Recent devt affirms need for disbursement of N51bn Cabotage Fund
Last week in a stakeholder conference organised by the Federal ministry of Transport, Rotimi Amaechi, Minister of Transport, revealed that the N13 billion used for the acquisition of land at Okerenkoko, Delta State for the building of the proposed Nigerian Maritime University by the Patrick Akpobolokemi-led administration of the Nigerian Maritime Administration and Safety Agency (NIMASA), was illegally pulled out of the Cabotage Vessel Financing Fund (CVFF).
CVFF is a pool of fund created under the Coastal and Inland Shipping Act (Cabotage Act) 2003 to enable indigenous shipping operators acquire vessels. This revelation by the Minister has further affirmed the need for the Federal Ministry of Transport through NIMASA, which is the custodian of CVFF, to disburse the fund to credible indigenous ship owners to enable them acquire ships for cabotage trade.
The resource in the fund, which is realised from the collection of a percentage (about 2 percent) of the freight carried by indigenous owned vessels, has remained undisbursed since over a decade that it was created. This means that the money in the fund has not benefited local operators, whom the fund is expected to empower and with the recent development, the amount in the fund has diminished beyond expectations.
Industry close watchers believed that the N52 billion said to have accumulated in CVFF, if properly utilised, can help the nation to not only build capacity among indigenous operators, but to also move from being solely dependent on oil revenue to obtaining revenue from other sectors of the economy.
According to them, developing Nigeria’s huge shipping business, estimated at N2 trillion annually, has become very important at a time when the Muhammadu Buhari-led administration is keen on diversifying the nation’s economy from oil.
Established after the passage of Cabotage Law, the fund is being managed by commercial banks known as primary lending institutions (PLIs), appointed to participate in the lending, monitoring and management of loans under the CVFF scheme so as to promote the goals of cabotage act. The four PLIs include Fidelity Bank, Skye Bank, Diamond Bank, and former Equitorial Trust Bank (ETB), now Sterling Bank.
Worried by the delay as well as the nonchalant attitude of former ministers of transport and director-generals of NIMASA in the disbursement of the fund towards realising its aim, a ship owner who claimed anonymity said that the gap created by none disbursement of the fund has allowed for corruption to set in.
To the ship owner, the alleged removal of N13 billion for land acquisition from the fund has further depreciated the fund without achieving the purpose for its creation, thus the need to ensure the current government channel the resources directly to achieve its course.
“NIMASA needs to release the money accumulated in the Cabotage fund to finance and empower local ship operators, which is the original reason for setting it up. Disbursement of this fund to credible shipping firms can help reduce pressure on government in terms of wealth and job creation for Nigerians especially in the wake of dwindling crude oil price,” said Adewale Ishola, a ship operator.
Ishola notes that disbursing the available N52 billion Fund to the six companies listed years back by NIMASA as beneficiaries and using the fund to repair the over 20 vessels owned by the firms that were shortlisted for repair by the agency, will go a long way in reviving the industry.
To him, the fleet of seafarers, numbered 2,600, who benefited from the ongoing Nigerian Seafarers Development programme (NSDP), would be gainfully employed, if Nigerians start developing fleets.
Ishola, who is also the former president of Association of Master Mariners, lamented that due to low shipping capacity, Nigeria is now the only member of Organization of Petroleum Exporting Countries (OPEC) that does not lift her own crude oil, as a result of which, the nation loses revenue as capital flight to foreign owned vessels. To correct this, he said, that the current government can support local shipping business by empowering them through access to cheap finance for vessel acquisition.
Recall that Emmanuel Ihenacho, chairman of Integrated Oil and Gas Limited once said in an interview with BusinessDay that there is need to implement the provisions of the Coastal and Inland Shipping (Cabotage) Act, promoted under the auspices of NIMASA, to raise the participation of indigenous shipping companies in Nigeria’s shipping business.
Ihenacho, who stated that Nigerian shipping companies are dying because there is no policy provision that ensures they have access to finance, cargoes and proper training, also pointed out that the current government needs to put a proper development plan in place to help develop different kinds of ships under Nigerian ownership.
“Local ship owners can be empowered from the CVFF to enable them have money to buy bigger ships and create opportunity for them to fly Nigerian flags in foreign nations. Nigeria is a diverse economy where different kinds of ships are used to bring in imports like roro vessels, general cargo ships, tanker vessels and others, thus the need to develop fleet that will match Nigeria’s diverse international trade,” he says.
Uzoamaka Anagor-Ewuzie