Nigeria’s maritime feels pains of $1trn losses on cabotage fund holdup

Onome Amuge

Maritime stakeholders have voiced concerns over the substantial financial losses Nigeria is incurring due to the non-disbursement of the Cabotage Vessels Financing Fund (CVFF), estimated at a staggering $1 trillion annually.

The stakeholders made this known during a meeting with Dayo Mobereola, the newly appointed director general of the Nigerian Maritime Administration and Safety Agency (NIMASA).

The CVFF was created as part of the Coastal and Inland Shipping (Cabotage) Act in 2003. The primary purpose of the CVFF is to support the development of indigenous ship acquisition capacity and to offer financial assistance to domestic coastal shipping operators.

According to reports, the CVFF has yet to be effectively distributed. Stakeholders argue that this has not only impeded the growth and development of the Nigerian maritime sector but has also resulted in substantial revenue losses for the nation.

Emeka Akabogu, a maritime lawyer, highlighted the significant financial impact of Nigeria’s inadequate local marine transportation infrastructure during the meeting. Akabogu estimated that the nation is losing approximately $4 billion due to this deficiency.

According to Akabogu, the maritime industry comprises three key components: fleet expansion, ship repairs, and shipbuilding. He added that the country is losing an additional $9 billion annually due to its non-participation in international freight services.

“Nigeria’s coastal resources have an estimated capacity of $504 trillion. Current realised capacity is $106 trillion; export and import on frozen fish is $876 million,” he stated. 

Akabogu also referenced a statement made by Bashir Jamoh, the former director general of NIMASA, who claimed that Nigeria incurs an annual loss of approximately $25.5 billion due to illegal maritime activities. Furthermore, he noted that the Nigerian National Petroleum Corporation Limited (NNPC) reportedly experiences an annual loss of $1.35 billion as a result of oil bunkering.

Also speaking at the event, Mustapha Hassan, flag officer commanding western naval command of the Nigerian Navy, pointed out the crucial role of NIMASA in effectively implementing the Cabotage Act. He noted that despite being enacted to promote the development of indigenous shipping capacity, the Act has faced challenges in its implementation.

Hassan highlighted the need for increased inter-agency collaboration within the cabotage regime, specifically in addressing issues related to boarding and inspection of vessels. He added that the use of automatic identification systems (AIS) is essential for monitoring and regulating maritime activities, and urged NIMASA to expedite the adoption of this technology.

According to Hassan, there is significant potential revenue to be generated from the successful implementation of the Cabotage Act. He further asserted that the Nigerian Navy is prepared to offer its full support to NIMASA in addressing any challenges that may arise in the course of enforcing the Act.

Temisan Omatseye, a former director general of NIMASA, explained that the agency was established with a primary mandate to promote, protect, and foster an environment conducive to the growth of indigenous shipowners and their vessels. However, he noted that the current NIMASA leadership is facing obstacles in disbursing the Cabotage Vessels Financing Fund.

Omatseye explained that the financial regulations in place are in conflict with the rules governing banking and finance institutions. As a result, the existing framework makes it difficult for the CVFF to be effectively distributed to support the development of the Nigerian maritime sector.

The former NIMASA DG pointed out that while the agency conducts risk assessments for the Cabotage Vessels Financing Fund, the disbursement process does not permit an external entity to perform such assessments. He added that this restriction goes against the legal framework that governs the funding.

He further stated that the law stipulates the existence of the CVFF and mandates that the fund be disbursed in accordance with guidelines provided by the minister of transportation and approved by the National Assembly.

In response to the discussions, Dayo Mobereola, the NIMASA DG outlined some of the agency’s key priorities moving forward. 

He announced plans to automate the ship registry process, noting that this is a goal that will be achieved in the near future. Additionally, Mobereola highlighted the need to address gender inclusion in maritime activities and work towards correcting any existing shortcomings in this area.