During the Nigerian Maritime Administration and Safety Agency {NIMASA) sendoff ceremony of the Batch B, 3rd phase of the Nigerian Seafarers Development Programme on Friday November 10th , the Minister of Transportation, Mu’azu Sambo Jaji stated that he is at the verge of disbursing the Cabotage Vessel Financing Fund(CVFF) after 18 years of existence. This vital information could be tagged as breaking a yoke of bondage among the indigenous ship owners in the country who have been paying their ‘tithe’ without recompense. The Minister divulged that he had received consent from the President, Muhmmadu Buhari to disburse the long-awaited CVFF which has accrued to 16 billion naira and 350 Million dollars.
Sambo urged NIMASA to start the process leading to the disbursement immediately and listed five banks; Union Bank, Zenith Bank, Polaris Bank, United Bank for Africa and Jaiz Bank to serve as the Primary Lending Institutions(PLIs).
The minister’s speech read: “The approval was forwarded to my office late Friday (December 9, 2022) but I thought it wise to use this opportunity for this ceremony where this opportunity for this ceremony where some of the primary beneficiaries are in attendance. On Monday DG NIMASA is going to get a formal communication from me conveying the approval from Mr. President and I expect him to take immediate steps when I say immediate I mean immediate. There is no question of one or two weeks once he receives the communication he knows what to do next. We have pledged to the president that they will continue to allow funds to go into the Treasury Single Account, TSA; however, whenever the money hits the threshold of 50 Million Dollars, the Central Bank of Nigeria(CBN) upon recommendation from NIMASA and the Federal Ministry of Transportation, would be expected to transfer the funds to the Primary Lending Institutions.
The action to disburse the CVFF by the Minister could propel many to probe or take the promise with a grain of salt or even rejoice for the great expectation. Recall that the former Minister of Transportation, Hon. Rotimi Amaechi, had sung the same disbursement song to ship-owners but dashed their hopes to the wind. Now, Sambo who has less than six months to vacate the seat of the Federal Minister of Transportation has woken the ‘sleeping’ CVFF matter.
Currently the CVFF is domiciled with the government through the Single Treasury Account but this negates the statutory guidelines of the fund.
Cabotage Act and the Cabotage Vessel Financing Fund Guidelines
The Coastal and Inland Shipping (Cabotage Act) No 5 0f 2003, Laws of the Federation of Nigeria was enacted by the National Assembly of the Federal Republic of Nigeria on April, 30th 2003. The Act was to restrict the use of foreign vessels in domestic coastal trade to promote the development of indigenous tonnage and to establish a cabotage vessel financing fund and for related matters. Section 42-45, Part V111 of the coastal and Inland Shipping (Cabotage Act) 2003 explicitly captured the nitty-gritty of the CVFF. It says:
“42 (1) There is established a fund to be known as the Cabotage Vessel Fiancing Fund (here in this Act referred to as the ‘Fund’)
(2) The purpose of the Fund shall be to promote the development of indigenous ship acquisition capacity by providing financial assistance to Nigerian operators in the coastal shipping
43. There shall be paid into the Fund
(a) a surcharge of 2 per cent of the contract sum performed by any vessel engaged in the coastal trade:
(b) a sum as shall from time to time be determined and approved by the National Assembly:
(c) Monies generated under this Act including the tariffs, fines and fees for licenses and waivers:
(d) Such further sums accruable to the Fund by way of interests paid on and repayment of the principal sums of any loan granted from the Fund
44. The fund shall be collected by the National Maritime Authority (now NIMASA) and deposited in commercial banks and administered under guideline that shall be proposed by the Minister and approved by the National Assembly
45 The beneficiaries of the fund shall be Nigerian citizens and Shipping companies wholly by Nigerians.
Former president of the Nigerian Ship Owners Association and Founder of Marina Law Chambers, Captain Dada Niyi Labinjo in an extensive chat with MMS Plus warned that ship owners should not be swayed by Sambo’s move to disburse the funds but should scrutinize variables behind the CVFF.
When Labinjo was asked if he trusted in the integrity of Sambo to fulfill his promise, he uttered: “I was at the media chat when the Minister of Transportation made the CVFF disbursement announcement. However, on the issue of credibility, it has been on since 2004 but we would wait for him, he said we should hold him responsible I can’t say if he will or will not. He has put his credibility on the line like we told other past ministers of transport, we would always tell them at the end of their tenure when they fail to do what they are supposed to do. “Before we even start talking about disbursement, we need to establish how much it is through a forensic Audit. They told us that the CVFF money is 16 billion naira and 350 million dollars whereas the Nigerian Content Development and Monitoring Board (NCDMB) that started in 2010 and contributed 1 percent value of their contract declared an account of 700 Million dollars in 2018. Compare this to the Cabotage Act that started in 2004 and takes 2 per cent of whatever contract. How can CVFF that has been there six years before NCDMB be generating only about 16 billion naira and 350 million dollars? That is to say, we have about 400 million dollars in total. Are we saying since 2004 till date we have only saved 400 million dollars? Let us do a forensic audit to establish how much is available. Everybody that pays to NCDMB also pays to NIMASA and if in 2018 they were talking of about 700 million dollars why is CVFF so low? We should not be excited and fail to ask the right question. How did we arrive at mere 400 million dollars in 18 years? It is paltry”,
Labinjo also highlighted the failure of NIMASA to diligently obey some parts of the Cabotage Law. He divulged: “In October, we got a judgment from the Federal High Court directing the NIMASA to disclose how much the fund is worth but till presently they have not come to tell how much it is worth. Also, all monies that NIMASA is making from shipping services they are supposed to add to the CVFF. That’s what Section 22 of the Cabotage Act demands from NIMASA. How much have they contributed to the Act? Part of the money from the shipping services and money appropriated to NIMASA, they are also to give 25 per cent of it to training schools”.
He advised the Minister and shipping stakeholders to emulate the footsteps of Malaysia and Indonesia in implementing the Cabotage Act. He said: “If we must succeed, like Malaysia or Indonesia, we must do what they did and one of the things they did was that they pegged the size of the ship one can buy with their cabotage finance. If one wants to buy a bigger ship that means the individuals wants to play in the international league and do commercial shipping. Cabotage is a monopoly by a country and it is done for social and economic development of a country”.
Labinjo also submitted that it is high time, Nigeria reviewed its Cabotage Act waiver policy to dissuade international vessels from exploiting Nigeria’s shipping resources. “Do we still need to be granting tankers a waiver in 2022 when they are not specialized ships? . Cabotage Act is very clear, it says specialized ships. We have been giving waivers to tankers since 2004. A tanker is not a specialized ship. There is a need to review our waiver policy. We have abused the waiver policy, that is why foreigners are all over our shipping industry. Their ships have jobs but our local ships do not and have drifted into illegal bunkers; some have even been arrested to be sold. Currently, there are about 300 ships that the Economic and Financial Crimes Commission(EFCC) wants to sell. If they were having regular jobs they wouldn’t have any reason to do illegal jobs. The jobs have been taken over by foreigners, the foreigners who import cargoes especially with petroleum products, they come with daughter- vessel; that do the light loading. So the local industry has no chance”, submitted Labinjo.
Finally, Labinjo beckoned on the government to include ship-owners in the disbursement committee. “The government should include the ship-owners as part of the people to distribute and determine the CVFF beneficiaries. We are not saying the government should not supervise the process but let ship-owners be part of determining who gets what to avoid the sum being hijacked by those who do not merit it. The government can chair it by having representatives from the Ministry of Works, Ministry of Transportation , NIMASA, CBN, etc but they need to include us in the committee”, said Labinjo.
Founding Member, Ship Owners Association of Nigeria(SOAN), and managing director, Elshcon Nigeria Limited, Dr Emi Membere-Otaji, anchored on the Minister’s promise and begged for transparency during the disbursement procedure to achieve impactful result. He mentioned: “I have no reason to disbelieve the government’s statement. I still give him the benefit of doubt despite all the previous experiences. The law setting up the Fund is very clear on who are the contributors; the beneficiaries and the guidelines for disbursements of the facility. I hope NIMASA and the Ministry of Transportation will be transparent in the process, so that the desirable impact can be achieved in the nation’s shipping industry. Already a critical stakeholder group had approached the court on the CVFF even before the minister announcement”
Meanwhile, president of Ship Owners Association of Nigeria(SOAN),Dr. MkGeorge Onyung pin-pointed that the Minister’s action is in tandem with the CVFF guidelines and gave excuses on why the funds are in the hands of the government instead of in the hands of the Primary Lending Institutions.
He said: ‘’The minister said we should rely on his integrity and we should hold him responsible. We have had promises for 18 years but the minister has said he is going to disburse this time. The law is there for the minister to follow accordingly. The law says he will bring up guidelines and send it to the National Assembly for vetting and then return to him. That’s a procedure! The minster has said the money belongs to ship-owners thus it’s not supposed to be in the treasury account but the fact that it is in treasury account means the minister has to get approval from the President to cause the CBN Governor through the Minister of Finance to release the money to the five commercial banks . One of the requirements to disburse the funds, is that the funds must be in commercial banks but right now, the money is in TSA which the president when he came to power in 2015 in his wisdom took to TSA. The money used to be paid to the commercial banks before Muhammadu Buhari came and diverted them to TSA.”
He lauded Sambo for his action geared towards ending the 18 year old CVFF tale. He praised: “The money came 18 years ago and since then nobody has told us they are going to disburse the money immediately. Now the Minister has said it! We are not even concerned with how much is in the account. Let’s collect what they are giving us , then eventually we can ask for the balance. It is our money. It contributed money. They have the record so we would eventually ask them for the balance . Every year NIMASA is obligated to do an audited report for us to know what has happened to the fund since 18 years but that’s not the crux at this point but for us to have this money disbursed. We need ships to be able to train seafarers, export goods, and improve the economy. We are waiting for the Minister to do whatever guidelines to disburse the funds; once that is done, we can move from there, the law has stipulated his jobs’’.
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