Reasons Why banks stopped funding ship acquisition in Nigeria

THERE are indications that banks have stopped financing ship acquisition in Nigeria  following underhand dealings leading to their loss of funds to bad loans in previous deals.

Vanguard Maritime Report gathered that banks were willing to give loans for ship acquisition in the past until some shipping operators devised a means of using the loans to get old refurbished ships at far less than the amount collected from the banks and afterwards, abandoned such ships on the grounds that they were serviceable.Vanguard Maritime Report was reliably informed that several banks were affected before they realised the fraudulent ship owners schemes.

A source in the Nigerian Maritime Administration and Safety Agency, NIMASA, told Vanguard Maritime Report that apart from a few ship-owners, majority were involved in the fraudulent deal.

The source explained that the banks’ losses ran into hundreds of millions of US dollars as such transactions are dollar-denominated. He stated: “Banks no longer want to invest in shipping because of failures and frauds in previous investments; the shipowners get refurbished ships, trade with it for a while before paying off the crew and abandoning the vessel.
He stated: “Banks no longer want to invest in shipping because of failures and frauds in previous investments; the shipowners get refurbished ships, trade with it for a while before paying off the crew and abandoning the vessel.

“When the banks approach these shipowners they look at your collateral. They take possession of the vessel. That is why there were several abandoned ships then,” the source noted.

When contacted, President of the Ship Owners Association of Nigeria, SOAN, MkGeorge Onyoung, said he was not interested in the issue.

He said: “The story does not make sense. If you go and borrow money to buy a house and the roof is leaking, the paint is coming off or in fact, it is not a good house, you who borrowed the money have to deal with it. “How does that benefit the ship owners or the industry. This story is not an interesting one. You don’t call me on a weekend and expect me to talk about everything and anything,” he said.

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