Alhaji Aminu Umar

Alhaji Aminu Umar
Thank you for having me.

We have to accept and acknowledge that we have a capability gap in terms of the percentage of Nigerians having the opportunity or assets that are required for providing the services within the industry or the market that requires it.

So, I think we accept and acknowledge that this gap is there.

The reason why we have always been part of the advocacy that we have been pushing forward is that one of our biggest challenges in acquiring those assets is access to capital.

It is not very easy to access the capital that is required for such kind of investment because, as I am sure you know, shipping assets are very highly priced.

Because they are highly priced, it is not easy to secure the capital. Even if you see the availability of capital, the cost of the capital is super high, which makes you totally uncompetitive.

It is not comparable to what is obtainable in other parts of the globe where they are having access to capital and the cost is very cheap.

So, we have not been able to secure or get to that level yet. This is the reason why you see this gap and, so far, it has not been able to be covered.

On addressing the capability gap, I think number one is to have government come in to help us with access to capital.

I think in the cabotage space or trade now, the government has taken the initiative of CVFF. The President has given the directive and the Minister has confirmed the directive.

The moment that fund is able to reach the right applicants, I am sure we will see in the cabotage market that there will be more participation of Nigerians in that space.

So, we believe that not only the cabotage market should be getting that intervention. We also hope to see similar intervention or any kind of scheme that will help where Nigerians can be able to participate in the global shipping business.

We can take a leaf from advanced countries such as the USA that have similar kinds of schemes, and China also has similar kinds of schemes, where they help their local entrepreneurs or shipowners with access to capital that they can be able to invest and do global trade.

I think we can take a leaf from what they have been doing there.

Alhaji Aminu Umar

I think on this one you have already captured it.

What all financiers want to see as part of the document to be able to give you access to capital is that you have a contract that covers the time he will completely collect his funds back.

This is long-term contracts for shipping because, like I said, they are very highly capital intensive.

Companies like Dangote, which we thank him for bringing this opportunity in Nigeria, where today we see cargoes originating from his refinery to all over the world, not only in Nigeria but in West Africa, the African continent or the entire globe.

I think if Dangote and any other major cargo owners are open to signing long-term contracts, it will help the Nigerian shipowners in particular to be able to have access to capital and be able to provide them with the required assets they need.

This is a win-win situation for both the Nigerian shipowner as well as the cargo owner, which includes Dangote Refinery.

Because if you have the Nigerian shipowners here, the pricing for freight will be less expensive compared to the present ships being used that are internationally owned because they would have added their premium, they will add their war risk insurance on top of it, and that will increase their freight rate per tonne.

So, if they are able to unlock this, I am sure that they will see a drop in their freight, and that will be a win-win situation for them as well as for the economy of Nigeria.

Alhaji Aminu Umar

I think, one, the banks have to first of all understand this business.

I think there is a need for the banks to invest in creating the know-how and seeing it as part of their business unit that they can develop as a product.

Presently, we have very few, if any, that understand the business as compared to international banks which are operating in Europe, USA or Asia, who have very huge departments or divisions for ship finance only because they have invested in creating the know-how.

With the knowledge and resources to understand how it works, they are able to create the product that matches what the market needs.

So, I think one is the bank to create that know-how and create the package and possibly secure where they can secure those kinds of financing to be able to give it out to potential shipowners.

I think this is the major thing that is creating a bottleneck.

They have to look at their structure to be comparable to elsewhere in the world because if the financing is far better in Europe and far better in Asia and we are not competitive, there is no way.

Remember, the market is global.

Shipping market is global.

International shipowners have their capital cost low. Their principal capex at the end of the day is low. They are able to give better pricing.

The cargo owner will go for the freight that is less. He will not decide based on the fact that he likes you.

He will not decide to take a freight that will add to his cost of goods and say, you take it because I like you, when the other person is giving him a lesser freight which will give him a better return on his business.

So, the banks must have to look at the products that are being given all across the globe and be able to say, we can match whatever is given in Asia and Europe. We can also match it here.

So, if they are unable to match, then it will be difficult to have Nigerian shipowners venture into it and take the loan at whatever cost, then come into the market and say they can compete with a person who gets his own capital at a very low cost.

It will be very difficult for the Nigerian to survive.

Alhaji Aminu Umar

Well, I think since we commenced this conversation, we have looked at it from debt financing. I think we should look at other opportunities in financing.

So far, in Nigeria particularly or Africa, we have not matured enough in our market of shipping to go to or source the capital from the capital market.

So, we believe the next generation should be able to grow or take it from where our generation has been able to reach and now explore the opportunities in the capital market, where you will have a very huge capital access and less cost.

Presently, most of the shipping companies have not been able to structure properly to be able to access funds from the capital market that is available in Nigeria and the African continent as a whole.

I think the next one, we have seen that happen in America, Europe and Asia. That is where global international shipping is going.

They access funds from the capital market either through share investment or through bond market, which so far very few companies have that capability or structure to be able to access.

So, we think the next generation should explore those opportunities, which I am sure will avail to them as the capital market is also maturing more and expanding.

Alhaji Aminu Umar

I will take first the maritime data, which I had made a statement relating to it at an event.

I think everyone in the industry has realised it and has seen the gap many years ago, particularly the access to data and long-term data that we can be able to review to see what are the seasonal changes in terms of cargo requirement or in terms of ship requirement in the country.

We realised that there is no data that is there to access.

Yes, there are organisations that take records, but no one has been able to put it together as data and is able to look at it.

I can testify to that because we have tried individually as a company to invest, look at it and put our resources and try to do it, but it is more of an individual company doing it.

We think that there is a high need and this is why I support the initiative of the Director General of NIMASA for trying to create that maritime technology innovation incubation scheme.

I have undertaken that if anybody is looking at investing in this maritime data, we are ready to work with them and we will look at even investing in it because it is something that I am very passionate about.

I would love to see some of this young generation look into that data. We do not mind to sit with them and guide them on how they can get it together and be able to bring out the good information that is required.

We will work with them on that.

Really, we do not have any organisation that is keeping those records. Maybe they have them and are recording them somewhere, but nobody is having that data to say, like, we take a year now or take a twelve-month period and say, what are the shipping requirements?

What are the cargoes that come out of Nigeria? What are the cargoes that are coming into Nigeria at a particular month? During the dry season, what is coming more? What is coming less?

During the rainy season, what is coming in more? What is coming in less?

What are the percentage kind of vessels that are coming into the country in every month?

We can go back many years and say we have seen this. This is how the trend happened and because of that there is a change in the volume of vessels and activities that come in at this time and go out at this time.

I think this is something we are not able to get, this analytics and interpretation or analysis.

So, we look forward to the next generation. We encourage them to look into it and it is going to become something that is sought after across the globe for decision making, not only for shipowners but for cargo owners, potential traders, even financiers who are looking at it.

They will want to know.

Alhaji Aminu Umar

First, it is a very big achievement by the Honourable Minister of Marine and Blue Economy.

I congratulate him on behalf of the Nigerian Chamber of Shipping as well as the Board and Council of the International Chamber of Shipping for achieving this great feat.

I think it is something we should all celebrate.

This lifting is more like a check by the USA. It is not only that it is affecting Nigerian-owned or Nigerian-flag vessels. No. It affects any vessel that is originating from Nigeria.

So, even if you are an international owner who loads a cargo from Nigeria or your last point of call is Nigeria, the moment you arrive at the shores of the United States, you must be subjected to some security checks.

I want to inform you what it means.

You are going to wait and then wait for the security checks.

In shipping terms, it means between you and the person who hires you, that is the charterer, who will now place you under off-hire.

This means you are not on hire yet. You are losing money.

So, in shipping terms, when somebody says you are waiting, you are losing money. Nobody will pay for whatever cost you are incurring.

Nobody pays until the United States Coast Guard comes onboard your ship, does their checks and, if they check and they are okay, then you are back on hire.

More or less, you tender your notice of readiness and then you can now start before the port can now reschedule you to berth.

So, if the Coast Guard has any reason not to give you the approval, then you are off-hire until you get their approval.

So, it is a loss that owners incur.

This is causing a lot of financial losses to ship and cargo owners, and it is creating so much fight between the ship and cargo owners because that creates a lot of conflict.

So, this is a very huge achievement that the Minister and his team were able to get us out of.

You will now see a lot of shipowners, whether Nigerians or global shipowners, will not mind to make a port call in Nigeria before going to the United States.

Before, even if they were scheduling the voyage, they made sure they did not come to Nigeria before going to the United States, so they would have created a diversion that would avoid Nigeria first.

Which will cost them in bunkers or even make Nigeria lose a lot of money because this opportunity will not come. The potential businesses it will bring.

So, it is a great achievement and we look forward to more from the Minister to better shipping business in Nigeria.

Alhaji Aminu Umar

I think a lot of few things need to be put in place.

One is to discuss how we can have access to capital and bring down cost of capital.

Two is to see how we can create human capacity building to build this capacity, because we need the seafarers.

If we are investing in ships, the ships need to grow, the people that need to work on the ships, not only the ships but also work in the offices.

Because the people who are going to work in the offices are people who have worked on the ships who now are able to man the offices and supervise and manage those shipping businesses.

Number three is for us in these cargo opportunities we have advocated for.

Number one, the Cabotage Act needs to be implemented and the implementation of the Cabotage Act needs to follow the main purpose of the Cabotage Act, which is to support indigenous shipowners.

So, the implementation of the Cabotage law or Act should reflect what it is made for, which is to support the Nigerian shipowners, not that cabotage should be put in the same basket with international shipowners.

The Cabotage law has to be implemented.

In one of the forums I discussed this.

When you see what the developed nations have done in order to develop their shipping capacity, it is because they are implementing their own cabotage law with all strictness.

We have seen it in China, Europe, in the Mediterranean, which is Turkey, the Black Sea. There is no waiver at all for a non-indigenous shipping company to operate in these countries.

Whatever they can do to support the local is what they do.

And this is what we have seen in all Asian countries, all Mediterranean countries, all European countries as well as in the United States.

So, this has to be done. It has to be deliberate and it has to be done properly and it has to be done to support the local shipping industry.

Two is the cargo reservation.

There should be an encouragement for all cargoes that are meant for or in the control of government to be taken by a Nigerian local company.

That is what every other country is doing.

We are not the first. Go to China. Every cargo that is meant or related to the Chinese government or funded by the Chinese government or supported by the Chinese government can only be transported by a Chinese shipping company.

China is number two in the world. If they can do that, go to Gulf countries, Saudi, Kuwait, UAE, USA. That is what is done.

So, Nigeria has to apply that to our industry because that is what needs to be done to support the local industry to be able to grow.

If we want to be like China, USA, we will have to do what they are doing.

I will encourage our leaders and regulators to look at what is done elsewhere.

We have the Cabotage law that is existing. We should follow it to the letter.

“PROMOTE, PROTECT AND PROVIDE”

“In short, the Cabotage law says PROMOTE, PROTECT AND PROVIDE for local shipping companies.”