Maritime sector anchors hopes on private investment, national policies for ship financing

Business a.m.

Nigeria’s maritime industry stakeholders have raised their collective voice, urging policymakers and private sector players to implement stronger national policies and increased investments, particularly in the capital-intensive vessel construction and acquisition sector.

The stakeholders issued a rallying cry for stronger national policies and increased private sector investments to tackle the industry’s financial challenges during the just concluded 2024 Maritime Finance Conference in Lagos, organised by the Association of Maritime Journalists of Nigeria (AMJON)  in collaboration with Nigerian Liquified Natural Gas Shipping and Marine Services Limited.

The event, which brought together industry experts and policymakers, provided a platform for frank discussions on the financial challenges besetting the industry, with a consensus emerging that stronger government policies and private sector support were essential for the sector to navigate the choppy waters of the global maritime market.

In his address, Abdulkadir Ahmed, the managing director/CEO of NLNG Ship Management Limited (NSML), underscored the critical role of financing in the acquisition and construction of vessels, the lifeblood of the Nigerian maritime sector.

Speaking under the theme, “Vessel acquisition/construction: Nigerian banks, insurance firms, government, and the blue economy”, Ahmed emphasised the urgent need for increased access to finance to support the construction and acquisition of vessels, a crucial step in elevating the Nigerian maritime sector to global competitiveness.

Ahmed noted that the cost of building vessels abroad had surged from $190 million to between $270 to $275 million per vessel. This increase, he explained, highlights the critical need for innovative solutions to secure the financing necessary for the growth and competitiveness of Nigeria’s maritime sector.

“Financing the construction of these complex and advanced vessels involves a mix of financial players, including both local and Korean banks, especially for vessels built in Korea,” he said.

Ahmed asserted that vessel acquisition and construction is driven by a lifeline of financing, akin to the oxygen that breathes life into the industry’s potential for growth and profit.

Illuminating the importance of capital in this endeavour, Ahmed underscored that while ample capital can give maritime ventures an advantage, successful operations should attract external financing, as their potential profitability and returns make them an attractive investment opportunity. The key, he noted, is to tap into the resources available and transform them into a vessel of success.

In the same vein, Pius Akutah, the executive secretary of the Nigerian Shippers’ Council (NSC), put forward a decisive call for a robust national policy aimed at crafting a thriving business ecosystem with incentives to lure private sector investments.

Akutah emphasised the need for deliberate measures that would unlock private sector resources and propel the acquisition and construction of vessels in Nigeria.

The executive secretary of the NSC, stressed the importance of exploring various financing options for vessel acquisition to fully realise the potential of Nigeria’s blue economy.

Akutah also advocated for strengthening and implementing existing financial support mechanisms, such as the Shipping Sector Support Fund, Cabotage Vessel Financing Fund, and the Nigerian Content Development and Monitoring Board Maritime Fund, as potential avenues for vessel acquisition funding.

In addition, he highlighted the critical role commercial banks play in financing vessel acquisition and chartering, as well as the importance of insurance companies in providing essential coverage.

“The council is committed to advising the Federal Government on crucial maritime issues, including freight rate structures, shipping space availability, quality of vessels, and port charges,” he stated.

In a hopeful tone, Akutah expressed optimism that the maritime finance conference would help address the feasibility of creating a national carrier that could lay the groundwork for establishing a national carrier, a crucial step in positioning Nigeria as a competitive player in the global maritime market.

Dayo Mobereola, the director general of the Nigerian Maritime Administration and Safety Agency (NIMASA), also shared his thoughts at the conference, highlighting the immense importance of shipping as an economic engine and underscoring the pressing need for a renewed focus on vessel acquisition and construction.

Mobereola, represented by Isichei Osamgbi, NIMASA’s director of administration and human resources, expressed the agency’s readiness to seize opportunities for the maritime sector’s development, particularly through effective channelling of funds from the Cabotage Vessel Financing Fund for vessel acquisition and construction by Nigerian entities.

He also discussed the strategic importance of fleet ownership, which was expected to enhance Nigeria’s economic standing, increase job opportunities, and retain more wealth within the country.

Paul Ogbuokiri, president of the Association of Maritime Journalists of Nigeria (AMJON), underscored the urgent need to address the critical financing gap in the maritime industry, which has been a key impediment to the development of Nigeria’s blue economy and the government’s efforts to diversify its revenue sources.

Ogbuokiri highlighted the vital role of financing in driving the growth and prosperity of the maritime sector, calling for concerted efforts to close the financing gap and foster a thriving blue economy.

Ogbuokiri observed that the theme of the conference was intentionally chosen to convene a diverse group of industry stakeholders, including regulators, investors, financiers, and insurers, to engage in a solutions-driven conversation about the challenges inhibiting the growth of the Nigerian maritime sector, especially shipping.

He emphasised the importance of the discussions in driving progress and finding solutions to the industry’s challenges, with the ultimate goal of spurring growth and development in the Nigerian maritime sector.