Expert explains delay in take-off of maritime bank


 A maritime expert, Chief Kunle Folarin, has attributed the delay in the take-off of the proposed maritime bank to the long gestation period of investments and paucity of funds.

 Folarin said in an interview in Lagos that since the maritime bank would only function on long-term lending activities, such funding should get government’s backing and privileges.

``The maritime industry in specific terms is a long-term amortisation industry. In other words, it is not like a venture that will yield in two months or six months.

``The operations of the bank have to look at lending for over a long period of time, the gestation period is long.

``So, that brings the issue, why do we have problems getting a maritime bank off the ground?
``Yes, promoters of a maritime bank, if not government, will not want to tie their money down for 10 years before they recover it.

``So, if you are going into maritime activity lending, you must know that it will take two, five, ten years to amortise the lending, the funds you have disbursed.

``That brings a very special approach to it. It has to be one, the one that guarantees inflow of funds, either it is from re-payment from those who have lent money and also, it must be supported by a special government kind of privileges and so many other physical incentives.

``In other words, to encourage private institutions or private banks to lend or for the maritime bank to be lending with the view of the peculiarities of the sector that the gestation period is long, then, it must be kind of open to so many funding.''

Folarin said the sourcing for funding from the pension funds was one way that could be explored for a possible establishment of a maritime bank.

He ruled out the idea of turning to depositors’ funds which, he said, was always on demand.

“It cannot be depositors’ money. Depositors’ money is on demand.

``You have to produce their money on demand and if the cycle of returns of money you have lent out takes two, three years, then you are going to be in a very serious problem.

``So, what is the solution? One, long-term investors must be solicited.
``Like for instance, pension funds, which probably will take about 20 years of work life before you start to ask for your money.''

He said the maritime bank was like any other bank; a lending
institution that was guided by the acts and procedures of the Central Bank of Nigeria.

Folarin, however, said that the only difference was the bank’s work-specific nature which would be focused on maritime or related activities.

He said that a maritime bank must be very strict in recouping its lending in order not to deplete the available funds for investments since a single investment in the industry was huge.