The Managing Director/CEO, Seatransport Services Nigeria Limited, Aminu Umar, in this interview, told Eromosele Abiodun how high interest rate and short-term loans from Nigeria banks are impacting negatively on the shipping and manufacturing sectors. He also supported the Nigerian Ports Authority’s decision to dismantle the secured anchorage area. Excerpts:
The Apapa traffic gridlock has defied all efforts to resolve the situation. Can you say operators in the sea port have lost hope in what the task team is doing?
For sure, I think that the main thing is that the task force is there to make sure that there is no traffic congestion or that there is no chaos as we are seeing it today. If for the past two weeks the chaos is back worse than the way it used to be, then I don’t think it is all about losing faith. It is not that the task force has failed and it is either they are not doing their job or something has happened that created more problems that they cannot solve. Our major sadness is that this is the premier port of Nigeria. About 80 to 70 per cent of vessels that come to this country come to discharge cargo in either Apapa or Tincan and you don’t have access roads. If I tell you how much it costs to move just one container, it is extremely expensive and it is adding to the cost of every good and service that comes into this country and goes out of this country because the same way the ship that is discharging imported cargo is the same that is loading exporting cargoes out of the country. How do you now say that you are going to improve other sources of revenue in exporting goods and commodities which is not oil? So it is going to be almost impossible. We believe that it is not about the task force. Everybody must put his hands on deck. That route has to go clear and clean. If you look at the developed world, the port roads where cargo go is almost the easiest roads you can access because that is where the revenue is coming from. Where somebody is generating revenue, you have to make it easy because you are generating money. So that you can go easily and easily out so that he pays for what you are going to do there and that is where you generate employment. We are facing a big situation, who knows the danger that is there because the trucks are sitting on a bridge that is not supposed to be a parking area for trucks.
Talking about the cost of doing business, the Nigerian Ports Authority (NPA), recently announced the dismantling of the secured anchorage because of cost. What is your view about this?
I think we would look at it from two angles. I remember some years back, I think before this government, when this secure anchorage approval was given, many of the ship owners particularly Nigerian ship owners raised objection, saying that it is not supposed to be. The primary responsibility of the NPA, NIMASA and the Nigerian Navy is to have a secure anchorage in the country. We have seen it all other West African countries. There is nowhere that the private sector runs a secure anchorage. It is not done anywhere in the world. However, at that point in time the government gave this concession. Presently today, I don’t think there is any Nigerian ship owner that is utilizing the secure anchorage. I believe the international ship owners do not feel secure at the anchorage that belongs to the NPA, NIMASA and the Nigerian Navy. So they prefer to have a special anchorage that makes them feel more secure where they see the patrols being done because of the frequency of attacks outside the Nigerian waters. That is why the SAA has been operating for years. Just like you said I noticed the issue between the NPA and the secure anchorage operators and the Nigerian Navy. Recently, I was in a forum where the Nigerian Navy said they never gave approval for that. But I think for us, we want our anchorage to be secure. It should be part of money we pay always to NIMASA and NPA and that is what is obtainable all over the world. So, it is not only in Nigeria. Any anchorage anywhere, particularly West African countries like Togo and Benin that is what you have. It is under their port when you arrive they tell you where to park. It is like arriving this office, the security tells you where to park. You are supposed to be under the security of this office and that is how it is supposed to be all over the world. So, I do not want to question why the government gave it out at the time, but now they have decided to revoke it. Actually, we as a company, have never used it. The international ship owners have been using it and it has been because it gives them the security they believe they should get here.
In line with the decision of the NPA, how secure are our waters?
If you are looking at comparing maybe four, five years ago with what is presently happening, we compare it in terms of anchorages not just one place. We look at Lagos, Warri, Bonny and Calabar. These are the anchorages we have. Attacks, sea robbery which was frequently happening in Lagos before has dropped. The question then will be which of the anchorages we are talking about because there are two anchorages now in Lagos; the secure anchorage position and the Lagos anchorage position, which is run by NIMASA and the NPA. What we are saying is, the Lagos anchorage there is significant drop in illegal activities but we are saying we want more because again, compared to other West African countries, which are our neighbours, the control and patrolling are more in those countries than in Lagos anchorage. If you go to Bonny anchorage, nobody will drop anchor at the anchorage because it is not secure at all. You can only reach there particularly at daylight. There are anchorages in Nigeria you cannot go during night time. You can only reach at daylight and must leave before night fall. No vessel can drop anchor there and spend the night. At Lagos, yes, vessels are dropping anchor. We have two anchorages in Bonny, the inner anchorage and Bonny outer anchorage. The inner anchorage is where NLNG is and that is secured. Vessels can only go into inner anchorages. The inner anchorage is inside the pilot district. So the pilot can bring you in as you are already in the port. On the outside, nobody drops anchor there, not even NLNG staff. When their vessels arrive, it does not wait at that place. It has to come inside straight. Nobody waits there. If you wait there, then you are on your own. That is the position. In Calabar, we have seen significant improvement of security in, it is very okay. Warri has been very okay also. There is almost no attack at all in Warri anchorage. So far, there is improvement but we want more. We want to see the patrols just like when you go to any other country outside Nigeria. You see it. You do not just hear. You want to see that they are doing it. If the police say that you are secured, you want to see them at least. It is not that you do not see anybody and you assume they are there.
Can you tell us some of the challenges that are hindering the growth of the shipping industry in Nigeria?
If you are going to look at the industry, I believe you have two categories, one ship owning and terminal operations. In the ship owning, our major bottle neck is financing. Secondly, are some of the government policies, fiscal and monetary policies that have put Nigerian ship owners at a disadvantaged position. Thirdly, we have inefficiencies that make the business to be almost impossible to operate. One of them is insecurity. Because of issues of insecurity, movement is restricted. If you have a vessel and you want to go to some places, movement is restricted. There are restrictions such as places you must reach in the day but cannot reach at night. So, because you cannot reach at night, you have to start stopping on the road in other to make sure you reach in the day and by then you have delayed almost a whole day. Sometimes, you reach and you cannot go out because you are going out at night and night will fall for you before you finish out. And if night falls, you are in trouble. All these create losses in time. Because in shipping any delay in time is a loss and somebody has to pay, either the cargo owner pays or the ship owner pays. In the tanker business, you have a situation where a place like Lome that has become so large and activity are high compared to our ports here. And 90 per cent of cargoes that go there are Nigerian cargoes. The reason they are there is because government policy made it mandatory for cargoes to load from there. You cannot bring the cargo to Nigeria empty because CBN policy restricts it. The situation supports us to develop other countries as against our own somehow.
What specific CBN policy mandates shippers to do transshipment?
It is the policy of opening a Form M. For you to import any oil product into Nigeria, you must open a letter of credit. If a vessel is coming all the way from Europe with a cargo and it reaches Nigeria and then from Nigeria you want to transship it, you are not eligible to obtain a letter of credit because the cargo is already in Nigeria. So the cargo must stay outside Nigeria and the only ports that are close to Nigeria that the vessel can stay are either Cotonou or Lome. So this is the policy, which is a CBN policy and that immediately made Lome a big hub of shipping in West Africa. Actually, bigger than Nigeria but 90 per cent of the cargoes there are Nigerian cargoes. We have discussed this many times in many forums, our association and sister associations, NIMASA has even gone with a committee to discuss with CBN. The committee on Nigerian Fleet Development has discussed with the CBN, but up till now, nothing has happened yet. One of the policies again is the issue of duty, the taxes are being imposed on a Nigerian ship owner. You have the duty on the ship and the duty on company is something that is not obtainable anywhere in the world. There is nowhere in the world that they do that but in Nigeria we are paying more than any other country in the world. As a Nigerian ship owner, you are already placed at a disadvantaged position to compete with international ship owners whose payments have been waived for them in their own countries and they come and do business in Nigeria at a subsidised rate which we don’t have in our own country. That is why you see that the industry is not developing with all the talk and all the people who want to invest. When you sit down and look at the figures, it does not make sense. Shipping is a capital intensive venture, assets are very expensive and it ultimately means long term investment. Unfortunately for Nigeria, it is difficult for our banks to fund highly capital intensive assets for long term. They are finding it difficult because there are so many factors the banks complain about. Very few banks have the balance sheet to fund these kinds of assets. That is why with all the number of ships and cargoes that Nigeria controls, we have almost zero Nigerian players in the international field for shipping and we are one of the biggest destinations of either importing or exporting of cargoes. We don’t have those capabilities because our banks have not been able to put funding in place.
What suggestions do you have for banks who are reluctant to fund ship owners?
First, the banks have to be able to provide long-term finance. It is very important for the business. They should not look at the ship owner and expect him or her to pay in three years. Shipping is 10 years, 12 years. You talk to all the big ship owners in the world, they are being financed to pay in 10 years, 15 years. But in Nigeria and they cannot cross four years even. And when you cannot cross four years, the figures that the person is supposed to pay back makes it impossible for him because the rate of return he generates cannot be able to pay what he is required to pay. Secondly, the interest rate for borrowing in Nigeria is one of highest in the world. You cannot compete when foreigners are getting loans at one per cent and you are getting at 25 per cent. So, ultimately, if someone gives you at 25 per cent, it means in four years, you have paid two times the loan. There is nowhere in the world where they are supposed to make times two of that money from you. They are supposed to make something from the money but in Nigeria, you see that the facilities are for them to recover the money times two of and that is what is happening to most of us. If you look at it critically, it is not only in the shipping industry, our manufacturing sector is also affected. When we cry about manufacturing that is not working in Nigeria, it is because the banks cannot fund it. It is also capital intensive because manufacturing means that a person would have to pay back in 10, 15 or 20 years. But the banks are not able to give that and the interest rates are too high. Manufacturing cannot cope that is why they are closing also. The ones that are having money from Development Banks, you can see that they are having too much problems because of the interest rates. So really, that is the major issue.
The post Umar: High Interest Rate Killing Shipping, Manufacturing Sectors appeared first on THISDAYLIVE.