Stakeholders in the Nigerian maritime sector have highlighted high interest rate and lack of single digit financing as one of the major problems facing the maritime industry in the country.
They made this claim during a maritime breakfast round table organized by Zoe Maritime Resources last week, on the theme “Financing Maritime Infrastructure In Nigeria”, stressing that an indigenous operator couldn’t compete with foreign counterparts because of inadequate funding.
The founder, Ingenious Ship Owners Association, Chief Issac Jolapamo who was represented by the Managing Director of Ayoknox Ventures Limited, Mr. Ojo Olagoke noted that the acquisition of vessels cost as much as 60 million dollars.
He noted that acquisition of cheap funding has been affected by high interest rates and government policies while calling on the government to provide access to cheaper funding.
“Part of the challenges ship owners are facing is how to acquire reasonable funding in order to buy the asset that will be used to carry out this operation. When you are talking about interest rate in Nigeria, it is in double digit which ranges from about 18-32 percent per annum for short term loans. Bankers themselves are interested in putting their finance somewhere that it can go on a short cycle and yield result in a short time. As a result of this to get this funding is a little bit difficult”.
Commercial Counselor, United States Department of Commerce, Mr Brent Omdahl while speaking at the event said that the maritime sector is critical for the security of the country, improves commerce and also provides employment opportunities.
Omdahl noted that the United States have the expertise, long standing presence and existing maritime finance frameworks.
Highlighting some of the ways which the United States supports its maritime sector, he noted that there is a Federal Ship Financing Program and Capital Construction fund which assist operators by deferring tax adding that these programs have been strategically implemented by the United States.
Also speaking, President of the Nigerian Maritime Law Association, Mr. Chidi Ilogu expressed displeasure over the state of the country’s maritime sector, adding that the smaller nations have taken up the leading position in the western coast.
“When I first started practice 30 years ago, we were faced with the challenges of finance and we are still facing the same thing today. The Nigerian Maritime sector has lost over 50% capacity in terms of patronage. Most of the young ones who study maritime courses are unemployed because the system has not encouraged the growth and the employment of younger generations. NIMASA has introduced private lending institutions, why don’t we give it a try and implement what we have put in place. The policy is in place so let us implement it. If single digit financing does not work, we have to look for another means” he said.
Also, the Managing Director of NESCO Maritime, Chris Abare also advised NIMASA to ensure that the educational department sensitizes people on acquiring vessels adding that it is very possible to own a vessel.
