SEYI OLUYEDE

We need to move from just being a bucket of shipping services to becoming a provider of those services. We need to progressively become ship maintainers and shipbuilders.

Capacity is not just about the number of vessels or putting ships on the water. It is the ability to win a charter, operate a ship safely, repay loans on time and repeat the process. If you own a vessel but cannot run it commercially, there is no value in that ownership.

 Competence matters more than tonnage. We need competent people in chartering, ship management, voyage estimation and protection and indemnity insurance. These are areas where the industry needs more capacity. We have to build our people, our ships and our management capabilities together.

 We should start where Nigeria has opportunities, such as coastal tankers, offshore support vessels, barges, short sea shipping and bulk shipping close to the cargo. We can use the Cabotage regime and progressively build the capacity to operate in international waters.

 We need to build a track record and evaluate our initiatives. A contract performed successfully and on time becomes the basis for securing another contract and financing another vessel.

 When freight and insurance payments go abroad, we lose foreign exchange. Nigerian owned tonnage carrying Nigerian cargo is a form of import substitution for services. We must build the capacity to retain more of that value within the country.

Government, as regulator and policymaker, should help reduce risk. The private operator must carry the risks it can assess and manage. We must not bite more than we can chew.

We need policy consistency. Policies should not change with every administration. Where there is funding through the Cabotage Vessel Financing Fund (CVFF) or other maritime financing mechanisms, there should be a transparent process, clear conditions and proper monitoring of repayment.

Government should also reduce port and clearance costs, turnaround times, cargo dwell time, demurrage and illegal charges. These costs affect the competitiveness of Nigerian shipping companies.

We need access to foreign exchange and long tenure funding. Government can also use cargo under its control as an anchor for Nigerian tonnage. If government has cargo to move, qualified Nigerian operators should have an opportunity to compete for it. 

The private sector also has responsibilities.

 Investors must be willing to commit their own money and develop sound business plans. It should not be about rushing to apply for the CVFF. Operators must understand commercial scale, chartering, cost control, safety requirements and the need to secure bankable contracts and reliable cargo relationships. 

Shipping is an international business. We must be competitive.

 Government should not own and operate ships. We should learn from the experience of the Nigerian National Shipping Line, which operated from 1959 to 1995. Government should be an enabler, not the owner of the business.

 Any support should have a defined period and measurable conditions. Waivers, guarantees and cargo preferences should be tied to performance, with clear timelines for ending the support.

 We also need an accountable structure that brings the relevant institutions together, including NIMASA, the Nigerian Ports Authority, the Federal Ministry of Marine and Blue Economy, Customs and the Nigerian Content Development and Monitoring Board, among others. We need to monitor the process from beginning to end and publish performance data.

 There should be no blame game. Government should de risk the environment, while the private sector must perform and contribute to the economy.

Ship repair is where money and skills can be developed, while shipbuilding shows whether the wider ecosystem is working. We should prioritise ship repair first and then build towards shipbuilding.

Vessels need to be dry docked and maintained. When we do not have adequate local facilities, Nigerian vessels go to places such as Takoradi in Ghana and Namibia for repairs. The money we spend abroad could support local businesses and create jobs for marine engineers, welders, electricians and other skilled workers.

I recall that NIMASA issued a marine notice around 2019 relating to local construction under the Cabotage regime, covering certain types of vessels such as tugboats, barges, anchor handling tugs and crew boats. We need to examine such initiatives and understand how they can support local capacity.

 We can learn from countries such as Indonesia, Japan, South Korea and China. Building a ship repair and shipbuilding industry requires more than a yard. It requires steel suppliers, certified welders, marine electricians, engine dealers, surveyors, classification services and reliable spare parts logistics.

We can start small with tugboats, barges and crew boats. We should develop capacity in phases and support local yards where they can deliver the required standards.

 We can also learn from local content development in the oil and gas industry, particularly the work of the Nigerian Content Development and Monitoring Board. There may be opportunities to extend similar thinking to selected vessel types and repair services.

 We must also consider the cost of energy and operations. These are important factors in the competitiveness of shipyards.

 The objective is to build an ecosystem for repair, construction and eventually shipbuilding. When vessels are repaired abroad, we lose opportunities to develop local technical skills, retain spending and create industrial jobs. We should deliberately build these capabilities in Nigeria.

The sequence should be cargo assurance, then contracts, ship repair and shipbuilding.

 A ship is only operational when it is employed, has a contract, is insured, has a crew, is classed and earns more than its debt service. This applies whether the vessel was financed through the CVFF or another maritime loan.

 The pipeline against which our policies should be measured is important. Does a vessel have a contract? How does the operator intend to repay the loan? What opportunities are in the pipeline? We also need to match the vessel to the type of funding. Do we have the right vessel for the trade? What is its age and size? Is it suitable for the market it intends to serve?

 While efforts are being made to provide funding and acquire vessels, we must also examine the financing structure. What equity has been invested? How much debt has been approved? How much has actually been disbursed? We must move beyond approvals to track disbursement and results.

 How is the vessel employed? What is its utilisation rate? What is the debt service ratio for the quarter, or the debt service coverage ratio? How is this being reported?

Failures often occur at financial close or when cargo has not been secured. Many policies focus on vessel registration but do not continue to examine how the vessel earns revenue. It is not enough to say we have registered a certain number of ships. We need to know how many are employed in gainful service, the duration of their contracts and their capacity to repay their loans.

 For a new operator, I would say that many Nigerian indigenous participants may not have the financial capacity to buy new vessels. Why not acquire good second hand vessels that are classed and surveyed, prove that you can deliver on contracts, and then expand over time? We should not become overly ambitious before demonstrating that we can perform.

 We should publish statistics on Nigerian registered vessels that are idle or not classed. This will help us measure what is happening in the industry.

 Another important issue is currency. If you earn in naira but take a loan in dollars, that is not viable without a way to manage the exchange rate risk. You can end up in a currency trap.

 Contracts and financing must match in currency, or the operator must have a credible way to manage the risk. We need to examine this practically.

 I read about Brazil’s Merchant Marine Fund, the Fundo da Marinha Mercante. We should study how its financing arrangements work and what lessons Nigeria can draw from them. I have also heard that Bangladesh increased its ocean going fleet from 36 vessels in 2018 to more than 100 within about five years, with tax incentives for imported ships. These are examples worth examining to understand how tax treatment can support indigenous shipping capacity.

Maritime Shipping & Ocean International Resources Limited is proudly a Nigerian indigenous shipping and logistics company with a bold vision to participate in the global maritime space. We are rooted in national pride and believe that we must be driven by excellence.

 We want to engage Nigerian seafarers. There is a gap, and we want to provide support wherever it is necessary. Nigeria has a pipeline of seafarers who can be deployed. I am sure you are familiar with the concern that our cadets do not have enough opportunities to obtain sea time. We want to contribute to addressing that problem.

 Our model is not to buy ships and then hope to find cargo. It is to secure cargo and build tonnage around proven demand.

 One of the services we intend to provide is the carriage of dry bulk, breakbulk, containers and project cargo. We have a vision, but we do not want to be overly ambitious. As I said earlier, we weigh the risks and consider how best to manage them.

 We want to start asset light and crew our vessels with Nigerian cadets. In that way, we can contribute to solving a national problem while building our business.

 We will separate commercial management from independent governance. One of the problems with the Nigerian National Shipping Line was the absence of a clear governance structure. From day one, we intend to build a commercially viable global shipping company with clear governance, so that people can see a model that works and is sustainable.

We believe there are market opportunities. Many Nigerian exporters complain about their cargo at our ports, including Apapa and Tin Can Island. 

 They face delays and demurrage, and their cargo can be deprioritised. Foreign liners may favour other, more lucrative routes.

 We see this as an opportunity to solve a national problem. A Nigerian exporter who needs to move cargo to Europe should not be left entirely at the mercy of foreign shipping companies.

  Agricultural produce, for example, is time sensitive. When it is delayed and reaches the end user in poor condition, its quality may have deteriorated.

 We want to help fill that gap by working with cargo owners, commercial banks and technical managers to build a formidable and reliable global carrier. That is the model we are working towards.

To move from policy to practice, we must take deliberate steps and be open with ourselves.

 Data is very important. Let us publish baseline data on Nigerian controlled ships that are actually trading. If companies have applied for maritime funding, we should publish the figures.

 If there have been disbursements, let us make them known. If there are impediments to disbursement, those should also be made public.

 Freight paid abroad represents a leakage from the Nigerian economy. Dry docking vessels abroad is another leakage. We need to identify the cargo available for international shipping in Nigeria, the major cargo owners, the routes and volumes, and who makes the freight decisions.

 We should then link these cargoes to Nigerian operators.

 Government should be an anchor for government cargo. We should identify state owned and government linked trade where Nigeria can nominate the carrier.

 Most of our exports are sold on a Free on Board (FOB) basis, whereas other countries may use Cost, Insurance and Freight (CIF) arrangements.

 The terms determine who arranges and pays for shipping. We need to examine where changes are commercially appropriate and how they could help develop Nigerian tonnage and retain more freight revenue in the country.

 We should open up suitable government cargo opportunities to qualified Nigerian operators, whether public or private. Let us publish baseline data showing how many Nigerian controlled ships are trading. If the CVFF window has been opened, let us publish whether there have been disbursements and explain the process. I heard that 99 people had applied for the CVFF. Has there been any disbursement? What are the impediments? What are the grey areas that need to be addressed? We need transparency so that we can measure and scale what works.

 Nigeria’s election to Category C of the International Maritime Organization (IMO) Council was an achievement. But that achievement must be backed by action. The IMO will eventually ask what Nigeria has achieved.

  Where are the ships? What capacity have we built?

 We must build tonnage by linking it to cargo. Government should work with cargo owners and open opportunities to qualified Nigerian operators. We can discuss national carrier status, but we must not put the cart before the horse.

 We should not say, “Find a vessel first, and then we will find cargo for you.” It does not work that way. Let us identify the cargo first, then identify the Nigerian operators capable of providing vessels for it.

We should also make domestic ship repair the default where the necessary capacity and standards exist. When you have the ship and the cargo, you must have a place to repair the vessel.

 As I have said, it is an ecosystem. We must build it and create momentum. We must address port delays, inconsistencies and other gaps that affect operations.

Indigenous capacity should help retain freight revenue in Nigeria. Ship repair should build technical strength, while shipbuilding should extend into manufacturing, engineering and industrial jobs.

 Government’s role is to grow the cargo pipeline, help build credibility around financing and establish a well run pilot programme. The private sector must perform when given the opportunity and demonstrate a business model that deserves to be scaled.