‘Vessel fund must deliver tangible trade gains’

A former President of the African Shipowners Association, Captain Ladi Olubowale, has emphasized that the success of the Cabotage Vessels Financing Funds (CVFF) should not be solely evaluated based on the amount available to individual shipowners, but on how effectively the funds are connected to actual trade opportunities. During a roundtable meeting in Apapa, Olubowale argued that a $25m CVFF could be sufficient to purchase a large vessel if the financing is linked to identifiable cargo and long-term trade contracts.

Olubowale suggested that the $25m should not be viewed in isolation, as different types of vessels are required for various cargo needs. He stressed the importance of identifying available cargo volumes in Nigeria and matching them with the appropriate vessels before deploying CVFF funds. According to the shipowner, Nigeria should not finance vessel acquisition without first establishing the commercial demand for such vessels.

The CVFF should be part of a broader national fleet development strategy rather than merely an individual financing option for shipowners, Olubowale argued. With an estimated $700m available in the fund, Nigeria could develop a national fleet covering various cargo segments if the money is strategically allocated and guided by industry professionals.

Several banks have shown interest in the CVFF, presenting term sheets outlining financing requirements, including equity contributions and other conditions. However, only a small percentage of the 136 applicants who applied had met the eligibility requirements as of July, according to a report by The PUNCH. Olubowale believes that the focus should now be on ensuring that the CVFF generates tangible economic value by increasing Nigeria's indigenous fleet and enabling Nigerian operators to capture a larger share of the country's maritime trade.