Effect of shipping company demographic characteristics on cabotage vessel finance and repayment in Nigeria

Abstract

The research examined the effect of shipping company demographic characteristics on cabotage vessel finance and repayment in Nigeria. The Nigerian Maritime Administration and Safety Agency (NIMASA) have been concerned about the inability of the Ship Acquisition and Ship Building Fund (SASBF) beneficiaries to pay back disbursed loans fully, resulting in the suspension of further disbursement of the fund required for the development of Nigerian local content capacity. The Cabotage Act 2003 was intended for local content development of shipping and maritime logistics capacity. The fund realized through a 2% surcharge on cabotage trade has accrued since inception, but no shipowner has benefited from the CVFF loan. The study relied on both primary and secondary data. Data was collected through a well-structured questionnaire. The study utilized a Statistical Product Service Solution (SPSS v. 23) and a one-sample chi-square test as statistical tools for data analysis. The results reveal that demographic characteristics of shipping companies, such as age, number of vessels, number of employees and total annual revenue, significantly influence CVFF loan repayment. Purpose: To identify and analyze the shipping company demographic characteristics which influence cabotage vessel finance and repayment in Nigeria. The findings suggested practical steps for effective CVFF loan disbursement and reliable loan recovery. Methodology: The study utilized Statistical Product Service Solution (SPSS v. 23) and a one-sample chi-square test as statistical tools for data analysis. Results: The demographic characteristics of a shipping company, such as company age in years, number of employees, share capital, number of vessels and shipyards as well as the age of vessels and shipyards has a significant influence on her Character, Capacity, Credibility, Capital, Conditions, Collateral and Creditworthiness of the organization. Theoretical contribution: The research contributed to exploring, understanding, and applying the probability of credit default theory in shipping finance loan repayment. The demographic internal microeconomic organization Character, Capacity, Credibility, Capital, Conditions, Collateral and Creditworthiness significantly affects the ability of CVFF fund beneficiaries to repay the loans. Practical implications: Prospective borrower indigenous maritime operators should be duly and professionally evaluated to ensure sustainable cash flow and revenue projection during and after granting CVFF loans to guarantee complete repayment.