The Cabotage Vessel Financing Fund (CVFF) was established alongside the Nigerian Coastal and Inland Shipping (Cabotage) Act of 2003, to empower indigenous ship owners to take control of the nation’s coastal and inland shipping business, otherwise known as Cabotage trade.
It is a two per cent contribution by indigenous ship owners involved in coastal and inland shipping trade in Nigeria’s maritime domain. Its collection actually started in 2004, when the Cabotage Act implementation started.
Since then, it has become a source of interest, disagreement and mistrust between Nigerian Maritime Administration and Safety Agency (NIMASA) and maritime industry stakeholders, especially ship owners, who have been requesting for information about the fund.
Sometime in 2022, a group of stakeholders approached a Federal High Court in Ikoyi, Lagos to compel the NIMASA to disclose details of accruals and disbursements of the controversial Fund.
The order was granted and the agency, in full compliance with the provision of the FOI Act, NIMASA furnished details of the CVFF collection.
The CVFF was confirmed to have accumulated to N29,912,410,730.83, while the Dollar component was given as $57,030,085.40.
The agency also affirmed that no amount has been disbursed from inception, however, six companies have been recommended to the Minister of Transport for disbursement and approval is being awaited”.
Even though the actual amount in the CVFF account with the Central Bank of Nigeria (CBN) has since remained an official secret, the fund must have accumulated beyond the 2022 figure.
Between 2022 and now NIMASA has had two Directors General, while between 2004 and now, the agency has had about six Directors General. All of them have failed in the matter of handling the CVFF.
Arguably, the CVFF remains one of the greatest headaches of NIMASA. Its successive Directors General have waded through the cacophony of arguments and bitterness that the non-disbursement of the fund has generated. In return, they have offered explanations and even gave deadlines that were never met.
It is painful that, even though the Minister of Marine and Blue Economy; Mr Adegboyega Oyetola had acknowledged that disbursement of the CVFF would support the growth and development of the shipping business in the country. Yet, what came out from NIMASA recently concerning the disbursement is disturbing, to say the least.
What makes it disturbing and concerning is the fact that the agency’s issued a fresh guideline on the CVFF disbursement, a few days after a section of the media alleged that the fund was missing.
In an apparent move to reassure stakeholders that the fund was intact, NIMASA in a statement (and to the consternation of stakeholders), requested for Expression of Interests from commercial banks for a role as Primary Lending Institutions (PLIs) in the disbursement of the CVFF.
Perhaps, the incumbent leadership were not told. But that was a familiar pattern, that had been used previously, after which nothing was heard.
Titled: “Implementation And Disbursement Of The Cabotage Vessel Financing Fund (CVFF): Expression Of Interest As A Primary Lending Institution”, the advertorial requested that, interested “Deposit Money Banks (DMBS) duly licensed by the Central Bank of Nigeria (CBN); and Local and Foreign Development Financial Institutions (DFIs), should apply for accreditation as Primary Lending Institutions (“PLIS”) under the Cabotage Vessel Financing Fund (“CVFF” or the “Fund”)”.
Sadly, the latest move came just a few months after Minister Oyetola told stakeholders in the industry, including ship owners, that the Ministry of Marine and Blue Economy was committed to delivering the disbursement of the CVFF to enhance efficiency, transparency, and competitiveness in the sector.
But non-chalance and non-committal has been the lot of CVFF, and the usual approach of either the Minister or the DG of NIMASA for the years that the fund has accumulated.
The collection and disbursement of the CVFF is backed by the provisions of Section 42(1)-(2) of the Cabotage Act 2003. The intended aim is to promote the development of indigenous ship acquisition capacity by providing financial assistance to Nigerian operators in domestic coastal shipping.
With foreign shipping companies flouting the nation’s Cabotage regime at will, the disbursement of the CVFF to indigenous operators is expected to increase indigenous capacity to a level that opens the space for competition with their foreign counterparts. But, this has not been.
May we remind everyone that, under the previous guidelines of CVFF disbursement, each beneficiary was expected to submit application and needs to tie the loan application to a maritime project, for which 15 per cent of the project cost must be provided, having been pre-qualified by NIMASA.
At a point, NIMASA which is statutorily mandated to disburse the CVFF appointed four banks: Skye, Diamond, Fidelity, and Sterling as Primary Lending Institutions (PLIs) for the CVFF. But this changed. We then had five lending institutions, namely: Union Bank, Polaris Bank, Zenith Bank, UBA and JAIZ bank.
Then, how is the emerging arrangement different from what previously existed. We remember that at a point, there was an announcement that six companies had been prequalified to benefit from the fund. That never happened. After the assurances of immediate disbursement, what we heard later was that the Federal Government would set up a committee to oversee the disbursement!
The closest the Nigerian maritime industry has got to the promise land concerning the CVFF was the December 12, 2022 approval by the then-President. This also did not result in anything tangible, since the Fund still remains in the custody of NIMASA through the Central Bank of Nigeria (CBN).
Yes, former President Muhammadu Buhari granted approval for the disbursement of the CVFF. Well, the fund was not disbursed.
Between NIMASA and the supervising Ministry, it does appear like there is a lot that is going on, that is detrimental to the success of Cabotage Act in general and implies lack of transparency in the CVFF.
It is a surprise that events are taking the same pattern. The usual practice is for every new DG of NIMASA and every new Minister to dangle the carrot of imminent disbursement of the CVFF in front of stakeholders, especially ship owners. But, we have passed this route severally in the past!
Between NIMASA, and the Ministry there appears to be a conspiracy of not wanting to disburse the CVFF, or is there something unusual or untold about the fund that handicaps them?
Nigerian maritime industry stakeholders are tired of hearing this same song of; “we will soon disburse the CVFF”. Both NIMASA and the supervising Ministry are beginning to sound like a broken record.
At this point, we are tempted to believe that the Federal Government has no intention of disbursing the CVFF. Even if this fear is unfounded, recent events at NIMASA give credence to this fear.
