The Nigerian Export-Import Bank, NEXIM, is advocating alternative sources of funding for vessel acquisition, the bank said it is doing so because the Cabotage Vessel Financing Fund, CVFF, alone cannot meet the asset demands of indigenous shipping firms operating in the nation’s coastal trade.
Speaking at the just concluded Stakeholders’ Consultative meeting on the Cessation of Cabotage Waivers organized by the Nigerian Maritime Administration and Safety Agency, NIMASA, in Lagos, the Managing Director and Chief Executive of NEXIM Bank, Mr. Abubakar Bello said that the maritime sector is key to trade and the economy, as there is a strong correlation between increase in growth of Gross Domestic Product, GDP per capita and the closing of infrastructure gap.
It added that shipping is also instrumental to the development of the external sector of the economy. Bello who was represented by his Special Assistant, Mr. Hope Yongo stated that maritime facilitates promotes trade connectivity and market linkage, just as it also promotes competitiveness and enhances market diversification.
He opined that if the industry is properly coordinated, it would encourage integration into regional and global value chains, thereby facilitating industrialization and technology transfer. He explained that NEXIM’s role in the maritime industry, particularly the shipping sub-sector, involves support to the maritime sector through either its developmental role in the regional Sealink Project or various funding supportive roles, such as Financial Advisory and Structured Trade and Project Finance.
Others include, Export Credit Agencies financing arrangements; which involves lines of credits window syndication, joint financing arrangements and provision of risk mitigation instruments.
The Bank’s chief executive in appraising the maritime industry, noted that the National Bureau of Statistical data showed that the annual GDP contribution of the transportation sector was less than two per cent with the shipping sector contributing less than 0.1%.
Explaining further, Bello said that there are diversified sources and types of funding to finance ship acquisitions and or any maritime assets, some of which include Bank Loans, Asset Acquisition, structured project finance, co-financing, syndication, guarantees / syndicated guarantees and forfeiting arrangement.
He, however, warned that Commercial Bank Loans may be attractive if funding would be for a long tenor or through a concessional line of credit and/or loan syndication arrangements. Bello also said that Export Credit Agencies financing arrangements like Buyer’s Credit, Seller’s Credit and Export Credit Insurance are options local players can take advantage of to grow their businesses.