Categories: Business

Who owns $195m CVFF between FG, indigenous ship owners?

The $195 million Cabotage Vessel Financing Fund is accumulated fund that represents two per cent contribution by indigenous ship owners on every contract done in Nigeria’s maritime sector. Recent happening have however cast doubt on who owns the funds stashed in the vaults of the Central Bank of Nigeria, writes TOLA ADENUBI.

To address the lack of capacity among indigenous ship owners in Nigeria, the Cabotage Vessel Financing Fund (CVFF) was inserted into the Coastal and Inland Shipping Act of 2003 otherwise referred to as Cabotage Act 2003, in order to provide funds for vessel acquisition amongst indigenous operators.

The source of the fund is two per cent contribution by indigenous ship owners from every contract executed in the nation’s waters. The disbursement of the CVFF is backed by the provisions of Section 42(1)-(2) of the Cabotage Act 2003, which aims to promote the development of indigenous ship acquisition capacity by providing financial assistance to Nigerian operators in domestic coastal shipping.

Since 2003, indigenous ship owners have looked forward to the day the CVFF will be disbursed. With foreign shipping companies flouting the nations Cabotage regime at will, the disbursement of the CVFF to indigenous operators was expected to increase indigenous capacity to a level that allows for favourable competition with their foreign counterparts.

However, the body language of the Federal Government in recent months seems to be saying that the fund is not owned by the indigenous ship- wners, and thus would not be disbursed solely for vessel acquisition purposes.

Ownership crisis

In 2021, during a maritime event in Lagos, the Minister of Transportation, Rotimi Amaechi, told the audience at the event that the Minister of Finance, Zainab Ahmed, during a Federal Executive Council (FEC) meeting, said the CVFF does not belong to indigenous ship owners, but a government fund meant to be used for public project. The Minister then directed the indigenous ship owners to write a protest letter, but they (indigenous ship owners) never did.

Also cautiously toeing the line of the Minister of Finance, the Director General of Nigerian Maritime Administration and Safety Agency (NIMASA), Bashir Jamoh, during a media briefing with maritime journalists wondered why somebody would claim ownership of a fund and still want to borrow from such fund.

According to the NIMASA DG, “On the ownership of the CVFF, I won’t want to say much on it for now. However, I want to ask you (journalists), can you borrow money from your own money? If a certain amount of money is mine, will I still request to borrow from it?

“We are talking of two per cent of every contract carried out in Nigerian waters by indigenous ship owners which is collected by NIMASA and warehoused in the Central Bank of Nigeria (CBN). If a fund belongs to somebody, does the person need permission to take from such fund? That is much that I will like to say on the ownership issue of the CVFF for now.”

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Threats to CVFF

The anti-piracy regulation, the Suppression of Piracy and Other Maritime Offences (SPOMO) Act, signed into law by President Muhammadu Buhari in June 2019, has suddenly brought a new twist into how the CVFF is expected to be used.

Part three, section 19, sub-section 3E of the SPOMO Act lists the sources of funding for the anti-piracy bill and surprisingly, the CVFF was among the source listed under the Act.

According to the SPOMO Act, the NIMASA, under the supervision of the Minister, shall establish and maintain a fund which will be known as the Piracy and Maritime Offences Fund otherwise referred to as the Maritime Fund.

To get funds into the Maritime Fund, the SPOMO Act lists five options which the CVFF is just one of them. The first option of funding for the SPOMO Act is money approved each year by the Federal Government.

The second option of funding for the SPOMO Act is gifts, financial contributions by beneficiaries of the services of the maritime law enforcement agencies.

The third option of funding for the SPOMO Act is 35 per cent of the proceeds of sales of any property seized and forfeited under the Act, including instruments used in the commission of crimes and criminal activities under the Act.

The fourth source of funding for the SPOMO Act is contribution from the Maritime Fund under the NIMASA Act.

The fifth and final source of funding for the SPOMO Act is contribution from the Cabotage Vessel Financing Fund (CVFF) under the Coastal and Inland Shipping (CABOTAGE) Act.

With the CVFF now part of the means of funding the SPOMO Act, indigenous ship owners have expressed fears that the funds which ought to be primarily disbursed to indigenous operators to boost capacity, might become eroded following its use for other purposes.

Agitated Ship owners

For the President of the Ship Owners Association of Nigeria (SOAN), Dr Mkgeorge Onyung, the plan to amend the Cabotage Act 2003 to suit the use of the CVFF for other purposes by the Federal Government is a slap on the faces of the true owners of the fund, the indigenous ship owners.

In the words of the SOAN President, “There is currently an effort by the Federal Ministry of Transportation to amend the Cabotage Act 2003 with a new Cabotage Act 2020. Under the new Cabotage Act, insertions that back the establishment of a Maritime Fund are being added to the Act and it has already passed second reading on the floor of the National Assembly.

“We are waiting for the call for a public hearing on the new Cabotage Act 2020 to voice our resentment of the bill. How can the government want to change the laws just to erode our contribution?

“The CVFF is two per cent of every contract that we do in the nation’s waters, and it symbolises our sweat. Using that fund for other purposes will amount to broad daylight robbery of indigenous ship owners.

“Nigeria is a signatory to the African Continental Free Trade Area (AfCFTA), how do we compete favourably with fellow African shipping firms if we cannot renew our fleets?

“The Cabotage Act 2003 is clear on what the CVFF should be used for, why is the Federal Government bent on using the fund for other purposes?

“Many indigenous shipping firms have gone bankrupt and gone under due to lack of funding. Over the years, the government has been shifting the dates for the disbursement of the CVFF, only for them to now come up with amendment efforts that aim to change the purpose of the fund.

“Why should the CVFF be included among the sources of funding for the SPOMO Act? Is that what the Cabotage Act 2003 says?

“Foreign ships keep plundering our cabotage regime and we have said repeatedly that the only way to address this huge capital flight is to increase indigenous capacity, yet the Federal Government wants to use the funds that we (indigenous ship owners) have contributed for close to 20 years for other purposes; what kind of government does that?

“We are waiting for the public hearing for the amendment of the Cabotage Act to object to this devilish plan. The CVFF is our contribution. The fund belongs to indigenous ship owners.”

Tola Adenubi