By Sandra Chukwunyere
A $25 million facility under the Cabotage Vessel Financing Fund (CVFF) can unlock Nigeria’s shipping potential and significantly boost the country’s indigenous fleet if the financing is tied to identifiable cargo and long-term trade contracts, shipowner and former Chapter President of the African Shipowners Association (ASA), Captain Ladi Olubowale, has said.
Olubowale made the submission at the Maritime Reporters Association of Nigeria (MARAN) Roundtable on Monday, where he stressed that the success of the CVFF should not be measured simply by the amount of money allocated to shipowners, but by the ability of beneficiaries to deploy the funds profitably and repay the financing.
According to him, the availability of guaranteed cargo and long-term trade contracts would make it easier for shipowners to acquire appropriate vessels, generate revenue and meet their repayment obligations.
He said the Nigerian Maritime Administration and Safety Agency (NIMASA) had indicated that applicants would be required to provide about $3.7 million in equity to access financing of up to $25 million.
“NIMASA wants you to bring out $3.7 million in order for you to be able to attract $25 million. They will now look at it in your own case. What trade will you be using that for?” he said.
Olubowale explained that the $25 million facility should not be considered in isolation, noting that different types of vessels are designed to serve specific cargo and trade requirements.
He therefore called for a proper assessment of the volume and nature of cargo available in Nigeria before financing vessels, arguing that cargo availability should determine the type and capacity of vessels acquired.
Citing dry cargo, cement and other commodities, he said each segment of the maritime trade requires vessels suited to its specific operational needs.
He warned against financing vessel acquisition without first establishing the commercial demand that would sustain the investment.
According to him, a shipowner with a one- or two-year contract guaranteeing cargo could acquire a vessel specifically for that trade and use the revenue generated to service the financing.
“Most of this shipping does not require a big capital. It requires you have a 10 per cent deposit as long as you trade to cover up that money,” he said.
Olubowale said linking vessel acquisition to guaranteed cargo would reduce the risks associated with ship financing while providing lenders with a clearer repayment structure.
He also called for the CVFF to be deployed as part of a broader national fleet development strategy rather than being treated merely as a financing scheme for individual shipowners.
According to him, with an estimated $700 million currently available in the fund, Nigeria could develop a strong national fleet covering different cargo segments if the resources are strategically deployed with the guidance of experienced maritime professionals.
The shipowner further disclosed that several banks had approached his company regarding the CVFF, with some already presenting term sheets outlining financing requirements, equity contributions and other conditions.
He described the development as a positive sign, particularly after years of complaints by shipowners over difficulties and delays in accessing the fund.
Olubowale maintained that the priority should now be to ensure that the CVFF produces measurable economic benefits by increasing Nigeria’s indigenous tonnage, creating opportunities for local shipowners and enabling Nigerian operators to capture a larger share of the country’s maritime trade.
He said the focus should be on matching the right vessels with the right cargo and securing viable trade contracts capable of generating the revenue required to operate the vessels and repay the financing.
This, he argued, would make the CVFF more than a funding mechanism, turning it into a strategic tool for rebuilding Nigeria’s indigenous shipping capacity and strengthening the country’s participation in maritime trade.
