‘CVFF Should Be Disbursed to Consortium, Not Corporate Individual’
SAMBO, TRANSPORT MINISTER
• ‘We must avoid pitfalls of undefined stakes and wrong concentration of funds’
By Francis Ugwoke
For a robust promotion of indigenous shipping development capable of lifting Nigeria to operating globally and not limited to just affreightment of imported petroleum products within the territorial waters, the federal government has been cautioned against disbursing the Cabotage Vessel Financing Fund (CVFF) to individual corporate shipping companies.
Shipping industry experts who are also stakeholders advised that the management of the Nigerian Maritime Administration Agency (NIMASA) should consider disbursing to a group of indigenous shipping companies who can come together to form a national vessel Consortium or alliance to benefit from the exercise.
A shipping expert and also a freight forwarder, Dr. Eugene Nweke , who spoke on behalf of other freight forwarders explained that the fear was that “disbursement to corporate individuals/firms may not achieve the overall objectives in the face of challenges in the global shipping industry or in case of financial difficulties”.
Nweke said that it was better to disburse to “group of operators teaming up together to form a common shipping line”.
He called on the Minister of Transport, Alhaji Muazu Sambo and the Director General of NIMASA, Dr. Bashir Jamoh who he commended for having demonstrated glaring commitment and transparency to ensure that the disbursement of the CVFF was effective in terms of achieving the desired objective.
He said that this was by looking at a global perspective and national interest instead of running into the mistakes of the past.
He further explained that by disbursing to consortium of Nigerian shipping operators, the government would be adding impetus to the exercise as well as changing the narrative of our national shipping activities .
Nweke who was asked by SHIPPING DAY to assess the current process by NIMASA to disburse the CVFF and also advise the agency on the national assignment looking at the past narrative that led to the suspension of the Ship Acquisition and Ship Building Fund (SASBF) about two decades ago said a consortium would have more vessels in its fleet to trade in international routes “in a joint schedule for a specific route with common ports of calls”.
He also listed the advantages of consortium and global alliance, as follow:
“Member lines build operational capacity working as a team, build big vessels to achieve economy of scale and exchange slots on individual vessels in proportion to the total slot committed by each member.
“ Member lines save on capital investment by not building as many operational worthy vessels as they would have if they were operating independently. Instead they build enough vessels to jointly operate in the consortium with like minds partners to achieve high frequency of sailings and deploy a bigger and efficient vessels”
.
He added, “ we must avoid the pitfalls of undefined stakes and wrong concentration of funds.
“We wish to reiterate in strong terms that the experience with a similar disbursement arrangement in the past shows that usually, the notice for the disbursement of designated public fund for industrial or sectoral development attract or creates a scenario akin to “The scrambling and partition for Africa”, without recourse. However. in the case of the CVFF it could be preferably described as ” Industry Strategic clamoring for the CVFF disbursement”.
Nweke said that in view of the above, there was the need for the Ministry of Transportation and NIMASA to carry out a due diligence by way of KNOW YOUR CUSTOMER (KYC) on the shipping firms applying to benefit from the disbursement scheme.
He explained, “The obligation to probe their respective integrity as an individual and their firms operational/financial state is key; measuring and putting their operational track records on scale of performance. This is apt so as to ensure that only reputable and operational able individuals and their firms qualify for the disbursement under a Consortium and Alliance arrangement” .
.
Full details of Nweke’s statement read:
”
“Ideally, there is need to understand that in one hand that the disbursements of the Cabotage Vessel Financing Fund (CVFF) is to a Ship Owner or an Operator of Vessel that transports goods for the Shipper. On the other hand is the underlying intents or vision of the CVFF, which is to develop or accelerate local capacity building with the aim of increasing national fleets and sailing the deep blues of the world flying the national flags , and promoting the effective participation in the international shipping routes, especially, fulfilling the ideals of the Cabotage/Local Content legislative objectives of the nation.
For emphasis, the Ship Owner or Operators owns and operates such ships ranging from:
a). Container Ship. (b). Conventional or Break Bulk Ship. (c). RO/RO ( Roll On – Roll Off) Ship. (d). Lash Ship. (e). Bulk Carrier Ship. (f). Oil Tanker Ship. (g). LNG/LPG Tanker Ship. (h). Coaster Vessel. ( i). Feeder Ship. (j) Special Types of Ships such as: ● Heavy Lift Carriers. ● Livestock Carriers. ● Oil Rig Supply Boats. ● Reefer /Fruit Carriers. ● Car Carriers. ● Tug Boats.
In view of the above, as a developing nation who must have capacity to exhibit a clear developmental focus of the areas of our shipping specialities ( foster the maximization of our comparative advantages in natural endowments and expertise).
Pertinently, it is expected that the Federal Ministry of Transportation will consider the disbursement of the CVFF with a clear vision, pointing to which aspects of shipping obligations require a purposefully development attention. While bearing in mind the availability of a corresponding national freights/ marketplaces across the regions.
Wherefore, the Federal Ministry of Transportation has a duty to ensure that it achieves a particular shipping development goal with its CVFF disbursement scheme, hence, the CVFF administrative policy strength should focus and target to engender, either of the following:
(a). Preparation towards boosting the nation’s participation in the African Continental Free Trade Area – AfCTA implementation regime.
(b). To rejig the private sector effective participation in the African Integrated Maritime Strategy aka the evolution of the “Blue Economy” concept.
c). To stimulate corresponding logistics for the effectiveness of the deep sea port operations – thereby achieving competitive edge within the subregion and attainment of the regional transhipment hub status.
d). Deliberate Integration and prompt participation in the lifting of Nigeria Crude oils.
e). Deliberate integration and prompt participation in the lifting of our liquidified natural gas.
f). Deliberate integration and prompt participation of our national fishing industry.
g). Deliberate integration and prompt participation in the quest to reenact our cold supply chains operations, in the face of our quantum national farm produce and deciduous fruits.
Once more we reiterate here that the primary vision of the CVFF is for a national sectoral development, therefore should be clearly stated. We hereby insist that the CVFF disbursement must not be done with the intent and spirit of business as usual. This is because the 21st century shipping transportation is technology driven and further embraced by the idea of ONE WORLD.
Nigeria like any Shipping nation reckons with the availability of some exportable products across the region, expectedly the variation in prices will in turn contribute to the cachet or image of our products, however the greater part of exportable products consideration is the shipping factor. In addition, the maximization of our cheap labor application will increase our freight availability if other factors are properly put in place.
In buttressing this, it must be observed that the Nigeria import and export markets need to grow in order to fulfill and meet the local and international demands of her products. This development now prompted various dynamic changes in the shipping industry, especially in terms of the reinvention and development of vessels and ports designs, with an intent to expand its market share retention or increase, while paying attention with the new developments in technology, which allows for new standards and boundaries to be created.
We wish to reiterate in strong terms, that the experience with a similar disbursement arrangement in the past shows that usually, the notice for the disbursement of designated public fund for industrial or sectoral development attract or creates a scenario akin to “The scrambling and partition for Africa”, without recourse. However. in the case of the CVFF it could be preferably described as ” Industry Strategic clamoring for the CVFF disbursement”.
Therefore, the Freight Forwarders in this regard expected that ordinarily the Federal Ministry of Transportation should have carried out a due diligence by way of KNOW YOUR CUSTOMER (KYC) on the shipping firms that had applied under the disbursement scheme. The obligation to probe their respective integrity as an individual and their firms operational/financial state is key; measuring and putting their operational track records on scale of performance. This is apt so as to ensure that only reputable and operational able individuals and their firms qualify for the disbursement under a Consortium and Alliance arrangement .
In view of the above, may we posit here that the Honorable Minister needs to consider the concept of “Consortia/Global Alliance” in the Disbursement of the CVFF to the Ship Operators or Owners in Nigeria, so as to fast track the realization of the industry and national set goals, filling the dearth in the sector.
Here again, without sounding more academic than modest, we crave your indulgence to make further clarification on this proposal, with the following explanation on this concept :
” A consortium is a group of shipping lines which combine their vessels in a joint schedule for a specific route with common ports of calls. Members lines will swop slots on the vessels in proportion to the number of vessels they put into the consortium.
Global Alliance allows vessels sharing and slot swopping/purchase and cover a wider geopolitical scope, which includes more than one major trade route.
This concept has been adopted by major shipping lines as a solution to the volatility in the liner shipping. The viability of maritime transport is very much dependent on the world economy and Consortia and Global Alliance allows shipping lines to make adjustments to schedule and capacity among member lines”.
The Advantages Of Consortia and Global Alliance:
This includes but not limited to:
a). Member lines build operational capacity working as a team, build big vessels to achieve economy of scale and exchange slots on individual vessels in proportion to the total slot committed by each member.
b). Member lines save on capital investment by not building as many operational worthy vessels as they would have if they were operating independently. Instead they build enough vessels to jointly operate in the consortium with like minds partners to achieve high frequency of sailings and deploy a bigger and efficient vessels.
c). In container ship, it allows member lines the free use of each other containers to reduce the empty positioning costs.
d). Member lines can react quickly by withdrawing capacity when there is a recession and likewise, thereby increasing capacity when there is recovery in the world trade.
Take note the advantages of Consortia and Global Alliance abound depending on operational objectives, however, the import of this reference with regard to the CVFF disbursement, is to propose by way of domestication a “National Vessel Consortia and Alliance Operational System”.
It is important to state that from a professional point of view, the Freight Forwarders believe that under the prevailing circumstances surrounding the disbursement of the CVFF, the Federal Ministry of Transportation has the onerous task to review its vision and objectives of disbursing the CVFF to ensure it does not leave out the core intents of building a sustainable national shipping capacity & development and operations as noted above.
The Forwarders are of the opinion that the Federal Ministry of Transport also has a duty to build trust amongst the shipping operators so that they can collectively develop their personal effectiveness. For this to happen, the Federal Ministry of Transport must establish a clear, compelling vision that will guide and energize every operator in the Nigeria shipping industry, and this to us, is the window created by the CVFF disbursement.
Therefore, to establish a clear, compelling vision in this regards, the Ministry as a matter of priority has to rethink the CVFF vision as an overall destination and not a journey through. For instance, though circumstances usually changes our transport means and routes, but the good news remains that, we know our destination. So it has to ensure to stay on course, focusing on the getting to the destination, irrespective of the seeming changes and difficulties, National interests should be paramount superintend any other considerations.
As Forwarders, we may need to reinstate that, the CVFF should assume its disbursement with clear guiding vision, having the capacity to:
• Inspire operators to enhance commitment.
• Show clear and actionable focus and usages, mitigating abuses.
• point at the beneficiaries sets values to guide actions and rechannelling efforts alright, with patriotism in the centre.
• Help to solve salient problem in the industry, rekindle confidence, guide decision making and bring about innovative and regional competition.
• To improve and promote teamwork and consistency in operations and in practice.
• To be seen as adding value to the maritime industry always.
Notably, it has been reported that the disbursement modalities are yet to be released by the concerned banks, but is said to include the interest rate concerns, tenure of fund payback, fund accessing requirements, e.g. requisite collaterals and other qualifications criteria.
International best practices entail that the interest rate for the disbursement of the CVFF must be of a unified standard template application, all of these modalities fall under secondary focus of the CVFF scheme.
Notwithstanding, the Freight Forwarders strongly advocate for a CVFF disbursement or implementation under a National Vessel Consortia and Alliance Operational System ” consideration. Our fear being that disbursement to corporate individuals/firms may not accelerate the overall objectives in the face of challenges in the global shipping industry ( post covid 19), or in case of financial difficulties than when disbursed to operational worthy group of operators ( teaming up together to form a common shipping lines).
At any case, we trust the wisdom of the Honorable Minister who have demonstrated industry commitment to put this saved sum into effective use and thereby adding impetus and positioning to change the narrative of our national shipping activities.
However, we must avoid the pitfalls of undefined stakes and concentration of funds.
We stop here for now, other questions, you raised shall be answered in our next chat”.
Fwdr (Dr) Eugene Nweke, Rff, Fnis, Fptm, Fffa, Fasca.
@ Sea Empowerment and Research Center RTG
By Francis Ugwoke
For a robust promotion of indigenous shipping development capable of lifting Nigeria to operating globally and not limited to just affreightment of imported petroleum products within the territorial waters, the federal government has been cautioned against disbursing the Cabotage Vessel Financing Fund (CVFF) to individual corporate shipping companies.
Shipping industry experts who are also stakeholders advised that the management of the Nigerian Maritime Administration Agency (NIMASA) should consider disbursing to a group of indigenous shipping companies who can come together to form a national vessel Consortium or alliance to benefit from the exercise.
A shipping expert and also a freight forwarder, Dr. Eugene Nweke , who spoke on behalf of other freight forwarders explained that the fear was that “disbursement to corporate individuals/firms may not achieve the overall objectives in the face of challenges in the global shipping industry or in case of financial difficulties”.
Nweke said that it was better to disburse to “group of operators teaming up together to form a common shipping line”.
He called on the Minister of Transport, Alhaji Muazu Sambo and the Director General of NIMASA, Dr. Bashir Jamoh who he commended for having demonstrated glaring commitment and transparency to ensure that the disbursement of the CVFF was effective in terms of achieving the desired objective.
He said that this was by looking at a global perspective and national interest instead of running into the mistakes of the past.
He further explained that by disbursing to consortium of Nigerian shipping operators, the government would be adding impetus to the exercise as well as changing the narrative of our national shipping activities .
Nweke who was asked by SHIPPING DAY to assess the current process by NIMASA to disburse the CVFF and also advise the agency on the national assignment looking at the past narrative that led to the suspension of the Ship Acquisition and Ship Building Fund (SASBF) about two decades ago said a consortium would have more vessels in its fleet to trade in international routes “in a joint schedule for a specific route with common ports of calls”.
He also listed the advantages of consortium and global alliance, as follow:
“Member lines build operational capacity working as a team, build big vessels to achieve economy of scale and exchange slots on individual vessels in proportion to the total slot committed by each member.
“ Member lines save on capital investment by not building as many operational worthy vessels as they would have if they were operating independently. Instead they build enough vessels to jointly operate in the consortium with like minds partners to achieve high frequency of sailings and deploy a bigger and efficient vessels”
.
He added, “ we must avoid the pitfalls of undefined stakes and wrong concentration of funds.
“We wish to reiterate in strong terms that the experience with a similar disbursement arrangement in the past shows that usually, the notice for the disbursement of designated public fund for industrial or sectoral development attract or creates a scenario akin to “The scrambling and partition for Africa”, without recourse. However. in the case of the CVFF it could be preferably described as ” Industry Strategic clamoring for the CVFF disbursement”.
Nweke said that in view of the above, there was the need for the Ministry of Transportation and NIMASA to carry out a due diligence by way of KNOW YOUR CUSTOMER (KYC) on the shipping firms applying to benefit from the disbursement scheme.
He explained, “The obligation to probe their respective integrity as an individual and their firms operational/financial state is key; measuring and putting their operational track records on scale of performance. This is apt so as to ensure that only reputable and operational able individuals and their firms qualify for the disbursement under a Consortium and Alliance arrangement” .
.
Full details of Nweke’s statement read:
”
“Ideally, there is need to understand that in one hand that the disbursements of the Cabotage Vessel Financing Fund (CVFF) is to a Ship Owner or an Operator of Vessel that transports goods for the Shipper. On the other hand is the underlying intents or vision of the CVFF, which is to develop or accelerate local capacity building with the aim of increasing national fleets and sailing the deep blues of the world flying the national flags , and promoting the effective participation in the international shipping routes, especially, fulfilling the ideals of the Cabotage/Local Content legislative objectives of the nation.
For emphasis, the Ship Owner or Operators owns and operates such ships ranging from:
a). Container Ship. (b). Conventional or Break Bulk Ship. (c). RO/RO ( Roll On – Roll Off) Ship. (d). Lash Ship. (e). Bulk Carrier Ship. (f). Oil Tanker Ship. (g). LNG/LPG Tanker Ship. (h). Coaster Vessel. ( i). Feeder Ship. (j) Special Types of Ships such as: ● Heavy Lift Carriers. ● Livestock Carriers. ● Oil Rig Supply Boats. ● Reefer /Fruit Carriers. ● Car Carriers. ● Tug Boats.
In view of the above, as a developing nation who must have capacity to exhibit a clear developmental focus of the areas of our shipping specialities ( foster the maximization of our comparative advantages in natural endowments and expertise).
Pertinently, it is expected that the Federal Ministry of Transportation will consider the disbursement of the CVFF with a clear vision, pointing to which aspects of shipping obligations require a purposefully development attention. While bearing in mind the availability of a corresponding national freights/ marketplaces across the regions.
Wherefore, the Federal Ministry of Transportation has a duty to ensure that it achieves a particular shipping development goal with its CVFF disbursement scheme, hence, the CVFF administrative policy strength should focus and target to engender, either of the following:
(a). Preparation towards boosting the nation’s participation in the African Continental Free Trade Area – AfCTA implementation regime.
(b). To rejig the private sector effective participation in the African Integrated Maritime Strategy aka the evolution of the “Blue Economy” concept.
c). To stimulate corresponding logistics for the effectiveness of the deep sea port operations – thereby achieving competitive edge within the subregion and attainment of the regional transhipment hub status.
d). Deliberate Integration and prompt participation in the lifting of Nigeria Crude oils.
e). Deliberate integration and prompt participation in the lifting of our liquidified natural gas.
f). Deliberate integration and prompt participation of our national fishing industry.
g). Deliberate integration and prompt participation in the quest to reenact our cold supply chains operations, in the face of our quantum national farm produce and deciduous fruits.
Once more we reiterate here that the primary vision of the CVFF is for a national sectoral development, therefore should be clearly stated. We hereby insist that the CVFF disbursement must not be done with the intent and spirit of business as usual. This is because the 21st century shipping transportation is technology driven and further embraced by the idea of ONE WORLD.
Nigeria like any Shipping nation reckons with the availability of some exportable products across the region, expectedly the variation in prices will in turn contribute to the cachet or image of our products, however the greater part of exportable products consideration is the shipping factor. In addition, the maximization of our cheap labor application will increase our freight availability if other factors are properly put in place.
In buttressing this, it must be observed that the Nigeria import and export markets need to grow in order to fulfill and meet the local and international demands of her products. This development now prompted various dynamic changes in the shipping industry, especially in terms of the reinvention and development of vessels and ports designs, with an intent to expand its market share retention or increase, while paying attention with the new developments in technology, which allows for new standards and boundaries to be created.
We wish to reiterate in strong terms, that the experience with a similar disbursement arrangement in the past shows that usually, the notice for the disbursement of designated public fund for industrial or sectoral development attract or creates a scenario akin to “The scrambling and partition for Africa”, without recourse. However. in the case of the CVFF it could be preferably described as ” Industry Strategic clamoring for the CVFF disbursement”.
Therefore, the Freight Forwarders in this regard expected that ordinarily the Federal Ministry of Transportation should have carried out a due diligence by way of KNOW YOUR CUSTOMER (KYC) on the shipping firms that had applied under the disbursement scheme. The obligation to probe their respective integrity as an individual and their firms operational/financial state is key; measuring and putting their operational track records on scale of performance. This is apt so as to ensure that only reputable and operational able individuals and their firms qualify for the disbursement under a Consortium and Alliance arrangement .
In view of the above, may we posit here that the Honorable Minister needs to consider the concept of “Consortia/Global Alliance” in the Disbursement of the CVFF to the Ship Operators or Owners in Nigeria, so as to fast track the realization of the industry and national set goals, filling the dearth in the sector.
Here again, without sounding more academic than modest, we crave your indulgence to make further clarification on this proposal, with the following explanation on this concept :
” A consortium is a group of shipping lines which combine their vessels in a joint schedule for a specific route with common ports of calls. Members lines will swop slots on the vessels in proportion to the number of vessels they put into the consortium.
Global Alliance allows vessels sharing and slot swopping/purchase and cover a wider geopolitical scope, which includes more than one major trade route.
This concept has been adopted by major shipping lines as a solution to the volatility in the liner shipping. The viability of maritime transport is very much dependent on the world economy and Consortia and Global Alliance allows shipping lines to make adjustments to schedule and capacity among member lines”.
The Advantages Of Consortia and Global Alliance:
This includes but not limited to:
a). Member lines build operational capacity working as a team, build big vessels to achieve economy of scale and exchange slots on individual vessels in proportion to the total slot committed by each member.
b). Member lines save on capital investment by not building as many operational worthy vessels as they would have if they were operating independently. Instead they build enough vessels to jointly operate in the consortium with like minds partners to achieve high frequency of sailings and deploy a bigger and efficient vessels.
c). In container ship, it allows member lines the free use of each other containers to reduce the empty positioning costs.
d). Member lines can react quickly by withdrawing capacity when there is a recession and likewise, thereby increasing capacity when there is recovery in the world trade.
Take note the advantages of Consortia and Global Alliance abound depending on operational objectives, however, the import of this reference with regard to the CVFF disbursement, is to propose by way of domestication a “National Vessel Consortia and Alliance Operational System”.
It is important to state that from a professional point of view, the Freight Forwarders believe that under the prevailing circumstances surrounding the disbursement of the CVFF, the Federal Ministry of Transportation has the onerous task to review its vision and objectives of disbursing the CVFF to ensure it does not leave out the core intents of building a sustainable national shipping capacity & development and operations as noted above.
The Forwarders are of the opinion that the Federal Ministry of Transport also has a duty to build trust amongst the shipping operators so that they can collectively develop their personal effectiveness. For this to happen, the Federal Ministry of Transport must establish a clear, compelling vision that will guide and energize every operator in the Nigeria shipping industry, and this to us, is the window created by the CVFF disbursement.
Therefore, to establish a clear, compelling vision in this regards, the Ministry as a matter of priority has to rethink the CVFF vision as an overall destination and not a journey through. For instance, though circumstances usually changes our transport means and routes, but the good news remains that, we know our destination. So it has to ensure to stay on course, focusing on the getting to the destination, irrespective of the seeming changes and difficulties, National interests should be paramount superintend any other considerations.
As Forwarders, we may need to reinstate that, the CVFF should assume its disbursement with clear guiding vision, having the capacity to:
• Inspire operators to enhance commitment.
• Show clear and actionable focus and usages, mitigating abuses.
• point at the beneficiaries sets values to guide actions and rechannelling efforts alright, with patriotism in the centre.
• Help to solve salient problem in the industry, rekindle confidence, guide decision making and bring about innovative and regional competition.
• To improve and promote teamwork and consistency in operations and in practice.
• To be seen as adding value to the maritime industry always.
Notably, it has been reported that the disbursement modalities are yet to be released by the concerned banks, but is said to include the interest rate concerns, tenure of fund payback, fund accessing requirements, e.g. requisite collaterals and other qualifications criteria.
International best practices entail that the interest rate for the disbursement of the CVFF must be of a unified standard template application, all of these modalities fall under secondary focus of the CVFF scheme.
Notwithstanding, the Freight Forwarders strongly advocate for a CVFF disbursement or implementation under a National Vessel Consortia and Alliance Operational System ” consideration. Our fear being that disbursement to corporate individuals/firms may not accelerate the overall objectives in the face of challenges in the global shipping industry ( post covid 19), or in case of financial difficulties than when disbursed to operational worthy group of operators ( teaming up together to form a common shipping lines).
At any case, we trust the wisdom of the Honorable Minister who have demonstrated industry commitment to put this saved sum into effective use and thereby adding impetus and positioning to change the narrative of our national shipping activities.
However, we must avoid the pitfalls of undefined stakes and concentration of funds.
We stop here for now, other questions, you raised shall be answered in our next chat”.
Fwdr (Dr) Eugene Nweke, Rff, Fnis, Fptm, Fffa, Fasca.
@ Sea Empowerment and Research Center RTG
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