Dangote Group’s planned acquisition of vessels to distribute its products across West and Central Africa has exposed Nigeria’s inadequate indigenous shipping capacity, a former president of the Africa Shipowners Association (ASA), Ladi Olubowale, has said.

Olubowale, who is also the Managing Director of Seamate Group, said Dangote’s decision was a rational response to limited shipping capacity and the high cost of road transportation, while absolving the conglomerate of blame for relying on available foreign shipping capacity.

Speaking during an interaction on vessel acquisition and its impact on the national economy in Lagos, Olubowale stressed that Nigeria’s inability to provide vessels of the appropriate size, specifications, and operational capabilities required by major cargo owners had given foreign-controlled ships the privilege of carrying cargo.

Olubowale said while Dangote wanted to secure its supply chain and move its products efficiently through ship acquisition, the company could achieve a wider economic impact by allocating part of its cargo requirements to qualified indigenous shipowners through long-term cargo commitments.

“Rather than building an entirely vertically integrated shipping system in which the industrial producer ultimately owns most of the vessels carrying its products, part of the cargo requirements could be deliberately structured to develop competent Nigerian shipowners,” he said.

He proposed the use of firm medium- and long-term Contracts of Affreightment (COAs), time-charter arrangements and other bankable cargo commitments to enable technically qualified indigenous operators to acquire vessels and build sustainable shipping businesses.

Olubowale, however, emphasised that cargo, not financing, should drive fleet acquisition, warning indigenous shipowners against acquiring vessels merely because financing was available.

According to him, shipping is trade, noting that banks considering a $25 million vessel acquisition loan would demand answers on the vessel specification, intended trade, charterer structure, cargo volume, frequency, routes, contract terms, duration of the commercial opportunity and repayment structure.

Olubowale argued that Nigeria had sufficient cargo to support a viable indigenous fleet, citing agriculture, cement, fertiliser, oil and gas, manufacturing and the Dangote Refinery as major sources of maritime cargo.

According to him, the enormous cargo generated by Dangote’s industrial operations could serve as the foundation for developing a new generation of Nigerian shipowners and transforming the country into a major African shipping hub.

Olubowale called for major cargo owners, credible indigenous shipowners, the Nigerian Maritime Administration and Safety Agency (NIMASA), Nigerian banks, development finance institutions, Afreximbank, insurers and international technical partners to jointly map the country’s cargo requirements.

He explained that the exercise should determine the volumes of crude oil, refined petroleum products, fertiliser, cement and dry bulk cargo requiring transportation, as well as routes, vessel sizes and projected cargo volumes over five, 10 and 15 years.

Olubowale said the exercise would also enable the identification of the specific vessels required, while calling for a broader approach to managing the Cabotage Vessel Financing Fund (CVFF).

The maritime expert said the CVFF success should not be measured simply by the number of beneficiaries, but should be assessed by the number of commercially sustainable Nigerian-controlled vessels created, the volume of cargo captured, jobs created for seafarers and the amount of freight income retained within the country.