Nigerian Maritime Sector Poised For Growth Amid Renewed Government Action On CVFF Disbursement – Samuel Benjamin

After over 20 years of stagnation, efforts around the disbursement of the Cabotage Vessel Financing Fund (CVFF) are gathering unprecedented momentum that is creating ripple positive effect within the maritime sector in Nigeria. And this is principally due to the series of comments credited to regulators.

The CVFF is an integral part of the Coastal and Inland Shipping (Cabotage) Act of 2003 meant to empower local Nigerian shipping companies to access structured financing for vessels’ acquisition to reduce dependence on foreign vessels, and boost local content. The fund is generated from the 2 per cent of the contract sum performed by any vessel engaged in cabotage trade. But despite years of contributions in billions of naira from shipowners, successive administrations failed to operationalise it.

First of the new efforts toward the disbursement of the fund was the Minister of Marine and Blue Economy, Adegboyega Oyetola, directing the Nigerian Maritime Administration and Safety Agency (NIMASA) to start the process for the disbursement of the Cabotage Vessel Financing Fund (CVFF).

Of note is that although the immediate past administration of President Muhammadu Buhari made some commitment with the approval given for the disbursement of approximately N16 billion and $350 million from the fund, but the directive was never implement. This is despite the government in December 2022 appointed five commercial banks for the quick and easy disbursement of the fund. The banks were Union Bank, Zenith Bank, Polaris Bank, United Bank for Africa (UBA) and Jaiz Bank.

The minister, through a statement by the Special Adviser on Media and Communications, Dr. Bolaji Akinola, said the disbursement of the CVFF will represent not just the release of funds, but a profound commitment to empowering Nigerian maritime operators, bolstering national competitiveness, and fostering sustainable economic development.

“This is not just about disbursing funds. It’s about rewriting a chapter in our maritime history. For over 20 years, the CVFF remained a dormant promise. Today, we are bringing it to life—deliberately, transparently, and strategically.”

As a follow up to the minister’s statement, NIMASA sent out a Marine Notice inviting eligible Nigerian shipping companies to apply with qualified applicants having access up to $25million each at competitive interest rates to acquire vessels that meet international safety and performance standards.  It was also stated that fund will be administered in partnership with carefully selected and approved Primary Lending Institutions (PLIs), ensuring professional and efficient disbursement.

Days after issuing the Marine Note, the Director-General of NIMASA, Dayo Mobereola, stated that the disbursement would be at a single-digit interest rate and listed the selected financial institutions to manage the funds to include First Bank, Fidelity Bank, Zenith Bank, United Bank for Africa, Jaiz Bank, and Lottos Bank, among others. According the disbursement ratio issued by NIMASA, the agency is to provide 50 per cent of the funding, Primary Lending Institutions contribute 35 per cent, with shipowners providing the balance of the 15 per cent equity.

While many stakeholders have commended the development, some are cautious about the development.  It was therefore not surprising that the Africa Association of Professional Freight Forwarders and Logistics of Nigeria (APFFLON) called on the Minister of Marine and Blue Economy, Adegboyega Oyetola to carry out thorough verification of credit ratings of Nigerian shipowners before going ahead to disburse the Cabotage Vessel Financing Fund (CVFF).

The President of APFFLON, Otunba Frank Ogunojemite, urged the minister to avoid the experience of the past where ship acquisition funds were mismanaged and the aim for which the funds were disbursed defeated.

APFFLON commended the Minister for his determination to change the face and the fortune of the marine and blue economy sector of the economy and for breaking the CVFF jinx in order to reposition the sector as number one economic enabler, a catalyst for job creation and foreign exchange earner for the country.

“However, much as we applaud you for this giant step, we equally call for caution in disbursing this fund to the beneficiaries. This is with a view to avoiding the experience of the past where funds such as this were mismanaged and the aim for which the funds were disbursed defeated.

“While we are not against the disbursement of this fund, we however, call for the verification of the ship owners who are to benefit from this fund to ensure that they are in business and viable enough to be entrusted with such an amount of money as it’s obvious some of them are out of business and some of them moribund.

“We advised that before the fund is disbursed to the beneficiaries, a committee should be set up to verify their credit ratings of the ship owners and ensure that they are not indebted to any financial institution both locally and abroad to avoid diverting the fund to loans repayment, thereby defeating the intent for which the fund was given in the first place.

“This we advised knowing that some of them had taken loans even from financial institutions abroad and if this money is disbursed to them, they may not make use of the money accordingly.

“The government should be very critical about credit ratings of each and every one of them before disbursing this money. We say this because, if you disburse the money and the expectations were not met, what then is the essence of the money being disbursed?”

He revealed that fund codenamed Ship Acquisition and Ship Building Fund was given out to the ship owners in the past to build capacity and turn around the sector, the fund was not only mismanaged, the fund which was in the neighborhood of $2 million to $2.5 million per ship owner was diverted by some of the beneficiaries to marrying many wives and taking chieftaincy titles with nothing to show for it in the long run.

“We must take every necessary step this time around to get it right so that Nigeria could build enough capacity in the area of ship building and ownership and in turn, gainfully engage our teeming maritime students and graduates in profitable ventures as well as reduce the freight cost for Nigerian bound cargo.

“We also advise that even when this fund is finally disbursed, it should be closely monitored by the ministry to ensure that the fund is channeled to the aim for which it was disbursed in the first place otherwise the rationale behind its disbursement will not be achieved.”