After toying with the over N100 billion Cabotage Vessel Financing Fund (CVFF) for more than 10 years, the Federal Government may have finally dashed the hope of maritime stakeholders wishing to access the facility to acquire more ocean going vessels.
Latest information from the sector was the government has decided to use the fund to set up a Maritime Development Bank (MDB). But the latest twist has set tongues wagging that the cabotage fund may soon be diverted to fund the 2019 general elections as part of Federal Government’s free funds.
The Cabotage Act was structured primarily to stimulate the development of indigenous capacity in the Nigerian maritime industry. The Act seeks to reserve domestic coastal trade (cabotage or cabotage trade) within Nigerian Coastal and Inland Waters to vessels built and registered in Nigeria, wholly owned and wholly manned by Nigerian citizens.
This means that, foreign-owned vessels and companies may be allowed to participate in cabotage trade within Nigerian waters, subject to obtaining a waiver and/or a licence from the Federal Ministry of Transport.
Under the Cabotage Act, “Nigerian Waters” is defined to include inland waters, territorial waters or waters of the Exclusive Economic Zone and the services that qualify as cabotage trade are identified as carriage of goods and passengers originating from one coastal inland point – ports, terminals, jetties, piers among others – to another point located within Nigeria.
The services also include the carriage of goods and passengers by sea in relation to the exploration, exploitation, or transportation of the mineral or non-living natural resources in or under Nigerian waters; the carriage of goods and passengers on water or underwater (sub-sea) installations; the carriage of goods and passengers originating from a point in Nigeria destined for Nigeria but transiting through another country then back to Nigeria for discharge; the engaging by vessel in any other marine transportation activity of a commercial nature in Nigerian waters. These include towage, pilotage, dredging, salvage, bunkering.
Under this jurisdiction, Nigerian vessel owners were encouraged to contribute two per cent of their contract values to build up a common purse where Nigerians could borrow to increase their fleet or buy new vessels.
Regrettably, in over 10 years of its establishment, available records show that no Nigerian ship owner has accessed the fund not to talk of growing his cabotage fleet, raising questions as to why Nigerian authorities are always playing politics with economic development.
Only recently, the Minister of Transportation, Mr Rotimi Amaechi, vowed not to release the fund until shippers come with their repayment plan.
He made this vow during the ship owners’ association’s workshop and dinner in Lagos.
“I will not release that fund unless I am removed tomorrow as Minister for Transportation. We gave over N300 billion to businessmen in the aviation industry. Some took N35 billion and some N32 billion and they disappeared thereafter. One used the money to build a bank in Ghana and Sao Tome. Nothing has happened to him,” he said.
Meanwhile, president of Ship Owners Association of Nigeria (SOAN), Mr. Greg Ogbeifun, had earlier cried out over the conspiracy of the government agencies in the oil industry who encourage International Oil Companies (IOCs) to lift Nigerian crude.
So, the IOCs capitalised on the collapse of the price of oil worldwide to reduce their charter rate to between 20 and 25 per cent such that the local fleet no longer catch up with the rate.
“The tonnage of our cabotage fleet has diminished considerably due to the collapse of the price of oil worldwide in the last couple of years. The consequence on our cabotage fleet is that the IOCs who are the charterers of these vessels with directive from our own government agencies (NNPC and NAPIMS) now reduce charter rates by up to 20 – 25 per cent in some cases. The consequence of this is that most vessel owners no longer meet their obligations to the financing banks leading to loss of jobs, training opportunities and failed businesses. This is, despite the fact that these vessel owners contribute two per cent of their contract values to the infamous CVFF, a fund meant to finance and grow the cabotage fleet but which has never financed one single vessel since inception over 10 years ago” he lamented.
However, with the 2019 elections around the corner, stakeholders are apprehensive that the new twist of a Maritime Development Bank could be diversionary tactic siphon the money currently domiciled in the Central Bank of Nigeria (CBN) to sponsor 2019 elections.
Similar fears were expressed in 2015 elections and at the end of the election, it was discovered that a large chunk of the fund has been used to fund that election.
Stakeholders had feared that like Ship Acquisition and Ship Building Funds, CVFF which was meant to provide financial assistance to indigenous shipping operators through access to loan facilities may soon go into oblivion with the setting up of the proposed Maritime Development Bank.
President, National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), Comrade Lucky Amiwero, warned that the money should not be diverted. In fact, using that money to establish Maritime Development Bank (MDB), is illegal.
He argued that before that is done, the Act establishing the CVFF should be vacated first.
“That fund is not to be converted to Maritime Development Bank. Doing so will be illegal. That is not what the fund is meant for. The maritime fund is under section 16 and 17 of NIMASA Act. That is where you have the maritime fund. And maritime fund is to build operators. Cabotage Vessel Financing Fund is for cabotage operating vessels. So, if you are not a cabotage operator , you cannot benefit from that fund. Essentially, there are two funds in the industry. You have the one under NIMASA Act which is under section 16 and 17. Twenty-five per cent of the total collection of NIMASA is supposed to be used and set aside for indigenous operators for expansion programme.
“The one for NIMASA Act, under section 16 and 17 is maritime fund. Maritime fund is the total collection of NIMASA which is given to indigenous operators . NIMASA has been existing since 2007 while Cabotage Act has been existing since 2003. So, the Cabotage Act is quite different and the maritime fund is different. One is for indigenous operators expansion programme and shipping infrastructure. Then Cabotage Vessel Financing Fund is for cabotage vessels. You don’t convert it to Maritime Development Bank. CVFF is for cabotage or for coasting traders. It is not for ship building. If the National Assembly wants to pass it into law, it means that they want to change the Cabotage Act and change the NIMASA Act,” he said.
Dr Osita Chukwu, roundly condemned the idea of using CVFF to develop MDB, saying that the bank is not the priority of the industry now.
“What do we need it for? We don’t need Maritime Development Bank. That is the usual way of diverting our funds. The people will reject it in the National Assembly during a public hearing. It is illegal to use the money meant for a particular project for another project. There is still need for CVFF. So, where will you get the money to solve that problem. How can we continue to misuse and misappropriate funds. Election is coming. They (politicians) are looking for ways to accumulate money for elections. Let the government go and do the needful and forget about the bank. Who will bank there? What are they using maritime bank for? Is it that operators no longer use commercial banks? They started with maritime microfinance bank and now they want to graduate to Maritime Development Bank. Let them forget about maritime development bank. It is not our priority for now” he posited.
For the National Publicity Secretary of Association of Nigerian Licensed Customs Agents (ANLCA), Dr Kayode Farinto, the stakeholders should monitor the implementation of that fund. But rather than allowing the money to remain in the escrow account of NIMASA, it should be used for the establishment of the bank. This is because the former administration of President Goodluck Jonathan dipped its hands in the money for 2019 elections because they saw an idle fund. So, let them use it for the purpose while we monitor the process.
“But whoever must manage that bank must have worked in the banking sector. The bank must have all the paraphernalia of office. The structure should be in form of a commercial bank in the maritime industry for maritime purposes. So, if that is done we will not have problem because there are ethics and rules in the banking industry. But when you bring a man who was in the railways in the 1970s, to run the bank then it means that their plan is to siphon the money. Let all the people who are working in financial institutions come and work in the maritime bank. Until that is done, we will not have problem.
We have the CVFF in an escrow account managed by NIMASA. It was when they did the last election that they siphoned part of the money. Whatever that is left of the money can be used for the bank.
This is a government that is talking of anti-graft. Let us give them the benefit of the doubt. The indigenous ship owners have actually wound up because they don’t have ships. NIMASA failed in its responsibility to disburse that money for political reasons. I remember we tried severally for NIMASA to give this money to indigenous ship owners when they (ship owners) have not gone into extinction. But nobody listened until somebody started dipping hands into that money for political reasons.
Well, if we insist that they should not use this money for the bank, how are we sure that they will not take it through the back door. We know that there are prerequisites to access that money. You must be an indigenous ship owner. We cannot say that because somebody may use the money for 2019 elections and our industry will not move forward. When they are implementing it (MDB) we will monitor it and when there is any sharp practice we will shout.