By Ebuka Oko
An expert in the maritime business, Professor Fabian Ajogwu, a Senior Advocate of Nigeria, SAN, has stated that despite the financial plan made by the government in funding assistance for ship acquisition in Nigerian maritime sector, indigenous participation in the owning of vessels and doing business in the sector has not improved because local shipping companies cannot access the requisite funding to acquire ship infrastructure and do the business.
Professor Fabian made this known at the just concluded Nigeria Ship Finance Conference and Exhibition, NISFCOE with the theme “Advancing Ship and Maritime Infrastructure Financing in Nigeria: Innovative Concepts and Sustainable Approaches”, also pointed out that lack of access to loans from banks and other financial institutions remains the most formidable challenge for ship-owners, operators and indigenous players.
He stated: “Few Nigerian banks have the capacity and sophistication, financially and technically, to undertake such transactions; and high interest rates and liquidity issues keeps funding out of the reach of the indigenous intending ship-owners. Similarly, access to the Cabotage Vessel Financing Facility, CVFF, has also been described as a big challenge for indigenous players, having just not happened”
The government funding assistance for ship acquisition is mainly under the CVFF established under the Coastal and Inland Shipping (Cabotage) Act in 2017 by the Federal Government of Nigeria through the Nigerian Maritime Administration and Safety Agency, NIMASA.
The funds from the CVFF and the contribution from the financial institutions was to help drive down the interest rate for ship-owners wishing to acquire vessels with borrowed funds, which was intended to be a major source of ship financing in Nigeria.
While speaking on the issue in a paper titled, ”Innovative Concepts and Sustainable Approaches to Effective Ship and Maritime Infrastructure Financing in Nigeria: A Critical Review”, Professor Fabian, a director of Kenner Partners, has claimed that Nigeria’s maritime industry is still at its infantile stages in terms of funding and must source funds in other ways aside the federal government.
Prof. Ajogwu also advised NIMASA to be transparent in disbursing the CVFF loan and bring in other innovative ideas to facilitate the local vessel ownership.
“NIMASA in driving development in the industry is urged as the principal regulator to be thorough and transparent in its management and disbursement of the CVFF and proactive in developing a regulatory framework, in collaboration with other relevant regulators, for financing solutions to drive investment and indigenous participation,” he noted.
In her welcome address, convener of NISFCOE, Ezinne Azunna, said the concept of funding shipping and Maritime infrastructure is not new, it is important to pay attention to funding of the heavy infrastructure available in the sector.
Azunna stressed that infrastructure funding in the sector is important because of its capacity to keep the nation afloat.