Home Business Uncertainty clouds $150m Cabotage Fund

Uncertainty clouds $150m Cabotage Fund

by Business News Report

A cloud of uncertainty is hanging over the status of the $150 million Cabotage Fund, eleven years after it was established to boost local content in the shipping industry.
Known as the Cabotage Vessel Financing Fund, CVFF, the Fund was created by the Coastal and Inland Shipping (Cabotage) Act, 2003, to promote the development of indigenous ship acquisition capacity by providing assistance to Nigerian operators in the domestic and coastal shipping.
Section 42 Part V111 of Section 44 of the Cabotage Act empowers the Nigerian Maritime Administration and Safety Agency (NIMASA) to collect, deposit and administers the fund in commercial banks under guidelines proposed by the Minister of Transport and approved by the National Assembly. The Act also limits beneficiaries of the fund to Nigerian citizens and shipping companies wholly owned by Nigerians. The CVFF is funded through: Two per cent surcharge of the contract sum performed by any vessel engaged in coastal trading; and monies generated under the act including tariff, fines, and fees for licenses and waivers.
Vanguard investigation however reveals s that eleven years after the fund was established, nobody is yet to benefit the Fund. Indication to this was given by the Chief Executive Officer of a bank, who complained that none of their customers have been able to access the fund, despite fulfilling all the conditions for accessing it. He added that the situation was not peculiar to his bank. This was corroborated by the Chairman of the Nigeria Ship Owners Association, NISA, Isaac Jolapamo. In an interview with Vanguard, he said that he was not aware of any of his member has benefited from the CVFF. On the complaints of banks over none disbursement of the Fund, Jolapamo said that the banks are part of the problem because they are the ones trading with the money in their custody.
The reason for this according to a source in NIMASA is that the fund has been spent for different purposes. Speaking to Vanguard on condition of anonymity, he said, “They have shared the money, Walahi. My oga in the finance department said the National Assembly, Presidency and some ministers got part of the money. This was done not long after the Director General told you people (maritime journalists) that politicians want him to share the money. There is little or nothing there again,” the source noted, promising to make available documents on how some of the funds were shared.

Indeed, the NIMASA DG, Patrick Akpobolokemi, had raised an alarm few weeks after he was appointed that politicians were scrabbling for the funds and had vowed then that no politician, no matter how highly placed will benefit from the fund. Akpobolokemi noted then that the agency is bidding it’s time to ensure that the over $110 million (as at that time) lifeline meant to empower shipping practitioners does not get into wrong hands.
According to him, “No Nigerian politician, under whatever guise and no matter how highly placed would be allowed to access the Cabotage Vessel Financing Funds. “Politicians see the fund as a bonus and I have resisted all manner of pressure to disburse the funds so far.


“Everybody is scrambling for the money but we are carefully scrutinising all applications. I shall personally inspect the facilities and other logistics of all the intending beneficiaries to ensure that those who eventually get the loans use them for the purpose they are meant’’, Akpobolokemi declared. An official of the Ministry of Transport however said that it was not true that the Fund has been spent for different purposes. He said that the fund is intact and that they are only trying to put modalities in place for the disbursement.
Speaking in the same vein, Deputy Director, Public Relations, NIIMASA Isichei Osamgbi, said, “NIIMASA is following due process to arrive at the disbursement. We have done our bit, other bits will follow gradually. We want to follow due process so that whenever any issue arises, we can be rest assured that we have done the right thing.”
Another source in NIMASA told Vanguard that “The banks have done their part, NIMASA has done its part, and the Ministry of Transport is doing its part, and would forward its recommendations to the Federal Executive Council, FEC for approval.
This is because the amount involved is not small money, “it is far more than the Director General’s level or the NIMASA’ board level or the minister’s level, it must be done by the FEC and the minister is very much on top of it.”
On the interest that has accrued to the fund, the source said, “It keeps growing but you can never see the money. Even as we are discussing, it is growing and NIMASA, collecting it. It is coming in everywhere.” On the allegation that the money has been spent, the source said, “The law does allow us to spend it. The law says you should place it with banks or invest it but you can’t spend it. So how can you spend what you do not have access to, it is not our money.”
Recall that NISA has severally stressed the need for government to seek its input in the planned disbursement of the CVFF. NISA noted then that the involvement of the group in the planned disbursement is necessary because it would help to ensure that the fund gets to practitioners and is used for the purpose for which it was meant. Jolapamo had said then that unless this is done, the Fund would end up in the hands of wrong persons and thus defeat government’s planned improvement of the shipping sector of the nation’s maritime industry.
According to Jolapamo, “NISA is fighting now that whoever is going to get that Fund should have its input because we know who the operators are, even if they are not NISA members. We know you cannot do something like this in Nigeria without having some percentage to give out for political patronage but not to the extent that it would be cornered by just anybody.” He however said the major problem is not the disbursement of the fund but refusal of chatterers to engage their vessels and the need for government to put in place adequate laws to make operators who borrow from the banks for ship financing pay back as is obtainable in other parts of the world.
In his words, “Our major problem is not about the money that NIMASA will give out, the fact remains that all you need is, god the father who is the charterer that charter your vessels, the second is you, the ship owner who is god the son and the bank who finance you, is the Holy Spirit. If one is missing then there is a problem.”
“We are missing one and that is god the father, the charterer. If we are patronised, if they drop the foreign ships and say Nigerians take over, then the table will turn. What I said yesterday was that if the banks have a legal framework that says when they lend money out to people (ship owners) and they do not bring the money back, there is jail term waiting for them. Such are the kind of laws put in place in countries like Greece, Italy etc. where you want to develop shipping but of course shipping is a verse area and that is where you have the best of crooks,” he concluded.
The none disbursement of the CVFF contradicts the comments of NIMASA top management staff at the Offshore Technology Conference, OTC, held two years ago, where he said that the CVFF fund should be disbursed in a matter of weeks.
The official had said then that the federal government had given the management of NIMASA, the green light to commence the disbursement. He said that NIMASA’s management had instructed the five banks selected to manage the fund to process all the applications send to them by intending beneficiaries and that some banks have already started contacting those applicants who are qualified for the loan then.
About that time, President of Women’s International Shipping & Trading Association (WISTA), Mrs. Jean Chiazor Anishere, confirm that one of her member has gotten a letter from one of the financial institution informing her that she has been selected as one of the beneficiaries of the fund. That was two years ago and yet the fund is yet to be disbursed.
The agency over four years ago, selected four commercial banks from the 21 that indicated interest in administering the fund. The four banks are Fidelity, Sky, Diamond and ETB. The four banks have since been given letters of authority to that effect after they were selected through a rigorous process including their experience and expertise of maritime business.
A source in NIMASA had told Vanguard then that the “selection process was very rigorous which included visits and evaluation of the depth of the maritime desk of each of the applicants.” The source also disclosed that other criteria considered in the award of the disbursement right to the four banks were, their risk analysis model, governing system and post Central Bank of Nigeria (CBN) audit report.
According to the source, we looked at “their risk analysis model, governing system and post CBN’s audit report as part of the criteria’s for the selection of the banks as Public Lending Institutions (PLI).” The source also said that the four banks are to guarantee the CVFF as well as put up a 35 percent contribution to the loan system. The source also assured that the actual disbursement would commence in a matter of weeks.
The question now is, over five years of collection of the CVFF fund and after two years of elaborate preparations for the disbursement, why has it not been used for the purpose for which it was made? How much exactly has been collected so far? Where is the fund domiciled? How much interest has accrued on the funds? These are questions that are begging for answers which NIMASA must provide urgently.


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