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By Steve Agbota
The provision of the mandatory 15 percent counterpart equity fund by intending shipowners willing to apply for a share of the $350 million and N16 billion Cabotage Vessel Financing Fund (CVFF) is currently threatening the disbursement of the fund as some indigenous shipowners 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 for 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 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 was near impossibility for them because many of them have become bankrupt already due to years of inactivity in Nigeria’s inland coastal trade.
Chairman, Board of Trustee of NISA, Chief Isaac Jolapamo said: “We will be telling NIMASA that we cannot raise the 15 per cent 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 inputed into modalities for 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 $10million, 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 has 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,” he said.
On the 50 per cent equity of commercial banks, the NISA chieftain explained that the conditions demanded by banks has always not favoured operators.
He argued that if a ship has jobs, 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.
The local shipowners informed that the 15 per cent of the required funds expected to be provided by shipowners posed a stumbling block to accessing the fund.
They lamented that most local shipowners are already in huge debts and have their assets confiscated by the Assets Management Corporation of Nigeria (AMCON).
