Lagos, Nigeria — In a recent quarterly meeting, the Nigerian Association of Master Mariners (NAMM) highlighted significant financial challenges faced by Nigeria’s shipping industry, pointing to the inability of local banks to adequately support vessel financing.
Mr. Emmanuel Ihenacho, a former Minister of State for Interior and retired Ship Captain, addressed the issue during NAMM’s meeting held at its Secretariat in Lagos.
He underscored that the current financial mechanisms employed by Nigerian banks are insufficient for the evolving demands of vessel financing.
According to Ihenacho, the high interest rates on loans for vessel purchases are a primary concern, with Nigerian banks charging rates that are markedly higher than those in other countries.
“The dynamics of vessel financing have progressed beyond the capabilities of the methods currently used by Nigerian banks,” Ihenacho said.
He emphasized that the prohibitive interest rates are a significant barrier for local ship operators, who are compelled to seek alternative funding sources for purchasing vessels.
In addition to high interest rates, Ihenacho listed several other hurdles that contribute to the challenges faced by local shipping operators.
These include short loan tenors, stringent collateral requirements, perceived risks by banks, limited shipping finance expertise, corruption, bureaucratic inefficiencies, and foreign exchange fluctuations.
“The local shipping industry and Nigeria’s coastal trade are still largely controlled by foreign entities, which limits opportunities for indigenous players,” Ihenacho noted.
He argued that this foreign dominance restricts the growth potential of local shipping companies and hinders their ability to compete effectively.
Ihenacho advocated for a stronger governmental intervention to address these issues. He suggested leveraging the Cabotage Act—a piece of legislation aimed at promoting the use of Nigerian ships in domestic shipping—and called for the Nigerian Maritime Administration and Safety Agency (NIMASA) to enhance its enforcement of Cabotage compliance.
The former minister pointed out the economic losses incurred by Nigeria due to the lack of a robust indigenous shipping industry. “The country is losing significant revenue and job opportunities because we do not control our shipping sector,” Ihenacho stated.
“If we had a more developed local shipping industry, we could negotiate better freight rates and have more control over the carriage of our cargoes. Instead, we are dependent on foreign vessels for our international trade.”
The NAMM’s meeting underscores a growing concern within the Nigerian shipping community about the need for more effective financial solutions and policy measures to support local shipping operators.
As the industry continues to face these financial challenges, the call for reforms and increased governmental support remains a critical issue for stakeholders.
In response to these concerns, industry experts and stakeholders are urging for immediate action to address the financial barriers and regulatory issues impeding the growth of Nigeria’s indigenous shipping sector.
This article was created using automation technology and was thoroughly edited and fact-checked by one of our editorial staff members