A former Minister of Interior, Captain Emmanuel Iheanacho, has decried the high interest rates charged by Nigerian banks, which he said has been inimical to the development of the shipping sector.

Iheanacho also said that banks in Nigeria lack sufficient knowledge of the shipping sector, and are therefore not sufficiently equipped to grant loans for the acquisition of ships and other critical maritime assets.

The former Minister and Master Mariner said this on Saturday while delivering a paper at the quarterly seminar of the Nigerian Association of Master Mariners (NAMM) in Apapa, Lagos. The theme of the seminar was “Cabotage Financing”.

Captain Iheanacho, who is also the Chairman of Genesis Worldwide Shipping, said while banks in other countries charge about 4% on loans granted to ship owners, some Nigerian banks charge as high as 16%.

He said some of the major commercial banks that offer ship acquisition loans in Nigeria include Zenith Bank which charges 10 – 15% per annum; GT Bank which charges 9 – 14% per annum; First Bank (10 – 16%) and UBA (10 – 16%).

He said the high interest rate charged by the banks has made it difficult for indigenous ship owners to acquire vessels and be competitive under the Coastal and Inland Shipping (Cabotage) Act 2003.

He said the Cabotage Act was enacted to address concerns such as reserving coastal trade for Nigerian-flagged vessels, establishing requirement for vessel ownership, crewing and management but that the success of the law has been hindered by many factors including high interest rates, short loan tenors, risk perception by banks, ship financing expertise, foreign exchange fluctuations, corruption and bureaucratic hurdles, and limited access to international funding.

“The desire to participate in all aspects of shipping operations and international shipping is crucial and this takes us to the buying of cabotage ships. However, there are other areas that we refer to as cabotage but they are not. They are coastal vessels, supply vessels and off- shore vessels on Nigerian waters.

“We have worked in Nigerian companies and participated in indigenous trade, so there is a need to enhance our capacity for owning and operating ships.

“This campaign should be maintained and taken to the level of participating in international shipping. However, we need to buy vessels depending on the trade involved, and this takes us to the opportunities available for funding shipping provided by the government,” he said.

Also speaking, the President, Nigerian Association of Master Mariners (NAMM), Captain Tajudeen Alao, called on the Nigerian Maritime Administration and Safety Agency (NIMASA) to stop pocketing the three percent levy it collects on cabotage operations. He said two out of the three per cent levy is meant to be warehoused into the Cabotage Vessel Financial Fund (CVFF) account for shipping development but has not been used for the purpose.

Alao called on the Federal Government to immediately commence the process of disbursing the CVFF to Nigerian ship owners to enable them acquire ships.