PERSISTENT IMPOSITION OF WAR RISK PREMIUMS ON NIGERIAN-BOUND CARGO: CAUSES, IMPLICATIONS, AND WAY FORWARD FOR MARITIME TRADE STABILITY

Abstract

The study examined why War Risk Insurance (WRI) remains imposed on Nigeria-bound vessels despite clear improvements at sea, and what that persistence means for prices, ports, investment and the Blue Economy. Motivated by the paradox that piracy and kidnappings fell sharply yet premiums stayed high, the paper set out to explain the causes and propose remedies. Using institutional theory as the guiding framework and a qualitative-analytical method that draws on secondary data from NIMASA, NPA, NBS, CBN, IMB, Lloyd’s and UNCTAD, the study found that WRI functions less as a response to current sea risk and more as an outcome of entrenched institutional perceptions and market inertia. Empirically, roughly $1.5 billion has been paid in recent years in WRI-related charges, these levies have contributed to rising landed costs and food price pressures, and they have hollowed out port competitiveness, driven cargo diversion and estimated revenue losses near ₦130 billion annually, and deterred FDI in ports, oil and gas, and fisheries. The study concluded that Nigeria’s maritime sector remains constrained by outdated high-risk classifications that inflate costs, discourage investment, and weaken port competitiveness. As part of the way forward, the study recommended coordinated institutional, security, financial, and diplomatic reforms to restore investor confidence, achieve risk reclassification, and unlock the full potential of the Blue Economy.