By Babajide Komolafe
A number of banks have risen to tackleÂ the problem of inadequate funding in the local maritime sector. Maritime sector operators have always identified inadequate funding as one of the barriers to the development of the sector.
The other factor is the dominance of foreign shipping lines in Nigeria related international maritime businesses.
In 2004, the Federal Government enacted the Cabotage Act to increase the participation of indigenous shipping lines in the international maritime business.
But due to lack of funding to acquire new and bigger ships and provide other necessary infrastructure, local shippers have not been able to harness the advantage of the Act.
This is because most banks, due to lack of competence and understanding of the sector, paid little or no attention to the sector.
Even after the enactment of the Cabotage Act, only a handful of banks have responded positively to the yearnings of local shippers by setting up Maritime Desk.
At a seminar on Funding of the Maritime Sector and Financing ofÂ Fuel Import organized by Akabogu and Associates held in Lagos recently, Director of Research Central Bank of Nigeria (CBN), Mr. C. N. O. Mordi, said that five years after, the expected impact of the Act on the domestic shipping industry and on the economy has not been felt.
He noted that factors responsible for this include financing constraints.
â€œThe Nigerian maritime sector has been faced with poor funding. Despite the banking sector consolidation, the financial system is yet to fully appreciate its peculiarity and adequately support its funding. It has been quite difficult for some shipping companies to get the required financial support from banks.”
However, in an apparent bid to tackle this challenge and increase market share, some banks namely Diamond Bank, Skye Bank and Finbank, have begun to increase funding toÂ the sector especially indigenous shipping lines.
Presently, Skye Bank dominates funding activities in the sector. The bank has funded about 60 per cent of the new ships acquired in Nigeria in the last two years.
Recently, Skye Bank was awarded the â€œMaritime financier of the year 2008â€Â by the Nigerian Shipping Council on account of its contribution to the growth and development of the maritime industry.
The Group Managing Director of the bank, Mr. Akinsola Akinfemiwa, had recently said Skye Bankâ€™s full understanding of the sector informed the reason why it has supported operators over the years.
Skye BankÂ has partnered with the US Ex-Im Bank and other foreign institutions to finance a number of projects in the maritime sector.
Such projects include financing the acquisition of first Nigerian vessel to sail under the Nigerian flag from the US, financing of Maevis Limitedâ€™s automation of FAAN, provision of finance for acquisition and upgrade of National Clearing and Forwarding Clearing Agency, among others.
The bank also recently hosted the Indigenous Ship Owners Association of Nigeria with the aim of charting the way forward and setting a new direction for the association as part of its commitment to the development of shipping and the maritime industry.
On its part, Diamond Bank, is another active player in the maritime business. The bank has supported the Slok Group in funding the acquisition of some vessels both for commercial and fuel lifting.Â
The bank is understood to have funded no fewer than three vessels for the group, all of which are involved in international maritime business. Â
FinBank Â also recently Â financed the purchase of a new vessel for Jevkon Oil & Gas Limited, a leading indigenous maritime transport company in Nigeria.
Speaking at the commissioning of the vessel on Monday, the MD, Mrs. Suzanne Iroche, said the bankâ€™s involvement in the financing of the vessel was a demonstration of its commitment to the success of the Cabotage Act 2003 as well as the growth of the Nigerian economy.
Essentially, the Act as enacted seeks to develop and increase indigenous tonnage by stipulating that subject to the licensing requirements and waivers embedded in it, all vessels engaged in Cabotage in Nigeria must be registered in Nigeria, owned by Nigerians, carry Nigerian flag and manned by Nigerians.
According to her, the implementation of the Cabotage Law will have a positive ripple effect on the economy as it is capable of generating millions of job opportunities for Nigerians.
This belief, she said, informed the Bankâ€™s involvement in the finance of various Maritime transactions and its resolve to continue to develop capabilities to appropriately manage relationships in the sector.
â€œFinBankâ€™s involvement is a testimony of its strength as a financial institution. We shall continue to finance projects that will add value to the Nigerian economy,â€ she added.