthermore, a shipping company must be registered as a national carrier in order to enjoy preferential rights and benefits granted by the Nigerian government.
The following documents are required to form a shipping company with the Nigerian Ports Authority:
- NIMASA form B1 completed
- The company’s current tax clearance certificate
- Certified authentic copy of the certificate of incorporation
- Certified authentic copy of memorandum and articles of association of which the share capital must not be less than 25,000,000.00 (twenty-five million naira), and the company’s goal must be shipping;
- The latest audit report
- Evidence that the company has filed its annual returns
- Evidence of registration as a registered customs agent
- Joint venture agreement, where applicable
- Charter party agreement where relevant
- Copy of the current list of each owned vessel
- Bank reference
#4. Registration of a Ship or Vessel
The following documents are necessary for ship registration:
- A completed NIMASA application form
- A completed NIMASA approval of ship name form
- A copy of the Certificate of Incorporation
- Evidence of registration as a shipping company with NIMASA
- CTC of Memorandum and Articles of Association
- The company’s current tax clearance certificate
- Company’s bank statement or reference letter
- The Ship Registry will issue a declaration of NIMASA ownership form.
- The applicant must submit an application for a survey and issue a Certificate of Tonnage Measurement in order to enable the ship’s flag survey.
When registering a ship, the applicant is also required to provide details about his personal information. These particulars should include the following:
- The applicant’s full name, residence, and occupation
- Evidence of competence to run and maintain a ship
- The Registrar of Ships will also inspect the ship’s logbook
- a NIMASA certificate of the approval plan for a newly constructed vessel in Nigeria only. Evidence of adequate financial resources for the ship’s operation and maintenance.
In addition, the following information about the ship must be submitted for registration:
- The name of the ship, the time, the location of the purchase, and the Master of the ship
- Details about the ship’s tonnage, construction, and description
- The evidence of title is a bill of sale or a builder’s certificate
- a NIMASA certificate of the approval plan for a newly constructed vessel in Nigeria only.
- Callsign certificate
- Load line certificate
- as per the Minister’s approved condition survey report and tonnage measurement certificate
- Certificate of carving and marking of the ship To the satisfaction of the minister, the ship must be permanently and visibly marked. Ship marks will be inspected at the ship’s expense.
- Payment of the registration fee
- Evidence of ship insurance coverage
Steps for Starting a Shipping Company or Business in Nigeria
The following procedures should be followed when opening a shipping company or business in Nigeria:
#1. Recognize the Industry
The shipping business is vital to the global economy; therefore, talking about it without facts, figures, and data is a disservice. Shipping accounts for 90% of world trade, according to popular belief. People enter this field for the money. The industry has one of the highest profit and turnover rates worldwide.
#2. Market Research and Feasibility Studies Should Be Carried Out
The demographic and psychological makeup of people in need of shipping company services is useful in the public, private, and household sectors, as well as in homes, communities, people of various classes, and people of all disciplines.
The people and organizations listed below require the services of a shipping company.
- The public sector
- Organized private sector (corporate organisation)
- Small and medium-sized businesses
- Entrepreneurs and businesswomen
- College and university campuses
- Contractor
- Religious sports organizations, for example.
#3. Choose the Niche in Which You Want to Specialize
Transportation, like every other industry, has various sub-niches. When it comes to launching a business in the shipping industry, the niche of choice may not be crucial, but there are several niche options for entrepreneurs to consider. Creative entrepreneurs can carve out a niche for themselves outside of the shipping industry.
#4. Choose Between Buying a Franchise and Starting From Scratch
If you’re considering purchasing a franchise from a successful shipping company or investing in the shipping industry, you might even explore partnering with a large and successful shipping company.
The most crucial point to consider is that people are inspired to establish a business for a number of reasons and incentives. Starting from scratch is the best option if you want to expand the business, control the corporate brand, and eventually transfer ownership and possibly sell the franchise.
#5. Understand the Potential Threats and Challenges You Will Face
In general, both established and start-up shipping enterprises may encounter problems from government policies, a worldwide recession that affects spending, and unanticipated natural calamities (frustrations). Threats and difficulties posed by a calamity
#6. Select the Most Appropriate Legal Entity
Starting a shipping company is unquestionably a serious business, owing to the procedures required. Similarly, the legal entity chosen will have a substantial impact on the business’s ability to scale. Choosing a business legal entity, such as a shipping company, is a little easier, especially if you intend to considerably expand your business.
#7. Obtain the Necessary Professional Qualifications.
The shipping business is heavily regulated all around the world owing to a variety of causes. As a result, if you want to work in the marine business, you must first receive the relevant credentials. It provides you with a competitive advantage. Indeed, the more relevant shipping certificates you and your staff possess, the more professional you are, and the easier it is to persuade others to use your service.
#8. Create a Business plan
A thorough business plan is one of the most crucial steps in the establishment of a successful shipping company. The business plan includes a business overview, competitive information, skills and pricing, the target market, the company’s sales offer and key competencies, their price, a financial plan, and a funding source.
Their funding sources, the potential and opportunities for the threat to the land shipping business and its exit strategy . The business plan guides you through the start-up and operation of your company. Present your business ideas to outside parties, such as investors and banks.
#9. Raise the Startup Capital Required
If you decide to start your shipping business or company in Nigeria on a modest scale, it may not be necessary to have numerous resources to start a business, but if you decide to start on a large scale, the capital required to start the company must increase.
If you want to launch a large-scale navigation company, you will need to install desktop computers, office equipment, and office furniture, as well as money to pay personnel and utility bills. You will need money to buy shipping paperwork that will help your business for at least three
#10. Establish a Supplier/Distribution Network
Because of the nature of the shipping sector, it is easy for shipping companies to connect with one another as well as with government shipping organizations. This is due to the fact that the issue of maritime freight cannot be addressed in isolation. This is especially true because bespoke service updates from various governments are continually required to ensure that everything runs smoothly. Because shipping businesses will constantly form strategic alliances, it is appropriate to connect their networks.
Renewal of Registration
To qualify for a license renewal as a shipping company, the following documents must be presented along with the specified fees:
- The company’s tax clearance certificate
- The latest audited account
- Evidence that the company has updated and paid its yearly returns at the Corporate Affairs Commission
- Evidence that the company does not owe the agency and has complied with a payment of 2% of the statutory fee.
Benefits of Shipping Company in Nigeria
The benefits of a shipping company to business owners and consumers in Nigeria include the following:
- Job Creation Across Sectors
The operations of these businesses generate job possibilities in a number of industries, such as shipping, logistics, and supply chain management, thereby contributing to workforce development.
- Supporting Local Industries
Shipping companies play an essential role in promoting the growth of local industries, improving production levels, and enhancing regional competitiveness.
- Catalyzing Infrastructure Creation
The activities of shipping Companies necessitate robust infrastructure, which leads to the development and enhancement of critical assets such as ports, airports, and roads.
- Attracting International Investments
The presence of shipping companies draws international investment, which promotes economic development and adds to the general prosperity of the region.
- Diversification Opportunities
The activities of shipping companies provide opportunities for economic diversification, reducing reliance on a certain commodity or industry and establishing a more resilient economy.
- Cost-Effective Transportation
Shipping companies help to increase commodity affordability and accessibility, which benefits both business owners and consumers in Nigeria and throughout Africa.
How Much Does It Cost to Start a Shipping Company in Nigeria?
However, the minimum share capital of a shipping company in Nigeria is N25,000,000.00 (twenty-five million naira). Please keep in mind that a shipping company’s share capital must be N100,000,000.00 (Hundred Million) or greater in order to qualify for national carrier status.
What Constitutes an Excellent Shipping Company?
Customer-centered services. The time of delivery, the style of packing, and the professionalism of the service provider all help to develop and keep a strong reputation among your clients. The delivery person who represents your company should function in accordance with the needs of the clients.
What Do You Call Someone Who Owns a Shipping Company?
In the shipping sector, the phrases “shipowner,” “disponent owner,” and “carrier” are frequently used interchangeably.
Who Owns a Freight Shipping Container?
Both carriers and the shippers they serve can own freight shipping containers. When a container belongs to the carrier, it is referred to as a COC or carrier-owned container.
Which Shipping Company Offers the Best Rates From China to Nigeria?
Sea Freight. Shipping from China to Nigeria is cheapest by sea freight. Air shipping can be very expensive and inefficient. As a result, if you want to save money on shipping from China to Nigeria, use sea freight. HART Logistics, on the other hand, offers discounts on both delivery options.
Conclusion
A company seeking to carry out shipping activities in Nigeria must be registered in accordance with the guidelines of the Nigerian Maritime Administration and Safety Agency, and such a company must produce the essential paperwork before it may function in the industry.
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