By Steve Agbota
Due to the federal government’s failure to disburse the Cabotage Vessel Financing Fund (CVFF), a consortium of indigenous shipowners has turned to foreign banks to secure a $500 million fund for vessel acquisition.
The move aims to enhance their competitiveness against foreign operators within Nigeria’s territorial waters.
After so many years of promising to disburse the CVFF, the local shipowners came together in 2021 to raise $500 million for ship acquisition, but the dream could not come to fruition due to association issues and government policy.
Daily Sun learnt that it appears the shipowners have dumped the CVFF, questioning the existence of the fund and deciding to revive their dreams by engaging foreign banks to acquire assets while carrying out contractual obligations, especially with the International Oil Companies (IOCs).
Speaking to Daily Sun in an exclusive interview, a shipowner, Ayorinde Adedoyin, said the local shipowners are currently talking with some foreign banks and institutional banks to set it up and run it as a fund.
Adedoyin, who is the brain behind floating the $500 million fund, said that the process is slow now, adding that getting money into Africa is not the easiest thing to do.
“But because of the institutions that we’re using now, it is looking more promising.
“It’s not like the shippers. It’s an idea that came to mind for me, and I sold it to the shipowners. But we’ll continue to push to raise the fund. We’re getting closer and closer to getting it all sorted out.
“And because if we can do that, I will get this institution to put that money up as a fund. So, it makes it easier for anyone who gets a contract from an IOC to buy an asset.
“If you bid with an IOC and get a contract, they will buy the asset for you and arrange with you and the ship management company to run it and make sure that the whole thing is sorted out.”
He is optimistic that getting the funds will be a game-changer because the issue with maritime development in Nigeria now is that local banks still don’t understand how this is done.
He also pointed out that the policies of the government are not being well implemented, which is causing issues.
“Let’s say I finance a vessel for you. But due to one little fault or another, the charter can easily just terminate the contract without costs. Would anybody want to do that? No. And at the same time, you cannot be using 30% of the money that you are getting at 30% to fund assets and compete with people coming from Europe, getting the same money at 5%.
“Do you see why we need to put the fund together? And why we need to be able to compete with all these foreign shipowners in our waters? Now, it’s not easy for us to compete because of the money that we’re getting. Even if you get money in dollars now, you are getting it at almost 15% or something. Can you compete with someone getting money at 4%? No!
“And your own banks are giving you money, and they say they give it for five years. You have to be reviewing your loan every year. So that means every year you are paying management fees, paying this, paying that. “So even if they charge you in terms of 30%, by the time you look at what the bank is taking from you, they’re taking almost 40%. Tell me, how do you want to survive? That is why you see that the majority of shipowners in Nigeria now have lost their assets. But when you look at the whole thing, the bank has been paid out. They are lucky they get paid, so they don’t care.
“You have a Cabotage law that is not being enforced. A local content law that is not properly enforced. So how do you want anybody to survive in Nigeria? And you know Nigeria is an import-dependent country as of now. And we don’t even play in that sector internationally. So who are the companies benefiting from all these things? They are all foreign vessel owners,” he explained.