NIMASA: Maritime operators to get $700m funding for vessel acquisition

resources such as energy and food.

Nigeria’s

manufacturing sector shrank for the second month in a row in March as cash scarcity in Africa’s biggest economy hampered private sector activity.

The development forced output and new orders to drop at rates steeper than those of the preceding month.

The latest edition of Stanbic IBTC Bank Nigeria PMI, which measures factory activity in the country, puts Nigeria’s purchasing manager index for March at 42.3 compared to 44.7 for February.

That signals the second deepest plunge since the survey started more than nine years ago. A reading above 50 indicates growth but the one below that threshold points to contraction.

“The continuous decline relative to February reflects the negative impact of cash shortage across different segments of the economy over the past two months,” said Muyiwa Oni, head of Equity Research West Africa at Stanbic IBTC Bank.

“Currency in circulation declined by 58% in January 2023 to N1.39tn from N3.01tn in December 2022, while currency outside the banks declined by 72% in January 2023 to N789bn from N2.57tn in December 2022,” Mr Oni added.

The contraction also meant that both staffing levels and purchasing activities fell.

The survey noted that output prices rose “at the softest pace in almost three years,” while suppliers’ delivery times reduced after having lengthened in the previous month.

It further observed that widespread reports by firms indicated that customers were unable to commit to spending in the face of the cash crunch, echoing a broader deterioration in business conditions within the private sector.

One of the major implications of that was a considerable plunge in new business, the survey said.

Challenges in paying workers wages were cited as a key reason companies chose to cut staff. Another was lower workloads.

“The cash crisis acted to dampen confidence in the private sector in March, with sentiment the secondlowest in the series history,” the survey stated.

The Nigerian Maritime Administration and Safety Agency (NIMASA) says operators in the maritime sector will get about $700 million to purchase ships.

Bashir Jamoh, directorgeneral of NIMASA, disclosed this when he spoke at the maiden annual lecture of the Institute of Maritime Studies, University of Lagos.

The lecture was themed, ‘from crude to blue — Nigeria’s blue economy: the imperative of maritime domain awareness and good governance’.

‘Blue economy’ is an economic system that seeks to preserve marine and freshwater environments while using them in a sustainable way to develop economic growth and produce

Jamoh said Nigeria was already engaged in the blue economy; but said what has to be done is to ensure its sustainability.

He added that about $700 million has been set aside for the cabotage vessel financing fund (CVFF).

The fund, according to Jamoh, aims to support indigenous ship acquisition capacity, and to provide financial assistance to domestic coastal shipping operators.

“On the issue of increasing jobs, we are about to commence the disbursement of the cabotage vessel financing fund. The total exposure of the CVFF is within the region of $350 million and this amount is 50 percent of NIMASA control,” he said.

“By the guidelines, the primary lending institutions will provide 35 percent and shipowners will have to provide 15 percent, making 50 percent in total.

“If we have $350 million as 50 percent contribution to NIMASA, then we are accepting another $350 million from the primary lending institutions and that means $700 million.”

Jamoh added that the government was considering giving ship owners $25 million each from the fund.

“With $700 million, we are set to give a maximum of $25 million each to shipowners to purchase ships which will directly or indirectly provide jobs.”

Jamoh also disclosed that the Nigerian National Petroleum Corporation (NNPC) Limited recently expressed interest in participating in the financing of ships that Nigerian shipowners would acquire using the soon-tobe distributed CVFF.

To achieve this, he said the NNPC offered to provide 9 percent funding that would enable shipowners to access the CVFF and buy new ships.

“The NNPC agreed to offer them 9 percent, so that the shipowners will only have to source for only 6 percent,” the NIMASA boss said.

“NNPC said it needs ships to lift Nigerian crude and that it will give Nigerian shipowners the specifications of ships to buy. It will also give them 9 per cent out of the 15 percent of the funding that was supposed to be provided by the shipowner.

“They said they will take over the ship and provide the cargo until it recovers the amount invested in the acquisition of the ships.”