Following the Federal Government’s renewed drive to apply the fund accumulated in the much awaited Cabotage Vessel Financing Fund (CVFF), into the acquisition of vessels, industry stakeholders have given their views on how best to manage the fund for the benefit of the nation’s shipping sector.
The CVFF was established 17 years ago 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 Cabotage trade.
It is also generated from the 2 percent contribution made by all indigenous ship owners from each Cabotage trade carried out on Nigerian waters.
Recall that Chibuike Amaechi, minister of transportation recently set up a committee that would be chaired by the director general of NIMASA, and comprised of other stakeholders, to come up with guidelines for disbursement of the CVFF fund.
Speaking to newsmen in an interview recently after an engagement with Cabotage Operators in Nigeria over the disbursement of CVFF, Mike Igbokwe, maritime lawyer, who stated that ship owners started contributing the money in CVFF since 2003, said that its long overdue and time for government to use the funds for the purpose for which it was established.
“We need to follow the provisions of the constitution and the Cabotage Act in the disbursement of the fund. According to the section 80 of the constitution, public funds that were for specific purposes are not paid into the Consolidated Revenue Fund, and the CVFF is one of the special purpose funds. The government must use it for that purpose,” he said.
According to Igbokwe, many people have been calling for the establishment of Maritime Bank using the CVFF Fund.
To achieve that, it means that NIMASA must go back to the National Assembly to amend the Cabotage Act because Maritime Bank was not one of the purposes for establishing the CVFF.
“Government must not divert the CVFF because it would be invalid, unconstitutional; and illegal to use CVFF for maritime bank,” he stated.
Margret Orakwusi, a member of the CVFF guideline Drafting Committee, pointed out the need for the committee in drafting the guideline, to be specific on the interest rate, duration of the loan and the category of vessels to be acquired using the fund in order not to misuse the funds.
“We need to be specific on the interest rate, duration of the loan by determining if it’s going to be two, five or seven years. We also need to specify the category of vessels that would be acquired because it would be abnormal that when the fund is released, it would be used to buy something that was irrelevant. These were the things that would be looked for to ensure that we have enough coverage and protection in the guideline,” she explained.
Orakwusi, who stated that she had always advocated for setting up of maritime bank with CVFF monies because as a specialised area, borrowing from the commercial bank with the commercial interest rate, makes it difficult for ship owners to survive.
“Shipping is an international business and we are competing with people whose funds are highly subsidised. Foreign ship owners get loans with interest rate that is as low as 2 percent, and can take a very long period to pay back,” she said.
Chidi Ilogu, another maritime lawyer, who described the decision by the minister to set up the committee as a positive step, said it was a clear indication that the Federal Government was committed to disbursing the fund to qualified ship owners.
Noting that the government has to be proactive in developing the nation’s shipping industry, Ilogu said the fund accrued under the CVFF cannot continue to remain in the bank but should be used to enhance indigenous capacity to aid economic growth.
“The minister just wants the industry stakeholders to guide him on coming to a decision on disbursement of the CVFF. It was good to interface so that people can bring in suggestion that will help the industry move forward. The committee he has set up should be able to give him the right suggestions, which will help move the industry forward,” he said.
According to him, Nigeria cannot continue to keep the CVFF money in the bank, adding that it should be used to buy even if it is three or four vessels on a recurring basis to enable the industry benefit from the funds.
Ilogu, however, predicted that ship owners may have to wait for another six months before the commencement of the disbursement of the fund as against the earlier scheduled date in January.
“I envisaged that it was not likely that any implementation can take place before the middle of the year on a positive note because the processes have to be carried out and that will take some time to be fine tuned. The review of the guidelines, the recommendation to the minister and the guidelines has to also be followed through to the National Assembly,” he said.