Provision of 15% equity threatens $350m, N16bn CVFF Disbursement

The provision of the mandatory 15 percent equity by intending shipowners who want to apply for a share of the $350m and N16bn Cabotage Vessel Financing Fund (CVFF) is currently threatening the disbursement of the fund as some of the indigenous shipowners have said that they can’t raise such funds due to years of economic hardship .

The CVFF was established alongside the Nigerian Coastal and Inland Shipping (Cabotage) Act of 2003, to empower indigenous ship owners to take control of the nation’s coastal and inland shipping business, otherwise known as Cabotage trade. Following approval of disbursement by President Mohammadu Buhari, applicants of the fund are expected to make an equity contribution of 15 per cent while NIMASA would make an equity contribution of 35 per cent; and 50 per cent would be provided by the commercial banks.
Speaking at the weekend with newsmen after a meeting of the Nigerian Shipowners’ Association (NISA), members of NISA said that raising 15 percent equity us near impossible for them because many of them have gone bankrupt due to years of inactivity in Nigeria’s Inland coastal trade.

According to the Chairman, Board of Trustee of NISA, Chief Isaac Jolapamo, “We will be telling NIMASA that we cannot raise the 15 percent equity expected from intending applicants of the CVFF because for years, many of us have faced economic hardship due to lack of inactivity in Nigeria’s coastal trade.

“Many of us have been out of jobs for years, where does NIMASA expect us to raise the 15 percent equity inputted into modalities of disbursement of the CVFF?

“Yes, provision of the 15 percent is part of the guidelines made by government towards the disbursement of the CVFF. If we are asked to raise 15 percent of $10m, that will be difficult for us to do. Economically, things have not been easy with some of us.

“Our Committee that is working on CVFF disbursement have been told that in the upstream, the Nigerian Content Development and Monitoring Board (NCDMB) does not demand for provision of any equity from operators. So, we are also looking at that line because it is achievable. We are looking at a situation where indigenous shipowners won’t have to provide such equity.”

On the 50 percent equity of commercial banks, the NISA chieftain explained that the conditions demanded by banks has always not favoured operators.

“If a ship has job, that ship should be enough collateral for the banks; but here in Nigeria, commercial banks demand for stringent conditions, thereby making loan repayment difficult for operators,” Chief Jolapamo added.