- AfCFTA, Dangote refinery will boost shipping activities – Umar
The President of Nigerian Chamber of Shipping (NCS), Mr. Aminu Umar has encouraged investors in Europe and Asia to take advantage of the opportunities in ship acquisition in Nigeria with the emergence of Dangote refinery and the African Continental Free Trade Area (AfCFTA).
Umar, who was speaking at the West Africa Shipping Assembly (WASA) in the London International Shipping Week on Tuesday, observed that there were huge opportunities for domestic shipping across sectors, but African shipowners lack access to capital.
“The biggest challenge for shipowners in Africa is capital. London is where the capital is, actually,” he said.
Umar noted that debt and equities markets in Africa posed their own challenges for existing and would-be Nigerian shipowners.
He called African stock markets as immature and not as enthusiastic about shipping as markets elsewhere in the world.
“In the UK, we see in America, we see in Asia that shipping companies have the ability to access capital,” he said of equities markets.
“Shipping is a long-term play,” Umar said. “The debt markets are not used to the long-term. They are mostly structured for short-term funding and this does not work for shipping,” Umar remarked.
Other speakers at the day-long assembly said demand for shipping was increasing and trade patterns changing following the ratification of the African Continental Free Trade Area by much of the continent in 2018, population growth across the region and the impending start of production at the Dangote refinery near Lagos.
Umar equally observed that dry cargo opportunities exist thanks to the free trade agreement and rising population in the continent.
The Dangote refinery — one of the largest in the world — is expected by brokers to contribute to the global reshuffling of oil trades that kicked of following Russia’s invasion of Ukraine.
Following the war and subsequent efforts to cut off Russian oil trades, Europe turned toward West Africa to find new sources of crude oil.
But the refinery, which has not yet begun production, could keep that crude oil at home and cut off product imports.
Further, Nigeria has cabotage laws that have Nigerian ownership and crewing requirements.
“There will be a requirement to move crude oil to the Dangote refinery,” Umar said, suggesting African shipowning could be an attractive investment opportunity.
“As it stands today, apart from Angola, Senegal, who owns some suezmax and VLCC, there is almost no African that owns that size of ship,” he added.