Aminu Umar is an indigenous ship owner, who doubles as the president of the Nigerian Shipowners Association (NISA). In this interview with select journalist, he said unfavorable government policies have ceded over 90 percent of Nigerian destined petroleum cargoes to Ports in Lome and Cotonou. He speaks on other issues on shipping development in Nigeria. AMAKA ANAGOR-EWUZIE was there to capture his views.
What is your take on the operations of Secure Anchorage Area (SAA)?
Years back, when Secure Anchorage approval was given, Nigerian ship owners said it was not supposed to be. For us, securing our waters is the sole responsibility of the Nigerian Ports Authority (NPA), the Nigerian Maritime Administration and Safety Agency (NIMASA) and Nigerian Navy. There is nowhere in the world, where a secure anchorage is operated by a private sector company.
I don’t think any Nigerian ship owner utilised the SAA. However, foreign ship owners that are coming to Lagos Ports assume that our waters are not safe. So, they prefer to have a special anchorage that makes them feel more secured, where they see patrols being done due to the frequency of attacks on Nigerian waters.
We have noticed the recent issues between NPA, Navy and the operator of the SAA. The Nigerian Navy said the approval was given by the NPA not them. For us, we want our anchorages to be secured. This should be part of the benefits of the monies that we pay to NIMASA and NPA. That is what is obtainable globally.
In other West African ports like Lome and Benin, anchorages are owned by their ports authorities. But, we don’t want to question why government gave the private sector the right to operate the SAA.
Given the recent abolishment of SAA by NPA, how secured is Nigerian waters?
There has been a drop in frequency of attacks and incidences of sea robbery, if we compare the present situation with what it was five years back. We have Lagos, Bonny, Warri and Calabar anchorages.
We have two anchorages that include the secure anchorage position and the Lagos anchorage. There is significant drop in the number of attacks in Lagos anchorages. However, the frequency of patrolling the waters in other neigbouring ports is more than what we have in Nigeria.
In Bonny anchorage, nobody drops anchor there because it is not secure at all. The ship can only reach there in the daylight and must leave before nightfall. There, we have two anchorages that comprise of the Bonny outer and Bonny inner anchorages.
The inner anchorage is where the Nigeria LNG is, and is secured. An anchorage is where a vessel can go and drop anchor pending when the pilot comes to take the vessel into the port. Bonny inner anchorage is inside the pilot district, meaning that you are already in the port, but the outside is not safe. The NLNG vessels do not have to wait outside the anchorage when they arrive.
We have seen a significant improvement in the Calabar anchorage, while Warri anchorage has been very okay as well. So far, there is an improvement but we want to see more patrols and security on the waters.
What are the challenges hindering shipping development in Nigeria?
For ship owning, our major challenge is financing. Two, is fiscal and monetary policies that put Nigerian ship owner at a disadvantage position. Three, is inefficiencies that create losses and also make the business almost impossible to operate.
One of the factors of inefficiency is insecurity. Because of the insecurity, the movement of the vessels is restricted. For instance, Nigerian ship owner is forced to ensure that his vessel reaches certain places at day time, thereby leading to numerous stoppages at a particular anchorage during nightfall to avoid attack and this results in delay. It also creates losses in time because time amounts to cost that must be catered for by either the cargo or ship owner.
Policy particularly in the tanker business is why the ports like Lome and Cotonou have grown larger than Nigerian ports. This is because 90 percent of the cargoes that go there is Nigeria-destined. Government policy has made it mandatory for mother vessels to go to those ports and for Nigerians to go there to transship the cargo. Here, Nigerians end up developing other countries against ours.
We have the policy of opening Form M. For an importer to bring any product into Nigeria, the person must open a Letter of Credit. If a vessel is coming from Europe and reaches Nigeria direct, such cargo is not eligible to obtain Form M because the cargo is already in Nigeria. So, the cargo must stay outside the country and the only port that is close to Nigeria is Lome or Cotonou. This automatically makes Lome a hub for shipping in West Africa.
Another one is the issue of duty and taxes imposed on vessels brought in by Nigerian ship owners. Ship owners pay as much as 14 percent as duty on imported vessels and spare parts when airlines pay zero duty. This places Nigerians at disadvantage against foreign ship owners, who do business in Nigeria at a subsidised rate and is why the industry is not developing.
Shipping is a capital-intensive business and its asset is very expensive, meaning that it requires long-time investment. Unfortunately, in Nigeria, commercial banks find it difficult to give long-term funding. Very few banks have the balance sheet to fund shipping business. Despite the cargoes coming to Nigeria, we have zero number of Nigerians participating and Nigeria is one of the biggest destinations for import and export cargo.
What is the way out of this?
The banks have to be able to provide long-term finance for ship acquisition. They should not invest in shipping and expect to get returns in three years. It has to take between 10 to 12 years to mature. The big shipping companies in the world are being financed to payback in 10 or 12 years.
The interest rate for borrowing in Nigeria is extremely high and the most expensive in the world. This makes it impossible for Nigerians to be able to compete with those that get loan at 1 percent. A loan of 25 percent means that in four years, you must have paid twice of the loan. It is not only the shipping industry that is affected because the manufacturers are also facing the same fate.
Banks are financing shipping in Nigeria but in short-term with high interest rates. The collateral required to get this facilities is too difficult. The equity contribution required to be able to meet the conditions for the loans is also difficult to achieve. This is shrinking the industry rather than grow the number of ship owners.
Why are Nigerians not registering their vessels in Nigerian Registry to fly Nigerian flags?
One, the moment you fly Nigerian flag, you pay duty of 14 percent. Two, is the bureaucracy that slows the pace of registering ships in our register. This is costing ship owners a lot. Number three is the issue of standardisation. Shipping is international, and if one registers a vessel in Nigeria and embarks on an international trade, the vessel would go under serious scrutiny because they believe that Nigerian flag means issues.
Due to this, many ship owners prefer a flag and register that would not put them through such stress. However, there is a committee set up to resolve all the problems. They have made recommendations and the implementation committee has also been set up. We believe that by the time they complete the process Nigerian Ship Register would be better off.
