By Kenneth Jukpor
Globally, shipping has been recognized as one of the catalysts for socio-economic development. It is an industry that has been at the fore front of opening up and connecting the world and thus is a major driver in the process of globalization. However, in West Africa and Nigeria precisely there are no ocean-going ships, a problem which has 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 Cabotage Vessel Finance Fund (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 which is over $100 million has never been used for what it was designed for. However, the Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA) Dr. Dakuku Peterside recently stated that NIMASA has concluded plans to disburse $100 million CVFF to indigenous ship owners at a single digit interest.
He said funds from the CVFF and the counterpart contribution from the financial institutions would help drive down the interest rate for ship owners wishing to acquire vessels with the fund.
He also assured that the agency has started to work towards ensuring that the CVFF was disbursed in accordance with set down regulations, adding, “we are determined to disburse CVFF according to the law and according to regulation. We are dedicated, we are committed and we are passionate about disbursing it.”
“We would match the CVFF fund with some money coming from the financial institutions. This will crash the rate of borrowing, and that is why we are passionate about disbursing CVFF to bring our own funds to come almost at the cost of nothing and match it with their own fund coming at the rate of 25%. The first thing that would happen is that the rate would crash from 25% to a one digit interest rate. CVFF is lying at the Central Bank of Nigeria under TSA arrangement, we are working hard to disburse it, and it is over a hundred million dollars”, Dakuku said.
Although several stakeholders in maritime sector have expressed displeasure at the non-disbursement of CVFF, others have advocated that the Fund be used to develop a maritime development bank rather than disbursed to ship owners.
Speaking with MMS Plus on the fate of CVFF, the Public Relations Officer of the Nigerian Indigenous Ship-owners Association (NISA) Engr. Emmanuel Ilori said, “I am one of those who started the campaign for the CVFF to be used to create a maritime development bank. The Nigerian maritime industry cannot develop if you give that money which is well over $100 million to a group of six people.”
According to Ilori, there are so many avenues for the maritime industry to develop and the development of a maritime bank will help improve several sub-sectors of shipping in Nigeria, ranging from the development of ship yards to ship building, repairs, etc. He stated that the reluctance of commercial banks to give loans to stakeholders in shipping underlines the importance of the maritime development bank.
“Don’t forget that established commercial banks are reluctant to give loans to the maritime sector because of the experience they have had in the past. When they do give out these loans, the interest rates are too high. The maritime development bank should be able to carter for the financial needs of the various sectors of industry. We want to build ships in Nigeria, we intend to do the repairs and have Nigerians man the ships; all these require funding but where would the funds come from if we give the CVFF fund to a group of people?” he added.
Meanwhile, the Chairman of the House Committee on Maritime Safety, Education and Administration, Hon. Mohammed Umar Bago, recently said that the Committee had already registered its displeasure against the non- disbursement of the funds.
Bago also disclosed that some ministerial bottlenecks have been responsible for the non-disbursement, adding that the Committee would do all within its powers to ensure that the fund is disbursed to local shipping operators.
Bago endorsed the disbursement of the fund to ship owners to acquire vessels even as he stressed the need for the Presidency to intervene in the situation.
He stated: “It is a shame that we have over a N100 billion in the Cabotage Vessel Financing Fund and our people cannot access the fund. There is a need for the Presidency to intervene in the matter so as to ensure that local shipping operators are empowered with a view to growing the economy.”
On her part, the President of Africa Women in Maritime (WIMA), Nigeria chapter, Barr. (Mrs.) Jean Chiazor-Anishere told our correspondent that the fund shouldn’t be given to ship owners but be channeled towards the establishment of a maritime development bank.
“The CVFF should be used to develop a maritime bank; using the 100m as its reserve. The ship owners should be encouraged to meet the requirements of the bank and at single digit interest rates.” She stated.
Shipping is a serious business and it requires astute funding. Although the Minister of Transportation, Hon. Rotimi Amaechi is result-driven as he has seen the multiple advantages of owning ships especially by the indigenous players on the carriage of goods, only the availability of funds at low interest rates would lead to an enduring transformation of shipping activities in the country.
The development of a maritime bank would also go a long way to grow other sectors like the banking, insurance, legal services, etc. Considering the massive cargoes Nigeria imports/ exports annually, it is important that more Nigerians participate in the carriage of these goods.
As the former President of Nigerian Trawler Owners Association (NITOA) Barr. (Mrs.) Margaret Orakwusi puts it; “It is high time Nigerians asked themselves why smaller nations like Singapore and Greece, for instance, are able to muster such huge investment in ship building and facilities. What makes their ship owners and those who have invested in shipping sleep better is the access to cheap funding and we can’t compete with that?”
Orakwusi who was speaking during an exclusive chat with MMS Plus also quizzed, “How can you compete with somebody who has a more stable currency than the naira and gets loan at 1-3% interest and I’m struggling to get loan at 20% interest? Already, you have failed in the competition. We need to defend our currency and bring down our interest rates to enable us be competitive. These are the issues; however we have the market, population and the tonnage in our favour.”
Amaechi had assured maritime stakeholders in 2016 that he would not disburse the CVFF to acquire the national carrier but will be driven in partnership with private investors. Lack of funds has also stalled the progress of the national carrier, a situation which would have been remedied with the availability of a maritime development bank.
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