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How Nigerian Exporters Can Mitigate Losses With Cargo Defence Fund

How Nigerian Exporters Can Mitigate Losses With Cargo Defence Fund

Mr. Okwudili Daniels

By Kenneth Jukpor

Mr. Okwudili Daniels is the Secretary of the Cargo Defence Fund, a subsidiary of the Nigerian Shippers’ Council. In this interview with MMS Plus, Mr. Daniels reveals the benefits of the Cargo Defence Fund to Nigerian importers and exporters, he also narrates the history of the Fund and the modus operandi.



How does the Cargo Defence Fund aid Nigerian importers and exporters?

The Cargo Defence Fund is a mutual scheme where importers and exporters contribute via annual registration fees, so that when a registered member runs into problems, the fund could be used to assist the member in solving the problem. The Fund is like the Nigerian equivalent of the Protection and Indemnity (P&I) insurance. Cargo Defence Fund was created to bridge the gap for indigent shippers.

In order to benefit from the fund, you only have to pay a token as registration fee. Nigerian shippers are usually at the mercy of the developed world and when there are cases of losses, Nigerian shippers suffer the most. Although Nigeria has cargoes, we don’t dictate the terms so we are always at disadvantaged positions when we are bargaining. What the Fund does is to appraise the situation when importers/ exporters have a loss and if it is something we think would succeed we would take the issue to court on behalf of our client. At the end of court proceedings, the Fund only takes 10% deduction for the administrative cost. However, where the Committee thinks the issue shouldn’t be pursued any further, we would pay the client 10% of his total loss.

It is sad that all Nigerian exports are done on Cost Insurance Freight (CIF). If you don’t have a platform to protect your interest, you lose your cargo and everything. The Fund can play the role that insurance companies play for importers/ exporters but it is better because the registration is only a token.

It is sad that only few people are aware of the availability of the Cargo Defence Fund, hence low patronage. We are creating awareness so that more people can participate. We also show how to obtain proper documentation from the beginning of the transaction because some of these exporters are not well informed on how to go about their documentation. This makes them unable to pursue their claims in most cases. Apart from the registration fees, the Cargo Defence Fund doesn’t demand extra charges.

How did the Cargo Defence Fund originate?

The Cargo Defence Fund is a project of Nigerian Shippers’ Council was set up because of the need to tackle problems associated with abandonment of legitimate Cargo Claims. The Fund was set up because of the need to tackle problems associated with abandonment of legitimate Cargo Claims successfully. Therefore it seeks to assist the often frustrated and confused Nigerian Shippers in their pursuit of legal remedies and claims recoveries.

Cargo Defence Fund has a legal committee headed by a lawyer on the CDF board and the role of the role of this committee is to look into the complaints of members to establish whether CDF can assist the claimant by taking over the claim and pursuing it in court. When the committee is of the opinion that the case cannot succeed in court, a recommendation of the ex-gratia payment of 10% of the total loss is made to the board to approve and the complaint is paid.


How are the registration fees paid, is it a one-time payment or annually?

It is a one-time payment but it is renewable every year. The fee is just a token, besides it is also categorized. If you do business from N1million to N10million, the registration fee is N15,000, business category from N10million to N100million pays N25,000 while businesses from N100million to N1billion would pay N100,000.

Insurance is usually from 5% but this is just a fraction which is very insignificant when compared to the value of the business.

However, when someone is involved in an incident, he may not have the fund especially if the issue would have to be addressed in a foreign country. You know how much it costs to take a Nigerian lawyer, it costs at least N500,000 but the Fund can stand for you at such times when you may not have the financial wherewithal to get a lawyer. The essence of asking people to pay is because people value what they put their money into. Nigerian Shippers Council is already sponsoring the Cargo Defence Fund.


What happens when the exporter is making an illegitimate claim or where the foreigners insist that Nigerian documents are fake?

The Cargo Defence Fund doesn’t support illegal activities. We would have to appraise the situation. The foreigners can’t claim that Nigerian documents are fake when these documents meet the standards here in Nigeria.


What is the structure and processes for administration of the Fund?

The various Shippers’ interests represented at the level of the Board of Trustees are the Insurance Industry, Maritime Law Practice, Manufacturers Association of Nigeria, NACCIMA, and four seasoned shippers from the four geo-economic zones of the country, the Executive Secretary/CEO and two other representatives from Nigerian Shippers’ Council. Shippers are encouraged to contribute on the basis of their associations, or otherwise as may be worked out because the identified beneficiaries to the Fund are shippers’ registered with the Council, directly or indirectly through the Shippers’ Associations. The Fund maintains a list of the existing Shippers’ Associations spread all over Nigeria.

The services provided by the Fund include; legal / technical advice, loan to pursue claims / litigation / arbitration, payment of risk management services, foreign legal representation, cover for specific risks as agreed, quality information services, general risk management advice and to convene alternative dispute resolution forum.

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