After 23 Years, Nigeria Begins Disbursing Financing to Local Shipowners
Nigeria has started to disburse the cabotage vessel financing fund (CVFF), a scheme created over two decades ago to boost domestic ship-ownership. Last week, Nigeria’s Minister of Marine and Blue Economy, Adegboyega Oyetola, presided over the launch of a digital portal, which will be used for accessing the CVFF. The fund was created back in 2003, when the Coastal and Inland Shipping Act (Cabotage Act) was enacted.
The launch of the fund comes almost a year after Oyetola signaled the end of waivers given to foreign shipping companies to operate within Nigerian coastal waters. According to the country’s Cabotage Act, coastal shipping is restricted to Nigerian-owned or operated vessels. However, the government has been extending waivers to foreign vessels owing to limited local capacity.
“The era of indiscriminate waivers is ending. It is time to build Nigerian tonnage, support local employment and give indigenous operators a fair chance to succeed,” Oyetola said last year.
For the 23 years CVFF has been in place, it has amassed over $700 million. The fund has grown from the 2% mandatory deduction on cabotage-protected shipping in Nigeria. Unfortunately, local shipowners have over the years been unable to access the fund due to lack of an institutional framework for disbursement.
With the portal now launched, qualified applicants could access up to $25 million, constituting 70% of the loan. In addition, the applicant will be required to raise a minimum 15% equity contribution, while the remaining 15% will come from a participating bank. As per the CVFF framework, the Fund will be managed by the Nigerian Maritime Administration and Safety Agency (NIMASA) in collaboration with vetted lending institutions. The loan tenure will be 8 years with an interest rate of 6.5%.
“The CVFF presents a generational opportunity for Nigerian shipowners to scale, modernize fleets and compete effectively in coastal and regional trade. Shipowners must approach this fund with strong governance and bankable business plans,” commented Ladi Olubowale, President of the African Shipowners Association- Nigeria.
The CVFF disbursement also comes at a time of renewed interest by local investors to establish shipping lines and acquire vessels. Last year, the Clarion Group founded the first fully indigenous container line in Nigeria, Clarion Shipping. The company has acquired a 349 TEU capacity container feeder, Ocean Dragon, and has plans to expand its fleet to target the broader regional market in West Africa.
that matters most
Get the latest maritime news delivered to your inbox daily.
Last year, Nigeria welcomed its first locally owned floating production, storage and offloading (FPSO) vessel. The FPSO Emem is owned by the Nigerian shipping company Oriental Energy Resources (OER).
Top image courtesy 28london9973 / CC BY SA 4.0