Lack of cheap funds for vessel acquisition and rising security concerns in the Gulf of Guinea, which houses Nigerian waterways, have been blamed for the huge gap in indigenous vessel ownership in Nigeria.
These, industry experts say, are major reasons the nation’s shipping business has remained underdeveloped and uncompetitive, leading to the growing rate of bad debt profile and non-performing loans (NPLs) for ship acquisition at Nigerian banks, estimated at N5 billion.
To industry players, Nigerian ship owners have failed to benefit from the locally generated seaborne trade largely due to the acquisition of outdated and not up to standard vessels as well as lack of jobs for indigenous owned ships. This, they say, calls for increased volume of Nigerian owned fleet to enable local players take jobs away from non-indigenous operators, who currently dominate the nation’s shipping business.
“Despite the stringent appraisal processes and due diligence adopted by financial institutions in ensuring that only experienced players have access to funds, many banks still have lots of non-performing loans resulting to rising debt profile and non-serviced loans used for vessel acquisition. This has risen outrageously and it’s now close to N5 billion,” Isaac Jolapomo, a former president of Nigerian Shipowners Association (NISA), said recently in an interview in Lagos.
Jolapomo, who doubles as a ship owner, said Nigeria owned vessels were currently not benefiting from imports and export trade, including lifting of crude oil produced in-country. Government needs the political will to lay sufficient ground rules that are level playing, strictly enforce the Coastal and Inland Shipping (Cabotage) Act and change the crude oil trading policy from Free-on-Board (FoB) to Cost, Insurance and Freight (CIS), to position the shipping sector as alternative to oil in the wake of dwindling oil revenue, he suggested.
“Security concerns, especially pirate attacks and sea robberies, are one of the things that delay investment in Nigeria’s shipping sector. This is because every investor needs to secure his or her investment from danger of loss or damage. And lack of cheap funds for vessel acquisition has also made indigenous ship ownership difficult. Banks have also refused to understand that investment in vessel acquisition is long-term and not cash and carry, making it difficult for investors to service bank loans and remain profitable,” Margret Orakwusi, former president, Nigerian Trawlers Owners Association, said recently in Lagos.
Orakwusi, who believed that the nation’s maritime sector had great untapped potentials due to lack of adequate investment, noted that ship owners, who have in the past invested millions of dollar in vessel acquisition, ended up servicing bank loan all through their lifetime due to high interest rate of 20 to 30 percent.
Lamenting further, she said the industrial fishing arm of maritime business had been losing largely to foreign fishing vessels, as “Nigeria does not have a single tuna fishing vessel, which is a money yielding machine in many countries. This is why foreign vessels encroach in our water and take away our tunas, package them and export them back to us.”
However, there are fresh hopes for the sector as the Federal Government through the Federal Ministry of Transport recently got some big Chinese fishing companies that are currently fishing in the Pacific Ocean, to declare interest in coming to Nigerian waters to do legitimate business that would put an end to the issue of foreign vessels encroaching in Nigerian waters to tap our resources, she said.
“Nigeria needs to harness its resources, produce made-in-Nigeria goods, provide jobs, so that we do not remain an import driven economy. We also need to generate our cargo, carry our cargo and provide services. We are excited that oil is no longer fetching cheap money for Nigerians because that was why Nigeria is seen as a corrupt nation. But the good news is that the greatness of this country will definitely come back if we work hard,” she said.
Jean-Chiazor Anishere, president, Women International Shipping and Trading Association (WISTA Nigeria), who also pointed out that the nation’s maritime sector had great potentials that were key to the economy, believed that Nigeria’s status as Africa’s maritime capital was to a large extent related to its strong financial services sector.
To her, shipping is a capital-intensive venture that requires specialised financial services and wide range of other professional services that promote shipping business. “Despite being oil producing and exporting country with a large market for imported foreign goods, we still have challenges in terms of taking our pride of place in shipping business,” she said.
