NIMASA Receives Buhari’s Approval to Disburse $200m Cabotage Vessel Financing Fund
By Daniel Terungwa
After 18 years delays, the Nigerian Maritime Administration and Safety Agency (NIMASA), has received the approval of President Muhammadu Buhari to disburse $200 million Cabotage Vessel Financing Fund (CVFF) to qualified indigenous maritime operators in line with the Treasury Single Account (TSA) policy and the CVGG Guidelines of 2006.
The Cabotage Fund, which was established alongside the Nigerian Coastal and Inland Shipping (Cabotage) Act of 2003 to empower indigenous ship owners to acquire vessels and thus take control of the country’s coastal and inland shipping business, has remained unutilized due to delays in the disbursement of the Fund.
In a recent publication signed by the Executive Director, Finance and Administration of NIMASA, Mr Chudi Offodile tagged “Implementation and Disbursement of the Cabotage Vessel Financing Fund (CVFF): Expression of Interest as Primary Lending Institution,’ the agency stated that the fund would promote the development of indigenous ship acquisition capacity by providing financial assistance to Nigerian operators in domestic coastal shipping.
“The request for the primary lending institution is in line with the Federal Ministry of Transportation guidelines for the implementation of the Cabotage Vessel Financing Fund (CVFF) 2006, which specified the minimum requirement for the participation of banks as Primary Lending institutions (PLIs),” Offodile noted.
The requirements include that the PLIs must have an existing relationship with NIMASA; have shareholders fund over N25 billion, and must have proof of substantial financial support in terms of credits extended to indigenous maritime operators.
The PLIs according to the publication, will be responsible for liaising with NIMASA in determining the risk acceptance criteria for the utilisation of the Cabotage Vessel Financing Fund or issuing of guarantees. They would participate in financing and management of specific projects where necessary to further secure repayment of the loan or obligation; be actively involved in on-lending monitoring and entire loan management, and any other financial advisory or ancillary services as the Fund may determine.
The Director further stressed that banks shall because of the Treasury Single Account policy of the Federal Government, also be prepared to open a dedicated account for each applicant who shall deposit a minimum of 15 percent of the loan request (sum applied for into the account); be committed to contributing between 10 – 35 percent of the loan request and also commit to a cumulative single digit interest rate.
“On approval of the loan request by the Minister of Transportation, NIMASA shall transfer its portion of the loan request into the dedicated account,” he said.
Time after time, the President Muhammadu Buhari led administration has unequivocally emphasised the importance of entrenching local content in both the maritime and the oil and gas sector.
In consonance with the CVFF is the US$350 million Nigerian Content Intervention Fund (NCIF) issued by the Nigerian Content Development and Monitoring Board (NCDMB) which is designed among a few functions to increase indigenous participation in the oil and gas industry, build local capacity and competencies and also to spur productivity and job creation in the oil and gas Industry.
The immediate disbursement of the CVFF will not only impact positively on Nigeria’s blue economy but also translate into a multiplier effect on the entire economy. This is owing to the fact that indigenous shipowners who eventually access the funding, would plough back into the maritime sector with improved capital to acquire more shipping vessels, boost international trade and provide more opportunities for Seafarers and other stakeholders connected to the sector.