‘17% import duty, high interest rate kill indigenous shipping businesses’
Nigerian ship owners at the weekend took a swipe at Nigeria Customs Service over its decision to impose a 17 per cent import duty on ships imported into the country, which they believe impedes their ability to compete with their peers in Europe, Asia and America.
Founding chairman of the defunct Indigenous Shipowners Association of Nigeria ISAN, now re-christened Nigerian Shipowners Association NISA, Chief Isaac Jolapamo, who spoke in an interview, regretted that the twin problems of high import duty payment and high cost of funds in terms of double digit interest on loans have contributed significantly to the low growth of indigenous shipping business in the country.
According to him, apart from being compelled by Customs to pay 17 per cent of the value of any ship they import as import duty in its quest to collect huge revenue, out of which it gets seven per cent as its statutory running cost, the Nigerian ship owner also pays over 17 per cent interest on loans from Nigerian banks and other financial institutions.
These compare to other shipping companies in most other climes, which import their vessels duty free and pay less than three per cent interest on loan facilities in addition to other mouth-watering incentives.
“In 1985, my ship was detained by the Nigeria Customs Service for two years over the payment of import duty and I went to court. A Federal High Court in Port Harcourt then ruled in my favour that we were not supposed to pay duty on ships. Customs opted for out of court settlement, pacified me and released the ship but today, we pay between 15-17 per cent duty on ships”, Jolapamo lamented.
“Today, the Greece, Indians and Italians have already taken over shipping business in Nigeria because they pay zero or at most one per cent duty on ship imports and pay less than three per cent interest on loans and we are expected to compete with them”
“Look Iam well over 70 years now and I started shipping business at about 19 years and I do not have anything to show for it”, he said.
He also disclosed that in addition to the arbitrary import duty and high interest rates, the indigenous shipping operators have also gone through hell in the hands of some officials of the Nigerian National Petroleum Corporation NNPC, who prefer to give contracts to foreign shipping lines.
Jolapamo narrated one of his several harrowing experiences in the hands of some officials of the NNPC, who awarded him a contract upon which he took a bank facility only for them to force him out of the same job and re-awarded it to a foreigner, whose vessel was not as standard as his own, thus making the loan to go bad.
He said: ” Between 1985-2009, I acquired more than 12 vessels, the first time I took a loan from a Nigerian bank was in 2010 and that was because NNPC gave me a job but because of conspiracy by some of these officials of the corporation, I was forced out of the job and it was given to a foreign firm, which made the loan to go bad.
The former ISAN-boss expressed regrets that many Nigerian ship owners are hugely indebted to banks while many have forfeited their landed property used useed to secure loans to the banks and are today left with nothing to show for several years of actively participating in the shipping industry.
On the way forward, he insisted that the Federal Government cannot continue to shy away from support the indigenous shipping companies, especially in terms of providing cargo, incentives, tax holiday and guarantee for foreign loans and expect them create wealth and job opportunities.
He noted that shipping, which he identified as the second oldest profession after prostitution, stands on a tripod which include the cargo, the vessels and the wellbeing of the shipping firms in terms of the right policies and a regime of incentives must be provided.