In Nigeria, shipping is an industry with the potential to be a major revenue earner for the country. But unfortunately, the country has not been able to tap the full potential of this industry for the simple reason that activities in the industry are dominated by a few foreign companies. However, the federal government has made some interventions that are expected to correct this imbalance.
Before the enactment of the Cabotage Act to address the challenges associated with shipping in Nigeria, the maritime sector was in a precarious state, characterized by ineffectiveness. The act was therefore introduced to stimulate, empower and reposition indigenous shipping companies for active participation in sub-Sharan shipping transactions.
Bank lending has proved to be one of the most reliable and sustainable sources of ship financing. Although shipping is a cyclical industry, bank financing has been consistent, even during periods of economic slowdowns. It is easy and convenient for shipping companies to obtain bank loans using vessels as collateral, and for decades, they have been using this option of financing. However, this source of financing seems to have dried up in recent times.
There is also the option of capital market financing. The capital market is critical for the promotion and enhancement of the growth of the shipping industry. Apart from the capacity to create corporate value, it acts as a qualified intermediary in providing funds needed to finance new investments and also enhance growth. The capital market remains a viable financing alternative for shipping companies.
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Source: GuardianNigeria - 🏆 1. / 94 Read more »