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NISFCOE 2018: Stakeholders suggest alternatives to ship financing

L-R: Mr. Bashir Jamoh, ED Finance and Administration at NIMASA; Mr. Mike Igbokwe SAN, Chairman NISFCOE 2018; Mr. Fabian Ajogwu SAN, Professor of Corporate Governance, Lagos Business School; Mr. Aminu Umar, President, Nigeria Indigenous Shipowners Association(NISA) at the 2018 Nigeria Ship Finance Conference and Exhibition in Lagos.

The Nigerian ship owners and other stakeholders in the shipping sector have
suggested groupings and joint ventures as alternatives to ship acquisition

The ship
owners made the suggestion during the 2nd edition of the Nigerian Ship
Finance Conference and Exhibition (NISFCOE) which closed on Wednesday in Lagos.

The News
Agency of Nigeria (NAN) reports that the theme of the event was: 
“Advancing Ship & Maritime Infrastructure Financing in Nigeria: Innovative
Concepts & Sustainable Approaches.”

part of efforts to correct the declining state of shipping in the country.
In his
presentation at the conference, Prof. Fabian Ajogwu, said that shipping had
evolved globally but noted that Nigeria should continue to look at the issues
of shipping from the traditional standpoint.

Ajogwu said
that ship ownership had gone beyond one man owning and managing vessels to an
era where a group of individuals and organisations would own vessels and
outsource the management to experts in the business.

According to
him, Nigerian ship owners need to utilise the power of pulling as it would be
better if they own five per cent of a vessel working for any of the
International Oil Companies (IOCs).

“People need
to raise fund but a ship isn’t an hotel that you build and expect patronage.
Rather, you have to secure the source of repayment upfront by having contracts
within the oil and gas sector.

“It is this
stream of cash flow that would enable you repay the debt,’’ he said.
Ajogwu also warned
the Nigerian Maritime Administration and Safety Agency (NIMASA) not to disburse
the Cabotage Vessel Finance Fund (CVFF) to individual ship owners, saying the
agency had no capacity to ensure repayment.

He said that
NIMASA should do onward lending to the banks so that the banks would in turn
lend to the ship owners.

“The banks
have the wherewithal to do the feasibility study of the projects as well as the
business plan.

“The banks
are also in better positions to go after the ship owners to ensure that they
repay the loans,’’ Ajogwu said.

He also noted
that there were some ship building and ship acquisition funds all over the
world that Nigerian ship owners could benefit from.

“These funds
help the European ship builders to sell while they help us acquire the vessels.
We should be able to tap into such opportunities,’’ he said.

Ajogwu also
stressed the need to separate assets ownership from operations, saying that
most Nigerian ship owners lacked the managerial skills to handle the management
aspect of the assets.
“We are in a
world where some of these processes have been tested so we just have to
replicate the initiatives to suit the local environment in the country,’’ he

the point, the Managing Director, Pan African Capital, Mr Christopher Oshiafi,
noted that British Airways owned less than 10 per cent of the aeroplanes in its

another alternative for ship funding, he suggested that ship owners could
approach Export Credit Agencies (ECA), the Nigerian Import-Export (NEXIM) Bank
and other Pan African banks.

Oshiafi noted
that availability and reliability of cash flow from the project would convince
the financiers that the ship owners would be able to repay the debts.

He also urged
NIMASA to provide an assurance to the financing banks to provide the deficits
if the revenue from the investment falls below projected expectations.
According to
him, this will enable the financiers become more willing to sponsor ship

Director-General of NIMASA, Dr Dakuku Peterside, said that the agency had no
role in making shipping products bankable, saying that the agency could only
function as a regulator.

According to
him, we need to look beyond the over 115 million US dollars CVFF money and
there is need to tackle the issue of transparency.

He said that
the Minister of Transportation, Mr Rotimi Amaechi, had called on stakeholders
in August 2018 to deliberate on the disbursement of CVFF.

Speaking from
the point of view of ship owners, the President of the Nigerian Indigenous
Shipowners Association (NISA) Mr Aminu Umar, described the business environment
for ship owners in the country as “extremely challenging.’’

He lamented
that beyond the obvious challenges of funding; there was also another tasking
problem of infrastructure.

infrastructure isn’t up to the global best standards and this has posed several
safety issues to ship owners. We have ugly experiences as a result of channels
that aren’t dredged and there are no tugboats to assist the vessels.
“The channels
aren’t well dredged so vessels encounter accidents and we can’t see the

“We only use
the chart to see the draft of the water. These are infrastructure challenges
and there are no provisions for emergency vessels for incidents offshore

These are
infrastructure deficits that the government should address,’’ Umar said.

www.onepageafrica.com, Mrs Hope Orivri, said that a strong single
institution would address the problem facing the disbursement of the Cabotage
Vessel Financing Fund (CVFF).

Orivri urged
NIMASA to enlighten ship owners and banks on how they could benefit from the
CVFF funds.

The convener
of NISFCOE, Mrs Ezinne Azunna, in her welcome address, said that ships were
assets to any nation for trade and in times of emergency.

She stressed
that maritime nations always had to consciously pay attention to funding of the
heavy infrastructure available in the maritime sector because of the capacity
of the sector to keep the entire nation afloat.

expressed optimism that the maritime sector in Nigeria had the capacity to
contribute significantly to the nation’s GDP.

“The benefits
of developing the sector no doubt outweigh the cost and sacrifices we have to

“This is why
this year’s theme “Advancing Ship & Maritime Infrastructure Financing
in Nigeria: Innovative Concepts & Sustainable Approaches’’ is more
appropriate,’’ she said.

suggested that there should be funding ideas, opportunities and insights which the
sector could leverage on. (NAN)

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