Eromosele Abiodun writes that the timely disbursement of the Cabotage Vessel Financing Fund as promised by the federal government will help revive indigenous ship owners whose business have suffered over the years due to lack of funds
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 of the world and thus a major driver in of the process of globalisation. Specifically, container shipping has been both a cause and effect of globalisation. Container shipping is believed to be the world’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, business and people, allowing them to buy and sell on a scale not previously possible.
As a matter of fact, it is impossible to imagine world 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, goods loaded at ports worldwide were 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 condition.
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.
THISDAY findings revealed that all the companies are also heavily indebted to banks and are mostly unable to service the loans they took to buy ships.
A top player in the industry recently told THISDAY 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 five 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 describing it as “almost dead”. The only vessel left in the company’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 it has been stolen. The case is in court in Ghana.
CVFF to the Rescue
It was in a bid to avoid the pitiable conditions of ship owners that the federal government put in place the Cabotage Vessel Financing Fund (CVFF) over 17 years ago.
The CVFF is a special intervention fund created alongside the country’s Coastal and Inland Shipping Act, 2003, otherwise known as the Cabotage Act, to assist indigenous ship owners with acquisition of vessels to enable them operate maximally in the country’s cabotage trade. The fund was also to form a source of aid to enable local ship owners compete favourably against foreign ship owners in crude oil freighting on the Nigerian waters. However, effort to get the government to disburse the fund, which is domiciled at the Central Bank of Nigeria (CBN) has not yielded any positive result despite the alarming decline in the number of indigenous players in the industry.
Things are about to change though as the federal government recently approved its disbursement to indigenous shipping operators.
Minister of Transportation, Rotimi Amaechi, who disclosed this at Stakeholders’ Appreciation Night organised by the Nigerian Shippers Council (NSC) in Lagos, said the fund has hit $200 million.
He said the process of the disbursement would begin after a meeting with the management of Shippers Council, Nigerian Maritime Administration and Safety Agency (NMASA) and Inland Waterways Authority (NIWA) on the subject matter.
Indigenous ship owners have been longing to benefit from the fund after several promises by the government failed. The accumulated fund represents a two per cent contribution by indigenous ship owners on every contract done in the nation’s maritime sector.
According to the Act establishing the fund, the Minister of Transportation is empowered to establish guidelines for the disbursement of the fund to eligible operators.
Amaechi had in the past told the ship owners that as long as he remained in charge as Minister of Transportation; the funds would not be disbursed, citing several excuses.
But after receiving directives from President Muhammadu Buhari, Amaechi assured stakeholders that he would be meeting with all the heads of agencies under his ministry to know their plans for the fund.
Meanwhile, the news may have buoyed the optimism of ship owners. For instance, the Nigerian Shipowners’ Association (NISA) called on the NIMASA to ensure that the procedure for the disbursement of the $124million CVFF to indigenous ship-owners will be transparent and all encompassing.
Speaking when members of the steering committee of NISA paid a courtesy visit on the Director General of NIMASA, Dr Dakuku Peterside, a member of the committee, Taiwo Akinpelumi said the pronouncement on the disbursement of the CVFF is important and game changing statement that will bring succour to indigenous Ship owners.
Akinpelumi also told NIMASA that the association would present suggestion and position to the disbursement of the CVFF accordingly.
“Some policy pronouncements have been made as regards disbursement of CVFF. We view this as important and game changing statement, which will definitely bring succour to ship owners in Nigeria. We hope the modalities and the criteria for the selection and the guidelines to be deployed for the disbursement will be transparent and all encompassing. However, with full benefit of the genesis and ultimate start of the Cabotage regime, NISA will present suggestions and position accordingly,” he said.
Also speaking, another member of the steering committee, Tunji Brown complained about frustration in securing a provisional certificate for used vessels.
According to him, while it takes 48hours to secure a provisional certificate in other countries it has always become frustrating in Nigeria.
Responding to the ship owners, the Director General of NIMASA, Peterside said the industry was excited about the end to the rift that engulfed the association for so many years.
Peterside, who was represented by an official of the agency, Mr Anthony Ogadi, further stated that the faction in NISA had over the years been a nightmare to the agency and stakeholders in the industry.
The NIMASA boss, however, assured the committee that NISA members would be adequately informed when the CVFF is about to be disbursed.
He said:”No penny has so far been disbursed from the CVFF but I can assure you that if the disbursement is about to take place, the guidelines and criteria will be made public for everyone to see.”
On the provisional certificate, the DG urged the ship owners to start the registration early enough so that they can be issued within 48hours.
Stakeholders Beg FG
Piqued by the spiral effects of the extinction of indigenous shipping due to lack of funds and unfavourable policies, maritime stakeholders had recently questioned the federal government’s wisdom in warehousing the CVFF.
Speaking at a breakfast meeting organized 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.
“Our indigenous ships will continue to die because of the fact that we are not saying the truth. Cabotage Vessel Financing Fund takes care of assisting our indigenous ship owners with funds. The CVFF holds nothing less than N70 billion in an escrow account. What happens to that fund, ”he said.
Similarly, the Special Adviser on Seafarers Affairs to the President-General of the Maritime Workers’ 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, “had a training ship made for cadets, which carried cargo and cadets to give them sea-time.”
Faulting the new trend whereby the NIMASA shuttles from country to country seeking assistance with sea-time training, Odey wondered: “How would you think that the other countries would like to train your cadets for you to compete with them?
“It 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.”
On his part, the Publisher of maritime daily, Ships and Ports, and Chairman, Board of Trustees of SCAN, Mr. Bolaji Akinola, noted that “indigenous shipping is dead.”
He blamed the situation on NIMASA, which he said has lost focus on shipping development.
Akinola regretted 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.