In support of forensic audit of cabotage fund

On May 2, 2023, the House of Representatives, in a resolution, ordered the immediate suspension of the planned disbursement of $700 million Cabotage Vessel Financing Fund (CVFF) to Nigerian shipping companies by Nigerian Maritime Administration and Safety Agency (NIMASA). The House also directed NIMASA to lay before it an audited statement of account showing all […]

On May 2, 2023, the House of Representatives, in a resolution, ordered the immediate suspension of the planned disbursement of $700 million Cabotage Vessel Financing Fund (CVFF) to Nigerian shipping companies by Nigerian Maritime Administration and Safety Agency (NIMASA).

The House also directed NIMASA to lay before it an audited statement of account showing all monies that had accrued to the CVFF not later than seven days from the date of the lawmakers’ resolution.

In adopting the motion, the House also directed its Committee on Local Content to engage an external auditor to audit all contracts entered into in the cabotage regime and report same to the House within seven days; to commence immediate investigations into the fund to determine all monies that have accrued to it since its establishment in 2003 and report to the House within 14 days.

The House also asked the Minister of State for Transportation, Mr. Ademola Adewole Adegoroye and NIMASA Director-General, Dr. Bashir Jamoh to report to the House Committee on Local Content on the state of the fund and how the funds have been applied over the past 20 years.

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The Cabotage Vessel Financing Fund was established by the Coastal and Inland Shipping (Cabotage) Act 2003 to develop indigenous ship acquisition capacity, and to provide financial assistance to indigenous/domestic coastal shipping operators.

In addition to monies allocated to the fund by an Act of the National Assembly, the fund draws from two per cent (2%) of all contract sums performed by any vessel engaged in the coastal trade, and all monies generated pursuant to the Coastal and Inland Shipping (Cabotage) Act, 2003.

But there have been concerns about the total amount collected and the diligent disbursement of the fund. The House complained about the absence of reliable data on the total amount so far accrued and the uncertainty of the actual worth of the fund.

This is more so as there is no record of any Nigerian citizen or company who has officially benefited from the fund as stated in the Act establishing it.

What is also worrying is lack of consensus on the accrued funds as there are discrepancies between the figures presented by the federal government (FG) and NIMASA. On April 4, 2023, during the Institute of Maritime Studies’ first annual lecture at the University of Lagos, the NIMASA director general, stated that the sum of $700m will be disbursed to ship owners “before the end of the current administration.”

Meanwhile, Head, Legal Services/ Board Secretary, NIMASA, Mrs. Aisha Idris Yakubu, in an account balance document duly marked as “Analysis of Cabotage Vessel Financing from January 2007 to October 2022” said the amount transferred from local banks to Treasury Single Account (TSA) is N20,613,344,488.8 amount paid directly to TSA is N16,953,322,635.17, while the total naira collection (NGN) is 37,566,667,123.97.

For dollar collections, the amount paid directly to Central Bank of Nigeria (CBN)/Access Bank is $257,228,760.32, amount with OAGF is $12,147,632.66, while the total dollar collections (USD) is $269,376,392.98.

Dollar collections converted to Naira (USD269.38million at NGN410.15/USD) is N110,484,727,580.75, while the total balance in Naira for both the naira and dollar collections is N148,051,394,704.72.

Nigerian Ship Owners Association (NISA), founding president, Mr Isaac Jolapamo, had earlier disputed figures from the government, stating that it is far higher. He said: “We want the federal government to account for that money, because it should be more than $2 billion and I am being conservative.”

Daily Trust believes that the House of Representatives directive to stop a seeming hurried disbursement of the fund is in order. Since the present government has a few days to leave office on May 29, 2023, it should leave further action on the disbursement to the incoming government, which must operate in strict adherence to the tenets of the law establishing the CVFF.

It is a great disservice already that since the establishment of the Cabotage Fund in 2003, even with all the funds accruing, there has not been a single known disbursement. It shows lack of seriousness and commitment to the growth of our maritime sector.

This is disheartening as the specifics of the law requires that each time the account hits $50 million, the Minister of Transportation should on the recommendation of NIMASA direct the Central Bank of Nigeria (CBN) to release the amount to any of the five designated banks for disbursement.

Therefore, Daily Trust believes that there is need to ensure that the CVFF is neither misapplied nor misappropriated and that it is only disbursed according to the objectives. There must be no obscurity and lack of transparency in the administration and disbursement.

There is urgent need for a forensic audit of the CVFF to ensure accountability and that those that get the funds utilise it properly.

The audit must trace and account for all payments made and that the right amount is paid. There must be no discrepancies in the funds paid in or disbursed.

And the House must conclude its investigations before the end of the 9th Assembly next month and order the resumption of disbursement of the fund so as not to hamstring its administration. This exercise must not be abandoned.

Both the executive and legislature should ensure that only genuine ship owners benefit from the fund and there should be no further delays.