Poised to encourage indigenous ship owners to acquire ships, the Nigerian Chamber of Shipping (NCS), has opened discussions with the African Finance Corporation (AFC) for synergy on alternative funding.
Speaking during a recent meeting in Lagos, President of NCS; Mr Andy Isichie, emphasized the huge potentials that the shipping industry holds for the economy, adding that it is desirable and mutually beneficial for organizations such as AFC to support operators in the Nigerian shipping industry to maximize the huge benefit and economic growth that the industry portends.
He told the AFC team that, “access-to-fund for ship / maritime asset financing has been near impossible for Nigerian ship owners, facility/equipment providers, and for a host of ancillary business operators in the maritime transport sub-sector of the economy’’.
Mr Isichie added that, ‘’indigenous banks have not risen to the occasion owing to a plethora of challenges, major of which is the need for adequate capacity building, high interest rates topping global statistics and liquidity issues” .
According to him, “the Cabotage Vessel Financing Fund (CVFF), which is cursorily and altruistically considered as the major funding solution has remained in the vaults, while every interest has concentrated on its disbursement. In essence, these and other multifarious challenges have contributed to the retarded growth and arrested development of the Nigerian maritime industry”.
Responding, the Senior Vice President & Head of Transport, at the AFC; Mr. Reuel Andrews expressed delight at forming a viable and mutually beneficial relationship with the NCS, saying that it is open to receive proposals for financing in any aspect of the shipping industry that would help to improve the business of indigenous ship owners and the Nigerian economy.
Mr. Andrews however emphasized that the major challenges militating against investments in the shipping industry to include, nature of shipping contracts, loan repayment and inadequate legal framework for recovery of loans.
“The administration of shipping contracts does not guarantee continuity which can sustain the business from which the loans granted will be repaid. Most shipping contracts are for a short term and this does not guarantee that the borrower can repay the loan. Short contracts do not usually cover the required period of repayment and this is a major concern to lenders who must be assured of repayment throughout the loan period”.
According to him, where the continuity of the business cannot be assured, it becomes doubtful whether the loan can be repaid.
“Financiers usually seek assurance that the loan can be repaid and when there is doubt hanging over whether the period of the contract is sufficient to accrue the loan to be repaid, they are reluctant to finance such businesses”
Speaking on the collaboration of AFC and NCS, he said it will provide a platform for contribution of ideas and acceptable framework to solve the problem.
“While the intervening collaboration between the AFC and the NCS is coming at an auspicious time, stakeholders are encouraged to be part of a sensitization parley or forum that will soon be jointly organized by AFC and NCS. This will provide a platform for contribution of ideas and to fashion out an acceptable framework to solve the problems. The expected outcomes from the synergy will be finding quality strategies to funding issues. The optimal objective will be for operators to have access to funds to buy and operate shipping and other marine related assets, provide employment opportunities and ensure that Nigerians play the dominant role envisioned by both the Cabotage and Local Content Laws”, he concluded.
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