Nation on Board

by Lynn Schler

  Let us not deceive ourselves. We Nigerians as yet know very little about shipping. A few of us have touched the fringe of the industry as shipping agents, dock-labour contactors or freight agents; some few hundred of us have gone to sea as deck-hands, engineers and apprentices. But let no one think for a moment that a few months or years in a shipping office or as a sailor qualifies one to run a shipping line. Ocean shipping is one of the most complex, diverse and highly skilled industries in the world. Large profits can be made, even larger sums can be lost in a surprisingly short time by overambitious people who lack both technical know-how and managerial experience. Do not mistake me. I am not suggesting for a moment that we Nigerians are incapable of ever acquiring the necessary skill and know-how. We can and are now acquiring them. But I am saying that if now we are to establish a national line on sound foundations, we must start in partnership with an experienced liner operator in whom we can have complete trust.47

  Njoku’s speech anticipated the public reaction to the surprising press release issued three weeks later, announcing the establishment of the Nigerian National Shipping Line. In what many saw as a highly controversial deal, Elder Dempster and the Palm Line were revealed as the technical partners “in whom we can have complete trust.” In the agreement between the Nigerian government and the two shipping giants, ownership of the Nigerian National Shipping Line would be divided, giving the Nigerians 51 percent of the company’s shares, while Elder Dempster held 33 percent and Palm Line held 16 percent. The technical partners committed to investing necessary capital into the venture, as well as training Nigerians for both seagoing and managerial jobs. The Nigerian government allotted up to £2 million. In addition, it was agreed that the NNSL would be positioned as junior partner in the West African Lines Conference.

  What had led to the hasty agreement? It is clear that the federal government was at least partly motivated by a desire to counter regional autonomy. The federal government was likely alarmed by rumors of individuals and regional governments planning to establish overseas shipping lines. Autonomous initiatives had already given expression to the general discontent in the Western Region with WALCON’s high freight rates. In the beginning of 1958, a local businessman from the Western Region, Patrick Osoba, set up his own shipping line, named the Nigeria Line. This was a joint venture with a Finnish shipping firm, Nordstrom and Co. Despite the company name, the ships were all registered in Finland, and, facing criticism, Osoba acquired two of the ships in 1959. Although the company could not withstand competition from the conference and folded in 1960, the initiative might have raised concerns for the federal government.48

  Archival evidence indicates that the federal government and the British shipping lines were highly concerned about the Western Region’s intention to form their own shipping line, following reports and rumors that representatives of the region had already been in contact with the Israelis about a joint venture.49 A conflicting report from the UK Board of Trade in January 1959 claimed that the Western Region had already closed a deal with the London & Kano Trading Company.50 In the January 1959 meeting of the National Economic Council, following the announcement of the newly formed NNSL, the Western Region protested that the federal government had finalized the negotiations without consulting the NEC. That same month, Elder Dempster and Palm Line offered the Produce Marketing boards up to 25 percent of the founder shares (of which Nigeria held 51 percent), hoping that this would induce the Western Region to drop their plans for their own shipping line.51 Apparently this move did not appease, and in July 1959, one month after the first voyage of the NNSL’s Dan Fodio, the Western Region threatened to join a boycott of WALCON. According to a report by Minister Njoku, the boycott began with the Electricity Corporation of Nigeria, which had given WALCON six months’ notice of termination of its freight agreement “in protest against the alleged monopoly of the Conference Lines in the Nigerian trade.” The Nigerian Railway Corporation also announced that it would give preferential treatment to Nigerian shipping companies in transporting its imports from overseas because of the monopolistic practices of the conference. Following these moves, the premier of the Western Region government announced that his government would not ship produce with WALCON in protest against the shipping combine.52 According to Njoku, at the time of the announcement, the Western Region was still investigating the option of its own shipping line.53 The aspirations of the Western Region to establish an independent venture, along with the establishment of Ghana’s Black Star Line, undoubtedly played a role in the decision of the federal government, and in particular Minister Njoku, to close the deal with Elder Dempster and the Palm Line.

  CRITICISMS AND PUBLIC DEBATE CONCERNING THE NIGERIAN NATIONAL LINE

  The announcement of the Nigerian National Shipping Line was celebrated by the federal government as a historic milestone in Nigeria’s march toward independence. In a speech to the House of Representatives on 19 February 1959, Minister Njoku praised the agreement with the technical partners as the best option available to Nigeria in the current circumstances:

  We must recognize that at the moment we Nigerians simply have not got the technical experience to run an International Shipping Line on our own. We must rely on the best and most experienced liner operations we could find to help us during the first years of the Company’s life. . . . Because we intend this should be a truly Nigerian project, manned and managed as soon as possible by Nigerians, we must therefore learn to walk before we run. The line will therefore start in a small way with one owned and two chartered cargo vessels.

  We are starting in a very small way because we are determined to build on firm Nigerian foundations with the help of the best technical partners it has been possible to find. But we are not going to remain small. The Nigerian National Line is going to grow with all possible speed into one of the biggest and most important Companies in Nigeria. Indeed it will take a proud place among the Shipping Lines of the world.54

  Despite Njoku’s enthusiasm, a review of the public outcry that followed the announcement indicates that not everyone was pleased with the negotiated deal. The press took the lead in this protest, and already in February 1959, editorials appeared in local newspapers regarding the terms under which the national line was established. In a Daily Times editorial titled “The Shipping Muddle,” the general sentiment was conveyed:

  People are baffled and shocked with an agreement which ostensibly seeks to establish a “truly Nigerian project” and yet allows itself to be completely swallowed up by two giant foreign firms which are members of a shipping monopoly, the West African Lines Conference. . . . New ships can only carry 50,000 tons of shipping worth a mere £250,000. This means that the country’s new shipping line will be limited to about 2-1/2% of the nation’s cargo whilst the rest will be handled by the monopoly!

  Two facts emerge: The new shipping line is completely impotent; it will give no effective competition to the monopoly the country seeks to break up! . . . No steps are being taken by the Federal Government to encourage the indigenous shipping enterprise.

  What Nigeria needs is a true “national” shipping line or none at all. The project announced by Njoku is an insult to the national aspirations of the country.55

  In an editorial appearing in the Daily Service on 7 May 1959, there is skepticism regarding the good intentions of the technical partners, Elder Dempster and the Palm Line:

  There is considerable public disquiet about the line-up between the Nigerian National Line and the foreign shipping monopolists. It is inconceivable, for example, that a shipping organisation operating 83 vessels will allow the interests of these 83 vessels to suffer in favour of a National Shipping Line operating on line three vessels with whom it professes to be in partnership. The logical conclusion, therefore, is that the foreign shipping monopolists are in the National Shipping Line not only to protect their own vested interests in the trade but also to defeat the national desire to establish an indigenous shipping trade.

  The pa
per demanded that indigenous shipping interests be permitted full opportunities with the National Shipping Line, as this would ensure that the shipping sector remained competitive.56

  Another source of criticism was the planned membership of the National Shipping Line in the West African Lines Conference. An editorial from the Daily Service called this a “Shameless Surrender”:

  The West African Lines Conference is the monopoly combine of shipping lines which all nationalists wish to see broken. It was for this reason that the agitation for a national line was carried out on the floor of the House of Representatives. But not only did Mr. Njoku betray the nation by inviting members of this conference to control and manage the so-called national line, his nominees on the Board of Directors have now gone one step further to throw the national line altogether inside the jaws of the monopolists. . . . The interest of the nation has been sacrificed to foreign monopolists and the country has been badly let down. The agreement to join the conference is a shameless and cowardly surrender to evil to which there can be no excuse.57

  According to the West African Pilot, the NNSL agreement with Elder Dempster and the Palm Line was evidence that power had corrupted the nation’s leaders. In an editorial titled “Nationalists in Office,” it was charged that once Nigerian nationalists held public office, their views and mode of thinking became corrupted. The proof of this was the “sell-out” of the nationalist government, which had “auctioned away our economy to British interests” by establishing the Nigerian National Shipping Line in cooperation with Elder Dempster. The editorial reflected the depth of disillusionment and anger the shipping deal had fostered:

  No matter how hard those responsible strive to convince us that they have acted in our own best interest, the practical facts belie them. A few days ago, as if to add insult to injury, we were told that the Nigerian National Line had joined the West African Lines Conference. . . .

  FOR TEN YEARS WE HAVE BEEN SHOUTING AND GROANING ABOUT THE MENACE TO THE ECONOMY OF THIS COUNTRY POSED BY THE CONFERENCE LINES. WE DID SAY THAT THEIR MONOPOLY OF OCEAN TRAFFIC AND OF GOVERNMENT PRODUCE WAS INIMICAL TO OUR INTERESTS. Federal legislators picked up the cry and forced the Government to safe guard our interests by starting our own Line. But in doing so, the Government merely allowed itself to become an appendage of the mighty Conference Lines. We sold out to the High Priest of the monopoly.

  . . . We set out to stand on our feet and found ourselves being taken care of by the very people we said would want to bleed us to death. Surely, political independence will come next year. But when do we have economic independence? Our nationalist Government has made certain that we will not win both together. We shall have to fight for economic independence after the first round. This would not have been necessary had the Federal Government been made of sterner stuff and if the men at the helm were real nationalists and not just drum beaters. What a pity!58

  Njoku’s response to these criticisms came in August 1959, in another statement to the House of Representatives. In this speech, he accused his critics of having sectarian interests rather than a nationalist outlook. This was a subtle reproach of the Western Region’s aspirations to launch their own shipping venture:

  The National Line is a national enterprise affecting the well-being of the thirty-five million people of Nigeria whose overall interests must prevail over the interests of a few Nigerians personally interested in shipping, as well as over the interests of any section of this country. I can assure the House that in the establishment of the National Line the overriding factor was not what would please certain individuals or a certain section of the country but rather what would be in the best interests of the nation as a whole.59

  Njoku claimed that the goals of the federal government remained the same: to give Nigeria a foothold in the shipping industry, to train Nigerians to manage and run the enterprise on their own, and to ensure the technical and financial support of the NNSL from the technical partners. With regard to membership in WALCON, Nkoju explained that the international shipping industry was organized around the conference system, and Nigerian membership in the conference would ensure a regulated shipping schedule and cargo sharing. He claimed that the Nigerian national line was following in the footsteps of other decolonizing nations, such as Ghana and India, whose shipping lines had also joined the conference systems. Njoku assured House members that the conference membership would enable the NNSL to turn a profit already in its first year.

  Njoku was particularly critical of those who claimed that the national line was not truly Nigerian, and cast doubt on other ventures that claimed to be “Nigerian.” He claimed that anyone could open an agency in Lagos and claim it was Nigerian, but a closer inspection would reveal that the ships were registered abroad, and the controlling interests of these companies were also foreign. Njoku explained that the national line was a “genuine Nigerian Line,” as Nigerians held the bulk of capital, the ships were manned by Nigerians, and all final decisions rested with the board in Nigeria. And unlike other ventures, the NNSL was represented by all regions of the country, as the regional marketing boards were also shareholders in the company.60

  It was not only the Nigerian press that was highly skeptical of the arrangement between the NNSL and the Elder Dempster and Palm Lines. In fact, the most virulent critique of the partnership came from one of the members of WALCON, the Norwegian firm Leif Hoegh and Company. In January 1958, Elder Dempster informed WALCON members of their intentions to pursue the joint venture with the Nigerians. In their reply to this announcement, the Norwegians cast doubt on the motives of Elder Dempster and the Palm Line. Hoegh expressed deep skepticism and disdain for the British companies’ maneuvers, and forecast doom for the Nigerians:

  It would be a peculiarity for West Africa that already existing Lines should help the underdeveloped countries in the Liner service. . . . It is hard for us to judge how wise a move this is, and you seem to be in a hurry so we have no time to investigate or even consider it. As you want an immediate reply, you put us in a difficult position, and we really have no choice, . . . but I do not really like that you will educate the Nigerian government in the Liner trade. We must presume that the Nigerian venture is kept within narrow limits, and that a possible further appetite is staggered. . . . We take it for granted that you will not help the Nigerians to run their ships, so that the mistakes they make in this field they will in all fairness have to take themselves. . . . For us it is, of course, unpleasant news that another line in addition to Black Star Line should enter the Conference on better terms than we have ourselves.61

  While Leif Hoegh’s protest can hardly be detached from his own company’s interest in keeping competition at a minimum, his criticism of the deal between Elder Dempster/Palm Line and the NNSL echoed the same skepticism that was voiced in the Nigerian press toward the underlying motives of the technical partners. Hoegh made it clear that there was no altruism at work, and Elder Dempster could easily agree to the minor loss of cargo share that would result in the NNSL joining of WALCON in exchange for the preservation of the monopoly. But for Leif Hoegh and Company, and the other smaller members of the conference, this could have a more significant impact. The Norwegian’s protest revealed the complexities of the conference system for the smaller carriers, and the mix of increased benefits alongside increased dependency of smaller shipping lines on the industry giants once they joined the conference.

  For the Nigerians, the pursuit of WALCON membership might have posed an ideological or even sentimental problem, but the NNSL also had little choice but to join the conference. The West African Lines Conference was a cartel formed to regulate shipping schedules and freight rates between Europe and Africa. Throughout the twentieth century, conferences were formed on most international trade routes in order to regulate competition between the various lines involved in any route. The heavy investments and heavy risks that characterized the shipping industry led shipowners to embrace this regulation in order to ensure profits. The West African
Lines Conference was established in 1924 with three members: Elder Dempster, Woermann Line, and Holland West Africa Line. Following World War II, two more British shipping companies joined in the conference—Guinea Gulf Line (1951) and Palm Line (1949). In the 1950s, two Scandinavian firms joined, SWAL (1955) and the Hoegh Line (1957). Ghana’s Black Star Line became a member of WALCON in 1957.62 With the addition of the NNSL in 1959, the conference membership reached nine. Within the conference, cargo share was determined by fleet size, and this gave a clear advantage to Elder Dempster throughout the entire history of WALCON. Thus, from the end of World War II until the end of the 1960s, Elder Dempster controlled 50 percent of all tonnage to West Africa, and the rest was divided among the other members of the conference.63

  There were many benefits to the conference arrangement, both for shipowners and for shippers. The organization of shipowners into this conglomerate was insurance for shippers that there would be regular, scheduled services, as well as stability in freight rates, equal treatment of all “loyal” shippers, and a high quality of services. In short, the WALCON arrangement enabled shippers to know with relative certainty that ships would arrive in ports on set times and dates, and that rates would remain stable. For shipowners, the conference helped members to weather economic recessions and periodic declines in shipping by setting freight rates at a level that compensated for the ebbs and flows of supply and demand.64

  For shippers, however, these benefits were often shadowed by an overall sense that freight rates were too high, and the conference system erased competition from the industry. The system was shrouded in secrecy, as freight rates within WALCON were never publicized. Shippers lacked vital information in order to determine if shipping services had been supplied at reasonable prices.65 The system increased a sense of powerlessness among shippers by tying them to the conference through what were known as “loyalty rates.” These were rates that offered shippers a 10 percent discount, provided they did not ship with nonconference members for up to one year after shipping with WALCON. Thus, for shippers, the benefits of regular schedules and rates were largely offset by a frustrated sense that there was no alternative to WALCON.