Nigerian Banks to support local shipping

 


The Nigerian Association of Master Mariners (NAMM) has raised concerns about the inability of Nigerian banks to adequately support the local shipping industry financially. During a recent quarterly meeting held in Lagos, former Minister of State for Interior and retired Ship Captain Emmanuel Ihenacho highlighted several issues, including high-interest rates on loans, short loan tenors, stringent collateral requirements, risk perceptions by banks, limited shipping finance expertise, corruption, bureaucratic hurdles, and foreign exchange fluctuations. These challenges hinder local ship operators from accessing necessary funding for vessel acquisition.

Ihenacho pointed out that the local shipping industry and Nigeria’s coastal trade are predominantly controlled by foreigners, limiting opportunities for indigenous players. He urged the government to leverage the Cabotage Act and address these challenges to boost the indigenous shipping industry. He also called for increased Cabotage compliance from the Nigerian Maritime Administration and Safety Agency.

For more details, you can access the full article here.


Steps the Nigerian Banks Can Take 


Indigenous ship owners in Nigeria face several challenges when trying to access financing for their operations. Some of the specific challenges include:


High-interest rates: Nigerian banks often charge high-interest rates on loans, making it costly for indigenous ship owners to borrow money for vessel acquisition or operational expenses.

Short loan tenors: Banks in Nigeria may offer short repayment periods for loans extended to ship owners, which can result in high monthly payments and financial strain.

Stringent collateral requirements: Banks may demand significant collateral or security for loans, which can be difficult for indigenous ship owners to provide, especially if they do not have substantial assets.

Risk perceptions: Banks may view the shipping industry as high-risk, leading to reluctance in extending credit to indigenous ship owners.

Limited shipping finance expertise: The lack of specialized expertise in maritime finance within Nigerian banks can hinder their ability to assess the unique financial needs and risks of the shipping industry.

Corruption: Corruption in the banking sector or bureaucratic processes can create additional challenges for indigenous ship owners seeking financing.

Bureaucratic hurdles: Complex and time-consuming bureaucratic procedures in obtaining loans can deter indigenous ship owners from accessing the necessary funds

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