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 financing.

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.”

NISFCOE is 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 said.

Reiterating 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 fleet.

Providing 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 acquisition.

The 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.

“The 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 underwater.

“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 Nigeria.

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

The Publisher,, 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.

Azunna 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 make.

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

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