Chief Isaac Jolapamo

Ship finance loans: Nigerian banks suffer N5 bn bad debts

About N5 billion is hanging as bad debts from ship finance loans given out by banks in Nigeria.

A Shipowner, Chief Isaac Jolapomo, who is a shipowner and a former president of the Nigerian Indigenous Shipowners Association (NISA) disclosed this in an interview in Lagos recently.

He said the debt profile of ship finance loans in banks kept rising in spite of the strict appraisal processes and due diligence adopted by financial institutions in ensuring that only experienced shipping professionals access the funds.

Chief Jolapamo attributed the situation to the lack of jobs for indigenous shipowners, and added that it was not necessarily from the management of the funds.

“The bad debt in Nigerian banks today of ship purchases is conservatively, between three and five billion.

“Having owned and managed ships in the past three decades and half, I can conveniently say that ship ownership and management in Nigeria is not a profitable venture because of so many factors…we have put the horse before the cart.

“Go and check from NPA how much import they had last year, not one ton of that import came with a Nigerian vessel.

“Ask NNPC how much crude they exported last year, not one litre of that crude… Go to Central Bank and ask them how much they paid for freight in the last five years… If those things happen, then we are on the right path”, Chief Jolapomo said.

The former NISA president, however, urged government to step in and reverse the trend as the shipping sector remains strategic to re-jigging the economy, conserving foreign exchange and creating jobs.

“In which economy do you have that amount of debt profile in one particular industry and nobody is doing anything to turn it round? It could be turned round!

“Solutions are very easy; it is the willpower of government to say we want to do this.

Jolapomo who also stated that shipping stands on a tripod – vessels, funding and jobs- added that the struggle for Nigerians have been access to the numerous jobs available.

“Buying a ship depends on whether you have a contract to do with the vessel, if you don’t have a contract to do with the vessel; it is like you are committing suicide, except maybe you want to launder some money you have stolen from somewhere.

“If you want to go to the bank and borrow money to buy ship and then the ship stays there one day without doing jobs, you are in trouble, not to talk of months or years”, he stated.

He also stressed the need for the strict enforcement of the Cabotage law in order to stimulate growth.

“Why is Cabotage not working? I had about eight ships before Cabotage. Cabotage was launched on one of my vessels, we were doing well, but when we thought that we had gotten ourselves a law that will let us take what belongs to us, rather than taking the crumbs that we were taking before, we got it wrong.

“Instead of Cabotage to be made to work for the people it is meant for, it is working better for the foreigners.

“I will pay 15% duty to bring in a ship that I bought for maybe 15miilion USD, while a foreigner will just put down a deposit, a paper! 1% deposit for a vessel that is going to trade and he gets better jobs.

“Until such a time when we there is will power from policy makers to say this is our own let’s do it.

He said like the Asian government, the Nigerian government needs to take personal responsibility for and ownership of its shipping sector and shun international shipping politics if it will regain its place as a maritime nation.

He called for a holistic evaluation of trade policies as it affects shipping and the development of a sustainable national programme for manpower development and ship acquisition.

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