Former President, Nigerian Shipowners Association (NISA) and current President, Nigerian Chamber of Shipping (NCS), Alhaji Aminu Umar, in this interview with SHIPS & PORTS’ Abolanle Oluwatola, evaluates the shipping industry and proffers possible solutions to the challenges facing indigenous ship owners.
What are the major challenges facing Nigerian ship owners?
One of the challenges is the issue of taxation on ships that are loading crude oil. We (Nigerian Chamber of Shipping) were at the forefront of putting together the discussion between the Nigerian tax authorities and the international ship owners, tanker owners, Baltic and International Maritime Council (BIMCO), international ship owners, and putting everybody together. We have also engaged the Nigerian Maritime Administration and Safety Agency (NIMASA) on discussions about the Cabotage Vessel Financing Fund (CVFF), seafarers; ship registry and with the new executive at NIMASA. There are lots of issues to discuss.
How did Nigerian ship owners fare under the last administration?
Well, it has been a very challenging eight years. Remember that their first term was clouded with issues relating to oil price collapse so there was low activity in shipping. You have to understand that shipping business is transporting goods which mean if there is low activities, no much money flowing in an economy, there will be less goods moving around. So, we had a little bit of problem with the first term. The second term came with COVID-19 and that also affected the level of activities. By and large, you know shipping cut across a lot of activities. Don’t forget that large percentages of ship owners in Nigeria are in the offshore services industry, so when oil price collapsed, many of the businesses also stopped but they are in the recovery state now. Things are coming up in the last few years because oil price has gone up and new investments in terms of exploration and production campaigns are coming up. I think there is a lot of positivity in the outlook. We believe that Nigerian ship owners have a lot of opportunities to cash in their investments. The biggest challenge is getting the capital to invest in that business.
So what is the solution to the challenges of capital?
One of the ways is the intervention fund which is the CVFF. We hope it will be disbursed. The Nigerian Content Development and Management Board (NCDMB) is also helping a great deal. Many of the ship owners have been accessing the (NCDMB) fund particularly the people doing business in the offshore services or support services. They are getting funds from NCDMB and they have been investing in the business. I think it is going well in that aspect.
How can foreign dominance in our waters be reduced to the barest minimum?
We have to look at this in a different way. Shipping is international. When we say foreign dominance, we have to understand that our shipping business too is to deliver services to other countries so, if we continue with the foreign dominance narrative, we would end up also becoming foreign dominance in their country and they will send us away. We need a lot of Nigerians to invest in that sector. I think Nigerians don’t have the capital to invest and our banks do not understand the business so they are not giving the funds for the investment. Furthermore, a lot of Nigerian investors who have the money don’t understand the sector so they are not channeling their money to that investment side. We expect the regulatory agency, NIMASA and the ship owners associations to create more awareness so that people can understand the industry and see that there is value to invest in.
Why do we have fragmentation of ship owners association?
We talk a lot about this. I do not see it as fragmentation. Every industry has their associations. In shipping, we just have a few and we are all working together. We know each other; we are partners in business and it is not a problem. Rather, we are all coming with different perspective to achieve our goals.
Nigeria waters have been categorized as war risk zone by shipping insurers. How is this affecting the business?
Unfortunately, this increases our cost of doing business because the insurance charge on ships is higher when you operate in the high war risk zone. This means ships that operate in Nigeria have to pay extra insurance in addition to the insurance we pay for. The insurance is twice more expensive compared to areas not declared as war risk zone. This has been there for so many years because of the piracy and insecurity issue in the land. The insurance company has declared Nigeria as a very high-risk area but the piracy issue has gone down now. NIMASA and the associations should engage with Lloyds underwriters who have declared us as such and see to it that at their next meeting, they are able to remove Nigeria from there.
Are Nigerian ship owners assisting seafarers in the area of acquiring sea-time experience?
A lot of our youth who have undergone academic training have been given chances on ships. Many of our members have put down policies that support gender in order to give chances to the female seafarers. Nowadays in the ship, you see that certain percentage of the Nigerian seafarers’ slot have been put aside for female seafarers and the number is increasing. At the Nigerian Chamber of Shipping, we are also trying to collaborate with International Chamber of Shipping to ensure that our young Nigerians are given chances on international vessels so that they can compete with their counterparts in the world because shipping is global and international. They are supposed to be trained when a ship is doing international trade. We are discussing this with our sister International Chamber of Shipping so that we can get access for both male and female seafarers. A number of Nigerian seafarers both male and female are on board already being trained and it is an ongoing thing. We will continue to give them these opportunities.
What is the market outlook for the business this year?
The shipping market outlook is positive for shipping. It has been good for the year 2024 because the international market is very busy. A lot of disruptions have happened which have positive impacts for shipping. There are lots of opportunities for Nigerians to come into the business because the business is good now. Many international ships are busy elsewhere so they don’t have the time to be here in West Africa to create monopoly or competition. It is a good thing that we are seeing a lot of opportunities for Nigerians to explore. There are Nigerian companies that have also done well in shipping. We have to now define what we call Nigerian companies. If a company that originates from Nigeria even if the owner is not a Nigerian; does it mean that it is not a Nigerian company or is it a Nigerian company? This is what we need to define. There are very good companies that originated very good shipping business in Nigeria today and are competing in the world as big shipping companies.
What can you say about the Nigerian ship registry?
We need the Nigerian ship registry to be standardized and modernized so that it will compete with any international ship registry. If we want to grow the Nigerian fleet, if we define Nigerian shipping companies as ships that are being registered in Nigeria, then we have to be able to grow the registry to be able to match the international logistics. We have to make the registry work but if our definition of a Nigerian ship means a ship that is owned by Nigerians and can be registered anywhere, then it is okay for the registry not to meet international standards. There is no reason why we should not have a standardized registry in the world.
Copyright Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to www.shipsandports.com.ng as the source.
