Reasons commercial banks struggle to finance maritime projects —Master Mariners

THE Nigerian Association of Master Mariners (NAMM) have listed high loan delinquency, currency fluctuations, economic volatility, security concerns and regulatory requirements as major reasons commercial banks have struggled to finance maritime related projects in Nigeria.

Speaking to the media during a lecture held at the NAMM Secretariat, Chairman of Genesis Worldwide Shipping, Captain Emmanuel Iheanacho, revealed that eight Nigerian banks offer ship financing support to maritime organisations.

According to Captain Iheanacho, “There are eight Nigerian banks offering ship financing options to Nigerian ship owners. They are Zenith Bank, Guaranty Trust Bank, First Bank, Access Bank, United Bank for Africa, Union Bank, Fidelity Bank and Sterling Bank.

“These banks have specialised maritime desks or divisions, offering tailored financial solutions to ship owners, operators and other industry players. These banks offer the following: Ship mortgage, Term Loans, Lease Financing, Asset-Based Financing, Syndicated Loans, Ship Repair Financing, Working Capital Financing, Export-Import Financing, and Vessel Financing.

“However, despite the availability of these financing options at the banks, the interest rates being given by these banks is not competitive compared to what foreign shipowners get from banks in their own countries.

“The best interest rates we get in Nigeria is between 9 percent and 14 percent which is being offered by Guaranty Trust Bank. Zenith Bank offers 10-15 percent interest rate; First Bank offers 10-16 percent; Access Bank offers 9-15 percent interest rate and UBA offers 10-16 percent interest rates, all per annum.

“These are the best we get in Nigeria when our foreign competitors get as low as 4 percent interest rate per annum. This is why issues like high interest rates, short loan tenors, collateral requirements, risk perception by banks, forex fluctuations and limited access to international funding is a major reason why indigenous ship owners are struggling to raise funds from commercial banks.

“Aside these financing options, the Federal Government also enacted the Ship Acquisition and Ship Building Fund (SASBF) and the Cabotage Vessel Financing Fund (CVFF) to help raise fund to boost indigenous capacity. However, those funds have not been disbursed but are there doing nothing.

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