Cloud of Doubts Over Nigeria’s $700m Ship Purchase Fund After Years of Failed Attempts

As over 60 shipowners scramble for the $700 million Cabotage Fund, fears grow that politics, weak screening and past mistakes could derail the maritime industry’s biggest financing intervention. ISMAIL ANIEMU reports

 

 

For more than two decades, Nigeria’s maritime industry has waited for what many stakeholders describe as the sector’s most important but most elusive intervention fund.

 

Established under the provisions of the Cabotage Act 2003, the Cabotage Vessel Financing Fund (CVFF) was conceived as the financial backbone for indigenous shipping development. The objective was straightforward: provide Nigerian shipowners with access to affordable long-term financing to acquire vessels, expand fleet capacity and compete effectively in domestic coastal trade reserved for indigenous operators.

 

Yet, 23 years after its creation, the CVFF has become synonymous with unfulfilled promises, shifting timelines and recurring assurances from successive governments.

 

Today, however, the conversation appears to be changing.

 

With the Federal Ministry of Marine and Blue Economy having launched a digital application portal and more than 60 indigenous shipping companies reportedly applying for access to the fund, stakeholders are no longer asking whether the CVFF will be disbursed.

 

Instead, the more pressing question is whether the eventual beneficiaries possess the financial discipline, operational competence and commercial viability needed to ensure that the fund succeeds where previous maritime financing initiatives failed.

 

The answer, industry experts warn, could determine whether the CVFF becomes the catalyst for a shipping renaissance or another expensive policy experiment.

 

A fund trapped in history

 

The CVFF was created from contributions made by operators engaged in coastal and inland shipping under Nigeria’s cabotage regime. The intention was to build a revolving fund capable of supporting indigenous vessel ownership and reducing the dominance of foreign shipping interests in Nigeria’s maritime trade.

 

Over the years, however, the fund accumulated while remaining inaccessible.

 

Under the administration of former President Olusegun Obasanjo, policymakers championed indigenous participation in shipping following the enactment of the Cabotage Act, but disbursement never materialised.

 

During President Goodluck Jonathan’s administration, former Minister of Transport Idris Umar repeatedly assured shipowners that efforts were underway to operationalise the fund.

 

The expectations continued under former Minister of Transportation Rotimi Amaechi, who announced plans to activate the scheme through designated Primary Lending Institutions (PLIs).

 

Amaechi later publicly attributed delays to bureaucratic challenges involving the then Ministry of Finance and the Ministry of Transportation. He argued that administrative bottlenecks had frustrated efforts to secure final approvals for disbursement.

 

The optimism returned in December 2022 when former Minister of Transportation Mu’azu Jaji Sambo announced that former President Muhammadu Buhari had approved the release of the fund.

 

Speaking during the flag-off of the third phase of the Nigerian Seafarers Development Programme (NSDP) in Lagos, Sambo declared that he was staking his integrity on the approval.

“Hold me responsible if this fund is not disbursed,” the minister said at the time.

Yet, despite the presidential approval, the fund again failed to reach beneficiaries before the end of the administration.

For many shipowners, that episode became symbolic of the CVFF’s troubled history.

 

A new push under Tinubu

 

The administration of President Bola Tinubu has revived hopes that the long-awaited disbursement could finally become reality.

 

Since the creation of the Federal Ministry of Marine and Blue Economy, Minister Adegboyega Oyetola has made operationalisation of the CVFF one of the ministry’s flagship priorities.

 

The launch of the digital application portal in January 2026 marked the most concrete step towards implementation since the fund’s establishment.

 

Applications submitted by indigenous operators are currently undergoing credit assessment, risk evaluation and due diligence through approved lending institutions.

 

Under the framework announced by the government, successful applicants can access up to $25 million at a single-digit interest rate of 6.5 per cent.

 

The facility carries an eight-year repayment tenure and a two-year moratorium.

 

Funding will be provided through a shared structure in which the CVFF contributes 50 per cent, the lending institution provides 35 per cent and the shipowner contributes 15 per cent equity.

 

For many operators accustomed to commercial lending rates exceeding 25 per cent, the terms represent an unprecedented opportunity.

 

However, experts caution that access to affordable financing alone will not guarantee success.

 

Is $25 million enough?

 

One of the major debates emerging around the scheme concerns the adequacy of the financing ceiling.

 

Global shipbuilding costs have risen significantly in recent years due to inflation, supply chain disruptions and increased environmental compliance requirements.

 

According to international shipping market data published by Lloyd’s List and global shipbroking firms, the cost of a Very Large Crude Carrier (VLCC) can exceed $90 million, while large bulk carriers and modern container vessels often require investments ranging between $60 million and $150 million.

 

Even second-hand vessels suitable for regional trade frequently command prices of between $15 million and $35 million depending on age, size and specifications.

 

This means that the maximum CVFF exposure of $25 million may only cover part of the acquisition cost for many vessels.

 

Maritime economist and former Director-General of the Nigerian Maritime Administration and Safety Agency (NIMASA), Dr Dakuku Peterside, has consistently argued that access to finance remains one of the biggest obstacles facing indigenous shipping development.

 

According to Peterside, financing schemes alone are insufficient unless they are accompanied by broader reforms that improve competitiveness, cargo access and operational efficiency within the sector.

 

Industry analysts say the current structure may therefore be better suited to helping operators acquire medium-sized vessels, offshore support vessels, tugboats and coastal trading ships rather than large ocean-going assets.

 

The implication is that shipowners will still need strong balance sheets and additional financing arrangements to pursue larger fleet expansion projects.

 

Lessons from SASBF failure

 

Perhaps the greatest concern among maritime stakeholders is the memory of a previous intervention scheme that ended badly.

 

The Ship Acquisition and Ship Building Fund (SASBF), introduced during the military administration of General Sani Abacha, was designed to provide financial support for indigenous vessel acquisition.

 

Instead, many beneficiaries reportedly defaulted on repayment obligations.

Several vessels financed under the programme either became distressed assets or failed to generate sufficient commercial returns.

 

The resulting loan defaults significantly weakened confidence in government-backed maritime financing.

 

Former President of the Nigerian Chamber of Shipping and maritime lawyer, Mrs Amiwero Stella, has repeatedly emphasised that sustainable shipping development requires transparent governance, commercial discipline and proper project evaluation.

 

According to her, financing schemes can only succeed when beneficiaries demonstrate genuine operational capacity and repayment ability.

 

Industry observers believe the CVFF faces the same risk if due diligence is compromised.

 

Unlike a grant, the fund was designed as a revolving financing mechanism.

Its long-term sustainability depends on successful repayment by beneficiaries.

Any widespread default could permanently undermine the programme.

 

The capacity question

 

As the screening process continues, a central question has emerged: who deserves access to the fund?

Many stakeholders argue that possessing a shipping company registration certificate should not automatically qualify an applicant.

 

A senior member of the Nigerian Indigenous Shipowners Association (NISA), who requested anonymity because of the sensitivity of the process, said the industry must differentiate between genuine operators and opportunistic applicants.

 

“The fund was created to develop shipping capacity. It was not established for wealth redistribution. Beneficiaries must demonstrate operational history, vessel management experience and capacity to repay,” he said.

 

Similar concerns have been raised by maritime lawyer and former President of NISA, Barrister George Omatseye.

 

Omatseye has previously argued that the industry requires a rigorous evaluation process to ensure only credible operators gain access to intervention financing.

 

According to him, the objective should be fleet expansion and national capacity development rather than political accommodation.

Industry stakeholders warn that if companies without proven maritime operations secure funding, the programme could suffer from poor asset utilisation and eventual loan defaults.

Fear of Political Interference

Perhaps the most sensitive issue surrounding the CVFF is the fear of political influence.

Several stakeholders interviewed across the maritime sector expressed concern that politically connected individuals may attempt to access the facility despite lacking genuine shipping operations.

Such fears are not unique to the maritime industry.

Nigeria’s history of intervention funds across multiple sectors has often been marked by allegations of political patronage, weak monitoring and poor loan recovery.

A former NIMASA executive, speaking on condition of anonymity, said transparency would be critical.

“The credibility of the programme will depend entirely on the quality of beneficiaries selected. If operators believe the process has been politicised, confidence will disappear immediately.”

The concern is echoed by members of shipowners’ associations who argue that indigenous operators have waited too long to see the fund diverted from its original purpose.

According to them, the CVFF should be treated strictly as a commercial facility rather than a political reward system.

Why the CVFF Matters

Despite the concerns, industry experts agree that successful implementation of the CVFF could transform Nigeria’s maritime landscape.

Nigeria remains one of Africa’s largest maritime economies, handling massive volumes of crude oil exports, petroleum imports and containerised cargo.

Yet indigenous participation in vessel ownership remains relatively low.

As a result, significant freight earnings continue to flow to foreign operators.

Former Director-General of NIMASA, Dr Bashir Jamoh, repeatedly estimated that Nigeria loses billions of dollars annually in freight earnings due to limited indigenous shipping capacity.

Stakeholders believe a properly managed CVFF could help reverse this trend.

Beyond vessel acquisition, increased indigenous ownership could create employment opportunities for seafarers, marine engineers, naval architects and maritime service providers.

It could also strengthen national shipping capacity in strategic sectors including offshore energy support, coastal logistics and regional trade.

A Defining Test for Nigeria’s Blue Economy

The CVFF arrives at a time when the Federal Government is placing renewed emphasis on the blue economy as a driver of national growth.

The Ministry of Marine and Blue Economy has repeatedly identified indigenous shipping development as a key pillar of its strategy.

However, industry experts warn that the success of the ministry’s broader agenda may ultimately be judged by the outcome of the CVFF programme.

If the fund produces new vessels, stronger indigenous operators and successful loan repayments, it could become a model for future maritime financing initiatives.

If it fails, it could reinforce long-standing scepticism about government intervention programmes.

For shipowners who have spent more than two decades waiting, the stakes could hardly be higher.

 

The CVFF represents far more than access to capital.

 

It represents an opportunity to finally fulfil one of the most important promises embedded in the Cabotage Act of 2003.

After 23 years of delays, assurances and missed deadlines, Nigeria’s maritime industry stands at a historic crossroads.

 

Whether the fund ultimately becomes a catalyst for indigenous shipping growth or another chapter in the country’s long history of unrealised maritime ambitions will depend not on the size of the money available, but on the integrity of the process, the quality of the beneficiaries selected and the discipline with which the loans are managed.

 

For an industry that has waited more than two decades, the real test is only just beginning.