By Oluyinka Onigbinde
The long-awaited disbursement of the Cabotage Vessel Financing Fund (CVFF) may have moved beyond the question of whether indigenous shipowners are ready to access the money, as a leading industry player has disclosed that applicants have completed the required processes, but are still confronted with questions over the availability of the funds and the purpose for which the facility is expected to be deployed.
Capt. Ladi Olubowale, a shipowner who spoke during a Maritime Reporters Association of Nigeria (MARAN) roundtable last week, said his company had applied for the CVFF and fulfilled the requirements expected of applicants, including the prescribed financial contribution, but questioned whether the funds had actually been made available to the participating banks for disbursement.
His comments provide a fresh insight into one of the industry’s longest-running controversies, that is – why Nigerian shipowners have continued to struggle to obtain a financing facility that was established specifically to develop indigenous capacity in coastal shipping.
According to Olubowale, the CVFF application portal had been opened and applicants had gone through the process, with banks recently beginning to engage those who applied.
But he said the critical question now was whether the money was actually available and had been properly warehoused with the banks for lending to qualified shipowners.
“The process has been done. The portal has been opened. And recently, the banks have been coming after people that have applied,” he said.
“On our own private sector, we have met all the requirements that are meant to be done. And the other part of it is to look at, is the money available? Has it been warehoused to the bank?”
The statement suggests that, for shipowners who have completed the application process, the bottleneck may now lie beyond the submission of applications and into the actual funding and implementation stage.
The CVFF, established under Nigeria’s Cabotage regime, was designed to provide financial support for the acquisition, construction and development of vessels by indigenous operators and, ultimately, strengthen Nigerian participation in domestic shipping.
Yet years after the fund began accumulating contributions from the maritime sector, Nigerian shipowners continue to complain that the country has not translated the existence of the fund into a sufficiently strong indigenous fleet.
Olubowale argued that the issue should not, however, be reduced to simply disbursing money to individual shipowners.
He said Nigeria must first determine the type of vessels the country strategically requires and ensure that the CVFF is deployed in a manner that creates a sustainable national fleet capable of supporting the country’s trade.
He questioned whether a comprehensive strategic fleet analysis had been conducted to determine what the country actually needs the CVFF to finance.
“And that’s the question I keep raising when it comes to the CVFF fund. Have we done a strategic fleet analysis? What we need for this money?” he asked.
He also questioned whether the government was merely financing individual vessel acquisitions or approaching the issue from the broader perspective of building a national fleet.
According to him, Nigeria needs to identify the vessels required to move its oil, gas and other cargoes and then structure financing around actual trade opportunities.
The shipowner stressed that acquiring a vessel without a corresponding trade or cargo contract could leave the vessel idle and make the investment unsustainable.
“Nobody buys ships or nobody wants to buy ships being idle. There must be a trade that will drive the ship industry as well,” he said.
Olubowale said ship finance globally was closely tied to trade, with long-term cargo contracts providing the commercial foundation for vessel acquisition and repayment.
He therefore argued that Nigeria must pursue ship ownership alongside the development of trade opportunities that would keep indigenous vessels commercially viable.
His position comes against the background of persistent complaints by Nigerian shipowners that foreign vessels continue to dominate lucrative shipping opportunities in the country’s oil and gas and other sectors despite the existence of policies designed to promote indigenous participation.
He cited the requirement under the CVFF arrangement for applicants to provide substantial counterpart funding, noting that NIMASA expects an applicant to bring about $3.7 million to attract financing of up to $25 million.
For him, the financial burden makes it even more important for the government to ensure that the fund is properly structured and deployed towards vessels backed by viable commercial opportunities.
He said his company had managed vessels through bareboat charter arrangements, but owning vessels outright required significantly greater capital.
“Carrying your own ships takes a lot of money, a lot of funding,” he said.
Olubowale also linked the difficulty of developing an indigenous fleet to weaknesses in the implementation of local content policies.
He said Nigeria had opportunities to create cargo for indigenous vessels through local content requirements, but questioned the extent to which such provisions were being effectively implemented.
He argued that having laws and policies on paper would not automatically translate into business for Nigerian shipowners unless the required vessels were available and the relevant trade opportunities were deliberately channelled towards them.
“In terms of trade, their trade in terms of local content… when it’s not implemented, or there are no service boats, or available readiness boats to be able to key into those services, it goes into the people that own the ship,” he said.
The situation, he argued, partly explains why foreign operators continue to take advantage of shipping opportunities that could otherwise help build Nigeria’s indigenous fleet.
Using the example of Dangote’s operations, Olubowale said cargo owners would naturally charter available vessels regardless of their country of ownership if Nigerian shipowners were unable to provide suitable vessels.
He said Nigeria must therefore stop viewing ship acquisition in isolation and instead develop a strategic framework connecting cargo, trade, financing and vessel ownership.
According to him, Nigeria loses substantial economic value when foreign-owned vessels are used to move cargo generated within the country.
“There are a lot of leakages in Nigeria every day, from $20,000 to $70,000 every day that foreigners are leveraging on with their assets,” he said.
He particularly identified the tanker segment as an area requiring urgent attention, arguing that Nigeria does not have enough medium-range tankers and other vessels required by oil terminals.
Olubowale said some of the vessels currently available to Nigerian operators were also limited in their ability to trade internationally, raising questions about whether the country was building a fleet capable of competing beyond its domestic waters.
He said the challenge therefore went beyond the availability of financing to the wider regulatory and economic environment required to sustain ship ownership.
The shipowner said regulators should focus on safety, compliance and creating an enabling environment, while the private sector should be allowed to drive commercial activity within the industry.
He maintained that government had an important role to play in laying the foundation but could not, by itself, create a sustainable shipping industry.
“The government cannot implement all these things we are talking about,” he said, adding that the present administration had “laid the foundation” through its maritime policies.
However, he questioned whether sufficient economic value had yet been delivered from the policies and agreements already put in place.
He cited Nigeria’s recent maritime security and international shipping milestones as examples of achievements that should ultimately be measured by their economic impact on Nigerian shipowners.
According to him, announcements and policy milestones must translate into actual business opportunities, vessels and jobs for Nigerians.
He also questioned the practical value of bilateral agreements entered into by Nigeria if indigenous operators were unable to take advantage of the resulting trade opportunities.
For the CVFF, he said the same principle should apply: the fund must not merely be disbursed, but should be used strategically to create a fleet capable of servicing identifiable cargoes.
His intervention therefore puts a new dimension to the debate over the financing scheme. While shipowners have repeatedly demanded access to the fund, the industry is now also asking whether the government has a clear strategic blueprint for determining which vessels should be financed, what cargo they will carry and how the investments will generate sustainable returns.
Olubowale said Nigeria needed to close the gap between regulation and commercial activity if the country was to build a competitive indigenous shipping industry.
He maintained that the ultimate objective should not simply be to give shipowners access to money, but to create a functioning ecosystem in which financing is tied to trade, cargo availability and vessels capable of serving both domestic and international markets.
