Nation on Board

by Lynn Schler

  For the press and some politicians in Nigeria, the decision of the NNSL both to join ranks with Elder Dempster and to become a member of WALCON did seem like a gross betrayal. Both the shipping giant and the conference it dominated had been the very symbols of economic exploitation and disempowerment for Nigeria in the colonial era. Joining the conference was a political liability for the NNSL, a situation bemoaned by one Elder Dempster official: “An agreement and organisation for rationalizing the West African trade must of course continue, but must it continue to carry the liability of a name that is now so dirty that all connected with it are tarred with the same brush?”66 But the organization of the international shipping industry left the NNSL founders little alternative. In joining the conference, the Nigerian National Shipping Line was guaranteed a share of the cargo to and from Nigeria, and the opportunity to join the ranks of decision makers and profiteers from which they had been historically excluded. As a member of the conference, Nigeria could take part in decisions regarding shipping rates, port traffic, and shipping schedules for all fleets involved in the trade between Nigeria and Europe.67

  There was, however, an unsettling irony in the arrangement. In joining WALCON, the Nigerian National Shipping Line lent legitimacy to the conference and had voluntarily agreed to subscribe to its policies. This had a potentially detrimental impact on the evolution of an indigenous shipping industry in Nigeria. The Nigerian federal government and the regional marketing boards, as part owners of the Nigerian National Shipping Line, had become members in an organization that was determined to keep competitors in the shipping industry at bay. As members of WALCON, the Nigerian national line would naturally want to discourage ventures into shipping by other Nigerian interests. Already in April 1959, the NNSL had argued to WALCON members that the Nigerian line needed a larger share of cargo in order to prevent the Western Region from developing their own shipping company.68 As Elder Dempster executive John Joyce wrote in April 1959 regarding plans for additional indigenous lines: “If such a line came into being it would be inevitably followed by similar Lines and similar requirements of Board cargo from other Regions. Mr. Ojukwu and the Federal Government wish to see one successful Nigerian National Line and not a number of other Lines supported by the Regions.”69 Thus, the government-controlled national line occupied an irreconcilable position of wanting to discourage competition locally, and worked to block efforts to develop an indigenous shipping industry that could offer some competition to the much-resented cartel.70 According to Larry Diamond, this was part of a broader problematic in which the establishment of state monopolies ultimately discouraged the growth of local enterprises.71 This is just one of the incongruences of the mixing of nationalist politics and business, to be examined in the following section.

  THE POLITICIZATION OF BUSINESS

  The federal government of Nigeria was originally reluctant to jump into the shipping industry, and despite public pressure, attempted to delay the enterprise until after independence. Political and economic circumstances led to a sudden turnaround in this position, and the Nigerian National Shipping Line was established in 1959 with much celebration and fanfare. The national line was quickly touted as a powerful symbol of decolonization and independence, and the activities and successes of the company were promoted as the lifeline of the new nation of Nigeria. Thus, news of the delivery of the first ship to Lagos was greeted by Minister Njoku: “The arrival of the Dan Fodio marks the opening of a new trading venture but it also has a deeper significance. Today marks the entry of Nigeria among the mercantile fleets of the world. We have taken our place amongst them, owning our own ships and carrying the exports and imports by which our country lives.”72

  While the NNSL provided opportunities for grandstanding the nationalist agenda, the actual running of the company mirrored the ambivalence with which the government had initially approached the entire venture. It soon became clear that the successful operation and development of the shipping line required more than ideological commitment and enthusiasm, and the government would have to dedicate significant resources to the company beyond grandiose speeches. The business of shipping was a complex enterprise that required technical expertise, massive capital investment, and a strong commitment to withstand the pressures and challenges of succeeding in a highly competitive and specialized industry. Yet, from the very start, the federal government’s management and input into the NNSL reflected an unhealthy mix of political considerations and an inconsistent regard for proper business practice. Rather than developing the company into a viable and successful enterprise that would be the pride of Nigeria, the federal government used the NNSL again and again as a tool to advance a political agenda. As a result, decision making among management of the Nigerian National Shipping Line often reflected an approach that was politically savvy but economically ruinous.

  The first chairman of the NNSL, Louis Ojukwu, was a successful businessman who had warned against the dangers of mixing government and enterprise. In 1956, he testified to a government commission investigating corruption among politicians: “I told government that they cannot be the government and be businessmen. The only thing I would like the government to do is to encourage African people to get on their way and later on withdraw. I will never like government to interfere in business. In fact, I will not like to share a company with government. It is just like a lion and a lamb sharing business.”73 Despite this unequivocal position, three years later, Ojukwu accepted the offer of Minister Njokwu to serve as the first chairman of the board of the Nigerian National Shipping Line.74 Ojukwu had built his fortune in construction and transport. A leading figure in the business community, he served as the chairman of the Eastern Nigerian Marketing Board, the Eastern Nigerian Development Corporation, and the Nigerian Produce Marketing Company.75 He was also a board member of the Nigerian Coal Corporation and the African Continental Bank, and the founding president of the Nigerian Stock Exchange. This impressive list of responsibilities raised the concerns of critics who felt that Ojukwu would not give the running of the NNSL the time or attention it required.76 According to Robert Tignor, Louis Ojukwu was not even aware of all the companies that had appointed him to their board. Thus, when he saw his name on the letterhead of the Nigerian Engineering and Manufacturing Company, “he ordered it removed because he had never been approached about serving on the board.” Ojukwu could not fulfill all of his obligations on the various boards he served, and Tignor claimed that although he collected payment for participating in board meetings, he could not in fact recall afterward if he had actually been in attendance.77 It could well be that Minister Njoku was fully aware of this situation, and perhaps recognized its advantages. Meetings of the board of directors in Lagos were only periodically scheduled, and many of the major debates and decisions of the management of the NNSL took place in monthly meetings in London among executives of Elder Dempster and the Palm Line.78 In Lagos, the day-to-day running of the NNSL was in the hands of the expatriate general manager, Donald Tod, who came to the NNSL from Elder Dempster. With very little familiarity with shipping, Louis Ojukwu might have been the ideal chairman from the perspective of the technical partners—a figurehead with little inclination or time for becoming too involved in the daily operations of the company.

  The appointment of Louis Ojukwu as chairman of the board undoubtedly served the political interests of the minister of transport, as well as the managerial agenda of the technical partners. But the choice of Ojukwu also came with a certain price. With his extensive influence across a broad range of major corporations and deep ties to the political and business elite of Nigeria, Louis Ojukwu became accustomed to a level of influence and privilege. During his tenure at the Nigerian National Shipping Line, he deemed that his position as chairman of the board of directors should afford him certain benefits from the NNSL. In one incident, Elder Dempster officials in Lagos wrote to Liverpool following the arrival of two dogs Ojukwu had purchased from England and shipped to Nigeria. The official
wrote, “I think he was somewhat surprised at the size of the bill.” The letter explained Mr. Ojukwu would be extremely grateful if Elder Dempster charged him the freight for only one dog instead of two, though he expressed willingness to pay for the gratuity on both.79 In another incident, Ojukwu stormed into the Calabar offices of Elder Dempster to file a complaint concerning the “poor treatment” and “discourtesy” he received while traveling on the Oron Ferry. On his journey to Calabar, Ojukwu was approached by the ship’s purser and asked to present a receipt for his fare. Ojukwu told the purser to go look for his driver to get the necessary paperwork, and became outraged when the purser replied, “I do not know you, how is it possible for me to go down and collect your fare from an unknown driver?” In his report concerning the complaint, the agent claimed the purser who had mistreated the chairman would be fired.80 Incidents such as these, as minor as they might appear, reveal a more troubling pattern. Political appointments came with a price, and from the very establishment of the NNSL, the functioning of the company was colored by the personal ambitions of the management, who did not prioritize the economic interests of the shipping line over their own personal needs.

  Poor business practices resulted not only from personal ambitions of specific individuals, but also from a conceptualization of the NNSL as a political project rather than an economic one. Gerald Chidi wrote, “It could be said that profit motive, though implied, was not the motivating factor for the company’s establishment. One has to understand the mood of the major political players at the time to appreciate why ‘showing the nation’s flag to the world’ was a major focus.”81 From the outset, the development and growth of the NNSL was framed by politicians and management primarily in ideological terms. This could be seen in debates surrounding the issue of fleet expansion. The Nigerian National Shipping Line would have to acquire a significant number of ships in order to play a substantial role in the trade with Europe and beyond. In its first meeting of February 1959, the board of directors authorized the purchase of two ships. Three months later, Chairman Ojukwu asked the technical partners to provide funding for a third ship, arguing that the expansion of the fleet would help to dispel public criticism of the company. But Ojukwu’s request for more ships was framed in political considerations: “I would like to see us take steps as quickly as possible to acquire our third ship. We already have the Dan Fodio with her Northern Regional name association and the Oduduwa to satisfy the pride of the Western Region. We have decided that the third ship will be named King Jaja and the Eastern Region will be thus identified. I appreciate, of course, that it will mean our calling up additional capital. . . . I trust, however, that with so much politically involved, Elders and Palm will be able to make the money available.”82 Similarly, political benefits were prioritized when weighing the option of opening branch offices outside of Nigeria: “Apart from the prestige value to the Line and to Nigeria of our opening offices in other West African ports, and this is of international importance in itself, there are other perhaps more tangible advantages.”83

  From the beginning of the company’s history, there was a lack of determination on the part of the government to invest in the NNSL. Modest profits were made in the first year of operation, with earnings of £155,000, and the company expanded to five ships owned and three ships chartered.84 This success fueled the aspirations of the management, and plans were made for the acquisition of more vessels to maximize Nigeria’s cargo-carrying potential. According to the agreement with WALCON, the NNSL could operate up to six ships in 1959, eight in 1960, and ten in 1961.85 Fleet expansion would enable the Nigerian line to capture a larger proportion of the cargo, as allocated by the WALCON agreement. But fleet expansion required massive investments from the Nigerian government, and this was not forthcoming. Throughout 1960, discussions between the management of the Nigerian line, the minister of transport, and the management of Elder Dempster and the Palm Line concerning NNSL fleet expansion revealed that political enthusiasm for the national line in Nigeria was not matched by the necessary material support for the shipping line. Time and again, the rationale for expansion was framed in political rather than commercial terms. In May 1960, Minister Njoku wrote, “I feel that the time is right for further expansion because of Independence and because of Ghana’s fleet expansion.”86 Chairman Ojukwu also used the approach of independence to argue for more ships: “It is my conviction that with the realization of Independence on the 1st of October, Nigeria will have to rely on her National Shipping Line more than any other economic asset. In case of war or other emergency we would be helpless without our National Line. . . . In any real emergency after the 1st October we would have to rely on our own vessels to carry essential imports and exports. We must therefore build up our National Line as swiftly as possible.”87 But despite the political significance of fleet expansion, Njoku explained, the government would not allocate funds to buy these new ships: “Unfortunately the Federal Government has not got all the money it needs and due to the NNL’s modest original plan there is no provision in the current Capital Programme. Extra expenditure now means either a widening of the gap between approved projects and available cash or the deletion of some already approved projects.”88

  The technical partners argued that the time was right for buying new ships in 1960, as a global recession had led to a significant drop in the prices of vessels. Elder Dempster officials made a very strong recommendation to Njoku to try to persuade the government to invest an additional £2 million for the expansion.89 But independence came and went, and the government had not committed to purchasing new ships. By the end of 1960, Njoku conceded that there would be no additional government funding for the new vessels, and he suggested that the management of the NNSL purchase the ships on deferred payment terms. But here again, political considerations played a part. Njoku instructed Chairman Ojukwu to invite tenders from shipbuilders and to award the contract to the one offering the best value, “but when assessing the ‘best value’ it is important that you should have regard to the value of the financial terms offered as well as to other factors. I would like your invitations to include all those firms which have taken the trouble to make offers to Nigeria (e.g. Inter-States Economic Developments, Mr. Comis and Sofindus).”90 In fleet expansion as well as other aspects of commercial development, ideological and sentimental considerations were continually set against best business practices.

  The reluctance of the Nigerian government to invest in the National Shipping Line put a strain on relations with Elder Dempster and the Palm Line. At the start of 1961, the cost of two new ships was £2 million, and the NNSL had only £400,000 available, so the purchase of the new ships would leave the company short of cash. Ruling out additional funds from the government, Njoku proposed that the technical partners loan the NNSL the funds.91 He presented them with calculations demonstrating that the NNSL could pay back the loan and still make a profit, but conceded that these calculations were based on a highly positive economic forecast and the risky assumption that freight rates would rise.92 Elder Dempster and the Palm Line were not in favor of taking such risks, and recommended that if possible, the Nigerian National Shipping Line should avoid taking out loans in order to buy new ships. But Elder Dempster officials recognized the pressures facing the NNSL. Joyce wrote in January 1961, “The two ships have to be built for political reasons,” and the technical partners recommended a compromise of purchasing the ships and then chartering them to the NNSL.93 Elder Dempster assured the Nigerians that the Nigerian flag would be flown on the charters. But this solution was unacceptable to the NNSL, and the management of the British shipping firms continued to plead with Njoku to seek the necessary funding from the government, to no avail.

  The Elder Dempster officials forecasted that there would be a political price to pay for refusing the Nigerians the loans, as Albert Hoffman of ED Lines wrote in January 1961: “I think our general attitude is that we want to be firm—on the other hand we do not want to fall out with our N
igerian colleagues if an acceptable solution can be found. I do not consider an acceptable solution to be one which in itself would be known beforehand to be uneconomic, but undertaken purely for the sake of prestige of Nigeria. This creates a difficult situation, but there are perhaps means of dealing with it without a break.”94

  The fears of Hoffman were not unfounded, as the aspirations of the Nigerian government and those of the technical partners regarding the Nigerian National Shipping Line could never be fully reconciled, and two months later negotiations began for Nigerians to take over full ownership of the NNSL. The federal government acquired 100 percent of the company shares from Elder Dempster and the Palm Line in September 1961, making the Nigerian National Shipping Line an enterprise fully owned by Nigerians. This buyout was seen by many as a rash decision motivated by “either the euphoria of political independence or the selfish interest of the Nigerian management of the company.”95 Bolaji Akinola wrote, “There was no rational justification for the acquisition. The shares were acquired out of sheer zeal to take control. The move by the Nigerian government was premature and was the first major bad policy of Nigerian leaders concerning the shipping sector.”96 Elder Dempster and the Palm Line had continually promoted a conservative program for expansion and development, and advised against taking on too much risk or debt. According to Gerald Chidi, a former managing director of the NNSL, the buyout of the technical partners removed a vital safeguard against the total politicization of the shipping venture. Chidi claimed, “The absence of [Elder Dempster and the Palm Line] denied the NNSL the privilege of being run as a pure commercial concern.”97