Not less than $70, 000 daily is being lost to foreign-owned vessels operating in Nigeria’s maritime trade, a maritime industry expert and ship owner, Captain Ladi Olubowale has revealed.
The indigenous ship owner’s revelation is coming on the heels of Nigeria’s struggles to develop an indigenous fleet capable of carrying its growing cargo volumes over the years.
Olubowale made the disclosure at the Maritime Reporters Association of Nigeria (MARAN) Roundtable which took place at MARAN International Press Centre (IPC), Apapa GRA, Lagos recently.
While identifying inadequate indigenous shipping capacity and the absence of a strategic national fleet plan as the major challenges confronting Nigeria’s shipping industry, the ship owner who was the former Chapter President, African Shipowners Association (ASA) averred that the huge financial leakages were occurring because foreign vessels were taking advantage of opportunities created by Nigeria’s cargo and oil trade.
He stressed that the country needed to urgently determine the types of vessels required to serve its different cargo segments.
The ship owner explained that Nigeria’s inability to develop a strategic fleet has become particularly evident in the tanker sector, where the country lacks some of the vessels required by oil terminals and other cargo owners.
According to the industry expert, vessel acquisition should not be approached simply as a financing exercise, arguing that ships must be acquired based on identifiable cargo and long-term trade contracts capable of generating revenue.
Said he: “Nobody buys ships without a trade. Ship finance globally is tied to trade because long-term cargo contracts provide the business required to sustain vessel operations and repay financing.”
As way out of the quagmire, Olubowale called for a strategic fleet analysis to determine the vessels Nigeria needs and the cargoes they would carry, rather than disbursing financing to individual operators without a holistic understanding of the country’s shipping requirements.
He also linked the challenge to the implementation of the Cabotage Vessel Financing Fund (CVFF), pointing out that the fund could contribute significantly to the development of a national fleet if deployed strategically.
According to him, his company had applied for the CVFF and that several banks had recently approached the company over the financing with banks providing term sheets outlining equity contributions and other requirements.
He argued that the estimated $700 million fund should not merely be viewed as money for individual ship purchases but as an opportunity to develop a national fleet covering both dry and liquid cargo sectors.
The industry expert disclosed that about $25 million could be sufficient to acquire a sizeable vessel when properly matched with a specific trade opportunity and backed by a cargo contract.
He said the industry needed to change the narrative that ship ownership necessarily required enormous capital, noting that the availability of cargo and a guaranteed trade could help drive vessel financing and repayment.
He also argued that the government’s role should be to create the enabling environment while the private sector and shipping professionals should drive vessel ownership and fleet development.
Olubowale averred that Nigeria could not achieve a sustainable national fleet by merely announcing policies and agreements without measuring their economic value and determining how Nigerian ship owners could participate in the resulting trade opportunities.
He also called for stronger co-ordination between regulators and industry stakeholders, saying regulatory agencies should focus on safety, compliance and creating an enabling environment, while the private sector should drive the commercial development of the industry.
According to Olubowale, Nigeria’s various trade agreements, projects and maritime policies could create opportunities for indigenous ship owners if cargo considerations were incorporated into the planning process.
The ship owner enjoined stakeholders to look beyond policy announcements and ask how many Nigerian-owned vessels were actually benefiting from such initiatives and how much economic value they were generating.
He stressed the need for what he called “measurable outcomes” from government interventions in the maritime sector of the economy rather than relying on mere words from government officials.
