Over 100 shipowners jostle for $360m Cabotage fund

There are strong indications that not less than 100 indigenous shipowners are currently jostling for a share of the $360 million in the CVFF account, Daily Trust investigation has revealed. This is just as indigenous shipowners as well as stakeholders in the maritime sector have advised the federal government to carry out a forensic audit […]

There are strong indications that not less than 100 indigenous shipowners are currently jostling for a share of the $360 million in the CVFF account, Daily Trust investigation has revealed.

This is just as indigenous shipowners as well as stakeholders in the maritime sector have advised the federal government to carry out a forensic audit of the Cabotage Vessel Financing Fund (CVFF) domiciled with the Central Bank of Nigeria (CBN).

The fund which is estimated to be well over $360 million was established over 21 years ago by the Cabotage Act of 2003.

The Coastal and Inland Shipping (Cabotage) Act 2003, which came into force in 2004, aims “primarily to reserve the commercial transportation of goods and services within Nigerian coastal and inland waters to vessels flying the Nigerian flag owned and crewed by Nigerian citizens, and built in Nigeria.”

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Though the Minister of Marine and Blue Economy, Adegboyega Oyetola, and the Nigerian Maritime Administration and Safety Agency (NIMASA) have pledged to commence the long-awaited disbursement of the Cabotage Vessel Financing Fund (CVFF) by August 2025, shipowners are sceptical about the promise considering the fact that promises had been made since Rotimi Amaechi held sway as the minister.

Daily Trust’s findings revealed that the race for who gets what is now divided among members of three different indigenous shipowners associations namely Indigenous Shipowners Association of Nigeria (ISAN), Shipowners Association of Nigeria (SOAN), with leaders like Greg Ogbeifun, the former president, and Sonny Eja, the current president, and Nigerian Shipowners Association (NISA).

Although the exact number of members isn’t publicly known, our findings revealed that all the associations have been actively involved in industry discussions.

On its part, ISAN had played a significant role in promoting the interests of indigenous shipowners, while NISA had taken initiatives like forming NISA Ocean Transport Limited to consolidate indigenous shipowners and enhance their competitiveness.

The association has members like Sola Adewunmi, who serves as the president, and Tunji Brown, a Board of Trustee member.

SOAN with leaders like Greg Ogbeifun, the former president, and Sonny Eja, the current president, has also been actively involved in industry discussions.

Notable companies like Starzs Marine and Engineering Ltd which is led by Greg Ogbeifun has made significant strides in Nigeria’s maritime industry.

Petromarine Nigeria Ltd, led by Sonny Eja, is another prominent player in the nation’s maritime sector.

Peacegate Group, headed by Ayorinde Adedoyin, is the Managing Director of this company, which has expressed concerns about the Cabotage Vessel Financing Fund disbursement process.

These associations and companies are working to promote the growth and development of Nigeria’s shipping industry, particularly for indigenous shipowners.

The findings also revealed that the ministry, through NIMASA, had established criteria for the disbursement of the fund.

Qualified Nigerian shipowners are eligible to apply for the CVFF which consists of 50 per cent contribution from the federal government, amounting to $360 million; 15 per cent equity contribution from applicants which in this case are the shipowners, and 35 per cent equity contribution from NIMASA.

It would be recalled that NIMASA had in 2023 appointed five banks that are referred to as the Primary Lending Institutions (PLIs) to handle the disbursement.

The PLIs are: Union Bank, Zenith Bank, Polaris Bank, United Bank for Africa (UBA) and Jaiz Bank.

It however couldn’t be ascertained if NIMASA will still be working with the original PLIs to finalise disbursement details, which include interest rates, tenor, collateral, and other requirements.

However, the funds will be managed through a collaborative effort between NIMASA and the PLIs to minimise risks and ensure effective utilisation.

NIMASA had earlier emphasised the importance of transparency and accountability in the disbursement process, while ensuring that contributors and stakeholders benefit efficiently.

The Cabotage Act allows Nigerian indigenous shipowners with companies that own and operate vessels, particularly within the maritime industry, and are seeking to increase their presence in the domestic and international shipping sectors, to participate.

The Shipowners Association of Nigeria (SOAN) had been a key player in this field, representing many of these companies.

SOAN had made several pushes for the disbursement of the Cabotage Vessel Financing Fund (CVFF) which primarily aims to boost indigenous ownership, particularly in the oil and gas sector, with the goal of reducing reliance on foreign-owned vessels and promoting local job creation.

Our correspondent reports that the nation’s shipping industry has been largely dominated by foreign-owned vessels, leading to capital flight and a weakened enforcement of the Cabotage Act.

The findings also revealed that despite the numerous challenges, indigenous shipowners have made significant contributions, including the contribution of over $2 billion to the Cabotage fund since it was created.

Some of the challenges in getting a pile from the fund include the requirement for indigenous shipowners to provide a 15% equity contribution for accessing the CVFF, which has led to some shipowners considering mergers or collaborations to meet this requirement.

NIMASA had also emphasised that banks should approve a single digit loan for beneficiaries. This request had also made it impossible as most of the PLIs silently opted out of the arrangements.

 

Shipowners, stakeholders demand audit of CVFF account

The founder, Sea Empowerment Research Centre (SEREC), Dr Eugene Nweke, in an exclusive interview with our correspondent urged the government to conduct a forensic audit of the CVFF fund and make the actual amount known to indigenous shipowners who are contributors to the account in the interest of transparency and accountability.

Nweke who is also a former National President of the Nigerian Association of Government Approved Freight Forwarders (NAGAFF) stated that a forensic audit would provide an in-depth examination of the fund’s financial transactions, ensuring transparency and accountability in its management and that the audit should be designed in such a way to detect and prevent financial irregularities, which would help protect the fund from potential mismanagement or embezzlement.

He stated that by making the audit results public, stakeholders, including shipowners and beneficiaries, would have visibility into the fund’s operations, fostering trust and confidence.

He listed some potential benefits of the forensic audits to include but not limited to: enhancing the quality of financial reporting, reducing errors and misstatements and that audits have proven to be effective in controlling financial frauds in various industries.

He added that it will also help to identify areas of weakness and improve governance and internal controls.

“Going forward, let’s consider the following steps: A. Appoint a qualified and independent forensic auditor with expertise in financial investigations.

b). Clearly define the scope and objectives of the audit, including identifying any specific areas of concern.

c). Communicate the audit’s purpose and progress to stakeholders, ensuring transparency throughout the process.

“Furthermore, let me reiterate the need for the implementation of recommendations as suggested.

“To this extent, I urge the administrator to develop a plan to implement the audit’s findings and recommendations, addressing any identified weaknesses or irregularities,” he said.

 

Shipowners’ position

Speaking with our correspondent, the President of Nigerian Shipowners Association (NISA), Sola Adewumi, stated that it is the responsibility of the government to audit its account without any prompting.

“Why will I doubt the government if it says it is X amount that is in the account. Government is the one to know and no one else,” he added.

The Chairman Board of Trustees of the Nigeria Shipowners Association (NISA); Chief Isaac Jolapamo, in his views stated that auditing the account is the right thing to do considering the fact that previous governments had kept sealed lips over issues concerning the fund.

He also stated that it’s even better to start disbursement before carrying out any audit.

“You know the position of the previous government that never wanted the money disbursed. I salute the courage of the Minister of Marine and Blue Economy who had openly given a timeline for the disbursement.

“Senator Gbemisola Saraki, as a minister, was passionate about growing the maritime sector. As the Chairman Senate Committee on Maritime, she will not allow the budget for the sector to be passed without allowing indigenous shipowners to know what is in the budget. It was an eye opener because the previous National Assembly would smuggle in different things into the budget,” he added.

 

CVFF’s benefits to indigenous shipowners

With Nigeria accounting for over 70 per cent of seaborne trade in West Africa, analysts say the disbursement will afford opportunities for indigenous shipowners to expand their operations under the Africa Continental Free Trade Agreement (AfCFTA), particularly in the areas of exporting petroleum products to other African markets.

More jobs will be created and it will also eliminate capital flight in addition to strengthening the nation’s maritime industry.