Analysts see opportunity for economic diversification, shipping development in N51bn Cabotage Fund

 

The N52 billion accumulated in the Cabotage Vessel Financing Fund (CVFF), if properly utilised, can help the nation not only build fleet capacity among indigenous operators, but also move from being solely dependent on oil revenue to obtaining revenue from other sectors of the economy, analysts have said.

According to them, developing Nigeria’s huge shipping business, estimated at N2 trillion annually, has become very important at a time the Muhammadu Buhari-led administration is keen on diversifying the nation’s economy from being oil driven to becoming non-oil driven.

The Nigerian Maritime Administration and Safety Agency (NIMASA) established the CVFF after the passage of Cabotage Law. The fund, which is being managed by commercial banks known as selected primary lending institutions (PLIs), appointed to participate in the lending, monitoring and management of loans under the CVFF scheme, is aimed at promoting the goals of Cabotage Act. The four PLIs include Fidelity Bank, Skye Bank, Diamond Bank, and former Equatorial Trust Bank (ETB), now Sterling Bank.

Also, the resource in the fund is realised from collection of a percentage (about 2%) of the freight carried by any indigenous owned vessel. This means that the money in the fund is gotten from businesses executed by local operators, whom the fund is expected to benefit.

Haruna Jauro, acting director-general of NIMASA, recently during the visit of the Senate Committee on Marine Transport to the headquarters of the agency, confirmed that the fund had amounted to approximately N52 billion (about $255m), thereby countering the allusion that the Fund had depleted with local players not benefiting from it.

“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 up the fund. Disbursement of this fund to credible shipping firms can help the nation’s economy, especially in the wake of dwindling crude oil price so as to help reduce the pressure on government in terms of wealth and job creation for Nigerians,” Adewale Ishola, a ship operator, said.

While urging the Federal Government to implement the recommendations of the maritime committee set up in 2012 by the former President Goodluck Jonathan, Ishola noted 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 shipping companies that were shortlisted for repair by the agency, would 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), which NIMASA is currently training overseas, would be gainfully employed if Nigerians start developing fleets. “The Nigerian National Petroleum Corporation (NNPC) and international oil companies (IOCs) like Shell, Oando, Total, and others, still engage the services of foreign vessels to lift our crude oil,” Ishola said.

Ishola, who is also the former president of Association of Master Mariners, said due to low shipping capacity, “Nigeria is now the only member of Organisation of Petroleum Exporting Countries (OPEC) that does not lift her own crude oil, as a result of which, the nation loses lots of revenue as capital flight to foreign owned vessels.”

To correct this anomaly, he said the current government could support local shipping business by empowering them through access to cheap finance for vessel acquisition.

Emmanuel Ihenacho, chairman, Integrated Oil and Gas Limited, told BusinessDay in an interview that there was 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 were dying because there was no policy provision that ensured they had access to finance, cargoes and proper training, also pointed out that the current government needed 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 said.