FG tasks banks on quick disbursement of Cabotage Fund

The Federal Government has called on the five banks appointed as the primary lending institutions for the disbursement of the Cabotage Vessel Financing Fund (CVFF) to fast-track the process of giving the fund to qualified Nigerian shipowners to buy new ships.

Mu’azu Jaji Sambo, the Minister of Transportation, made the call in Abuja at a recent meeting with the representatives of heads of the five banks including Polaris Bank, UBA, Union Bank, Zenith Bank, Jaiz Bank, the DG NIMASA, the MD Shipping of NNPC and other stakeholders.

He told the banks that the Federal Ministry of Transportation has received the approval of the President to disburse the funds and that it is now left for the key players to actualise the Presidential directive.

According to the Minister, it has taken 17 years to get presidential approval for the disbursement of the CVFF Fund.

Sambo said the maritime sector would be a significant income earner for the country if properly managed, adding that it was fulfilling for him to lead the historic process of disbursing the Cabotage Funds.

Read also: FG orders banks to disburse cabotage vessel financing fund

He explained that the President also approved that the 2 percent charge that makes up the Cabotage fund should continue to accrue to the CBN Treasury Single Account (TSA) and that each time the account hits $50 million, the Minister of Transportation should, on the recommendation of NIMASA, direct the CBN to release the amount to any of the five banks to disburse.

Section 44 part VIII of the Cabotage Act 2003 provides for the establishment of the Cabotage Vessel Financing Fund (CVFF) and a 2 percent deduction on Cabotage-protected trade earnings goes into the savings for the development of indigenous tonnage through ship acquisition in Nigeria.

The bankers and other critical stakeholders had hours of closed-door deliberation after the minister’s remark, to chart out a clear course for the final disbursements in the coming days.

The CVFF was established alongside the Nigerian Coastal and Inland Shipping (Cabotage) Act of 2003, to empower indigenous ship owners to take control of the nation’s coastal and inland shipping business, otherwise known as the Cabotage trade.

According to NIMASA, the funds, which are available in naira and dollar components, are about ₦‎16 billion and about $350 million respectively.