Time to Disburse Cabotage Vessel Financing Fund
The important role played by the media in national and economic development cannot be over-emphasised. The role is multifaceted. It ranges from information dissemination, agenda setting to advocacy. One can imagine a society without the media. It is in this direction that Shipping Day Magazine was set up. The quest is to be part of the larger role of the media in nation building. Shipping Day has its corporate background from online publication started in October 2014.
Run by media professionals with impeccable records of serving in national tabloids, Shipping Day believes in truth which remains the strongest pillar upon which a society is built. We shall strive to promote truth and equity to be able to contribute our own quota to socio-economic development.
The magazine is hitting the road running as a quarterly medium and targets featuring national and other industry issues as they impact positively or negatively on the economy. This will be in the form of analyses, special features, focus, exclusive stories and general news.
Being the maiden edition, our editorial is on the Cabotage Vessel Financing Fund (CVFF) which is as old as the Cabotage shipping regime established in 2003 mainly to promote indigenous shipping through loans to local operators. CVFF is incidentally made up of contributions from indigenous operators by way of fees imposed by the apex maritime regulatory agency, the Nigerian Maritime Administration and Safety Agency (NIMASA).
CVFF came with the Cabotage Shipping policy after the suspension of the Ship Acquisition and Ship Building Fund (SASBF) some years before. Under SASBF, government assisted indigenous shipping companies to acquire their own vessels to enable them compete with foreign shipowners. The idea was to promote indigenous fleet capacity. However, SASBF was suspended when some shipping companies that benefitted from the fund saw it as simply their own share of the national cake. Most of the firms could not pay back the loans and this affected the plan of the government to continue to make the same facilities available to other indigenous operators. Some even used the loan to trade in other businesses instead of ship acquisition. Angered by this development, the management of NIMASA decided to suspend the fund.
In do so, NIMASA introduced CVFF with tight lending conditions. This was seen as a good development to check the repeat of what happened to SASBF. But the concern of industry stakeholders over the years is that NIMASA after 18 years could not give out loans from the CVFF. Few who acquired vessels did so under harsh lending environment of the commercial banks. About one or two companies, it was gathered had sought the assistance of NIMASA to acquire vessels and received attention but through discreet arrangement. Since then, it has been promise after promise without any fulfillment. In 2017, the Minister of Transport, Hon Rotimi Amaechi had made it clear that the fund will not be disbursed. Amaechi was later to change his decision but gave conditions, including asking the different shipping companies associations to form a consortium to be able to benefit from the fund. This was seen as political pronouncement because the Honourable Minister may not have been unaware of the division among shipowers associations and coming together was therefore difficult. Early 2018, the government tilted towards changing its mind on some of the conditions. This time, the Director-General of NIMASA, Dr. Dakuku Peterside, promised to disburse the fund. Peterside who put the fund at $124m was to shift later as the year neared to end with another promise to disburse it in 2019. This obviously is seen as not being realistic because of political events in the country. With the 2019 election, many believe that the administration will not have time to carry out the disbursement. Shipping Day urges the government to consider the economic benefits that the disbursement of the CVFF will bring to the country. For a government which agenda include opening the sector to contribute to national economic development, now is the time to disburse the CVFF. In doing so, government should not be political on who benefits from the fund. The criteria should be that the beneficiaries will deploy the fund for the purpose it was received, acquire the right bottom as part of the indigenous shipping development. With a multiplier effect on such disbursement, Nigeria stands to make more economic gains as the vessels are deployed into operations with more seafarers being employed as well as training opportunities for cadets to acquire sea-time training on board vessels. Since the fund is to be disbursed by a commercial bank, it is left for the institution to apply necessary conditions for repayment. Government can no longer continue to hold the fund in its kitty with excuses of the past when in the first place, this fund was contribution from indigenous shipping companies for the purpose of growing local fleet.
*Culled from the SHIPPING DAY MAGAZINE
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