REVEALED! How banks frustrate CVFF disbursement

There are strong indications that the banks selected as primary lending institutions (PLIs) by the Nigerian Maritime Administration and Safety Agency (NIMASA) may be causing the delays that have frustrated the commencement of the disbursement of the Cabotage Vessel Financing Fund (CVFF).
The four PLIs are Skye, Sterling, Diamond and Fidelity banks.
The delays, it has been revealed, owe to the reluctance of these banks to meet their respective financial obligations under they agreement entered into with NIMASA on the CVFF disbursement.
The revelation over the uncomplimentary roles of the banks in the effort to help boost the capacity of indigenous shipowners was made by no less a weighty voice than the immediate past Director, Cabotage Department, NIMASA, Mr. Boniface Igwe.
“The intendment under the Cabotage Vessel Financing Fund (CVFF) guideline was to fast track the disbursement the fund by abiding by the following provisions: one, NIMASA will contribute 55 per cent of the total application of a particular applicant company; the banks will contribute 35 per cent of the total; then applicant company will contribute 15 per cent, making a total of 100 percent.

“Now the main problem is, when it was being done, the banks were like yes, they were prepared to play ball, in the sense that they agreed to contribute their share, which is 35 per cent, but at an agreed cost price approved by the Board of NIMASA of 5.6 per cent interest rate. A total of 200million dollars have being sent to the banks just before I left NIMASA. The banks what they have do is just send in a total of six companies whom they declared were qualified to access the CVFF, without any proposal with respect to the provision of their own 35 per cent. This I believe is as a result of possibly the economically unviable option of bringing out their own 35 per cent at 5.6 per cent interest rate,” Igwe said.
Faulting the modest total number of applicant companies qualified by the banks and sent to NIMASA, the erudite lawyer said that these “do not represent a broad-based industry population.”
He said: “There were about 93 applicants at the time I left NIMASA. So, it is my considered view that the reason the banks are developing cold feet is because of the economic unviability of bringing in 35 per cent of an applicant’s amount.”
He sees as “the only way out” of the “quagmire”created by the banks’ “footdragging” over the CVFF disbursement, in NIMASA summoning the banks and retrieving the lodgments with them, approaching foreign shipbuilding yards and placing “orders with specific configuration for particular tonnage”, and getting “these vessels built by these shipyards with necessary indication of input from other banks not necessarily from the four banks chosen, maybe foreign banks, NEXIM (Nigeria Export Import Bank), or all these foreign banks that have a lot of money to invest.”
Igwe added: “NIMASA can syndicate this money and then get these vessels, maybe for starters build ten vessels then give these vessels to Nigerian companies either conglomerate or groups that come together like ISAN Shipping Company and then allow them to run these vessels with a view of divesting from the agreement if they do very well.”
Meanwhile, as NIMAA may be poised to finally commence the long-awaited disbursement of the CVFF this month, the management of the nation’s apex maritime regulatory agency has been urged to resist intense moves by certain politicians and other entrenched interests hiding behind phantom shipping companies to access the CVFF.
The umbrella body of maritime journalists in the country , the Maritime Reporters’Association (MARAN), which made the call in Lagos over the weekend, also accused certain unnamed persons of attempting to foist an unqualified firm on NIMASA as Consultant to the Cabotage Fund.

The association noted that a politician, who served as Minister of State for Transport under the regime of former President Olusegun Obasanjo; a former Director-General of NIMASA; and a Federal law maker, are part of those jostling for a slice of the CVFF, which has accumulated to over US$255 million (about N40 billion).
MARAN said that, bearing in mind that four banks have been appointed as Primary Lending Institutions (PLIs) for the CVFF, and, also, that NIMASA has a full-fledged department – the Cabotage Department – devoted to overseeing the implementation of Cabotage, there is no need for appointing any Consultant to the Fund, especially when the so-called potential Consultant is being deliberately positioned to do the bidding of politicians and other entrenched interests “who are not qualified to benefit from the Cabotage Fund.”
MARAN stated: “The person being positioned as a Consultant to the CVFF is someone who was sacked from the bank and who hurriedly registered a company a few months back. Neither this person nor his company have any pedigree in managing any such fund or project. Indeed, the company has no history. Besides, such an appointment should have been advertised if it were desirable and organisations with global repute; organisations that will not be fronting for anyone and with good track record of performance invited to bid.”
MARAN advised NIMASA to scrutinise applications for the CVFF carefully to avoid a recurrence of past experience, especially with regards to the Ship Acquisition and Ship Building Fund (SASBF).
“In the 1980s and 1990s the National Maritime Authority, now known as NIMASA, administered the Ship Acquisition and Ship Building Fund (SASBF) through which it gave loans that were intended to encourage ownership of ships by Nigerians.
“While a few number of genuine Nigerian ship owners benefited from the SASBF and bought ships, though old and rusty, several politicians, ‘briefcase ship owners’ and cronies of the then military junta also dipped their hands in the till and diverted the money to other uses.
“The fund was suspended in the late 1990s, but most of the money was never recovered and no one was prosecuted”, the maritime journalists’ body stated.

It said that less than 15 months after SASBF was activated, more than $100 million had been given out as loan.
“As it were, the loans were not secured and when the beneficiaries developed cold feet in paying, the National Maritime Authority (NMA), the precursor to today’s Nigerian Maritime Administration and Safety Agency (NIMASA) could not recover much of the loans. Eventually, the facility was cancelled,” MARAN said.
CVFF, established under the Coastal and Inland Shipping Act 2003, is derived from the two per cent deduction from all contracts awarded under the Cabotage regime designed to enable indigenous shipping companies acquire adequate tonnage to be able to participate in coastal and inland trade currently dominated by foreigners, who also dominate deep sea shipping.
NIMASA is the statutory secretariat for the fund and is also mandated to disburse it.
Only last Thursday, the NIMASA Director-General, Mr. Patrick Akpobolokemi, told journalists in Lagos, that the disbursement of the CVFF will commence this month.
Notably, Akpobolokemi has made similar affirmation directly with his own mouth or through the voice of his representatives at a number of public fora without actualisation.
Therefore, keen industry watchers posit that it is time enough that the long-awaited CVFF disbursement commences, but spared the spectre of briefcase ship owners that strangulated the defunct SASBF and still haunts the memory of that particular effort to boost indigenous ship ownership.

Copyright Ships & Ports Ltd. Permission to use quotations from this article is granted subject to appropriate credit given to as the source.