Shipowners and key maritime stakeholders have raised serious concerns over the operationalization of the Cabotage Vessel Financing Fund (CVFF) under the Nigerian Maritime Administration and Safety Agency (NIMASA), warning that the fund’s current framework and implementation could undermine Nigeria’s ambitions to develop a competitive maritime industry.
At a recent one-day interactive forum attended by shipowners, financial institutions, maritime operators, and industry experts, as well as other participants questioned the fund’s narrow focus on vessel acquisition, while calling for broader support for critical infrastructure such as shipyard development.
Issues surrounding the roles of Primar Lending Institutions (PLIs), unclear financing terms, lengthy loan approval timelines, and risk management were highlighted as major barriers to the fund’s effectiveness and sustainability.
One of the participants, Michael Sugami of STARS Maritime and Engineering, questioned whether the CVFF would expand to fund shipyard construction and maintenance, stressing the urgent need to strengthen maritime infrastructure beyond just vessel purchase. But, the fund’s managers responded that the current legislation limits the fund strictly to vessel acquisition, leaving the future of shipyard financing uncertain.
Concerns about the PLIs’ role dominated discussions. An anonymous stakeholder noted the reluctance of commercial banks to shoulder the entire risk of CVFF loans given the limited returns. “If I were a PLI, I would be hesitant to invest fully in the CVFF, because I must carry the entire risk but only receive single-digit loan returns,” the source said. Similarly, Abufolame Gastangame highlighted banks’ typical aversion to loans with tenors exceeding eight years, urging NIMASA to align the fund’s terms with commercial banking realities.
Transparency issues were also at the front and center of discussions. Prospective applicants such as Ademi Adeyi sought clarity on moratorium and interest rates, while a marine engineer Tony Cookie pressed for clear insurance provisions covering risks like vessel grounding and depreciation. CVFF officials acknowledged these concerns and promised to enhance risk management frameworks and disclose more detailed financial terms.
Financial viability of the fund was questioned Dr. MkGeorge Oyung of Jeffcott Oil and Gas, and former President of Ship Owners Association of Nigeria (SOAN) who noted that the $700 million fund, which comprised of 50% contribution from NIMASA, 15% from shipowners, and 35% from PLIs can finance only about 40 vessels if loans are capped at $25 million per ship. This limitation, Oyung warned, could hamper Nigeria’s goal to upgrade to IMO Category C shipping standards and diversify the maritime fleet beyond oil tankers.
The forum also spotlighted procedural inefficiencies. Otunba Shola Adewumi President of the Nigerian Shipowners Association (NISA) warned that the current CVFF approval process, which can stretch to 100 days, risks losing time-sensitive vessels to competitors. On the strength of this fear, there was a strong call to reduce processing times to under 45 days to keep pace with market realities.
Similarly, stakeholders stressed the importance of a strategic fleet policy and maritime human capital development to sustain long-term growth. Capt. Ladi Olubowale urged the agency to avoid repeating past sector failures, while CVFF managers committed to ongoing stakeholder engagement to align the fund with national maritime objectives.
Moreover, participants noted the necessity for funded vessels to have consistent access to cargo within Nigeria’s waters. Monitoring trading restrictions and cargo tax compliance were highlighted as crucial to prevent vessels from remaining idle or evading national obligations.
