Home / PERISCOPE / Buhari’s CVFF Approval: Uncertainty Clouds Disbursement Guidelines

Buhari’s CVFF Approval: Uncertainty Clouds Disbursement Guidelines

Buhari’s CVFF Approval: Uncertainty Clouds Disbursement Guidelines

By Kenneth Jukpor

The problems associated with the non-disbursement of Cabotage Vessel Finance Fund (CVFF) in Nigeria seems to have found a matching solution, as the Minister of Transportation, Hon. Rotimi Amaechi revealed last week that President Mohammadu Buhari had given approval for its disbursement.

Globally, shipping is recognized as one of the catalysts for socio-economic development. It is an industry at the fore front of opening up and connecting the world and a major driver in the process of globalization. However, dearth of ship owners in West Africa and Nigeria precisely led to myriad of challenges in the maritime sector as well as other linking industries.

As part of efforts to mitigate these challenges in shipping, the CVFF was created by the Cabotage Act of 2003 in Nigeria to promote the development of indigenous ship acquisition capacity by providing assistance to Nigerian ship owners in domestic and coastal shipping.

The fund which is a consolidated fund is accruable from the 2% levy payable by ship owners on any vessel engaged in coastal trading as well as revenue accumulated from tariffs, fines and waiver under the Cabotage Act.

Since the scheme came into being, the fund hasn’t been disbursed but Amaechi’s revelation last week means there is hope at the end of this tunnel.

“We have approval from the President to disburse the Cabotage funds. We have approval from the President. We don’t want to disburse without discussing with stakeholders. We want to here what you want and how to go about that disbursement. We want to be sure of the outcome of that disbursement”, the Minister said at the Nigerian Shippers’ Council (NSC) 2019 Stakeholders’ Appreciation Night, last week.

Following this announcement MMS Plus reached out to several stakeholders in the maritime sector, including; ship owners, marine surveyors, advocacy groups, among others.

Speaking with MMS Plus on this development, the Managing Director, Sea Transport Services Group, Mr. Aminu Umar described the news as ‘Christmas miracle’ for Nigerian ship owners

“This is good news. We are so happy that this approval has come and we pray that by January 2020 the Ministry would have concluded the guidelines so that the disbursement can commence.

On the kidnapped sailors onboard Nave Constellation in Nigeria, Umar lamented that the problem worsened in the last two months.

”I’m pleased that the Minister has said he would take the security situation personal to ensure the problem is eradicated and Nigerian waters would be secured. It is also a good development that the Minister wants to take the issue personal. We look forward to a time when there would be no security threat in the maritime industry in this country” Aminu added.

While commending the Federal Government on this development, the President of Ship Owners Association of Nigeria (SOAN) Dr. Mkgeorge Onyung described the development as one which elicited ‘mixed feelings’.

Dr. Onyung stressed that ship owners and the entire shipping industry had anticipated the disbursement of the fund for so long.

“We are relieved that the Minister said next year CVFF would be disbursed. However, we aren’t relieved because he said next year but because of the approval in writing. We have waited for twelve years for this and we can’t say that we are tired”

“He already has guidelines as to how to go about the disbursement. Now he intends to meet with the government agencies and also meet with us, we can’t be too sure of the guidelines until that meeting” Onyung added.

Meanwhile, the Chief Executive Officer, Seaguard Services, Mr. Monday Ogadina said he was unconvinced by the news from the Minister.

Ogadina who spoke with MMS Plus at the expert observed that the exciting news he was taking away from the Stakeholders’ Appreciation Night was the promise and inspiration of young members of staff at Shippers’ Council who have brough private sector nous, meticulousness and business strategies to public service.

“Do you really know what I find fascinating about today’s outing? It’s the young workers at Shippers’ Council who have assured that they are there to work hard and already introduced innovation to the system,” he said.

Ogadina, who is a marine insurance expert and surveyor, stressed that the Transport Minister had only made a statement and he would wait until the actual disbursement of the funds before making comments.

The women group in the maritime industry wasn’t left out in the buzz around the disbursement of CVFF as the President, Women’s International Shipping and Trading Association (WISTA) Nigeria; Mrs. Mary Hamman commended the development.

According to her, the President’s approval for disbursing the fund meant that more Nigerians would be empowered to buy ships, refloat their businesses and the entire shipping sector would be better for it.

Hamman noted that such improvement in shipping would lead to more opportunities for seafarers, especially female seafarers who she holds dear to her heart.

“This is a good development and the entire maritime industry should be elated. This would usher in a more vibrant shipping industry in the country” she said.

Meanwhile, the Transport Minister said that the Ministry would meet with heads of NSC, Nigerian Maritime Administration and Safety Agency (NIMASA) and National Inland Waterways Authority (NIWA) to look at the entire maritime industry and know the industry needs.

He, however, assured that if the findings from the meeting with heads of maritime agencies don’t align with what the practitioners want, he would willingly go with the position of the practitioners.

While the maiden meeting with Chief Executives of maritime agencies would hold next week, the Minister assured that the expanded meeting with other stakeholders would follow swiftly as the disbursement of the fund would commence in January 2020.

Speaking with MMS Plus recently, the Chief Executive Officer, Oceanic Energy Limited, Capt. Taiwo Akinpelumi shared some avenues to explore in utilization of the CVFF.

His words: “The fund should be used as seed money to establish a Maritime Development bank and not disbursed to individual ship owners or companies. The government could be approached for intervention fund for the bank while CVFF also goes there and experts in the banking sector should be allowed to manage it.”

“The bank would set up as a conventional banking institution but the goal would be to ensure that ship owners get loans at single digit interest rate. The double digit interest rate has been a major fiscal challenge over the years” he recommended.

Akinpelumi also suggested that CVFF could be channeled into developing a Protection and Indemnity or (P&I) club for the country.

“The CVFF which was contributed by ship-owners can be used to develop a formidable P&I, so that the huge capital flight going abroad would be done here in Nigeria. The insurance companies in Nigeria can’t underwrite P&I because it would be very expensive,” he added.

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