Ships & Ports reported months back that the names of six indigenous companies have been forwarded to the Nigerian Maritime Administration and Safety Agency (NIMASA) as those that will be the first set of beneficiaries of the Cabotage Vessel Financing Fund (CVFF) after emerging from the screening of proposals submitted to the four primary lending institutions (PLIs), even as the Minister of Transport, Senator Idris Umar said eight companies have been selected who are awaiting for his approval.
These are certainly good tidings, owing to the fact that acquisition of ships is capital intensive. It rarely is the case that an individual will simply dip hands into the pocket or withdraw money from the bank account(s) to buy even a single seaworthy trading ship. It is too expensive to do so.
Thus a lot of financing is needed to encourage Nigerians to buy ships.
The Federal Government had, in the past, created various intervention funds to aid the acquisition of ships by Nigerians. These intervention funds were necessary since Nigerian banks had been incapable of providing effective financing, while those banks that were able to do had been reluctant because of perceived notion that such loan facilities might be difficult to recover.
In the 1980s and 1990s, government, through the defunct National Maritime Authority (NMA), created the Ship Acquisition and Ship Building Fund (SASBF).
While a few number of genuine ship owners benefited from the SASBF and bought ships, albeit old and rusty, several politicians, briefcase ship owners and cronies of the then military junta also dipped their hands into the fund and diverted the money to other uses.
Suffice it to say that the fund was suspended in the late 1990s and many of those who borrowed from the fund also refused to pay back to government.
Recognising that empowering Nigerian ship owners and supporting them in buying vessels so that they can compete in the global maritime business cannot be compromised, government introduced the CVFF as an appendage of the Cabotage Act.
Guidelines for the implementation of the CVFF were launched in 2006.
As at the last count, the CVFF had over 100 million dollars in its kitty awaiting disbursement.
The difference between the administration of the CVFF and past intervention funds such as the SASBF is that whereas the SASBF was disbursed directly by government through the maritime administration, the CVFF will be administered through four select banks as PLIs.
Under the new arrangement, NIMASA acts as the approving authority and guarantor for the beneficiaries, while the PLIs are responsible for granting loans and recovering same.
For over two years, operators have been clamouring for the disbursement of the fund and we hope this will make a whole lot of difference to indigenous shipping in Nigeria.
For no reason should anyone who has no business with shipping be allowed to access the fund, while effective monitoring system must be put in place to monitor the activities of loan beneficiaries and ensure timely recovery of all loans granted.
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