The Cabotage Vessel Financing Fund (“the Fund”) was established by the Coastal and Inland Shipping (Cabotage) Act 2003¹. The Fund was established for the purpose of developing indigenous ship acquisition capacity, and to provide financial assistance to indigenous/domestic coastal shipping operators².

The Fund is generated from a surcharge of 2% of the contract sum performed by vessels engaged in coastal trade, monies generated from tariffs, fines and fees for licenses and waivers, a sum periodically approved by the National Assembly, and interests that accrue from loans granted from the Fund ³. The Fund is administered by the Nigerian Maritime Administration and Safety Agency (NIMASA).

Contributions into the Fund commenced with the coming into force of the Cabotage Act in May 2004, however, no record exists of actual beneficiaries of the Fund till date. This position has persisted notwithstanding that the Cabotage Vessel Financing Fund Guidelines 2006 (CVFF Guidelines 2006), which prescribes the administration and implementation of the Fund was established over 17 years ago. There have been several moves in the past to disburse the Fund but none has come to fruition. In December 2022, President Muhammadu Buhari approved the disbursement of the Fund to qualified beneficiaries, as part of the Federal Government’s commitment to grow indigenous ship ownership and the local maritime industry.

The Director General of NIMASA, Dr. Bashir Jamoh, announced that the funds available for disbursement were slightly over N16 Billion Naira and $350 Million. The Minister of Transport stated that the approval received from the President confirmed Union Bank, Polaris Bank, United Bank of Africa, Zenith Bank and Jaiz Bank as the appointed Primary Lending Institutions (PLI) for the disbursement of the Fund⁴. Under the CVFF Guidelines 2006, an applicant for facility from the Fund shall make an equity contribution of at least 15% of the total cost of the project whilst the remaining equity of 85% will be made by NIMASA and the PLI⁵.

Additional requirements for qualification under the Fund are as set out in the CVFF Guidelines 2006 and as approved by NIMASA from time to time⁶. Prospective beneficiaries of the Fund have commenced applications to the PLI. It is projected that successful applicants will receive the first disbursement of the Fund from this March 2023⁷ . The approval to disburse the Fund is no doubt a step in the right direction. Nigeria’s maritime sector will benefit substantially if the Fund and investments are properly managed, and beneficiaries adhere to the laid down regulations that govern the implementation of the Fund. It is hoped that the disbursement of the Fund will continue to completion this time.

1. Section 42 (1) CABOTAGE Act

2. Section 42 (2) CABOTAGE Act

3.Section 43 CABOTAGE Act

4. Vessel Acquisition: Buhari approves disbursement if Cabotage Vessel Financing Fund (primetimereporters.com)

5. Paragraph 7.10 Cabotage Vessel Financing Fund (CVFF) Guidelines 2006

6.Paragraphs 8-10 Cabotage Vessel Financing Fund (CVFF) Guidelines 2006

7. https://leadership.ng/banks-begin-disbursement-of-350m-cabotage-fund-next-month/