• Thursday, February 22, 2024
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‘We need a non-profit driven specialise maritime development bank’


Access to fund has been a huge challenge confronting vessel acquisition in Nigeria. In this interview, Taiwo Akinpelumi, managing director of Oceanic Energy Limited, an indigenous shipping firm, says the government needs to develop a maritime development bank for the shipping sector.

Fund for vessel acquisition

Shipping business is very capital intensive and our commercial banks do not have the financial muscle to give facility for a long time period. Our banks want to give you money today and get it tomorrow. Secondly, it is only in Nigeria that businesses are given facility at double digit as high as 22 percent. This alone has de-marketed the Nigerian ship owners and makes them unable to compete with someone, who borrowed money at 7 percent in USA.

Most Nigerian banks lack the expertise as regard vessel acquisition. All these are hindering the participation of the commercial banks in funding vessel acquisition in Nigeria. To make shipping business bankable, there is need to ensure there is access to cargo, and this is where the Cabotage act becomes relevant especially Cabotage cargo. Our banks need to employ maritime experts that understand the intricacies of vessel acquisition while government needs to put good policies in place to encourage banks to participate.

Maritime bank

Commercial banks are out to make profit, thus the need to develop a specialised maritime development bank that is not profit driven but has the aim of developing shipping business. Such bank will know the things to look at for when giving credit at a reasonable interest rate.

Trade policy

When we say freight on board (FoB), it means the buyer of our crude oil can bring ship of choice to load the cargo and this does not generate opportunity for our ship owners to grow. Cost, insurance and freight means that Nigeria can use her vessels to deliver the product at the doorstep of the buyer. We need government to change the crude oil trading policy and create a balance for the indigenous shipping players to benefit.

Apkobolokemi administration

The former DG of NIMASA came to office not as a seasoned technocrat but as a university don and this made him to twit most of his projects towards that direction. This is why he invested billions of naira into the training of seafarers in maritime schools abroad, building of shipyard and Maritime University in the remote part of Warri. All this is not the main things that would really develop shipping in Nigeria. Shipping development is about empowering indigenous operators to ensure that their businesses grow.

NIMASA should have created an enabling environment for shipping business to develop before talking about manpower building so as to create jobs for the cadets.

Enabling environment

Coastal and Inland Shipping Act (cabotage) was enacted over 12 years ago without effective implementation such that we allow foreigners to dominate our cabotage trade. Almost 99 percent of the shipping business in Nigeria is being cornered by foreign players and this translates to capital flight. If we develop our shipping sector, there will be jobs for seafarers but in a situation where business is not thriving due to lack of infrastructure, shipping and human capacity cannot develop.

However, the creation of Cabotage Vessel Financing Fund (CVFF) is to assist ship owners in acquisition of vessel and no shipping company has benefited from this till date. Without this, how can our shipping business develop?

Agenda for incoming NIMASA DG

Government needs to appoint a technocrat, a seasoned shipping operator as a director general of NIMASA because we need someone that knows the rudiments of the sector. If we are able to do that, our problems will be solved by half. A technocrat is someone, who is trained in maritime related field like a Marine Engineer, Nautical Scientist, Naval Architect or a Surveyor, who have worked to gather wealth of experience over the years and have contributed in making policy for the sector.

We want the new NIMASA boss to empower our indigenous shipping operators by ensuring full implementation of Caboatge Act. This will encourage growth in the sector. The person also needs to look at the bottlenecks negating the disbursement of CVFF and ensure the upgrade of training facilities for seafarers so that we will not have half baked seafarers.