Stakeholders decry absence of banks, insurance in ship acquisition, construction
Stakeholders in the nation’s maritime industry have lamented lack of finance from Nigerian banks and insurance firms for ship acquisition and construction of vessels in the country.
The stakeholders who stated this on Thursday at the at the 2024 edition of Association of Maritime Journalist Association of Nigeria (AMJON) on Maritime Finance
Conference in Lagos, said that the absence of Nigerian banks and insurance firms to finance ship acquisition and construction of vessels retarding the growth of the maritime industry.
In his keynote address, the MD/CEO, NLNG Shipping and Marine Services Limited (NSML), Abdulkadir Ahmed, said that key role of finance and insurance in the maritime industry, especially on how they impact the vessel acquisition and construction (newbuild) activities is quite apt and pertinent especially with increased focus on deepening the contribution of marine and blue economy’s contribution to economic growth.
According to him, access to finance is key for acquisition and construction of ships that will propel the Nigerian maritime sector towards emerging as a global player.
He said that strict compliance with standards would ensure that ships are not only built and operated to the highest quality and safety standard but is also able to trade both locally and internationally.
“Vessel ownership and acquisition occurs within 2 segments of the shipping industry – the sales and purchase segment where second-hand vessels are traded and acquired, and the newbuilding market where newbuild vessels are constructed from scratch. Irrespective of the market owners’ play in, the importance and role of finance cannot be overemphasised.
“According to the Petrofin Index for Global Ship Finance, the top 40 banks lending to shipping in 2023 was US$284.27 billion, the total global bank lending of all banks, including local banks approached US$375 billion in 2023. Whilst a cautious and indicative figure for global ship finance, including all forms of lending – leasing, export finance and alternative providers – is approximately US$600 billion,” he said.
He added that these amounts are huge and significant and underscore the key roles of financial institutions including insurance institutions in the acquisition, construction and operations of vessels globally.
He added that ship owners’ and prospective players must ensure a proper understanding of the dynamics that lead to success in the constantly evolving maritime sector.
“Shipping is a hugely capital-intensive activity, and accessing financing is key for acquisition and construction activities. Irrespective of the market owners’ play in, the importance and role of finance cannot be overemphasised.
“The need to have fully compliant vessels trading internationally is of paramount importance and all stakeholders must understand the ever-changing dynamics to ensure compliance right from the point of conceptualising the acquisition or construction of the vessels”
Speaking further, the NSML boss pointed out the importance of financial institutions including insurance institutions in the acquisition, construction and operations of vessels globally.
Meanwhile, the President of AMJON, Paul Ogbuokiri said that the theme of the event was carefully chosen to capture intendment of the association which is to bring the regulators, the investor and the financiers and insurers on one table to find solution to this challenge which is retarding the growth of the Nigerian maritime industry, which of course has hindered development and exploitation of the Nigeria’s blue economy resources.
“With the coming of the Ministry of Marine and Blue Economy, and specifically noting that the Nigerian Government is looking to diversify the economy to boost revenue and putting an end to the country’s status; the time all hands must be the deck to develop the Nigerian maritime industry is now.
“I won’t end this short speech without specially thanking the NLNG Shipping and Marine Services Limited (NSML) for collaborating with AMJON to make this event possible,” he said.
