African shipowners are fully supporting the planned disbursement of the $700 million Cabotage Vessels Finance Fund (CVFF) by Nigeria’s maritime agency, with hopes it will create greater opportunities for local shipowners.
The African Shipowners Association (ASA) has hailed the Nigerian government’s plan to release the CVFF to local shipowners at single-digit interest rates as a game-changing move for the country’s maritime industry. Set for disbursement in August, the fund aims to provide much-needed financing for shipowners, thus boosting Nigeria’s shipping industry and reducing reliance on foreign-owned vessels.
A Strategy for Transparency and Growth
According to Captain Ladi Olubowale, President of ASA, the involvement of banks in the disbursement process is a significant step forward. He stressed that this approach would not only foster greater transparency but also help eliminate dishonest borrowers who could otherwise undermine the fund’s purpose.
Many developed and developing nations, including Japan, China, and Indonesia, have long had export funds to support ship development, with local banks playing a central role in ship financing. Olubowale believes that Nigeria should follow suit, leveraging its banking sector to build a stronger domestic fleet and boost the country’s maritime capabilities.
In an address given over the weekend in Lagos, Olubowale emphasized that many Nigerian banks lack a dedicated maritime desk, instead grouping maritime affairs under their energy departments. This lack of specialization has hindered shipowners’ access to financing in the past. He explained that while Seamate Maritime Integrated Services Limited, a company he manages, had sought funding from multiple banks, it faced rejection due to the banks’ lack of expertise in the shipping industry.
By getting involved in the CVFF disbursement, Nigerian banks would help rectify this gap in expertise and facilitate the establishment of maritime-specific desks, which would improve the chances of success for Nigerian shipping companies.
The Potential to Revitalize the Industry
Olubowale also highlighted that many African shipping companies have failed because shipowners tried to manage the business without sufficient professional guidance. He believes the CVFF disbursement will unlock tremendous opportunities, providing much-needed capital for local shipowners. With this fund, more Nigerians would be able to purchase ships and compete within Nigeria’s coastal waters, an area currently dominated by foreign vessels.
“This is the time for us to play on our field,” Olubowale said, emphasizing the need for Nigeria and other African nations to assert themselves in their own shipping markets.
The fund’s disbursement is seen as a critical step toward fostering the growth of Nigeria’s shipping sector, allowing more local vessels to operate and compete both within the country and across the continent.
Looking Ahead: The Future of African Shipping
The impact of the CVFF on Nigerian and African shipping will largely depend on how efficiently the disbursement process is managed. If successful, it could lead to an increase in the number of Nigerian-flagged vessels and create more jobs in the maritime sector.
However, the industry still faces challenges. While the CVFF fund will certainly boost local ownership, there is still a need for improved infrastructure and greater technical expertise within the Nigerian maritime sector. As the government and banks take steps to address these issues, the hope is that the local shipping industry will gain more competitive power in the global marketplace.
In the coming months, the shipping sector will be closely watching how the disbursement process unfolds. If the $700 million fund is used effectively, it could pave the way for a more sustainable and competitive maritime industry in Nigeria and across Africa.
