The Nigerian Maritime Administration and Safety Agency (NIMASA), has been finalising plans to begin the disbursement of the long-awaited Cabotage Vessel Finance Fund (CVFF) to qualified indigenous shipping companies in less than no time.
Approved by former President Muhammadu Buhari in December 2022, the disbursement was further given a boost by the National Assembly’s recent approval after the outcome of its investigation.
To make the disbursement a reality, NIMASA recently met with the Chief Executives of the five commercial banks appointed as the Primary Lending Institutions (PLIs) and they include Union, Zenith, Polaris, UBA, and Jaiz Banks.
BusinessDay understands that the banks had submitted to the NIMASA the draft modalities for giving loans to shipowners while the latter has sent the draft to the Transportation Ministry as the supervising Ministry.
Also, the indigenous shipowners, who are interested in benefitting from the loan, have also submitted their applications to NIMASA.
Meanwhile, the current leadership of the NIMASA has made efforts toward making the disbursement a reality. Since his appointment as the director general, Bashir Jamoh had made efforts to develop Nigeria’s shipping sector and enhance its contributions to the economy.
As an intervention fund, CVFF was created to provide financial assistance to Nigerian shipowners operating in domestic coastal shipping and enable indigenous shipowners to take control of the Cabotage trade.
According to the guidelines for the disbursement, applicants would make an equity contribution of 15 percent, NIMASA 50 percent, while the remaining 35 percent, would be provided by the banks.
To make it easy for the beneficiaries to repay the loan, NIMASA ensured that the Nigerian National Petroleum Limited (NNPL) takes up 9 percent of the 15 percent of the loan that is supposed to be provided by the prospective beneficiaries.
NIMASA has also insisted that the banks must give out the loan to the prospective beneficiaries at a single-digit interest rate to make repayment easy for the beneficiaries.
Findings show that NIMASA had announced that the money available in the fund is over ₦16 billion and $350 million.
Also, the agency has concluded with the Transportation Ministry, that a total of 28 vessels are expected to be acquired from the estimated $700 million that would be disbursed and that each beneficiary may benefit about $25 million.
In its proactive measure, it had gotten the Ministry of Transportation to liaise with the Minister of Finance and the Central Bank of Nigeria, to take all the necessary actions needed to ensure the disbursement by the Federal Government.
Also, in continuation of the process of accountability, NIMASA and the Transportation Ministry have agreed to allow the funds to go into the Treasury Single Account (TSA) and that when the money hits the threshold of $50 million, the CBN upon recommendation from the Agency and the Transportation Ministry would be made available for disbursement.
Jamoh said that efforts have been made to ensure the disbursement of the Fund enhances local shipping business by creating jobs for the over 2,041 Nigerian seafarers trained by the agency in institutions overseas, out of which over 800 have gained jobs with shipping companies globally.
The seafarers were supposed to be trained by NIMASA and retained in-country to provide a pool of personnel for the maritime sector, but this has not been possible due to the absence of a fleet to provide jobs for them in Nigeria after their training overseas.
It is expected that the ships to be procured by beneficiaries of the CVFF will fill the gap as it is said that one vessel has the capacity to employ up to 40 seafarers.
Also, it is expected that the purchase of the vessels will awaken the nation’s dying marine insurance sub-sector and assist in realising the Blue Economy Initiative, meant to harness the nation’s marine resources for the development of the economy.
The need for NIMASA to have the CVFF disbursed to ship owners is also to enable local shipowners to have the needed number of fleets to participate in the Cabotage business and reduce the dominance of foreign shipping firms in Nigeria’s shipping business.
Industry close watchers believed that the planned disbursement of the Fund is no doubt a step in the right direction, considering the tremendous benefits the step holds for the maritime sector and Nigeria’s economy.
It is however expected that when disbursed, the fund would be properly managed and that the beneficiaries would adhere to the laid down regulations on the repayment.