CVFF disbursement, FG gives marching order

The federal government on Tuesday affirmed its determination to empower indigenous shippers’ participation in the global maritime trade by directing the Nigerian Maritime Administration and Safety Agency (NIMASA) to immediately commence the disbursement of the Cabotage Vessel Financing Fund (CVFF) to qualified Nigerian shipowners.

Minister of Marine and Blue Economy, Adegboyega Oyetola, while giving the directive emphasised that a strong national shipping fleet is essential to building local capacity and asserting Nigeria’s presence on global trade lanes, with the ultimate goal of establishing a National Flag Carrier.

The disbursement of the CVFF has been a subject of controversies since it was established under the Coastal and Inland Shipping (Cabotage) Act of 2003 to provide financial support to indigenous shipowners in Nigeria.

The Fund was designed as an intervention scheme to enable local operators acquire vessels, expand fleet capacity, and participate more actively in Nigeria’s cabotage trade—shipping activities reserved for Nigerian-owned vessels within the nation’s coastal waters.

The CVFF is built from statutory contributions, including 2 percent surcharge on every contract executed by vessels engaged in cabotage trade, Tariffs, fines, and fees for waivers or licenses granted under the Act.

The rest are charges approved by the Ministry of Marine and Blue Economy through the Nigerian Maritime Administration and Safety Agency (NIMASA), which administers the fund.

Since inception, billions of naira have reportedly accrued to the Fund, though disbursement has been a recurring controversy.

The primary objective of the CVFF is to reduce the dependence on foreign-owned vessels in Nigeria’s coastal shipping trade by building indigenous shipping capacity.

Nigeria’s oil and gas industry, which accounts for over 80% of maritime cargoes, remains dominated by foreign operators because local shipowners lack access to affordable finance to acquire and maintain standard vessels.

By providing long-term, low-interest loans, the CVFF is meant to empower Nigerian shipowners to compete fairly, retain value within the economy, and create jobs.

However, the disbursement debate has rage for years, with stakeholders expressing frustration that the CVFF, despite accumulating billions, has never been disbursed.

Multiple administrations promised disbursement but failed, citing policy bottlenecks, lack of transparency, and concerns about loan recovery.

In 2022, the Federal Government announced plans to finally begin disbursement through five primary lending banks (PLBs): Union Bank, Zenith Bank, Polaris Bank, UBA, and Jaiz Bank.

The model was designed to ensure accountability, with government providing part of the risk guarantee and the banks handling due diligence.

However, as of 2025, industry operators still complain of delays, policy inconsistencies, and political interference stalling the process.

Multiple reports approximates that the sum of $360 million has accrued to the fund.

According to a report by the House of Representatives committee based on data from NIMASA, the CVFF account with the Central Bank of Nigeria (CBN) holds about $360 million, representing 50% of the total disbursable funding; the remaining 50% is expected to come from stakeholders and banks (15% from shipowners, 35% from banks).

Others however suggested that over $700 million have accrued from the mandated 2% surcharge on cabotage contracts.

NIMASA confirms the funds are safely held in an account at the Central Bank under the Treasury Single Account (TSA), affirming that there have been no unauthorized disbursements or missing funds.

Stakeholders’ have expressed concerns over the transparency in the disbursement as shipowners want clarity on criteria for access and fear the fund could be cornered by a few politically connected operators.

Also, the repayment structure has been a worry for financial institutions as banks are cautious about lending into an industry with high default risks, costly insurance, and volatile freight rates.

Again, policy instability has been adduced to be a major factor in the hurdle as frequent changes in ministerial leadership and shifting maritime policies slow down momentum.

However maritime experts have put forward some suggestions on how to achieve success in the exercise saying that for the CVFF to achieve its purpose, government must ensure transparent disbursement based on merit and viability, not politics, strengthen ship mortgage laws to allow banks recover assets in case of default and support local shipbuilding and repairs, so funds don’t flow back overseas.

They also called on the federal government to Institutionalise governance of the CVFF through a dedicated management framework insulated from political interference.

The CVFF represents one of Nigeria’s boldest attempts to grow indigenous participation in its maritime trade.

After more than two decades of waiting, stakeholders are united in one demand, that is, it must be disbursed transparently, fairly, and efficiently.

They are of the opinion that if managed well, the Fund could be the game-changer that finally empowers Nigerian shipowners to take control of the nation’s cabotage regime.