The much-anticipated disbursement of the Cabotage Vessel Financing Fund (CVFF) has again ran into troubled waters as indigenous shipowners point accusing fingers at commercial banks over stiff conditions and hidden charges that threaten to frustrate the entire scheme. Despite Federal Government’s promise that the first tranche of the $700 million fund would be released in August 2025, shipowners say not a dime has been paid, leaving them disillusioned.
The CVFF, created under the Cabotage Act of 2003, was designed to provide financial assistance to indigenous operators to acquire vessels and deepen local participation in Nigeria’s shipping industry. Financed by a two percent surcharge on all Cabotage contracts and other statutory levies paid by operators, the fund has grown substantially, but has remained undisbursed for more than two decades.
Giving a brief update, Chairman of the Nigeria Shipowners Association (NISA) CVFF Committee, Mr. Edward Sowho, lamented that nothing tangible has been communicated to operators despite the much-publicized readiness of government. He revealed that the online portal for applications has not been activated, while some shipowners resorted to submitting hard copies, a process he described as inappropriate.
“We have not heard anything, whether they’ve started disbursing or not. Even the portal I’m told has not been opened for people to apply. Some people have submitted hard copies to NISA office, but as far as I know, nobody has received any payment. If the government is serious, discussions with the banks should have started long ago, but nothing is happening,” Sowho lamented.
Beyond the silence, the actual terms being pushed forward by banks have triggered outrage among stakeholders. a senior member of NISA, Mr. Ayorinde Adedoyin, warned that the charges attached by Primary Lending Institutions (PLIs) have already defeated the purpose of a single-digit loan.
He disclsoed that banks are asking for 3.5 percent interest in addition to flat fees, while other deductions include a one percent administrative fee, one percent monitoring fee, and another one percent flat charge.
“With all these, are we still getting money at a single digit rate? We cannot continue to deceive ourselves in this country. Where will an average Nigerian shipowner raise 15 percent equity contribution from? For a $20 million vessel, that’s $3 million. The banks expect us to come up with that, while still borrowing 35 percent from them. These terms are not realistic,” Adedoyin said.
Adding to these concerns, the Chief Executive Officer of Bricks Murstern Mattoni Limited, Mr. Emmanuel Maiguwa, revealed that the banks’ conditions are almost impossible for indigenous operators to meet. According to him, some banks are demanding that only brand-new vessels be purchased, while others require a bank draft and a mortgage registered in the flag of the vessel—criteria he insists are unsuitable for shipping.
“I must tell you that all what the three commercial banks put forward to me as their requirements are not suitable for any shipping business model. Personally, as a businessman, I won’t be able to access the CVFF on the basis of those proposals. The terms are not a favourable model for vessel acquisition. I don’t see any shipowner accessing that fund, except someone wants to be fishy about it,” Maiguwa stated.
He further explained that Nigerian banks lack marine expertise to structure vessel financing, and their approach mirrors that of lending for property or vehicle acquisition. “Out of the three banks I approached, two are demanding for a brand-new vessel and a bank draft. One bank even required a mortgage to be registered in a flag when building a vessel. But Nigeria’s ship registry does not have flag-to-flag transfer for mortgage. This makes the CVFF dead-on-arrival for indigenous shipowners except some people want to be mischievous,” he warned.
Maiguwa disclosed that some shipowners have already abandoned the CVFF process, turning instead to foreign funding sources which, he said, offer better terms. “One of the shipowners I spoke with just received some vessels without waiting for when the CVFF will be disbursed,” he disclosed.
As the delays stretch into September with no clarity on disbursement timelines, industry operators fear that the CVFF—meant to be a lifeline—could end up being another government project lost in bureaucracy and unfavourable banking practices. For many shipowners, the promise of August disbursement has slipped by without result, and the tough terms being proposed suggest that even when funds are eventually released, only a few players may be able to access them.
