Olisa Agbakoba Legal (OAL) has unveiled a legal framework to reduce lending risks under the $700 million Cabotage Vessel Financing Fund (CVFF).
This was unveiled during the maiden Maritime Policy Roundtable, where stakeholders proposed stronger credit assessments, legal due diligence, effective risk management and enforceable security arrangements for CVFF implementation.
The roundtable was organised as stakeholders continued discussions on the implementation of the CVFF, which was established under the Cabotage Act to support vessel acquisition, strengthen indigenous shipping capacity and expand Nigerian participation in domestic coastal trade.
Olisa Agbakoba, Senior Partner at OAL, stated that the Cabotage Act established the CVFF to support the acquisition of vessels by indigenous shipping operators and to increase Nigerian participation in domestic coastal trade.
He further provided a historical overview of the CVFF, tracing its development within Nigeria’s broader efforts to promote indigenous ownership and participation in the shipping industry.
Agbakoba examined major developments in Nigeria’s maritime policy, including the establishment of the Nigerian National Shipping Line and the enactment of the Coastal and Inland Shipping (Cabotage) Act 2003.
Collins Okeke, Partner at OAL, presented a legal and credit-risk framework to assist participating financial institutions in assessing maritime finance risks, protecting their loan portfolios, and reducing exposure to non-performing loans.
Okeke identified credit-risk assessment, corporate and regulatory due diligence, security and facility structuring, and clear default and recovery procedures as important safeguards for sustainable CVFF lending.
He stated that financial institutions should independently assess applicants’ financial capacity, existing debt obligations, operational experience and projected cash flow rather than rely solely on information provided by applicants.
He also highlighted the need to verify beneficial ownership, regulatory compliance and the source of applicants’ mandatory equity contributions before financing is approved.
Nicolas Bernard, the managing director of NBC Maritime Ltd., stated that acquiring a vessel was only the beginning of the investment process, noting that successful operations were essential to generating returns and maintaining asset value.
He made this known in a presentation on professional ship management and its role in protecting maritime investments and preserving the long-term value of financed vessels.
Bernard identified technical management, preventive maintenance, crew management, regulatory compliance, procurement, financial oversight and digital monitoring as important components of professional ship management.
He also emphasised the importance of involving professional ship managers from the early stages of vessel selection and acquisition.
Participants at the roundtable also noted the need to examine cargo reservation systems in other jurisdictions, given the close link between cargo reservation arrangements and banks’ ability to finance vessels on viable terms.
Discussions at the roundtable extended beyond the immediate implementation of the CVFF to the development of a sustainable framework for long-term maritime financing in Nigeria.
Participants considered cargo-backed financing and long-term Contracts of Affreightment, which provide for the transportation of agreed quantities of cargo over a specified period, as potential mechanisms to create predictable revenue streams for indigenous shipping operators and to improve their ability to secure and repay vessel-financing facilities.
To sustain this momentum, participants agreed that the forum should expand its membership to include ship management experts, marine insurance practitioners, marine surveyors, engineers and valuers, broadening the pool of expertise available to support safe and sustainable vessel financing.
The forum also nominated Wale Mesioye of Fidelity Bank to serve as its coordinator, working with Olisa Agbakoba Legal to build a body of knowledge and expertise around ship financing.
Participating banks were further encouraged to develop and strengthen dedicated maritime-finance units within their institutions.
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