Master Mariners Bemoan Obstacles To Vessel Financing In Nigeria
. Say Foreign Dominants Pose Threats To National Security, Jobs Losses, Revenue
By Abimbola Abdullah
Poor funding mechanisms have been described as a clog in the wheel of the quest for development of Nigeria’s shipping capacity, thereby posing threat to revenue generation and attendant job losses in the country.
Members of the National Association of Master Mariners (NAMM) made this assertion at the second quarterly lecture tagged: “Cabotage Finance”, in Lagos yesterday.
The group declared that the Federal Government and the financial institutions should review the shipping funding mechanisms to favour domestic maritime operations and the economy as a whole.
Chairman, Genesis Worldwide Shipping Limited, Capt. Emmanuel Iheanacho, who was a guest speaker at the lecture, said Nigeria currency heavily relies on foreign ships for cargo transportation and that idea is compromising national security and sovereignty.
Iheanacho, a former minister for interior, said the country is losing significant revenue and jobs due to the absence of a robust indigenous shipping industry.
He lamented that the financing options in Nigeria are not encouraging as the Federal Government failed to disburse the Cabotage Vessel Financing Fund (CVFF) over the years, while the commercial banks charge outrageous interest rates on loans for ship acquisition.
According to him, some of the banks lack capacity to finance ship acquisition because it’s highly capital intensive. He said a ship costs as much as $12 million and more, which becomes too burdensome for most banks to finance.
Besides, the interest loan is still very high compared to their international counterpart.
SlyeNews gathered that short term loan (less than two years) in Nigeria attracts between 15% to 25% yearly, while long term loan (5 to 10 years) goes for 10% to 18%. Lease financing attracts between 8% to 15%, and asset-based financing goes for 10% to 18% yearly.
Some of the Nigerian banks offering ship acquisition loans with competitive interest loans include: Zenith Bank, Guarantee Trust Bank, First Bank, Access Bank, and United Bank for Africa, Slye News gathered.
Iheanacho stated that foreign banks charge between 4% to 5% interest on loan to buy ships, which makes it difficult for Nigeria ship owners to succeed when playing in the same field with such international counterparts who are paying lesser interest rates.
According to him, some Nigerian banks do have reputable consultants that would take them through the opportunities in shipping financing, as they often make poor decisions.
Meanwhile, he said Nigerians are finding it difficult to secure loans from international bankers due to the huge collateral requirements and the “Nigerian factor” behind it.
Iheanacho applauded the Federal Government for creating some measure and financing scheme to help the industry, but said the political-will is lacking in their implementations.
For example government has set up the Ship Acquisition and Ship Building Fund (SASBF); the cargo reservation policy; the Cabotage legislation; the Nigerian Content Monitoring and Development Monitoring Board (NCDMB) ship acquisition financing initiatives; tax incentives; duty waivers; and the CVFF which has remained in the government’s vault for over 15 years without disbursement.
He enjoined the Federal Government to disburse the CVFF in order to initiate Nigerians into the shipping sector and enjoined the banks to get competent shipping consultants to look into their procedures and review their loan packages for ship acquisition.
Iheanacho listed other challenges to shipping in Nigeria as; high interest rates, short loan tenures, risk perception by banks, inadequate maritime infrastructure, corruption and bureaucratic hurdles, foreign exchange fluctuations and limited access to international funding.
President, NAMM, Capt. Tajudeen Alao said, the shipowners need the loan to propel the industry so that there would be many indigenous players and Nigeria will enjoy the multiplier effects of shipping.
He raised concerns about the 3% shipping development fund being collected by the Nigerian Maritime Administration and Safety Agency (NIMASA), which are still being collected from operators, without much benefits to show for it.
He enjoined the stakeholders and government alike to pursue an agenda of shipbuilding to further buoy the nation’s economy
Also said: “When are we going to start building ships in Nigeria? it is a tall order, “because we have to start from building barges, building small crafts in modules and putting them on the water. If you want to build a 10,000 ton deadweight tanker, it will be a difficult task. We need good political-decisions for the country to be progressive.”
