Nigeria is expected to earn over $7.05 billion in revenue generated by government from corporate income tax within a five-year period if it develops fleet of vessels that are owned and crewed by indigenous players, according to the National Fleet Implementation Committee (NFIC) survey.
The NFIC survey, a copy of which was exclusively obtained by BusinessDay, further said over $5.42 billion is expected to be added to the country’s and in Gross Domestic Product (GDP) while over $1.63 billion would be generated into the Federation Account as corporate income tax paid by indigenous shipping firms within five years.
In terms of job creation, the survey also estimated that upon the development of national fleet, over 131,304 direct and indirect jobs would be created for Nigerians in the five-year period.
A breakdown shows the estimated jobs include 13,750 direct seafaring jobs and 106,412 indirect jobs, 1,275 direct support service jobs and 9,867 indirect support services jobs.
After the demise of the Nigerian National Shipping Line (NNSL), the government-owned company, in 1995, Nigeria has not been actively involved in shipping business estimated at N2 trillion annually. This automatically left the shipping aspect of crude oil lifting in one the world’s largest producers of the product to foreign vessels.
“Owning of Nigerian registered, flagged and crewed ships would have an immeasurable effect on the economy because Nigerian ship owners have been losing by allowing foreigners to own and operate ships on the nation’s waters,” said Hassan Bello, chairman of NFIC, who gave insight into the survey.
Bello said it has become very important that Nigerians own and operate ships because shipping business, together with other aspects of maritime, could finance Nigeria’s annual budget if properly harnessed.
Bello emphasised the need for government to incentivise the private sector to encourage them to invest in vessel acquisition, saying the maritime industry wants a private sector-led national fleet.
He listed the fiscal incentives required for growth and sustainable indigenous shipping in Nigeria to include zero import duty on vessels, application of tonnage tax, abolishment of temporary importation permit or imposed stringent measure, shipping sector support fund, change of Nigerian crude oil trade policy, among other incentives.
“Owning of ships is a vital qualification for a country to be called maritime nation. The employment potential of the maritime industry is better imagined. It will impact on training and certification of cadets especially with the existence of ship building and repair yards, insurance and banking industries as well,” Bello said.
Aminu Umar, president, Nigerian Shipowners Association (NISA), listed finance, unfavourable fiscal and monetary policies as well as high import duty and taxes imposed on imported vessels as major factors putting indigenous ship owners at disadvantage over foreign ship owners.
Umar said in an interview that there is need for banks to be able to provide long-term finance for ship acquisition in order to encourage more local players to invest in shipping business.
“Banks should not invest in shipping and expect to get returns in three years. It has to take between 10 to 12 years for such investment to mature. The big shipping companies in the world are being financed to pay back in 10 or 12 years,” he said.
Noting that the interest rate for borrowing in Nigeria is extremely high and the most expensive in the world, Umar said this makes it impossible for Nigerians to compete with foreign owned ships that get loan at 1 percent.
“A loan of 25 percent means that in four years, the investor must have paid twice of the loan. The collateral and equity contribution required to get loan facilities in Nigeria are too difficult to achieve. This is why indigenous industry is shrinking rather than grow,” he said.
Adewale Ishola, a master mariner, said in a telephone interview that Nigerian commercial banks ought to be very active in funding ship acquisition given its economic benefits and that shipping business is a long-term project that requires specialised funding.
“Shipping requires credit facility with a competitive interest rate of single digit. Our banks want to make returns in a very short term. This is why banks find it difficult to invest in ship acquisition. There is need for the establishment of a Maritime Development Bank that would understand the intricacies of shipping,” he said.
Ishola said that a specialised bank would give ship owners loans at a very competitive interest rate and not in a double-digit rate which makes it difficult for Nigerian ship owners to compete favourably with their foreign counterparts.
AMAKA ANAGOR-EWUZIE
