Eromosele Abiodun posits that the federal government should take urgent steps to bail out Nigerian-owned shipping companies and disburse the Cabotage Vessel Financing Fund to avoid a total eclipse of the industry
For several years, shipping has been recognised as one of the catalysts for socio-economic development. Shipping has since the ancient times, been at the fore front of opening up and connecting the world and thus is a major driver in the process of globalisation. Specifically, container shipping has been both a cause and effect of globalisation. Container shipping is believed to be the worldâ€™s first truly global industry.
Container shipping could claim to be the industry which, more than any other, makes it possible for truly global economy to work. It connects countries, markets, businesses and people, allowing them to buy and sell on a scale not previously possible. As a matter of fact, it is impossible to imagine worldâ€™s trade, and ultimately our lives as consumers, without container shipping. Shipping has led to a phenomenal growth in world merchandise trade, which has consistently grown faster than output.
In 2006, for instance, goods loaded at ports worldwide are estimated at 7.42 billion tonnes, up from 5.98 billion tonnes 2000. The value of total world export increased from $6.454 trillion in 2002 to $40.393 trillion in 2005, representing an increase of 64 per cent. However, the reverse seems to be the case in Nigeria. It is on record that no fewer than 90 per cent of shipping companies owned by Nigerians have either completely shut down their operations or barely struggling to survive.
Some of the indigenous shipping companies include: Equitorial Energy; Oceanic Energy; Morlap Shipping; Peacegate; Pokat Nigeria Limited; Al-Dawood Shipping; Potram Nigeria Limited; Joseph Sammy, Genesis Worldwide Shipping and Multi-trade Group all in Lagos; Niger-Delta Shipping in Warri, Delta State; and Starzs Investment Group in Port-Harcourt, Rivers State.
Of all the companies listed above, only two can be said to be operating viable businesses while others, representing 83 per cent of the companies, are either completely dead or are in comatose.
Ironically, all the shipping companies based in Lagos are either dead or struggling to survive while the ones in Warri and Port-Harcourt are thriving.
The companies, which the General Secretary of the Indigenous Shipowners Association of Nigeria (ISAN), Capt. Niyi Labinjo, described as â€œstruggling heavilyâ€, have mostly downsized and are operating with less than 20 per cent of the workers they had about two years ago.
THISDAY findings also revealed that all the companies are heavily indebted to banks and are mostly unable to service the loans they took to buy ships.
Labinjo, who is also the President of Al Dawood Shipping, disclosed that most of the ship owners have resorted to selling their landed properties to enable them service their bank loans, while others have lost prime properties to the banks.
The companies, sources volunteered, also owe their crew arrears of salaries ranging from six to 14 months, while some have sold off their vessels.
THISDAY also learnt that Genesis Worldwide Shipping, which was once seen as a thriving indigenous shipping company just four years ago, has completely gone under with not a single ship to operate.
The company, at its peak less than five years ago, had six ships.
The same fate has befallen Joseph Sammy Nigeria Limited with one of its staff members describing it as â€œalmost dead.â€
The only vessel left in the companyâ€™s fleet, MT Kemepade, was stolen recently. The ship was taken to a ship breaking yard in Ghana and the breakers were about to commence work on it before the owners found out. The case is in court in Ghana.
CVFF Fund to the Rescue
Piqued by the spiral effects of the death of indigenous shipping due to lack of funds and unfavourable policies, maritime stakeholders have decried the federal governmentâ€™s decision to warehouse over $100 million in the Cabotage Vessel Finance Fund (CVFF) while its purpose suffers.
Speaking at a breakfast meeting organised by the Shipping Correspondents Association of Nigeria (SCAN) for public relations officers of maritime and related organisations, the Public Relations Officer of the Association on Nigerian Licensed Customs Agents (ANLCA), Dr. Kayode Farinto, said the problem was due to lack of patriotism.
â€œOur indigenous ships will continue to die because of the fact that we are not saying the truth. CVFF ought to assist our indigenous ship owners with funds. The CVFF holds nothing less than N70 billion in an escrow account. What happens to that fund,â€ he said.
Similarly, the Special Adviser on Seafarers Affairs to the President-General of the Maritime Workersâ€™ Union of Nigeria (MWUN), Comrade Henry Odey, said that Nigeria was only able to rescue citizens trapped in Liberia during its civil war because the Nigerian National Shipping Line (NNSL) was still operational.
While stressing that cadets from the Maritime Academy of Nigeria (MAN), Oron are half-baked, the retired sailor recalled that the NNSL, â€œhad a training ship made for cadets, which carried cargo and cadets to give them sea-time.â€
Faulting the new trend whereby the Nigerian Maritime Administration and Safety Agency (NIMASA) shuttles from country to country seeking assistance with sea-time training, Odey said: â€œHow would you think that the other countries would like to train your cadets for you to compete with them?
â€œIt is shame on our country because we are doing nothing. Do you think you can go to The Philippines and ask them to train your cadets so that you can compete with them? I worked onboard the British ship, Dempsa, and if you were not a good sailor, nobody would employ you. But today, nobody wants to care.â€
On his part, the publisher of maritime daily, Ships and Ports, and Chairman, Board of Trustees of SCAN, Mr. Bolaji Akinola, noted that â€œindigenous shipping is dead.â€
He blamed the situation on NIMASA, which he said, has lost focus on shipping development.
Akinola noted that NIMASA was now a money-making agency as its three per cent freight levy on ships has made it a big attraction for political appointments, adding that while CVFF grows in idle billions of naira in escrow account, MAN Oron continues to churn out ill-trained and ill-qualified cadets.
According to him, no fewer than 6,000 of those cadets are today stuck with their National Diploma programme because they could not get the required one year sea-time training to proceed for Higher National Diploma.
NIMASA to Disburse CVFF Fund
However, the Director General of NIMASA, Dr. Dakuku Peterside has assured Nigerian ship owners that the agency is making frantic efforts to disburse the CVFF in line with set down regulations.
Peterside said the fund is with the Central Bank of Nigeria (CBN) due to the Treasury Single Account (TSA) policy.
He said that in line with its cargo support initiative for indigenous practitioners, the agency is already getting the support of the presidency to change the Nigerian terms of trade from Free-on-Board (FOB) to Cost Insurance and Freight (CIF).
But he lamented that many Nigerian ship owners are not ready to take advantage of the opportunity when it finally arrives.
Peterside identified lack of debt facility from Nigerian banks and high interest rates as major challenge confronting Nigerian ship owners. He stated that NIMASA was ready to crash the interest rate in order to allow Nigerian ship owners compete favourably against their international counterparts.
According to him, â€œWe are determined to disburse CVFF according to the law and according to regulation. We are dedicated, we are committed and we are passionate about disbursing it. We would match the CVFF fund with some money coming from the financial institutions, this will crash the rate of borrowing, and that is why we are passionate about disbursing CVFF to bring our own funds to come almost at the cost of nothing and match it with their own fund coming at the rate of 25 per cent, the first thing that would happen is that the rate would crash from 25 per cent to a one digit interest rate. CVFF is lying at the CBN under TSA arrangement, we are working hard to disburse it, and it is over a hundred million dollars.
â€œWe are in talks with the CBN. We want to change the terms of trade from FOB to CIF, but how many persons are prepared for this regime? If we get NNPC to change the terms of trade and we are getting the support of the presidency, if we get it changed, how many of us are ready?â€
Peterside said that the NISFCOE is apt because it would enable NIMASA meet critical private sector investors who would translate its vision.
According to him, NIMASA depends on private sector energy to set frame work and it is ready to partner anybody that has concepts that can change its story.
Also a former Director General of NIMASA, Temi Omatseye said that the Minister of Transport needs to be properly guided on how to draw attention of financial institutions to benefits of supporting shipping trade in Nigeria.
He said changing the terms of trade from FOB to CIF would only require a presidential order.
On her part, a ship owner and former President of Trawler Owners Association, Mrs. Margaret Orakwusi said it is wrong for government to keep holding on to the CVFF fund. Rather, she advocates that the fund be used as seed money to set up a maritime bank.
According to her, â€œCVFF does not belong to the federal government. It is our money, the government is only to monitor it, but they are now squeezing life out of us.â€