Banks, shipowners endorse de-risking plan for $700m CVFF fund

Banks, indigenous shipowners and key players in Nigeria’s maritime industry have thrown their weight behind a comprehensive de-risking framework aimed at accelerating the disbursement of the $700 million Cabotage Vessel Financing Fund (CVFF) and boosting indigenous participation in coastal shipping. The consensus emerged at the maiden Maritime Policy Roundtable organised by Olisa Agbakoba Legal (OAL), […]

Banks, indigenous shipowners and key players in Nigeria’s maritime industry have thrown their weight behind a comprehensive de-risking framework aimed at accelerating the disbursement of the $700 million Cabotage Vessel Financing Fund (CVFF) and boosting indigenous participation in coastal shipping.

The consensus emerged at the maiden Maritime Policy Roundtable organised by Olisa Agbakoba Legal (OAL), where stakeholders from the banking, insurance, ship-management and maritime sectors examined practical measures to improve access to vessel financing while safeguarding lenders against credit risks.

Participants agreed that the long-awaited CVFF can only achieve its objective of expanding indigenous shipping capacity if lending institutions are protected through robust legal, financial and operational safeguards.

Leading the discussions, Senior Partner of OAL, Dr. Olisa Agbakoba (SAN), said the CVFF, established under the Coastal and Inland Shipping (Cabotage) Act 2003, remains a strategic instrument for increasing Nigerian ownership of vessels and reducing dependence on foreign operators in the nation’s coastal trade.

Presenting the de-risking framework, OAL Partner Collins Okeke urged participating financial institutions to adopt stringent credit-risk assessment procedures, conduct comprehensive corporate and regulatory due diligence, and insist on enforceable security arrangements before approving loans under the scheme.

He recommended independent evaluation of applicants’ financial capacity, debt obligations, operational experience and projected cash flows, as well as verification of beneficial ownership, regulatory compliance and the source of equity contributions.

To minimise default risks, Okeke proposed enforceable mortgages on financed vessels, assignment of vessel earnings to lenders, comprehensive marine insurance and structured loan recovery and restructuring mechanisms where borrowers encounter financial challenges.

On the operational side, Managing Director of NBC Maritime Ltd., Capt. Nicolas Bernard, stressed that professional ship management is critical to preserving the value of financed vessels and ensuring consistent returns.

He noted that involving professional ship managers from the vessel acquisition stage would strengthen technical due diligence, improve regulatory compliance, reduce operating costs and minimise vessel downtime.

Stakeholders also reviewed the shortcomings of the first phase of the CVFF lending programme, agreeing that the next phase must be anchored on stronger credit evaluation, specialised maritime-finance expertise, continuous monitoring and a supportive regulatory environment to avoid a repeat of past failures.

The forum further identified cargo-backed financing and long-term Contracts of Affreightment as viable tools for creating predictable revenue streams, improving the bankability of indigenous shipping companies and enhancing their capacity to service loans.

To institutionalise the initiative, participants resolved to broaden the forum’s membership to include marine surveyors, engineers, valuers, insurance professionals and ship-management experts.

They also nominated Fidelity Bank’s Wale Mesioye to coordinate the platform and urged participating banks to establish dedicated maritime-finance units to deepen expertise in ship financing.