Call for action on NIMASA, BoI’s single-digit facility for ship financing

By Samson Echenim

Nigeria’s apex maritime regulator, the Nigerian Maritime Administration and Safety Agency (NIMASA) broke the news recently that it was working with the Bank of Industry (BoI) to establish credit facilities within the threshold of single-digit interest for acquisition of vessels for local shipowners and other operators in the country’s maritime sector.

Specifically, the credit facility predicted at eight percent, is meant to help in the procurement of maritime assets to put operators in a position to compete favourably with their foreign counterparts.

According to Olukayode Pitan, the BoI currently gives a similar credit arrangement to indigenous firms through the Nigerian Content Development and Monitoring Board (NCDMB).

BoI’s willingness to extend same partnership to NIMASA was revealed when Pitan paid a courtesy visit to NIMASA at the agency’s corporate headquarters in Lagos.

Dakuku, who received the BoI delegation, said the meeting with NIMASA was a follow up to the agency’s efforts to ensure that Nigerian players are competitive in the global maritime arena.

He said, “We have continuously sought partnerships that would grow our industry. We know that maritime asset financing is one of the major challenges of this industry and we are tackling it head-on. In no distant future our people would be able to reap the benefits of our strategy.”

Speaking during the visit, Pitan commended the NIMASA management led by Dakuku for its various transformative initiatives in the maritime sector. He said the initiatives had brought renewed confidence in the maritime industry and BOI was ready to partner with NIMASA because the viability of the sector would rub off on the entire economy.

The BoI managing director disclosed that it had an existing financing model in partnership with the NCDMB, which could also benefit the maritime sector if applied.

“We are proposing a partnership with NIMASA on vessel financing. We already have a similar partnership with NCDMB that is currently running at a single digit of eight percent, with little or zero risk for NCDMB since the fund invested by NCDMB is guaranteed by BOI. This model, we think, can also benefit NIMASA and the entire maritime sector,” he said.

Indeed, one of the factors hindering development of Nigeria’s blue economy has been lack of capital for investment. This challenge was one of the myriads of issues that the Coastal and Inland Shipping Act, otherwise known as the Cabotage Act, 2003 set out to fix with the inclusion into it, the Cabotage Vessels Financing Fund (CVFF), which NIMASA, the custodian authority says now stands at $124 million. The fund has however, remained undisbursed and therefore, has not been helpful to Nigerian ship owners.

A number of ship owners and other stakeholders have reacted to the vessel financing plan of the NIMASA and BoI, while calling on the two organisations to match words with action.

James Udeh, a ship owner in Port Harcourt, said NIMASA should work on the plan as it is the right step in the right direction. He called on Dakuku to include the plan in the nation’s maritime development policy framework and not to “just talk and forget about it.”

“It is unfortunate that in Nigeria, those given public responsibility would just talk about plans that are never implemented. The low-interest facility for vessel acquisition which the NIMASA and the BoI are reported to be working on is a laudable step. However, it should be made to become a part of mapped out policy plan to develop the sector,” he said.

“I do not know how much the BoI would be willing to lend to ship owners, but I hope that as a banking institution, the organisation understands that vessel acquisition involves huge capital investment. If the BoI is willing to do something in that area, it should also look at a long term plan for the facilities being offered to vessel owners,” Udeh added.

Also commenting, popular maritime stakeholder, Kunle Folarin said the maritime sector had been waiting too long for such intervention.

He said, “One thing I have always known is that people who occupy public positions, such as head of government agencies, especially in the maritime sector, whether they are technocrats or not, will come to have a good understanding of the sector. Maritime potential for Nigeria is so huge that any leader who understands it would want to explore its massive economic benefit. What the NIMASA DG has come up with is a good plan and I trust in his ability to execute it.

“The agency has come up with the plan and I do not think that it would need anyone to tell it how to go about the plan. I will charge the NIMASA to work on the plan faithfully and with commitment because it is a good plan. Right now, how many of our ship owners have vessels? If they can access loans with low interest and long term, it is something we all are asking for. Whatever the agencies, the regulators can do to develop maritime is always welcome.”

Mkgoerge Onyung, president of the Ship Owners Association of Nigeria (SOAN) commenting on need for the government to come up with workable policy framework to develop maritime, said maritime and ship owners own the key to unlock the economic prosperity of Nigeria.

“We know that shipping is 90 percent of the global trade and as I coined it before, about two months ago, that if there is no shipping, then, there is no shopping. So, for those of you who have shopped before, we must understand that you are all involved in shipping. So, there is a connection between shipping and national development and of course, controlling 90 percent of the global economy is a serious business,” Onyung stated, while speaking on the need to develop local shipping industry at the Lagos Shipping Expo recently.