The Maritime Sector has been bedeviled by several constraints right from the time of concessioning to this present time, mainly due to the financial crisis facing ships owners and maritime operators.
examines the challenges facing the industry, and the possible way out.
It is no longer news that the maritime industry in Nigeria is endowed with enormous possibilities that are waiting to be maximised but the difficulty in accessing funds by indigenous shipping business owners is currently threatening the sector.
Access to funds is a great limiting factor preventing interested Nigerians players from actively participating in the vast opportunities presented by the maritime industry in the country
This is so in view of the fact that many Nigerian banks have little or no understanding of the maritime sector, one of the major reasons why many ship owners seek foreign financial loans. And when they are not able to pay back the loans, some of them run into huge debts while some are left with no other choice than to abandon the business.
Ships owners are tired of this whole process of ‘we will soon disburse it’, ‘it is in this bank’, ‘it is this amount’, ‘it is that amount’, so much talking without action won’t get us to anywhere, let NIMASA do the needful if CVFF is not a fraud
CVFF not helping sector
The Cabotage Vessel Financing Fund, which is a two per cent surcharge of the contract sum performed by any vessel engaged in coastal trading; and monies generated under the Act,including tariffs, fines and fees for licenses and waivers, which should have served as alternative way out for ship owners , is being stalled in the Central Bank of Nigeria, 15 years after it was established to boost local content in the shipping industry.
The lack of financial capability by indigenous ship owners has been the reason for the endless wait for the disbursement of the CVFF even though the CVFF is not the only solution for shipping development in the country.
It’s the same old story
Prince Adedoyin Ayorinde, an indigenous shipowner, told The Point in an encounter that the whole process of the CVFF is fraudulent.
“I am tired of talking about the CVFF because the whole process of the CVFF seems to be fraud.
“The same old story we hear in time past is what they have kept telling us, we are tired and as a matter of fact, the CVFF is our money but since they have decided to keep repeating the same story to us every time, then, there is nothing really to talk about.
“Ships owners are tired of this whole process of ‘we will soon disburse it’, ‘it is in this bank’, ‘it is this amount’, ‘it is that amount’, so much talking without action won’t get us to anywhere, let NIMASA do the needful if CVFF is not a fraud,” he said.
Another ship owner who spoke on condition of anonymity said over 10 operators were swimming in indebtedness running into N600 billion.
This, he said, had made many indigenous ship owners to back out of the business due to lack of funds.
Alternative financing strategy as way out
On account of this, stakeholders are pushing for alternative financing strategy to aid the development of the industry. This is coming as many have pushed for the establishment of a Maritime Development Bank, as a catalyst for the growth and development of the industry.
According to report, the closest Nigeria got to in this regard was the Regional Maritime Development Bank, Abuja, promoted by the Maritime Organisation of West and Central Africa (MOCWA). Nigeria, being the host country, was expected to provide the take-off grant.
Since 2008 when the idea of the bank was conceived, the project had been on hold until 2016 when the current Minister of Transport, Mr. Rotimi Amaechi announced Nigeria’s disinterest in hosting the bank. That announcement dashed the hopes of stakeholders who had looked forward to a bank tailored to understand the operations and complexities of the maritime industry and serve it accordingly.
However, the need for a specialised bank with competence to cater to the need of the maritime industry cannot be over-emphasised.
Nigeria has been divinely situated strategically with huge maritime potentials but the divine endowments have not translated into wealth for Nigerians.
Local shippers have become highly disadvantaged in their country because they lack access to funds despite the establishment of the CVFF with N100billion liquidity domiciled at the CBN. Thus, it is easier for foreign shippers to source funds abroad, invest locally and dominate the industry at the expense of local shipping lines.
The recent forecast released by NIMASA shows that the industry is projected to grow at between 2-5% in 2018/2019. But in actual fact, the growth forecast is only a minute fraction of the inherent potential of the maritime industry in Nigeria. The non-availability of funds especially for local businessmen has been a major debilitating factor in advancing the sector.
Diverse sub-sectors of the industry have remained underdeveloped owing to this perennial difficulty. Many business owners cannot access loans from the conventional commercial banks and when they do, the interest rates are outrageous and simply depressing.
Nonetheless, respite came last year when Hon. Mohammed Gololo sponsored a bill for an Act to establish the Nigerian Marine Development Bank. And in response to the clamours by stakeholders to utilise the N100 billion Cabotage Fund as seed capital for the take-off of the bank, the House of Representatives through the Chairman of the House Committee on Maritime Safety, Education and Administration, Hon. Umaru Bago, recently communicated the readiness of the House to accelerate the enactment of the Act to set up the bank. He also stated that N55 billion would be drawn from the Cabotage Fund to kick-start the bank.
As good as this may appear, there is need for thorough planning and proper input from stakeholders in the industry. It is commendable that the chairman of the House Committee has hinted of plans to organise a stakeholders’ roundtable next month to garner inputs from practitioners. The importance of such roundtable cannot be over-emphasised. Many laudable initiatives of this manner have been stunted for lack of professional and expert inputs. A notable example is the Cabotage Vessel Financing Fund that has not added significant value to the industry after 13 years of establishment. We hope that the National Assembly will be truly committed to this noble cause and save stakeholders the uncertainty that has characterised the industry. We also expect the lawmakers and stakeholders in the industry to extract the support of the executive in order to ensure that the take-off of the bank is not stalled when the bill is eventually passed into
law.
Access to funds is an essential ingredient in developing any industry or sector. There is no doubt that the Marine Development Bank will usher a new era in the maritime industry in Nigeria. It now behoves on all stakeholders to join hands with the National Assembly to ensure that the bill is passed in time. The longer the
bill stays at the National Assembly, the more underdeveloped Nigeria’s maritime sector will be. Nonetheless, it is more important for the final version of the bill to be one that is truly representative of the aspirations of stakeholders in the
industry.
