Shipowners kick over 8.5 per cent bank rates for $350m CVFF loan

Indigenous shipowners have kicked over the request by commercial banks to charge 8.5 per cent on loans for the $350m Cabotage Vessel Financing Fund (CVFF), stating that anything more than 7.5 per cent is on the high side.

Recall that the Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr. Bashir Jamoh, while fielding questions from newsmen on Tuesday, said the agency had rejected the 8.5 per cent request from commercial banks.

Speaking exclusively with the NIGERIAN TRIBUNE on Wednesday, Founding President of the Nigerian Shipowners Association (NISA), Chief Isaac Jolapamo said that any interest rate higher than 7.5 per cent will be deemed to be too high by indigenous shipowners.

According to Chief Jolapamo, “8.5 per cent rate from commercial banks for CVFF disbursement is on the high side depending on what individuals wants to use the money for.

“8.5 per cent is on the high side of single digit. What everybody is looking forward to is on the middle side of single digit, which is what is applicable elsewhere. When you say the first quarter of any amount by 10, it’s like you are talking about 25 per cent of 10 per cent, which is going to be a 2.5 per cent interest rate.

“The middle of the interest rate is 5, so we are looking at something around 7.5 per cent. The 8.5 per cent is on the high end of the interest rate calculation. It has gone past the three-quarter percentage of 10.

“For the CVFF disbursement, we should be looking at an interest rate between 5 per cent and 7.5 per cent.

“8.5 per cent is okay if it is below 10, but the ideal situation will be based on what individual shipowners are doing with the money. What is the cash flow of each ship owner? These are the considerations that should be looked at when coming up with the interest rate for the CVFF.”

Also speaking with the Nigerian Tribune, another indigenous shipowner wondered why NIMASA is not allowing shipowners to negotiate with commercial banks directly.

In the words of the indigenous shipowner who wouldn’t want his name in print, “I expect NIMASA to allow indigenous shipowners to negotiate with the commercial banks ourselves. We are talking about the money that we contributed.

“How can the banks be coming up with an 8.5 per cent interest rate for a fund that is absolutely free. The money is with NIMASA and the Maritime Administration will be giving it to the banks free of charge. All what the banks are bringing in is 35 percent contribution. Why should the banks slam such high interest rate on a money that is been given to them free of charge?

“We indigenous shipowners contributed the fund. The entire money was generated by us. NIMASA should allow indigenous shipowners to negotiate directly with the banks. NIMASA, ordinarily should just be the custodian of the fund. NIMASA should not be negotiating on our behalf. The fund belongs to us, not NIMASA.”

The approved commercial banks acting as Primary Lending Institutions (PLIs) for the disbursement of the CVFF are Union Bank, Polaris, United Bank for Africa (UBA), Zenith and Jaiz bank.