$100m CVFF: Stakeholders call for Maritime Bank to develop shipping business

Worried by the inability for Nigerian ship owners to fully participate in driving the nation’s shipping business, industry stakeholders have called on the Federal Government to promote shipping development by facilitating the establishment of Maritime Development Bank.
The Maritime Development Bank when established would special in funding ship acquisition and other maritime related projects, by providing cheap and affordable funds for Nigerian ship owners to acquire ships especially at the wake of high cost of servicing bank loans in Nigeria.
Currently, the high lending rates of banks to ships owners for vessel acquisition, has been one of the problems of ship financing in Nigeria.
Shipping is capital intensive and has long gestation period, meaning that the current debt financing regime in Nigeria does not support ship financing. In many countries, ship owners get as low as 1 to 3 percent lending rate for ship acquisition, making it difficult for Nigerian ship owners that get same facility at 25 percent to compete with foreign counterparts.
Margret Orakwusi, former president of Nigerian Fishing Trawlers Association said recently in a stakeholders’ forum held in Lagos that Nigerian ship owners are struggling to compete with their foreign counterparts, who get funding from banks from their countries of origin, at single digit while Nigerians get fund at double digit.
“We generate cargoes locally but our indigenous ship owners struggle to participate in the transportation of those locally generated cargoes due to their inability to buy quality vessels. Ship owners are losing jobs to their foreign counterparts while Nigerian seafarers are also losing job opportunities to foreigners,” said Orakwusi.
According to her, Nigeria has a fund known as the Cabotage Vessel Financing Fund (CVFF), which is a contribution by indigenous ship owners, which is currently idling away at the bank without the Nigerian Maritime Administration and Safety Agency (NIMASA), the custodian of the fund, making concrete plans to disburse it to deserving ship owners.
“CVFF has accumulated over $100 million and it is ship owners’ funds, which does not belong to the government. The fund was originally handed over to the NIMASA as a regulator to ensure that it was appropriately utilized and not for them to squeeze life out of us,” she stated.
She suggested that the money that accumulated in the fund can be used to set up a Maritime Development Bank that would understand the intricacies of shipping business. “We need our own bank that would finance the development of ship building yards, ship acquisition and other maritime related projects.
Collaborating her views, Raymond Omatseye, a former director-general of NIMASA, who said that Coastal and Inland Shipping (Cabotage) Act of 2003 stated that CVFF should be establish by allowing indigenous ship owners to pay about 2 percent of every cargo carried, specifically for the development of local shipping business.
He stated that the fund, according to law, must be disbursed to ship owners in line with the established guideline, meaning that government can go ahead to disburse the fund in line with the guideline. And that there is no need for the government or any minister of transport to put another guideline in place for the disbursement of the fund.

Uzoamaka Anagor-Ewuzie